The collision repair industry has reached a point where enough is enough. Shops have been watching their bottom lines drop to a point that is becoming dangerous. The insurers are so accustomed to getting something for free that when there is a legitimate charge, they make us feel as if we are the ones that are being unreasonable by asking them to pay it.
When I first began writing articles I was a body shop owner blowing off some steam. I sent it off hoping someone else out there felt the same way. As things turned out I was not alone, I’m now a columnist for Autobody News, and in a position of “Industry advocate.” [Photo: Lee and Sheri Amaradio outside the California State Capitol]
The insurers have a dilemma; they can’t raise their policy prices in California but must keep their profits up to keep their stockholders happy. They need to run a tight ship and find savings where ever possible. As owners, we also have a big dilemma – raising our prices to keep our profits up. So while insurers still think that cutting the cost on our end is a way to maintain their profits, we are continuing our downward spiral.
Truth: Conformity to fact or actuality, A fact that has been verified.
Honesty: Freedom from deceit or fraud.
Integrity: Soundness of moral character, honesty.
I’ve always taken pride in my business. Being a business owner and being my own boss is something I not only appreciate, I cherish. Making my own decisions became important to me early on in my life, but I knew that to have the freedom I wanted in my future, I would have to earn it. Owning a business has its rewards, but there is a price to pay.
Today’s “industry standard” is rapidly becoming the industry substandard. This new substandard is becoming the norm and the so-called “measuring stick” that all other repairs are judged by.
People often contact me asking what they can do to help fix our industry. More often, though, people contact me just to complain and tell me what needs to happen. They are more than willing to root for me, but don’t want to get their hands dirty. I can’t fix your problems alone. You need to step in and step up.
When I was a kid I used to love to get ice cream at 31 Flavors—the best, most expensive ice cream around. Normally our family would go to Thrifty Drug Store to get double dips for ten cents each. 31 Flavors was a real treat with more choices Plus, their ice cream was so expensive, we rarely went there.
1. DRP rates should be discounted no more than 10% of our door rates across the board (SB 1492 by former Senator Jackie Speier suggested this). Every time we raise our door rate we automatically raise our DRP rates.
We are involved in a game with the insurance companies and we are on the losing team. I call it a game because the collision industry operates like no other business model I know of. Insurance companies wouldn’t play this game from our point of view. Let’s switch sides and put the shoe on the other foot.
As president of "Faith" Quality Auto Body, Inc., a large auto body shop with several direct repair programs, I annually renew several company insurance policies with carriers. This year, I decided to conduct an experiment by approaching the insurance companies the same way they approach me.
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.
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.
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.
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.
Recently I had the opportunity to give a presentation to a group of shop owners and managers. The presentation highlighted several areas of change in vehicle technology: advanced high-strength steels, laser welding, MIG brazing, hybrid disabling procedures, structural sectioning, and panel attachment methods, such as bonding and riveting. During the presentation, I spoke not only about the technology, but also how the technology was impacting the collision repair industry in areas such as: technician safety; required tools, equipment and materials; technician efficiency; estimate accuracy and other areas that affect the business.
Over the past several years we have seen changes in vehicle design and construction. Many of these changes provide increased protection for vehicle occupants, increase fuel economy, reduce emissions, or meet the market demands of potential new vehicle buyers.
How many times have you heard over the last several years? “I’ve been doing this for more than 20 years, and I know how to create a damage report, repair plan, and perform the repairs.”
The first thing I would like to start this month’s column with is an update on the shops that have started to implement the lean process.
In a recent article I discussed the lean process and how we can eliminate waste. I recently taught I-CAR’s Cycle time class in Downey and San Jose. Greg Gunter, owner of Greg’s Autobody in Whittier, CA, asked me for help in starting the lean process in his shop. I spent about 4 hours with his staff prior to the 4th of July holiday discussing the lean process and what we were going to accomplish, but before we got started, we did a walk-through of the shop as a group and identified all of the items of waste.
Toby Chess, well-known I-CAR instructor and consultant, was the featured speaker at the California Autobody Association’s (CAA) East Bay chapter meeting, held at Scott’s Seafood restaurant in Walnut Creek, CA, on May 19th.
Hey Toby—I read your articles on lean production and I would like to set up my shop as a lean facility. I know I-CAR has a class on cycle time improvements. I checked with a consultant on helping me but the cost was prohibitive. What do I need to do first?
—Thanks, Old Time Shop Owner, Los Angeles
Hey Toby—I thought that all high voltage wires on hybrids are orange, but an adjuster told me that there are other colors. Are there more that one color for high voltage wires?
—Dan from Fresno
With summer only a few months away, I’ve been receiving a number of questions dealing with automobile air conditioning. It’s a good time to answer them. To read this article in PDF format with photos, click here .
Hey Toby—My repair center recently repaired a vehicle that was involved in a front end collision. The vehicle was not running and towed in. After the repairs were completed, I took the car for a test drive and turned on the air conditioning system to check it out. I was blasted by a foul smell coming from the air conditioning vent. Did we do something wrong?
—Jose from Scottsdale.
Hey Toby – I am a technician in Los Angeles and I need some information on repairing an aluminum hood. Can you help me?
— Miguel from Los Angeles
Hey Toby---I recently attended I-CAR’s Advanced Metals class and found the class interesting, but too scientific. I have also read a couple of articles in Autobody News on the same subject, but again, it’s complicated. Could you possibly shed a different light on this subject and make it a little easier to understand?
---Not Albert Einstein from Los Angeles
Hey Toby—Thank you for the resistance spot welding class you conducted at our Chatsworth location the other night. The class was very helpful in several ways:
The in-class technical information portion was helpful in understanding the increasing usage by auto manufacturers of advanced high strength steels and the importance of proper welding techniques needed to retain metal strength.
The actual hands-on portion of the class was powerful in that we could utilize the latest state-of-the-art equipment you provided for the class and actually test the strength of the welds we performed.
Overall, the class was beneficial for a better understanding of the importance of proper squeeze type resistance spot welding related to advanced high strength steels. Thank you for conducting the class!
Hey Toby—What is your take on those 3M disposable mix cups that fit on the spray guns?
—Dave from San Diego
HEY TOBY will return in July.
On May 6, Toby Chess and fellow I-CAR instructors hosted an evening dinner lecture for about 250 insurance adjustors to familiarize them with the ICAR Steel Unitized Structures Technologies and Repair Course (SPS07). On hand to train the estimators and adjusters were Doug Moore, Eric Stretten, Ken Boylen, Steve Morris, Steve Saunders, Mike Mastro, Frank Schiro, Jeff Lawson, Bob Mickey, and of course, Toby Chess.
Hey Toby—I took the aluminum welding qualification test with you about a year and a half ago. I am trying to remember why you push the puddle instead of pulling it when welding aluminum?
—-Joe from Rohnert Park, Ca
Hey Toby—About 9 months ago, we put in an A/M radiator into an ‘06 Honda Accord with 22,000 miles that sustained front end damage due to an accident. We have a DRP for an insurance company and the price for the part was dictated by the carrier with a large radiator company that they had contracted with. The radiator failed and the customer took her car to an authorized Honda dealer because she was still under factory warranty. My customer was contacted by the dealer and was told that engine blew the head gasket, but she was going to be responsible for the repairs due to the fact that the radiator was not an OEM radiator. She called me immediately and I told her that we would be responsible for the repairs. I contacted the radiator company and they stated that they would replace the radiator and the labor for its installation. I then called the insurance company supervisor and he stated that we needed to call the radiator company, but I explained that they would only cover the cost of radiator replacement and the insurance company recommended the radiator company. His reply was that I was free to purchase the radiator from anyone. I ask him if he would have paid for the difference in price and he said no. I am out $2,300. Do I have any recourse?
—Mike from Bakersfield
Hey Toby—Where can I get some repair information on a 2004 Chevrolet Corvette frame?
—Steve from Temecula, CA
Jeremy and Barbara asked me to respond to an e-mail about a repair process and I said “sure.” After all, I already receive an average of five e-mails or phone calls a week about some sort of question pertaining to the collision repair process. They thought that it would be a great monthly column and, wanting to see my picture in print, I agreed.
Question: Which is cheaper - an airline ticket from Los Angeles to New York with a weekend stay at Five Star hotel including two front row seats to a Broadway Hit play or a gallon of epoxy primer and hardener? If you chose the first scenario you are correct, but if you look at the plane flight alone, it is cheaper than a gallon of epoxy primer.
Have you as a collision shop repairer recently been asked to change the paint time on a panel by an insurance company representative - a time that is different from that listed by the information providers? The answer, I think most of you will agree, is yes.
A shop in my area recently experienced an attack by a competitor. One of the competitor’s reps was trying to get one of the shop’s dealership “authorized collision repair” status. At the same time they tried to hire away one of his best technicians, and some nasty “black P.R.” was employed to hurt his reputation with local insurance agents.
The New Year is well under way and by now most of us have probably forgotten our New Year’s resolutions—that is, if we even bothered to write any.
The collision industry in my area is divided into two camps: The big guys and the smaller independent shops. The big multi-location or consolidator-owned shops have a huge advantage over the smaller shops. In addition to more revenue to hire top-rate repair technicians, they can also afford many more administrative people to enter data into the computer and do follow-up mail, e-mail and phone calls.
I recently spoke to an insurance agent who said that in this tough economy they have had to shift their strategy. He said during normal years they had about a 15 percent attrition of customers, but they were generally able to attract at least 15-to-20 percent new customers to make up the difference. Now, he said, attracting new customers seems all but impossible, but fortunately the attrition rate is way down and by stepping up service they have almost been able to retain all of their existing customers.
The California Autobody Association Glendale Foothill Chapter meeting, on April 28th, featured speakers from three major providers of Refinish Materials Calculators. Wayne Krause and Brian Bragg from Mitchell presented Mitchell RMC. Bob Klem, president of PaintEx, presented PaintEx. Richard Palmer, President and CEO of Computer Logic, presented PMCLogic. Mr. Palmer traveled the farthest, coming from their headquarters in Macon, Georgia.