Every business faces competition in the marketplace, and a large part of every the business world is figuring out how to beat that competition. Racor, a Modesto-based company, does it through technical ingenuity and patent protection.
Racor is a division of Parker-Hannifin Corporation that designs and manufactures fuel, air, oil, and coolant filtration systems for diesel engines, as well as a variety of supplemental products. A big part of Racor’s business is the design of original equipment manufacturer (OEM) parts for a variety of automobile makers that range from Ford to John Deere, but perhaps the largest, or at least the most profitable aspect of the business comes from the sale of aftermarket filtration products.
“We have a lot of competition,” explains General Manager Brian Hook, “But most of it comes in the aftermarket products.”
Racor needed a way to keep people coming back once they needed new or aftermarket parts and they realized that the best way to do this was through patent protection.
With many of their systems, Racor designs an innovative feature, valve, or handle and then patents that design, ensuring that consumers will need to go to Racor for their replacement parts.
Hook likens it to razors: “When you buy a razor handle, they give you blades with it. But when you need a new blade, you need to buy the specific replacement kind from the manufacturer. It’s similar to that.”
The sale of aftermarket products, with their lower margins, accounts for two-thirds to three-quarters of the businesses profits. That increase in profits has a noticeable effect in Modesto, where Racor has both its main office and largest factory.
“The Racor division has been the most successful acquisition for Parker-Hannifin,” says Hook, “And it brings a lot of skilled white-collar jobs here to the Valley.”
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