By Douglas McColloch
Export Success Story
Kooks Headers & Exhaust
Kooks Headers & Exhaust’s Jack Tese (second from left) and Chris Clark (third from right) meet with buyers at the SEMA Middle East Business Development Program.
As the globalization of automotive manufacturing has accelerated in recent decades and U.S.-spec vehicles are now being manufactured and distributed via worldwide supply chains, a side effect has been the emergence of an increasingly affluent consumer class in much of the developing world. This, in turn, presents tremendous growth opportunities for American manufacturers offering goods and services that cater to this rapidly expanding market segment. And with SEMA importing vehicles popularly customized overseas but not sold in the United States presenting yet another opportunity for U.S. manufacturers to create export-ready products, U.S. companies are gaining a foothold overseas. One North Carolina aftermarket exhaust manufacturer is a case in point.
Kooks Headers & Exhaust is an Asheville, North Carolina-based manufacturer of performance exhaust components for American musclecars and pickups. Now, thanks to logistical support from SEMA, the company is also manufacturing parts for the overseas market—specifically, for the Nissan Patrol as well as the non-U.S.-spec Toyota Land Cruiser and other applications soon to come. In business since 1962, the company has been exporting parts for roughly 10 years, but exports were a tiny and underutilized fraction of its overall business until recently.
A big catalyst for change was an international business trip to the United Arab Emirates that gave the Kooks marketing team a hint at the potential for global business expansion, as the company’s International Business Manager Jack Tese explained.
“We’d been selling in the Middle East for a decade, but it was a tiny slice of our business,” he said. “About three years ago, we took our first business trip over there in association with SEMA, and we were amazed at what enthusiasts were doing to modify their cars to increase performance. That was where we got our first taste of the car culture there.”
Added Chris Clark, Kooks Headers & Exhaust’s director of sales and marketing: “We realized then that we needed to focus on soliciting international business, and that’s when we brought Jack onboard. He was very diligent in finding performance shops as well as getting acquainted with other manufacturers that were selling over there, making connections and getting introductions to the right people and just figuring out what would be good fit for a particular market.”
Kooks’ global business has taken off since then.
“Of the 20 countries we’re currently selling in, we’re seeing 400% growth over the last three years,” Clark said. “And if we look at it strictly as revenue in dollars and cents, we’ve increased international sales by 600%–700% over the last five years. As an example, we went from average annual sales of $2,000 in China to $96,000 last year. It’s still a small slice of the business, but it’s growing rapidly.”
Overall, international sales account for 7%–8% of Kooks’ business. “But if we were talking three years ago, I’d say it was maybe 1% of sales,” Tese said. “We’ve seen that segment of the market grow to the point where we think we’re looking at a ‘snowball effect.’”
An added benefit of globalization to an aftermarket company such as Kooks is the growing trend among OE manufacturers to adopt global production platforms.
“As U.S. cars become world cars, that’s helping us to grow the international business even more, because now we have the opportunity to expand into markets that previously didn’t have a vehicle for us to work with,” Clark said. “As an example, we’ve spent the last year and a half developing a set of right-hand-drive headers for the Mustang 5.0GT, which has gotten us access to the United Kingdom and Australia. Now that Ford has the taken Mustang global, that’s really opened a big door for us in the international marketplace.”
In addition to right-hand-drive headers for the Mustang 5.0GT, Kooks also makes a full system for the EcoBoost Mustang that has been a success in the Chinese and South Korean markets.
Now that Kooks has established a beachhead overseas, the company is planning a comprehensive product rollout in the near future, besides currently offering a host of exhaust systems for the Nissan Patrol.
“We just finished development on a full exhaust system for the Toyota Land Cruiser, including headers, which should be a huge overseas focus, again with an emphasis on the Middle East,” Tese said. “We’re also in the testing phase of an exhaust system for the ’17 Ford Raptor EcoBoost, which should be popular for us in the Chinese market.”
Other overseas projects Kooks has scheduled this year include exhaust systems for the Cadillac ATS and Chevy Camaro 2.0T, with the focus on Asian markets. Also under consideration are headers for the BMW M4 and Mercedes C63 (Europe/Asia/Middle East), and for the Subaru WRX, Mitsubishi Evo and Holden Commodore (Australia/New Zealand).
Any new business expansion is bound to encounter its share of obstacles, and Kooks’ expansion into overseas markets was no exception.
“Start with communicating with potential clients,” Tese noted. “In some places, just getting your message out can be difficult. The language barrier—particularly in Asia—can be formidable. In the case of China, it took the form of a three- to four-month battle of emailing every performance shop and distributor we could find with experience in that market to see what we could learn from them.”
Fortunately, Tese added, resources are available to improve logistics and enable improved communications, such as market-research materials published by the U.S. Department of Commerce and by SEMA, to name but two.
“They can help you find out exactly who the key players are in every market,” he said. “But in some places, just finding a distributor or a dealer with English-language skills can be a challenge.“
According to Tese, the actual nuts and bolts of exportation are not that difficult in the long run. He attributes that to the guidance he’s received from the Department of Commerce.
“They’re a big help, because they can show you how to ship the product the right way,” he said. “And their assistance is free of charge.”
Regulatory hurdles, either at the point of sale or delivery, have been minimal.
“The only thing we’ve had in the past domestically has occurred at pre-shipment inspection,” Tese said. “Typically, they’re looking for certain kinds of materials that aren’t supposed to be sent to Saudi Arabia and Kuwait, specifically, but we’ve never been held up on our end.”
Clark added: “As the point of delivery, I won’t say the regulatory burden is any easier, but we haven’t had any backlash. Even the countries we thought would be more difficult for regulation have turned out to be a little more wide open than we are in the States.”
When asked what kind of advice they’d offer a colleague who’s looking to expand into the global marketplace, Tese and Clark were unanimous.
“First and foremost, utilize SEMA,” Tese emphasized. “I couldn’t quote a dollar amount value-wise that we’ve gotten in resources and information from [the association] or in making connections with overseas dealers. When it comes to breaking into new markets, which can seem very complicated and a very exhausting task, SEMA really helps with getting introductions to new dealers and distributors. They also help with all sorts of little things, like advising you how to set up your booth at a show. They handle everything from start to finish.”
Tese also pointed to SEMA’s abundant market research—in particular, the association’s reports on international markets, which help members figure out which products to market in specific areas.
“Outside of SEMA, another recommendation that I would strongly make—especially as it is free for American companies that are shipping product overseas—is the Department of Commerce,” he said. “Reach out to your local department representative. They’re found throughout the United States, and they will help you every which way possible. They’ll help you build a business plan for a given overseas market, and they can help you with intellectual property rights, which can be an issue when you take a product international. They’ll help you make sure that your brand is protected.”
Clark also noted the importance on plain, old-fashioned networking.
“If you’re looking into new-business development, you want to get out and talk to the people who are already doing it,” he said. “So we’ve also reached out to friends at other manufacturers, and we were able to learn some best practices from them so as to mitigate the potential big mistakes that can be made. It also helps you to set your expectations at a reasonable level.”
In closing, Tese counseled patience and a big-picture outlook.
“One thing you need is the determination to stick it out,” he said. “The travel costs alone that are required to form new business partnerships in places such as the Middle East can really add up, so if you’re going to do something like this, you’ve got to be willing to stay in it for the long haul and not expect to recover all of your costs and be in the black by year two.”
For more information on SEMA’s overseas business development programs to the Middle East, Australia and China as well as year-round resources to help SEMA members grow their overseas exports, contact SEMA Senior Director for International and Government Affairs Linda Spencer at firstname.lastname@example.org, or visit www.sema.org/international.