Friday, 31 October 2003 17:00

CAA celebrates passage of anti-steering bill, looks ahead

Once the fog burned off, the San Diego day was almost too beautiful to stay inside, but that's exactly where nearly 100 attendees at the California Autobody Association (CAA) Convention spent that temperate mid-October Saturday. 

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President Peter Hurwicz opens the 2003 CAA Convention in San Diego.

This was the first time in recent memory that the CAA Convention did not include a trade show. The CAA trade shows at the Ontario Convention Center and last year at Disneyland had suffered from declining attendance and exhibitors were less than enthusiastic about continuing the trade show, particularly in light of NACE moving to Las Vegas in 2004.

With the delegates comfortably settled into the Bahia Resort Hotel conference center, Jack Molodanof, CAA's lobbyist, reported on legislation of concern to the collision repair industry. He lauded the group for their efforts in helping get SB 551, the anti-steering bill, enacted into law. This bill should go a long way toward leveling the playing field, since the law now has the mechanism for penalties for those who do not comply.

He also discussed the association's position on AB 761, the automotive report card pilot program sponsored by Senator Jenny Oropeza. Molodanof explained that the association is opposed to this bill because it is highly punitive in nature and unfair; that a repair shop receiving anything other than a green ball would simply go out of business. He was also concerned that the bill would potentially mislead consumers by the posting of a green ball, giving a false sense of security that the repair shop was thoroughly inspected by a government agency and determined to have met high industry standards, when in fact that would not be the case. Molodanof has met with Senator Oropeza to try to clarify the issues and explain why this "Scarlet Letter" bill would cause more harm than good.
Strategic outlook
Jim Murphy, an automotive specialist with the international consulting firm of Carter & Carter, spoke about the strategic outlook for the collision repair industry in 2003 and beyond. He discussed the three major factors that will impact the collision industry: state legislatures making new laws, OEMs active entry into collision repair through their dealers, and of course the insurance companies.
On OEMs, Murphy talked about "the moment of truth," saying that when a customer has a collision, the service provided by the OEM dealer "can support or subtract from the brand." Right now, few dealers have body shops and so "dealers do a lousy job at that moment of truth." While the national trend is still a decline in the number of dealers offering body work, the percentage of work done by those dealers with body shops has increased, a trend that Murphy sees continuing.

Murphy said the strategic landscape for collision repair in the foreseeable future points to certain trends: fewer body shops, more sophisticated management, corporate giants entering the collision repair industry and greater demands by insurers in return for work referral.

Repairers, said Murphy, can survive the industry changes and flourish by (1) utilizing available information (insurers have data that shops and associations don't have and must acquire); (2) understanding opportunities provided by the growing number of collision repair networks; and (3) understanding new competitive challenges outside of the networks. Owners must have a strategic plan in order to keep their businesses moving forward, cautioned Murphy.

Improve shop productivity

Marc Olson, an I-CAR instructor and industry consultant for VeriFacts Automotive, talked about how to take small steps to improve business efficiency. He explained how little tweaks to existing operations can save money in the shop.

As an example, he discussed the use of "weld-thru primer." Most techs are taught how to use the product in I-CAR class but often don't remember the details. Consequently, Weld-thru primer is frequently slathered on a part rather liberally which causes two problems - it has to be wiped off before paint will stick and one can't actually weld on weld-thru primer, so welds don't hold. I-CAR instructors actually rename the product "weld around primer." By using the product sparingly, said Olson, time and money can be saved by not wasting the product and not wasting time removing excess and redoing welds.

This is just one small way in which a shop can immediately start saving money and time. Olson suggests that there are many more procedures that can be evaluated and streamlined without much effort that will pay dividends in the long run. As to the greatest quality control issue, "it's welding, without a doubt," said Olson, who used a Power Point presentation to illustrate the welding issues he found repeatedly at body shops.

Higher rates in No. Cal

Following the presentations, CAA members had an opportunity to air concerns and ask questions of an industry panel consisting of consultants Murphy and Olson, Workers Comp insurance specialist Jim Vawter, and lawyer/lobbyist Jack Molodanof.

With CAA President Peter Hurwicz as moderator, the panel took questions such as why the labor rates are so much higher in Northern California than in the Los Angeles area.

"We're not here to set rates," cautioned Molodanof, "but that said, we're our own worst enemy. There are always people who are willing to do things for a lot less. We don't have a free market" because of the third party payor system, he said, likening the situation to health care.


Specifically addressing the Northern versus Southern California question, Olson suggested that "Southern Cal is breaking out and charging for more operations" than in Northern California and other parts of the country, and further suggesting that severity rates are the same.

Hurwicz disagreed, calling insurers' statements that severity rates are the same despite the rate difference "nothing more than insurance propaganda. We know it can't be true."

One Southern California shop owner, Curt Nixon of Pasadena, said that he had raised his rates "on the ten per cent of customers who really want to do business with me." He suggested more shops would do so except for the "fear factor" in raising rates. "We raised the rates, and the customers stayed," he said. Since focusing on those customers, he noted that his percentage of the more profitable non-DRP business has gone up.

Assemblyman Juan Vargas (D-San Diego), the luncheon guest speaker, discussed the changes likely to be seen in Sacramento with Arnold Schwarzenegger as governor. "He has ten Humvees. There should be a lot of work out there for you guys." Calling himself a "conservative Democrat," he said Democrats should not be frightened of Republican Schwarzenegger. "We need to work cooperatively, and we will try." He was not optimistic about Schwarzenegger's "audit of the government" solving the budget crisis. "He may find waste of a billion dollars, but the deficit is $8 billion."

On Worker's Comp, the Assembly Insurance Committee chairman said that the latest legislation has cut the costs on the medical side of Worker's Comp, but now "we need to cut the disability side."

Annual awards presented

Following the luncheon, many delegates settled into one of two AMI seminars, while others took advantage of the weather and the luxury accommodations at the Bahia Resort before assembling during the evening for an awards banquet, dance and party.

The awards given out at the banquet were:

•Darrell Malott Memorial Award Member of the Year: Tony Bairos

•Lifetime Achievement Award: Jack Caldwell

•Chapter President of the Year: Ted Stein

•Chapter of the Year: East Bay

•Chapter member of the year:

•Agri-Center: Finis Fortney

•Antelope Valley: David Stark

•Capitol: Mike Passof

•East Bay: Sal Contreras

•Grass Valley Auburn: Rowland "Tug" Franssen, Jr.

•Orange County: Mike Ramirez

•San Diego: Hop Sanchez

•Santa Clara: Dan Diridoni

•San Louis Obispo: Paul Amaral

•South Coast: Chuck Hartman

Board meeting

The afternoon prior to the general session, the Board of Directors conducted a relatively routine board meeting. The slate of officers for year 2004 was presented and unanimously accepted. Kelly Swenson is now president-elect, with Steve Sturken, first vice president -finance; Ron Guilliams, vice president; Dave Mello, treasurer and Ted Stein, secretary.

102 new CAA members

•Executive Director David McClune reported for the year 2003 CAA has 102 new members, still slightly short of this year's goal.

•McClune alerted the group that SCAQMD has been targeting body shops over odor abatement. He testified on behalf of the CAA against imposing more restrictions, suggesting voluntary efforts could be made to minimize exposure.

•Michael Vawter, California Coastal Insurance, spoke briefly about new integrated services being offered to CAA members by his company.

•Treasurer Ron Guilliams, who is in charge of quality control for the FIX Auto network, spoke about the need to bring more technicians into the collision repair industry. He pointed out that the average age of a technician is 56 years old. One suggestion to improve this situation would be for each chapter to adopt an auto tech - serve as a mentor - and take an active participation in career days and similar activities that target students about to make career choices.


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