INDUSTRY UPDATE

PPG Industries announced in late August that it will acquire the technical coating business of Orica Ltd., Melbourne, Australia for about US$150 million. This acquisition comes close on the heels of the Herberts acquisition by Kohlberg, Kravis and Roberts announced in August and reported in the September issue of INSIGHT.

The business PPG is acquiring includes Orica’s automotive refinish, automotive original equipment, coil, packaging and production coatings, generating annual sales of about US$100 million.

Orica, the largest producer of automotive and industrial coatings in Australia and New Zealand, retains its architectural and powder coatings businesses.

PPG’s acquisition will include manufacturing, office, laboratory and warehouse facilities at Clayton, near Melbourne. About 600 Orica employees will join PPG.

With this acquisition coming so shortly after the Herberts acquisition by KKR, it appears the pace of coatings manufacturer consolidation is keeping pace with collision repair industry consolidation. (Editor’s Note: See the Herberts acquisition article on the first page of the September issue of INSIGHT. Also, see the Standox article on page 7 of this issue.)

The Colonel’s International, Inc. announced September 17 that it will sell substantially the company’s wholly owned subsidiary The Colonel’s, Inc. to the Colonel’s Acquisition Corp., an investor group led by Philip B. Storm. The sale is subject to certain post-closing adjustments set forth in the definitive asset purchase agreement. In addition, the buyer will assume liabilities of The Colonel’s. Terms of the sale were not disclosed.

"This transaction stems from a desire to focus the company’s efforts on expansion of our truck bed liner and truck accessories wholesale and retail operations, as well as to pay down the company’s long term debt," said Donald J. Williamson, chairman of the board and chief executive officer for The Colonel’s International. "We believe that this transaction offers us an attractive price for the assets of our bumper division and that the cash from this transaction will allow us to continue the expansion of our other lines of business."

The Colonel’s Truck Accessories, Inc., a wholly owned subsidiary of the company, manufactures truck bed liners and other truck accessories parts. Parts are sold wholesale to new vehicle dealers and distributors and retail through the company’s 25+ owned retail outlet stores in the truck after-market industry.

Brainerd International Raceway, the company’s other subsidiary, owns and operates Brainerd International Raceway, a multi-purpose motor sports facility located in Brainerd, Minnesota.

October 1998 has been designated by the National Auto Body Council (NABC) as the first annual Collision Industry Pride Month. The objective of this event according to the NABC is to provide a national annual event to serve as a focal point for mobilizing all segments of the Collision Repair Industry. By doing so the industry can attract attention to the good news about the industry and its people, and generate positive interaction between members of the industry, and their customers.

The NABC has petitioned the White House for official designation of the month, and is encouraging state and local autobody associations to do the same with their state governments and any other local or regional authoritative body.

The event is intended primarily as a public relations activity. The NABC has a series of press releases and articles to be fed on a regular basis to the industry media. Again, local associations can be of assistance in covering events in their newsletters or forwarding material to local papers and other media. Events planned or occurring at the local level should be reported to the NABC for national exposure.

The NABC has developed suggested activities for industry people. The following list indicates those being worked on presently.

• Public open houses held by repair facilities.
• Organize and host shop tours for high school and grammar school students.
• Get trade schools to do a full day of shop tours.
• Invite radio & TV personalities (weather or other) to broadcast from a repair facility.
• Invite city officials to association meetings.
• Have Rotary and other such clubs feature collision repair professionals to speak or set up a shop tour.

In addition, it is hoped that local associations or individual shops will plan other activities and report their success to the NABC. Ideas received in time will be shared with others across the country. This year will be a learning experience for all involved, and the Council will record and share the successes for improving the event in future years.

I-CAR has announced that several changes will be made to the Gold Class Professionals program in the U.S. for 1999. The changes were developed from input by the Gold Class Steering Committee and will take effect in the U.S. starting January 1, 1999.

I-CAR will sunset courses where the content has changed by 40 percent or more. This decision was made because students who have taken these courses are in need of updated training. For 1999, this policy will affect the old Nine-Part Unibody course (010 OLD) and the old Plastic Repair course (040 PLA). Effective January 1, 1999, these courses will be sunsetted, and students who have taken these courses will not be allowed to apply them towards Gold Class.

All new applicants to the Gold Class Professionals program will have to meet these requirements to qualify for Gold Class. All renewing applicants will have a one-year grace period to update their training.

Also effective in the U.S. January 1, 1999, helper and apprentice positions will be required to have I-CAR Training. This decision was made because helpers and apprentices are involved in the collision repair process and should be required to have such training. Helper and apprentice positions will be required to obtain 50 percent of the points required for the position they are assisting. The points required for helper and apprentice positions will be as follows:

Within a collision repair business, a combination technician helper will be required to obtain seven Gold Class points, collision repair technician helper six points, alignment and mechanical repair technician helper six points, and refinish technician helper three points. Within a glass business, an installer helper will be required to obtain one Gold Class point. Within a recycler business, a dismantler helper will be required to obtain four points.

Helper and apprentice positions for all new applicants to the program will be required to meet these point requirements for the business to qualify for Gold Class. Helper and apprentice positions for all renewing applicants will have a one-year grace period to obtain the necessary I-CAR Training.

In the U.S., a business will be required to obtain 80 percent of their total point requirements, and the individual point requirements for 1999 will remain at 40 percent.

Verification of employment, in addition to the Gold Class program application, will again be required for 1999. The following documents will be accepted as verification of employment (minus salary or financial information):

• Quarterly Wage Report
• Statement of Tax Deposits and Filings
• Wage and Tax Register
• Employee Earnings Record
• W-2’s
• Unemployment Record

As the number of automobiles on U.S. roads continues to climb by an average of 2 million a year, the number of professionals qualified to repair these increasingly technologically advanced vehicles is dropping precipitously - as much as 5 percent annually.

"Consumers are only now beginning to feel the effects of the shortage of trained auto repair technicians," said Marty Keller, chief of the California Department of Consumer Affairs/Bureau of Automotive Repair (BAR) and an organizer of the summit. "Unless we act to reverse this disturbing trend soon, owning and maintaining a car is going to become a much more expensive and inconvenient proposition."

The summit, Automotive Repair Leadership 2000: Strategies for Success took place September 2-4 in Anaheim, CA and brought officials from automotive manufacturing, parts and repair, together with educators, government regulators, consumer advocates and insurance executives, to develop plans to fill the shortfall of qualified technicians.

According to the organizers, three major factors have conspired to create the current shortage of qualified technicians:

Cars have become much more technologically advanced.

The average 1998-model car relies on more on-board computerization than the Apollo 13 mission.

Training has not kept pace with the rate of technological advance.

Only a small fraction of automotive training programs nationwide have either adequate equipment or faculty with up-to-date technical knowledge.

Automotive repair is still widely perceived as an undesirable career choice by high-school graduates, parents and career counselors.

The repair industry fails to attract new recruits to undertake a high level of technical training.

Herbert Born, managing director of Standox GmbH stated that the recent acquisition of Herberts by Kohlberg, Kravis and Roberts (KKR) will benefit Standox operations worldwide.

During an interview with INSIGHT at the Automechanika exhibition in Frankfurt, Germany, Born stated, "They (KKR) are very patient investors who focus on building value in the businesses they acquire. We at Standox feel the acquisition and KKR’s commitment to the management plan currently in place will benefit our business worldwide."

According to Born, "We are committed to the long-term development of the North American market. I believe the acquisition will help us accelerate our growth in North America."