Mirrors on the ceiling, the pink champagne on ice, And she said, We are all just prisoners here, of our own device…
Deep down inside every sane, reasonably intelligent one of us, we know that we really are “prisoners of our own device.” No matter how many twists and turns our pasts may have taken, we have no one but ourselves to blame for our circumstances. This is all the more true in the crazy world of collision repair – we are where we are by the whim of our own device. And yet I’ve heard, ad-infinitum, shop owners reasoning that they had no choice other than to go with the flow and sign the Direct Repair agreement, lest they be starved out of business.
From my own personal sour experience, I know the actual motivating forces that encourage otherwise reasonably intelligent shop owners to “do DRP.” The mirrors on the ceiling and pink champagne on ice are the lure of fast cash and canned customers.
Three deadly sins
Cutting through all the crap, greed is the major motivating influence involved in shops’ decision to take the path of least resistance -- direct repair. Greed to put those around you out of business and take their customers for your own.
Fear is the second motivator to “do DRP” -- fear that is so eloquently implied, yet may not be explicitly stated, by insurers. Fear that if you don’t do DRP your competitors will, leaving you to repair rustbuckets.
Pride is another strong compulsion to “do DRP” – the pride of having the biggest operation in your area.
One shop owner I spoke with had DRP contracts with 30-some insurers. How can a shop owner with more than one DRP honestly promise each insurer its policy holders will take precedence over the repairs to all other insurers to which they are subservient?
Insurers have made direct repair programs into their current cartel-like state appear to be a panacea for all your and your customers’ repair woes. Direct repair has lowered shops to a “take it or leave it” position. The mirrors on the ceiling have lost their luster and are in no way reflecting what insurers had induced shops to anticipate, as shops find themselves to be in the position of the prostitute. The pink champagne on ice: the enticing benefits of doing DRP which insurers had promised, has gone flat.
There is a far better way of conducting business.
And in the master’s chambers, they gathered for the feast. They stab it with their steely knives, but they just can’t kill the beast...
Taking on the position of the scapegoat, one influential, self-promoting “industry leader” encouraged shops to work the DRP system to their own advantage, beating insurers at their own game by signing on to direct repair programs to build up a clientele base, and then drop out of those DRP agreements and go independent whenever they desired to do so.
But that’s not the nature of this direct repair beast, and it never has been. Direct repair has a way of sucking shops into its dependency vortex, bleeding them dry of profits, and then making it extremely difficult for shops to escape. Insurers can’t be held accountable for your insurer compliance.
As a DRP-dependent shop owner you have allowed yourself to be put into that position through some combination of greed, fear, pride, and possibly ignorance. Insurers offer the incentive to that end, but you, the insurer-dependent shop owner, provide the means. Without you, there is no direct repair.
Todd Fox, former owner of 18 FOX Collision Center shops in Kansas, [see related stories this issue of ABN] Arkansas, and Oklahoma, was heavily dependent on direct repair contracts with insurers for his combined $28 million in gross yearly sales.Fox wrote a sob story letter to anyone willing to read it, blaming insurer contracts for the demise of his empire. He has generated a lot of sympathy, and hatred, within and far beyond collision repair circles, and his actions have given the collision industry another undeserved black eye.
Some collision industry leaders have told us to not kick a colleague when he is down. In reality, though, he kicked himself. I view this has-been shop owner no different than I view any other DRP shop owner. If Todd Fox had had a shop near my shop he would have been using every underhanded means, motivated by greed, fear, and pride, to put me out of business by sucking up to his insurer “partners.”
No sympathy for the devil
For that reason I have absolutely no respect for him, or sympathy for the demise of his empire. Nor do I have sympathy for any other DRP shop owner who has built his business on the backs of above-board collision repairers. I also have little sympathy for Fox’s 100+ employees who lost their jobs, many of them also losing several weeks back-pay. When you sleep with the devil, you should be expecting your due.
There is a far better way of conducting business.
Last thing I remember, I was running for the door, I had to find the passage back to the place I was before...
Todd Fox, in his lengthy lament, blames “Insurance carriers (which have) leveraged their economy of scale to implement concession-based (direct repair program) contracts and forced collision repair businesses to offer the cheapest and quickest repair possible, many times sacrificing quality, safe repairs.”
Pardon me. Did Mr. Fox state that he was “forced… many times sacrificing quality, safe repairs”?
Since there is no reference to any insurer holding a gun to his head, his statement is just as bogus as is the same lament coming from the thousands of other DRP shops. Don’t ever use that slimiest of excuses. After greed, fear and pride apparently overcame Mr. Fox, as his extensive operation increased in size, sucking up as many customers as possible with the help of insurer referrals. No doubt it became much more difficult for him as his profit margin per job continued to shrink. That’s the nature of the beast when most businesses expand, at least where they allow insurers to be involved. But no insurer forced him, nor are they forcing you “to offer the cheapest, quickest repairs possible” at the sacrifice of safety, quality, and aesthetics.
What Mr. Fox’s 2,100-word lament really masked was his quick sprint in a rented 2008 Cadillac Escalade to his latest venture, a fine leather wrap and blanket store named Toddy’s in Aspen, Colorado, home of the rich and famous [search on autobodynews.com]. It seems that, some time before issuing his tearful lament, knowing his collision repair empire had hit the rocks, Todd Fox was busily putting the finishing touches on Toddy’s even though he had to know that his 100+ employees were working for weeks on rubber checks.
I have no doubt that Mr. Fox would have desired to find the passage back to the place he was before. I’m sure his plan was the same as that of so many other collision shop owners that have gone out of business – to build up his business, and then sell it to a consolidator. Now that the elusive Todd Fox has been located, he will have no rest; lawsuits by enraged former employees, creditors and, most likely, insurers, are already plaguing him. I doubt that Toddy’s will live to see the light of day. But I feel no remorse for the demise of Todd Fox’s collision empire which, it is reasonable to assume, put some good local collision shops out of business. And let us not forget that other shops or consolidators will most likely rise up to buy out at least most of Fox’s locations and re-employ most of his staff. Only time will tell if anyone has learned anything from the experiences of Mr. Fox about running a profitable, above-board business.
There is a far better way of conducting business.
Relax said the night man, We are programmed to receive, You can check out any time you like, but you can never leave…
No good DRP
A good friend in the collision industry put Todd Fox’s experiences into proper context. Mike Orso, president of the New York State Auto Collision Technicians Association (NYSACTA), put into words the thoughts of many independent shop owners in the November 18, 2007 edition of Sheila Loftus’ CRASHNetwork. Orso stated in his commentary, “No DRP is a good DRP, All DRPS are wrong” for our industry. It’s not a business decision. It’s ignorance and greed and a fear of being left out.
Mr. Fox has not admitted reality and is still delusional as his 2,100-word statement protects the ‘non-concession’ based DRPs and insurers. He hangs on to a false sense of security as a saving grace that these companies are the good guys. Maybe they appear to be so for today, but tomorrow his opinion may change as even the ‘non-concession’ based programs will not look so great.
We are collision repair professionals and have a duty to the consumer and to act in the best interest of that consumer when it comes to repair decisions we recommend. We work for the consumer. If consumers need a referral, they should go to the web, the local BBB, or ask a friend or family member, but certainly not their insurer.
And consumers should certainly NOT be coerced if they decide against the insurer’s advice. We should not be repairing one single car where we have to wonder if the insurance company will like our decision about the repair because it costs more to do it right.
There really are no “non-concession” based DRPs. Deferring storage, omitting mark-up, suppressing labor rates, allowing paint caps, or giving any kind of price break to a third party is simply a way of managing and suppressing the whole collision repair industry. Every DRP is guilty to a degree of participating in a plan to restrict trade and defraud consumers.
Insurers have enormous power. But they are still helpless because we, with our knowledge and skill, have to fix the car. We still assume all the liability and the responsibility to consumers who trust we will act on their behalf and in their best interest. We can’t do that if any insurer is paying today and, we hope, sending us work tomorrow. Somewhere someone is going to lose. As long as someone subsidizes the repair, does it for free or doesn’t do it at all, consumers lose, and the industry is compromised.
If Todd Fox’s DRPs were going even marginally well, he’d still be the recipient of work steered away from many of you. He still has DRPs he thinks are good and he is the recipient of work steered from you! Some of his “non-concession” DRP consumers are still not getting what they are entitled to. And we are the shops still paying for it.
You’re in serious denial if you think any good will ever happen for this industry until we cut the ties to insurance companies completely. They are not our friends. They are not our partners. They are not our customers. Some of you are allowing them way more power than they deserve. I’m glad someone has admitted it: Welcome to the Hotel California.
There truly is a far better way of conducting business. Contact me or Mike Orso to learn what you can do to regain control of your collision repair business and industry.
You can call my cell: 206-310-2008. See Dick’s email in the column banner.