Eastern Catalytic News

Executive Interview with George Schafer, President of Eastern Catalytic in aftermarketNews 2/18/08 Edition

- From aftermarketNews Staff & Wire Reports -

Langhorne, PA... This week, we hear from George Schafer, who founded Eastern Catalytic (Eastern Manufacturing Inc., Langhorne, PA) in 1980. Shortly after graduating from Marist College in 1977, he helped manage his father’s muffler pipe shop part-time while training for spot on the U.S. Olympic Rowing Team. When the United States elected to boycott the event in 1980, Schafer concentrated his full- time efforts on the business and started Eastern Manufacturing Inc., remanufacturing catalytic converters. Over the years, he has successfully grown the company to become a major player in the converter business and made Eastern one of the fastest growing catalytic converter manufacturers in North America.

In addition to managing Eastern, Schafer also focuses on innovation, new product development and new venues for the company. He recently expanded the company’s manufacturing and R&D capabilities to meet the increasing demand for new catalytic converter products not only in the automotive market, but also in other engine markets.

Schafer participates in various business and industry associations and committees and is a board member of The Manufacturers of Emission Controls Association,, a non-profit association dedicated to the establishment of strong and effective state, federal and international air quality programs that promote public health, environmental quality and industrial progress.

Join us as Schafer shares his thoughts on the potential impact of emissions control legislation on the aftermarket industry as well as some changes in his company’s business strategy.

The catalytic converter segment of the industry is not only complex but also facing certain challenges, as states look to develop emissions-related regulations, of which catalytic converters will play a role. What’s your overall take on this segment of the industry today and how do you envision the future for this challenged industry segment?

Since the mandate for catalytic converters on all vehicles sold in the U.S. went into effect in late 1970s, this industry has evolved from making an individual component to full systems. Today, cars are not just equipped with a converter; they have a complete emissions control system, which encompasses everything from the engine management module to the gas cap.

OE manufacturers design their vehicles to operate on very tight parameters in order to warn the vehicle operator of an immediate or impending problem. In many cases, the catalytic converter is one of the puzzle pieces that fit into the string of things that could be wrong with a vehicle and set off a MIL or check engine light.

The aftermarket converter industry has a tough job to develop and manufacture lower-cost catalytic converter replacements that will work on a range of vehicle applications but still satisfy very specific vehicle system parameters. As the complexity of the market for OE systems grows with tougher emissions legislation, the aftermarket needs to develop and create new products to keep pace with it.

What are your thoughts on the current situation with CARB and how it will impact emissions-related legislation throughout the country?

California has always been the world leader for emissions control legislation. Under the Federal Clean Air Act, it was granted the right to set its own tougher-than-federal vehicle emission standards as long as it obtained a waiver from the U.S. EPA. Over the past 30 years, the U.S. EPA has granted California more than 40 such waivers. The Clean Air Act allows others states to follow California's low emissions vehicle (LEV) program. So far, 18 states, representing almost half the U.S. population have adopted or announced plans to adopt the regulations. However, none have currently adopted the California aftermarket emissions legislation.

This means that all aftermarket catalytic converter manufacturers must produce two different product lines if they want to compete in the market, one for California and one for the rest of the country. In addition to creating higher production costs that make it tougher for smaller manufacturers to cope, the entire industry must explain to the general public that a specific catalytic converter, certified to work on applicable California emission vehicles, is legal for aftermarket use, as long as is not used in California.

Currently, I do not know of any other states looking to follow the California aftermarket emission standards, but we would expect that, if the next few years prove successful for the California program, other states may follow.

It can be assumed that the (pending) legislation would be a good thing for your business. Is the company doing anything in anticipation of this – as far as any improvements or updates to products and manufacturing procedures?

While the majority of the 1,500-plus catalytic converters we make are certified to work in 49 states, only a small portion are currently certified, and allowed by law, to be sold in California. Eastern Catalytic has been investing in research, development and converter certifications to increase our California certified product line. But it will most likely be a few years before there is broad coverage from anyone in the industry. When it comes to business strategy in this segment, we must look at not only 49 states vs. California aftermarket products, but also the global emissions market. Currently, Eastern distributes converters to more than 50 countries. We have catalogs published in multiple languages and have product certifications in the U.K., South America, Mexico, China, Egypt, Sweden and Israel, among others.

Talk to us about the strategic move to drop ship in favor of warehousing.

While I would love to take all the credit for drop shipping as a great strategic move, it really has come more from necessity. My family has been in the automotive industry for more than 40 years and I am an equal partner in Eastern with my brothers, Ken and Bill. Together, we realized two important factors: As the size, complexity and cost of catalytic converters multiplied, no warehouse would be willing to or able to stock more than 1,200 parts, and that consumers would be willing to wait for a part rather that pay an average of double the cost from the dealer.

What I can take credit for is the insight to invest in people and technology to be sure we are set up to handle large volumes of single piece orders shipped on a daily basis. Currently, an active account can log into our secure website, look up an application, import a stock order, view an actual product picture and place orders. A packing list and shipping label are generated automatically, the part is pulled from our 115,000-square-foot Langhorne facility and it’s labeled and ready for shipping. Customers can log in to our site to track order progress and print their invoice at any time.

Eastern Catalytic has developed a strong brand reputation and has experienced significant growth in a short period of time. To what do you contribute this recent up-tick in business?

I think our tremendous growth over the past four years can be attributed to a few factors. While many people look upon their business investments in the sense of building, machinery and equipment, I add an additional piece, and in my opinion the most important piece -- people. We have a great core group of people who have made our sales, quality and customer service what they are today. From our executive sales director of five years, Henry Hippert, to our shipping manager, Harry Meyers, a 20-year veteran, I count on heavily the people that work for Eastern for growth ideas and individualized service.

From our beginnings in 1980, housed in a 2,000-square-foot garage in Philadelphia, to our current state-of-the-art 115,000-square-foot manufacturing headquarters in Langhorne, PA, I have genuinely enjoyed this business, growing it with my family and the daily interaction with the people and companies I have had the pleasure to work with around the world.

While Eastern Catalytic has developed a good reputation, the company still flies under the radar somewhat. Is this intentional? And, what’s been the most successful way for your company to build new business?

Because Eastern focuses its efforts specifically on catalytic converters, it is not a priority to build a consumer brand image. We are well known in our industry segment, having built our name and our business on being the converter company with the most application coverage in the industry. When a consumer has a vehicle at a repair facility and needs a catalytic converter, the shop will most likely call its local parts warehouse. If that warehouse doesn’t want to miss a sale, it will look for a supplier with the deepest converter line coverage available either in stock or just a drop-ship away, and that’s Eastern.

Because other manufacturers in the exhaust industry see that we have the most coverage available, they too look to buy parts from us under a private branding program and then add those parts to their line. It’s really a win-win for everyone and that has been one of the most successful parts of our business recently.

What advantages or strengths you feel Eastern Catalytic brings to the marketplace?

Because we are still a relatively small family-run business, we can change quickly to meet customers’ needs, and we are very personable and directly involved. I am always available to talk to a shop tech who has an application question on a single converter or the president of a major manufacturer looking to source a large order. I always tell prospective customers, we are the best in the business because we have to be. We don’t make toasters, mufflers or spark plugs. We make catalytic converters.

I am also a big proponent of new technology, so we pride ourselves on having the latest catalog software, data resources and web technology in the industry. Any consumer or warehouse can go to our website at http://www.easterncatalytic.com and look-up converter applications, see detailed specs on our parts and download all our available literature. We also publish a quarterly newsletter that has become an industry hit with its technical insight and industry information.

On a more personal note, you learned the business by managing your father’s muffler shop part time and went on to start Eastern Catalytic in 1980. What made you decide to take that leap? The aftermarket struggles to recruit and retain bright young professionals to this industry. If you were a recruiter for the aftermarket what would you say to a young college graduate to encourage them to consider a career in this industry?

It was not a planned leap. Customers would come in the shop with an exhaust pipe broken off a good converter, and we’d simply copy the pipe and weld it back together. As I began to see repeat business on the same pipe, I would record the information to make it easier to reproduce the next time. As demand started to grow, I wrote and copyrighted a catalog and took it to a starter and water pump company call S.M.S. Products. In the following three months, they placed about $300,000 in orders, and Eastern was off to the races.

To encourage young students to pursue a career in today’s aftermarket industry, I would suggest they first possess an interest in cars in general. There is nothing better than working in an industry where you also have a hobby or general interest. I don’t just read aftermarketNews.com to keep in touch with the industry, I actually enjoy it. When you enjoy what you do, and the industry you work in, I think your work reflects it. For a career in the aftermarket emissions control industry, I suggest a solid background in chemistry and/or engineering. Knowledge here goes a long way in presenting your product.

The emissions control industry is growing in many ways and not all are automotive. In the next five to 10 years, every emissions producing engine, from lawn and garden weed whackers, to ocean going vessels, to stationary generators, will need to have some type of emissions control catalytic converter. Eastern is currently under an approved Federal Aviation Administration contract to assist in the development of a catalytic converter for small aircraft engines. We are also building development samples for the stationary emissions control industry.

Thinking back just five years ago, I would have never envisioned that we would be in this position.

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For more information, contact: Henry Hippert, Eastern Catalytic, 2151 Cabot Blvd. West, Langhorne, PA 19047-1808 - Email:hhippert@easterncatalytic.com