Sunday, 26 January 2014 10:54

Fourteen Ft. Wayne, IN, Shops Opt out of Select Service Citing PartsTrader

In December 2013, State Farm experienced a dramatic reduction in the number of shops participating in Select Service (their direct repair program) in the Fort Wayne, IN, area due to the implementation of PartsTrader. Of the 22 local shops participating in the DRP, 14 (over 60%) opted out of the program, though some of these shops had been on the program for decades. Several shop owners and managers were willing to discuss their reasons for being removed from the Select Service.
Todd Bonecutter, General Manager at Glenbrook Collision at 100 W. Coliseum Blvd in Ft. Wayne, said he opposes PartsTrader as a mandated tool. “We don’t like being told where we can buy our parts or being prevented from buying parts from our usual vendors. This is just a stepping stone for the insurers to dictate other things in the collision industry. They starts with parts, but it’s only a matter of time before they move on to paints and other materials.”

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Jeff Rice, Estimator at Koester Body Shop at 6818 SR 930 East, also in Ft. Wayne, agrees that the changes to the Select Service program are a bad thing which is why his shop opted out when use of PartsTrader became mandated. He also notes that since being removed from the program, there have been big delays in getting State Farm to get out to the shop to look at new jobs.
The owner of Dan T. Gratz Body Shop, Dan Gratz, said PartsTrader is “just another way of keeping us under State Farm’s thumb and having them dictate how we run our businesses. They are looking for a way to make more money off the little guy, the collision shops… Insurer interference is getting worse and worse. If we don’t take a stand now, when will we? State Farm needs to learn that there are shops who will take a stand for the right thing.”
Since the removal of these shops, State Farm has been using small, sometimes uncertified, shops that don’t have the proper training and equipment, according to Gratz who sees this as a “lawsuit waiting to happen… State Farm doesn’t seem to realize that they are running shops out of business by doing things like implementing PartsTrader which reduces our profits.  If we can’t make money, we will have to close our doors.  Who is going to repair cars then?”
Eric Knipscheer, owner of Knipscheer Collision Center at 747 W Superior St in  Fort Wayne, opted out of the Select Service because PartsTrader did not offer parts from any local suppliers. He prefers buying locally for the benefit of his local economy and “really doesn’t appreciate someone telling [him] where to buy his parts.”
All four of these shops currently participate in four to six total DRPs, and the consensus seems to be that the Select Service program wasn’t particularly problematic until the use of PartsTrader was enforced. All of these gentlemen agreed that they’d be willing to renegotiate their DRP contracts with State Farm if the insurer ceased to mandate the use of PartsTrader.
When asked about the advice they’d give to shops on the Select Service in areas where PartsTrader is not yet mandated, everyone agreed that whether a shop should remain on the program after PartsTrader is implemented is a personal decision each shop must make. Bonecutter suggests that “you understand the ins and outs of the program so you can evaluate your options and make an educated decision in the best interests of your business.”
Gratz believes that shops should also consider contacting some of the shops in Fort Wayne that opted out to learn more about the program and why they made the decision to withdraw from the Select Service. Knipscheer cautions that if PartsTrader is not resisted, “other insurers will adopt similar programs if we allow it, and shops will lose the freedom to choose their suppliers and to make a profit.”
Mike Hartman, former president of the Indiana Auto Body Association (IABA), is also paying close attention to this situation. Though Hartman Auto Body still participates in Select Service since he is located in an outlying rural area where PartsTrader is not yet mandated, once this changes, he will “probably bail out. My sign says Hartman Auto Body, not State Farm Auto Body! I’m not willing to be forced to use PartsTrader because I see no benefit to it whatsoever, especially if there are no local vendors on the system.”
From his conversations with some of the shops that chose to opt out, Hartman has found “the shops are not opposed to using parts procurement systems, but they are opposed to having it shoved down their throats. Owners don’t like someone coming in and telling them how to run their shops.”
Another problem cited is that since parts vendors in Fort Wayne are not participating in PartsTrader, shops have to order parts from outside their area, from suppliers they don’t have relationships with. This negatively impacts the shops’ cycle times as they’re forced to wait to receive their parts, and this affects their scorecard with State Farm.
One Fort Wayne dealership opted out of Select Service because the program forbade them from purchasing parts from their own parts department since it wasn’t on PartsTrader, and they didn’t like the loss of control in choosing their parts, particularly in being unable to supply their own body shop.
Yet another criticism of PartsTrader is that it cuts the collision repair facility out of the parts profit. In New Zealand, the parts procurement program has progressed and expanded to include paints and materials also, and Hartman fears this happening in the U.S. because “you can’t sustain your business on labor rates alone.”
Hartman also notes that the shops that opted out are seeing State Farm take longer to write estimates, sometimes taking as long as a week to even visit the shop. Because of this, longtime customers are being steered to shops on the Select Service where estimates are being written immediately. In one such instance, a shop waited eight days for an appraiser to come out to view a claim; meanwhile, several appraisers from State Farm visited the shop for supplements, yet they refused to write an estimate on the new job, according to Hartman.
Though State Farm is making it difficult on the shops that opted out, Hartman believes these shops are doing a fabulous job with explaining the reasons for the delays and educating consumers on their right to choose. Customers have been pretty understanding, and some even dropped State Farm because they were displeased with how the insurer is treating the shops and their customers.
The 14 shops, many of them larger facilities and dealerships, which opted out of Select Service were doing approximately 80% of State Farm’s business in Fort Wayne before PartsTrader was mandated. The shops that remain are struggling to keep up with the increase in volumes while State Farm presumably seeks new shops in the Fort Wayne area to join Select Service.
IABA continues to monitor the situation closely. In October, Mississippi’s John Mosely and Lloyd Bush attended IABA’s meeting to discuss PartsTrader, and this topic will certainly be pursued at the association’s next meeting. Members of IABA include shops that opted out, as well as those who stayed on Select Service.
Hartman thinks “it’s really cool to see so many Fort Wayne shops sticking together. This is a really competitive area, and it’s amazing to see these shops supporting one another. I’ve never seen such solidarity.”
State Farm’s has issued the following response: “Repairers who want to leave our Select Service program can inform State Farm and remove themselves. We are aware that some repairers in the Ft. Wayne area have recently done that. Our priority is to continue to meet the needs of our customers in the Ft. Wayne area, and we continue to do all we can to do that.”