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.
After a lifetime in the auto collision industry you might think I would know it all, yet I'm amazed at how much I still don't know. Attending this year's NACE demonstrated that I still have much to learn to repair some of today's vehicles properly. If we are going to stay up with these new technologically-advanced automobiles, a substantial investment in equipment and training will need to be made.
Many things will have to change about our approach to collision repair. We can no longer afford to concede to a repair method for the sake of a relationship with a particular insurance company. The liability becomes far too great and we are the ones that will get stuck holding the bag for a substandard repair.
Any type of repair procedure that is against the manufacturer's recommended repair method I would consider substandard. The old days are gone and shops that don't step up and learn to repair state-of-the-art vehicles to manufacturer's specifications will soon be gone also.
Five different OEM representatives at NACE said they were in the process of developing required certification for collision repairs to their vehicles. Many have had them in place for quite some time. Mercedes, BMW, and Volvo link their warranty to properly certified collision repair. Be careful repairing any of these vehicles unless you are properly certified to do so.
This is brand-specific training by the OEMs. I-CAR is presently creating some programs working directly with manufacturers to create brand-specific training. But for some vehicles like Mercedes and BMW, only the manufacturer's training and certification is accepted.
Simply because you are allowed to purchase the parts does not mean you are properly trained to install them in certain vehicles. Many of these vehicles have five different types of metal and cannot be welded. Some are not welded together at all. Unless we want work on "older" vehicles while they slowly disappear, we need to change the way we think.
|I-CAR booth at NACE lacked participants.|
During NACE, I attended a free I-CAR training session on aluminum structure. It was awesome. The presenters really knew what they were teaching, and the display was outstanding. This great class should have been standing room only, but it wasn't even close to full. I was amazed at this, but it demonstrated to me that a lot of techs will only go to training if forced to.
As shop owners, we need to take charge of the training in our shops and stay on top of the changes to vehicles that may become a liability by repairing them improperly - without all of the details. We need to protect our customers and assume the responsibly for their trust. Just because we will make more money repairing a frame rail doesn't mean it should be repaired rather than replaced. Many new vehicles require that everything be replaced - with repair becoming less and less of an option.
We must educate ourselves or get left behind. Someone said to me that I shouldn't worry about the shops that try to cut corners and work cheaper because the vehicles themselves will eliminate those shops soon enough by the type of training and equipment required to repair them. This is actually becoming a reality today; it's time to step up or step out.
Size doesn't matter
It isn't necessary to be a large shop to survive but it is necessary to be trained to use specialized equipment. If you haven't already, start now and invest in the training and equipment required to guarantee your place in the future. If you think you can't afford it, then it's time to raise your prices so you can purchase what you need. If not, you won't survive anyway.
With knowledge comes power. Knowing more about how a vehicle should be repaired than the insurance company, and backing it up with documentation, will give you the power to control the repair process.
There are plenty of resources regarding proper repairs. Contact your dealers and ask them for their repair manuals. Many of the OEMs have web sites you can subscribe to that tell you about their recommended collision repair process. I-CAR has great resources including their web site, and so does NASTF. A new subscription service - theppages.com - presents empirical knowledge along with approved procedures.
Don't sit back and do nothing thinking everything will be business as usual. Be proactive and push into the future with the attitude that knowledge is power. Power over your future, power over the repair process, power over the competition.
Vehicles are rapidly moving ahead of current repair methods. Most of us are already behind the eight ball, and are being held back because we have been brainwashed into believing that it is our responsibility to repair vehicles as cheaply as possible. While cost control is an important element, the repair should not be compromised to accomplish this. It is the insurance company's responsibility to control cost. It is our responsibility to control the repair process.
My experience with insurers has been that most are willing to pay to get a proper repair if its necessity can be documented. They are afraid of paying for items and procedures that never get done, and I can't blame them.
Recently, I checked out of a hotel and saw charges on my bill for drinks that I never purchased. I don't drink, so I knew the bill was wrong. When I questioned the bill they looked at me like I was some kind of a tight wad. The charges weren't much but I didn't order any drinks and I wasn't about to pay for something I didn't receive.
The whole process took way more time than it was worth and left me with a bad feeling about that particular hotel. They reluctantly removed the charges and still acted like I was the jerk. The experience brought to mind the number of insurance companies I have treated in a similar way as they adjusted one of my estimates. Maybe they were just trying to keep from being overcharged.
Our industry has allowed cost shifting so often that we have this sense of entitlement to be paid for everything on an estimate whether we do it or not. We didn't create this problem by ourselves. I have had many insurance companies force me to cost shift one item for another so the estimate would look right to their auditors and I was willing to accommodate them for the sake of our relationship.
Cost shifting needs to stop and our estimates need to be accurate because we are accountable for every line item. Never should any customer be charged for something that wasn't done. The fact that cost shifting was acceptable in the past means nothing; there is no place for this illegal action in our future.
Just as the entire repair process needs to be updated to keep up with the current vehicles, our estimating process needs to be accurate to keep up with present laws. It is our obligation to educate the consumer on what their rights are and what a proper repair is. We need to get started by acquiring the training and equipment necessary to give us the authority to control the repair process. And remember - knowledge is power.