Wednesday, 31 May 2006 10:00

Industry professionals speak out on topics

Written by Dick Strom

Over the course of the year, I receive comments and correspondence concerning the collision repair industry experience from shop owners and techs across the country. Below are some of the comments that have come across my desk. 

"I can't help but think that we are playing into the hands of the insurance industry… another wicked ef-fect of DRP agreements that mandate the use of (imitation) parts, hence wide acceptance of them. Without DRP agreements there would be no market for them at all." (admission of a DRP shop owner)

Pick on the underdog

"Insurers can't win against attorneys, so they are picking on (shops), capitalizing on shops' stupidity. You must never forget that you can't offer a volume discount on labor. Labor can't be stored. Labor can't be liquidated. Labor can't be shipped to another store across the country where it is more in demand. Labor is only consumed in real time. Until collision repair processes can be automated, you cannot produce more (labor hours) with fewer people, unless your operation is presently being run inefficiently… We have already driven away half of our workforce, because few people remain who want to do what we do for the little we get paid. DRPs just make this worse." (shop owner)

Who can you trust?

"DRP-relationships only benefit insurers. They steal from shops, and steal from consumers. Attorneys General across the country are beginning to smell the stink from the DRP-pit. Just recently, after working with the Auto Body Association of Connecticut, A.G. Richard Blumenthal announced he was calling for the Insurance Commissioner to be an elected official, instead of continuing to be appointed by the Governor. Between the payola scam he was investigating, and the ABAC's complaints, Blumenthal got a firsthand look at the shenanigans in the Insurance Department. He saw a clear bias toward the insurance industry, and understands that it is contrary to the Department's mission." (shop owner comment)

What's a proper repair?

"When the collision industry cannot clearly define what a proper repair consists of, how are we going to hold an insurer to paying for one? If we allow insurers to write a contract to pay for a repair with 'opinion' as the standard, how is the contract going to be enforced? If we ask our customers to purchase auto insurance based on 'quality,' without ourselves being easily able to explain how to measure that 'quality,' either as it pertains to the repair, or to the contract of insurance to pay for the uncertain 'quality' repair, how are they going to make an intelligent choice? Educating people about the snakes and alligators in the swamp after they have been bit is too-little-too-late. Yet, if repairers and customers continue to play in the swamp, we're all going to keep getting bit. Maybe repairers and consumers together can bail it out little by little." (shop owner input)

A way to raise the bar

"The zeal for big profits has replaced the concept of taking care of the customer. The concept of getting repairs 'certified' is an excellent one, but we have too many whores in the repair industry who would 'certify' a bad Maaco job if the insurer asked them to. If we could ever set up 'certification' stations with qualified yet disinterested persons doing the inspecting, we could raise the bar of repair quality." (shop owner)

Message board persuasion

"I'm ashamed and embarrassed to admit that I was one of those 'get along' guys. I, like many of us who are smart enough to know better, rationalized my behavior by justifying this as part of the deal to put food on the tables of my employees, and to keep my bosses and owners happy… But this myopic, short- sighted vision has screwed us to the point that we no longer have control. I for one would not encourage anybody to get into this business unless they truly believe that the 'insurer way' based on volume and slim margins is the way to run a shop."

"I don't yet know you, but I've had the same feelings you express here. The absolute wrong thing is to become a DRP shop. The right thing for you to do is to join the CCRE and become an advocate of independence. The CCRE educates, supports, and links you up with other like- minded shop owners. CCRE's website and board discussions are totally private, without insurer participation. This is the only organization that has your best interests at heart. CCRE members will help you with any problems, and give real, tried and proven advice. Again, please join us." (post on a shop discussion board. The one to whom he was writing responded, "I just mailed my check to CCRE.")

Tech's view of the future

"Clearly, the dumbing-down of the collision industry began when insurers weeded out from their appraisers those with collision repair experience, replacing them with educated, though inexperienced, appraisers. But I think the next phase of dumbing-down began when large chains such as Sterling and other consolidators implemented the production-line style of production in their shops. Trim-boy R&Is trim for $7/hour. Mud-boy slaps on bondo for $8/hour. The only guys remaining in the shop with skills will be the frame and paint techs. But how long will that last? It's just a matter of time before the new hires come in at $6/clock hour, and train for trim-boy's job, while structure-boy learns frame repair. Structure-boy will make $10/clock hour when he proves himself on the frame machine. Then the frame tech's position at $17/hour will be eliminated. If these shops are even remotely successful in converting the collision repair process to an assembly line production, the word 'skill' will no longer apply to collision repair technicians. We will be nothing more than expendable factory workers who should be glad to even have a job. This conversion will remove the value of our skills because there will be less skills involved in each individual step of the repair process. As the value of our skills is removed, I expect the skilled techs to leave the industry at a much higher rate than we've ever seen. Just as McBurger Thing isn't getting any top chefs in their kitchen, McSterling and its equivalents won't have top talent on their assembly lines. Whether the corporate know-it-alls will admit it or not, the quality of repairs will suffer far more than it does now." (a well respected tech's view of techs' future)

Told you so

"One refreshing piece of news was a short discussion with an old enemy (he was at one time heavy into DRP). He told me I would be proud of him because since his shop had tossed all their DRPs, profits now were up 21%. I could have told him that if he wasn't so stupid ten years ago." (comment of shop owner)

Who benefits?

"The customer told me the insurer's appraiser had told him that our shop was very expensive and his truck would probably not 'total' if it was fixed at one of their DRP shops. The customer responded that 'if' he has his car repaired, our shop would be doing the repairs. He told the appraiser he had been down the 'insurer-recommended' road, and the repairs were horrible. They subsequently declared his car a total, but our shop made more money on storage and tear-down than we would have if we had repaired it." (shop owner)

Don't try that again

"A Hartford appraiser told a previous customer that our shop didn't have the required equipment to repair his Mercedes. In fact, the appraiser knew we had the needed equipment, and that we were the only one who actually used the manufacturer recommended paint system. When the insurer talked the customer into using the insurer-recommended shop, the repair took almost three months. The work was so bad he ended up selling his car immediately. I confronted the Hartford appraiser and told him I intended to put all my equipment on a part of his body 'where the son doesn't shine' if he ever tried this kind of trick again." (shop owner)

Cost shifting or fraud

"I have had techs apply at my shop that tell of having worked for (a well known multi-shop repairer in Dallas, Texas), telling me that (this shop) is taking, say, an $8K insurer-generated estimate and rewriting it for, say, $6K, and telling the collision techs to fix the car for that amount. Then, a portion of the money left over from the (money laundering) is rebated to the insurer for being on their DRP program. This repairer is offering kickbacks, and paying managers of several insurance companies, and no one does anything about it. And that's just the start." (frustrated Dallas shop owner)


Who knew?

"Upon completion of a rather large repair to a high-end German sports car we called the adjuster (team) to confirm that the check had been sent. We were told that, after more than two months, the check had not been issued because we didn't call the insurance company and tell them to issue the $14,000 check. When we let them know we would not be releasing the vehicle without full payment in hand, we were again blamed for not telling them to issue the check. Imagine that; all this time we apparently have had the authority to call insurance companies and tell them to issue us checks!" (shop owner)


"Insurance companies are successful at keeping your labor rates low only because you let them. It's clear and obvious that they will take every inch you give them. Their financial power is snowballing; just look at their influence on the database providers. Even paint suppliers are sleeping with insurers now, and getting into the 'network' business. How long will it be before insurers gain control of the paint and materials market? Insurers are getting into the parts business. They already finance the aftermarket parts industry by backing CAPA. I bet a little investigation will discover that insur-ers have interest in some of these commie junk part manufacturing companies also. Companies like OE Connection are helping insurers track DRP parts purchases. How long will it be before insurers get involved with OEM parts manufacturers pricing structure? Many insurers are involved with I-CAR. How long will it be before they start influencing recommended repair procedures to save themselves money?" (shop owner/ writer comment)


"Several years ago an adjuster was here inspecting a quarter panel job on a Caravan. We had pulled the 'C' pillar, cut off the quarter panel, and were test-fitting the quarter by around 2 p.m., when he stopped in to check on it. He thought we were almost done with it, and commented on how the equipment these days must really speed things up, not having a clue that we still had all the fitting and welding, and so forth, to do. Though I told him we weren't half done with the repair, I'm still not sure he really understood." (shop owner)

No missing daily headache

"I came to the conclusion quite some time ago that one different approach this industry has to take is to demand that the information providers provide more accurate information. What they presently put out is based on helping the insurance industry. Before I left them, the state autobody association was going to tackle that problem, but like most of the so-called industry leaders, they failed. That's why I have not gone back to help. I'm done beating my head against the wall. Life is great without a headache every day!" (retired shop owner)

Look to the future

"The country's top collision repair technicians should seriously consider venturing into the post-repair inspection (PRI) business as a next career. It's never too late to learn what you need to know about PRI, and it's never too late to use what you know about collision repair to make a better living. It is imperative that the top techs get involved with the PRI industry before it is flooded with opportunists who will sell out to insurers. Insurers will soon realize the importance of finding and buying those who can be bought. When that happens, the PRI industry will be faced with the same 'dumbing down' tactics of insurers that the collision repair industry currently faces. Insurers and opportunists among the PRI people will feed on the ignorance and lack of understanding that plagues the general public now." (forward looking industry professional)


Dick Strom, Modern Collision Rebuild, 9270 Miller Road, NE, Bainbridge Island, Washington 98110; (206) 842-3621; e-mail: moderncol@qwest.net.