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State Farm auto-parts trial documents, Ben Parr 2

Editor's note: The following excerpted memo is a verbatim copy of State Farm's internal documents that were entered as evidence in the auto-parts class action lawsuit in Marion, Ill. On Oct. 4, a jury found State Farm guilty of breaching its contract with its policyholders and awarded $456 million to the plaintiffs. On Oct. 8, Judge John Speroni ordered State Farm to pay an additional $730 million in damages.

October 8, 1990

ROUGH DRAFT

MEMO TO: Jack Gillis
CAPA

FROM: Ben C. Parr

RE: Taiwan Technical Committee Findings

RECOMMENDATIONS

  1. Get 202-3 and 4 realigned and approved so that we can have Tong Yang PUR and RIM products in the CAPA manual. This needs priority.
  2. Investigate DTL procedure for checking certification on "farmed out" dies producing parts.
  3. Insist that when DTL is waltzed and danced about as we were, and sees that the manufacturer's quality is marginal for any reason (including management attitude). that it really totally inspect the entire aftermarket part manufacturing operation - including any dies and any stock on the premises.

COIN JOIN KEY

At Coin Join Key we saw a significantly improved operation from three years ago, yet it cannot consistently produce quality sheet metal products.

  1. Many of their fixtures should not have been certified to the OEM sample (it didn't fit) and in some cases the OEM sample had obvious damage.
  2. Newer products did show improvement.
  3. Production parts for that day should not be certified.
  4. Observed a strong willingness to improve, but a lack of ability to do so. SUSPECT that DTL gave significant assistance to this organization and it appears some of it was incorrect and other portions not well understood, e.g.. edge waviness and other features necessary for the part to be satisfactory.
  5. Coin Join Key repeatedly asked for more feedback from CAPA on what to specifically correct.

In my opinion they know what is inferior - they feel that since they got a CAPA approval their product, as produced, is good enough. They do not check their production runs for production variance.

RECOMMENDATIONS

Coin Join Key should (on a part number basis) be completely resurveyed by DTL in the strictest detail for certification and possibly cited or decertified for:

  1. Fixture qualification to OEM part fit.
  2. Fixture maintenance and irregularities.
  3. Quality control protocol and procedure availability and for not adhering to that protocol.

Wednesday we visited Haur Tay and DTL.

HAUR TAY

Mr. John Chen arrived back in Taiwan from a 40 day U.S. trip to meet with us. John is the president of the Apex Group, which consists of Haur Tay, Coin Join Key and three other organizations. Apex Group members contribute to a significant majority of manufacturer oriented quality related complaints. He said that he had received complaints while in the U.S., but they were too general for them to fix anything. It was obvious, as we worked their checking fixtures using parts brought from the U.S.A., that they had heard from the Coin Join Key of the CAPA visit the previous day. They were not in production (this day was their Moon Festival Holiday), therefore we were restricted to viewing their checking fixtures and items from their finished inventory. We found unsatisfactory and inconsistent quality. Haur Tay was extremely cooperative, obviously and sincerely wanting to know "what" to correct.

*Personal Note:
Considering what we saw this time, coupled with the significant yet inadequate improvements they have made to date. I suspect they are saying, "Tell us how." (not what) to correct their deficiencies. We seem to be losing the complete meaning of their requests. I believe that they know when the part is not the same as OEM, but think that the differences are forgivable, or that the part can be "adjusted to fit."

RECOMMENDATIONS

  1. Exactly the same as Coin Join Key.
  2. Accept the request that CAPA send back to the Apex Group, at their expense, returned as unacceptable in U.S. parts.
  3. CAPA have a strong presentation as far as to what CAPA means to the Taiwanese manufactures, to the U.S. body shops, to the U.S. importers, the Taiwan trading companies and the U.S. insurance company members. Only then will they understand the value of the CAPA Seal and its true meaning.
  4. CAPA find ways to improve communication to its Taiwan members, especially suggesting that when visiting the U.S.A. they visit the CAPA office. Today the trend is to only visit DTL.
  5. Procedure manual be revised to state that DTL (or certifying organization) be required to give reasons and demonstrate deficiencies which cause the decertification action.
  6. Revise procedure manual to require manufacturer tie in the CAPA seal number to a production lot. This will correct many of the observed difficulties and enhance the ability to track complaints.

DTL - TAIPEI

  1. The Taiwan office records are pretty good from an administrative content viewpoint. Technical content accuracies and organizational factors need improvement.
  2. An average of 20 new parts per month are being investigated for certification by DTL. Improvements in efficiency are required.
  3. DTL (Don Auen) has a proposal for a procedure to replace the "container inspection program" yet assure that a "quality alert" for the prevention of shipment of substandard parts "is available". This might be a candidate for a Tech Committee meeting agenda item.

CONCLUSION - OPINION

The next few weeks are critical for CAPA. DECISIONS AND ACTION ARE REQUIRED. The NACE convention in New Orleans will see significant aftermarket part activity and the ABPA convention (after NACE) in San Diego can be made into an opportunity.

TIE FENG

At Tie Feng we saw an up scale Taiwanese manufacturer who produces over 100 parts - 34 for the North American market.

We did not look at procedures and quality control protocols, but they were obviously in use! We saw assembly fixtures in operation and checking fixtures nearby.

We saw a complete staff doing their job quite well, being led by proficient, well motivated, and well meaning management. The president of Tie Feng, Mr. Parkson Jong, is the new incoming president of TABPA and he took office on October 4. 1990 (the day of our visit).

RECOMMENDATION

Work closely with this new president. He appears knowledgeable, capable and well meaning! The CAPA Director and he have a challenge that might easily become the best opportunity since the inception of CAPA.

Friday we attended the TABPA from 8:30 am to 12 noon, and then visited the MRL/TTRL Complex.

TABPA

  1. At TABPA we saw a much more mature and disciplined group than previously observed. The Xerox copy of Appendix I is a partial list of attendees.

    A. Each of us made a statement pertinent to the need for quality parts.

    B. We were courteously received and sincere, courteous appreciation was conveyed by the CAPA Tech Committee visitors.

  2. TABPA Committee members were introduced. There are four committees:

    A. Sales & Planning
    B. Public Relations
    C. Material
    D. Technical

    Committee number D is newly formed whose mission (according to Mr. Parkson Jong) is to "promote the production of quality parts." The chairman is from Nam Ji who sells mostly to Europe and the vice chairman is from Legion, which is affiliated with Keystone. I do not; believe that the chairman was present at the meeting. MRL and ITRI were in attendance.
  3. The following requests were made for us to take back to CAPA.

A. Will CAPA help with specific complaint data and other detail necessary for improving part quality? Update frequently, report at least monthly (or more often) in a timely and informative fashion. Answer: Yes, we owe you that - from a technical viewpoint.

B. Will CAPA supply an OEM master component? Answer: We can see advantages and disadvantages, but we will look at it.

C. Can CAPA revise program to include drawings? Answer: We can see more disadvantages, but will look at it.

D. Can CAPA help market CAPA parts? Answer: Do not know. USAA and Allstate policy of using (only) CAPA parts was again restated.

E. Will CAPA talk to ADP regarding marketing of parts? Answer: We will look into it. Not a function of the Technical Committee, but we are considering developing a requirement that a decertification be immediately reflected by ADP.

F. Would CAPA rate the manufacturers by some method of ratio parts manufacturers to number of complaints, or some other "report card?" Answer: I denied that it was a CAPA or a Technical Committee function to provide a report card, or a hit list. I wanted all manufacturers to compete among themselves, by their standards, to build and certify their best products. Tech-Cor and USAA said that they had no objection to this proposal! I agreed to bring to the CAPA organization their request and worded my reply as follows:
(Read and interpreted to them.)

"Obviously we do not have a consensus (here today), however, we do agree that we owe CAPA participants a thorough, accurate, and timely assessment of the problems that we see with the quality of the parts they produce." We will get back to them regarding this request.

At MRL, we heard that there are three divisions of IRTI that might be of help to CAPA and TABPA.

A. The MRL.
B. The Mechanical Energy Research Lab (MERL) that deals with molds, dies, and fixtures, and have had successes with such high tech components as jet engine components for GE and Pratt and Whitney.
C. Measurement Center, Mr. Li-Chung Lee, Ph.D has been given the responsibility to work this project. Mr. Lee indicated that he had some manufacturing experience and had studied in the U.S. I personally propose that the entire MRL/ITRI potential be discussed with Jack Gillis either at a special committee meeting, or as an agenda item with adequate discussion time available.

Appendix II contains a "report of sorts" from one of the female interpreters/translators who was with us the first two days. I asked her for her assessment of what transpired and any other comment she had. She had lived in the U.S. while attaining an advanced degree at a well known university located in the Northwest U.S.A. (Oregon, as I recall). Take them for what they are worth!

BCP:jf

Attachments

cc: Bob Mercherle
Ed Schrank, USAA
Jack Billington, USAA
Donald B. Cameron, Tech-Cor
Jerry Dalton, Craftsman Auto Body, Inc.

Back to part one of the memo

Back to State Farm auto-parts trial documents

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