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In the movie “Identity Thief” actor Jason Bateman plays the role of a man whose identity is stolen by a con artist. 

In manufacturing, identity theft is better known as counterfeit and it’s a big problem. Since 2009, reports of counterfeit goods have quardrupled. OEMs, contract manufacturers and component suppliers reported 1,363 verified counterfeit-part incidents worldwide, four times the 324 incidents reported in 2009, according to analysis from US firm IHS. In Canada, the RCMP investigated more than 4,500 cases of intellectual property crimes between 2005 and 2012. In 2013, the RCMP seized $38 million worth of counterfeit and pirated goods.

Counterfeit parts pose a big risk: if such parts fail on aircraft, missile systems and other military hardware, it could have devastating consequences. In the US, the Missile Defense Agency learned that mission computers for its Terminal High Altitude Area Defense (THAAD) missiles contained suspect countefeit devices that could have lead to an entire system failure. In January, fake parts were identified by OEM manufacturer Lockheed Martin on several aircraft in their worldwide feet including some of Canada’s Hercules C-130J aircraft. The counterfeit Chinese parts in the cockpits could leave pilots with blank instrument panels in mid-flight.

To thwart the growing problem, Canadian and US governments are taking action to stop the flow of counterfeit goods and it may make it a lot tougher (and more expensive) for manufacturers to get approvals for parts they supply to customers in military-related markets such as aerospace, defence, electronics and satellite communications.

In Canada, the government has introduced the “Combating Counterfeit Products Act” which will give greater authority to border officers to detain suspect counterfeit goods. (The bill received second reading in June 2013, but the government’s decision to prorogue Parliament means the bill will die and be re-introduced in the Fall session to be passed into law). In December 2012, the US government introduced the US National Defense Authorization Act, which places the responsibility (and rework) of detecting and avoiding the use of counterfeit or suspect parts on contractors.

There is one simple way to address the growing problem of offshore counterfeit parts: make them in North America. While we can’t insist (nor do we want to given the economic importance of international free trade) on 100 per cent Canadian or even North American-made goods, increasing the North American content rules for manufacturing can go a long way in ensuring the prevention of questionable quality, low cost components from offshore countries. It would also be a good boost to North American manufacturing. SMT

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