After attending a recent meeting with one of my largest direct repair accounts, I found myself totally stressed out. We discussed LKQ and aftermarket parts usage, as well as cycle time. Procedures now called for three alternate part searches for every part on the estimate - each of which had to be documented. Furthermore, going over their allotted four hour per day formula would force us to pay rental car ex-penses.
Currently I am struggling to get my shop's recently raised labor rates accepted by the insurance companies we deal with. Raising rates is one thing; getting paid the new rates is another
It amazes me how quickly some of us are ready to throw State Farm under the bus. Have we forgotten how much we loved doing business with State Farm up to this point? Perhaps the problem is not State Farm, but with the collision industry itself.
Let's look at the new Select Service program and some of these so-called outrageous demands made by State Farm. Are they really asking for anything that we haven't agreed to do for their competitors? State Farm is not the first insurance company to demand guaranteed cycle time or rental car reimbursement. We in the collision repair industry are just upset because they are choosing to equal the playing field.
If you're going to complain about State Farm, you better include all your DRP programs. State Farm is just following our lead, as we have trained the insurance companies we do business with how to treat us. State Farm isn't bad; they are doing what any good business would do. They see us giving concessions to their competitors and they want the same treatment. If my paint vender starts selling paint products to the guy down the street for less than he is charging me, I'm going to let him know that he had better lower my price or I'll change suppliers.
Our industry is afraid of the "N" word. We are so used to giving in to ridiculous concessions and demands that we say "yes" to almost everything. Who defined cycle time anyway? To me, it's the time elapsed from when a repair is completed to when I get paid. How's that for cycle time. Why hasn't anyone figured out that it takes more time for us to receive the payment than the time it took us to repair the vehicle? Why aren't we demanding twenty dollars a day interest according to our own version of cycle time?
I started my auto collision business in 1979, because I wanted to be my own boss, and I've been fortunate enough to survive for over twenty-seven years. I can even remember when I still knew how to repair cars. Now twenty-seven years later, you would think I knew little or nothing about repairing cars or running a business.
Twenty-seven years after opening my business in 1979, I'm trying to figure out how our industry went so wrong. Although I have learned many things in those years, I haven't learned how to produce a profit consistently.
"What we have here is a failure to communicate!"
- Paul Newman in Cool Hand Luke
I've been writing articles trying to give my perspective on what I think would be good changes for our industry. This collision industry is a major part of my life. It provides a living, I enjoy doing what I do, and I love to repair collisions. But there are many things in my life that I value more. I'm also "Lee" the person; I have a life apart from this industry. If we ask about the most meaningful things in our lives, the answer is never going to be the collision industry. While it consumes most of our time, it is far from the most important aspect of our lives.
The tactics used by the insurance companies to outsmart us never cease to amaze me. They have us processing their claims for free. They've figured out how to control our labor rates and dictate the way we repair vehicles. Now we are being asked to pay rental bills.
I'm not anti-insurance company but I am anti-bully. When I was a kid there was this guy who just kept picking on me. Because he intimidated me, I always laughed it off and pretended that I thought he was joking - although I knew he was not. For a couple of years he pestered me and I continued to take it, even though I wouldn't take it from anyone else.
Deep down inside I knew there would be a day of reckoning. Something was building inside of me that the kid knew nothing about. He couldn't see the effect his bullying was having on me, but I knew his day was coming.
The subject of supplements was brought up at the Collision Industry Conference (CIC) in San Jose last July - and it is an issue that is clearly in need of attention. One participant pointed out that each supplement costs an average of $250. While this number struck me as high, it began to make sense when I focused on the fact that supplements are time consuming - and estimators don't work for free.
Several different reasons for the growth of supplements were explored. First, it was suggested that inexperienced estimators were the major cause for the increase in supplements, but I disagree. While inexperience plays a small part, it is far from the major cause. Once again body shops are being blamed for the biggest part of the problem. I know exactly when we saw our supplements begin to increase at an abnormal rate - and that was with the inception of DRP programs.