Bill Lawrence Leaves Allstate to Pursue Collision Consolidation Opportunities

Bill Lawrence announced November 15 that he has left his position as assistant vice-president for Business Strategies at Allstate Insurance to pursue opportunities in the collision repair industry. Lawrence, whose responsibilities included managing Allstate’s PRO network nationally, has joined with Eddie Cheskis, formerly of Carter and Carter, CCC Information Services and Globe Glass and Roger Wachtell, president of Alpine Equity partners.

According to Lawrence, "Changes in technology, relationships, and service expectations have created major opportunities in the $25 billion collision repair industry for a team possessing operating, claims and financial skills." "I am looking forward to working with Eddie, Roger and the team we are building to focus on the collision repair business and a wide range of related services. Our committment is to provide a best-in-class collision repair experience for both the consumer and insurer while streamlining both the claim and repair process to reduce insurer cost.

Lawrence continued, "My decision to leave Allstate after 28 years was the most difficult of my career. I will truly miss the organization, the work and the people."

The newly formed group is currently finalizing capital arrangements and plans to enter either or both the Southern California and Chicago markets.

"During our start-up phase we plan to acquire profitable, well-managed facilities with excess capacity. Over time, operations will be modified to increase production while maintaining rigid quality and service standards. Future acquisitions will be rapidly integrated into the core business. Greenfield sites will also be developed to accomodate growth and to meet service and production requirements." stated Lawrence.

Lawrence will be responsible for operations at the acquired facilities. Cheskis will serve as chief executive officer and focus on sales and marketing for the company. Wachtel will serve as chief financial officer for the firm.

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Keystone Announces Q2 Earnings and Acquisitions

In two separate announcements, Keystone Automotive Industries reported on their earnings for their second quarter and a merger with Inteuro Parts Distributors.

On October 30, Keystone reported net income for the second fiscal quarter ended September 27, 1997 of $2,525,000, or $0.20 per share, up from $1,636,000, or $0.17 per share, posted in the comparable period a year earlier, a 54 percent increase in net income.

Net sales for the second fiscal quarter rose more than 23 percent to $54,311,000 from $43,894,000 recorded a year earlier.

For the six months ended September 27, 1997, Keystone reported net income of $4,335,000, or $0.39 per share, up from $3,155,000, or $0.35 per share, reported a year earlier, a 37 percent increase in net income. Net sales for the six months ended September 27, 1997 were $107,791,000, up from $89,455,000.

Second quarter sales were driven primarily by an increase of approximately 17 percent in the sales of body panels. Also, an increase of about 23 percent in sales of new and recycled bumpers; and an increase of approximately 17 percent in the sale of paint and related materials.

According to Charles Hogarty , president and chief executive officer, "We are particularly pleased with the results of our newest business, remanufactured alloy wheels, which represented nearly $2 million in second quarter sales."

On November 11, Keystone announced that it has entered into a letter of intent to merge with Inteuro Parts Distributors, Inc. in which the Inteuro shareholders will receive Keystone Common Stock. Inteuro, headquartered in Miami, Florida with eight service centers in the Southeast, distributes aftermarket collision replacement parts to collision repair shops in Florida, Georgia, Alabama and Mississippi.

Inteuro estimates that revenues for the year ending December 31, 1997 will be approximately $34 million. The two founders of Inteuro, Leo Schigiel and Joe Bick, will remain with the company.

In addition, Keystone has entered into a similar letter of intent providing for a merger with Car Body Concepts, Inc. located in Miami, FL, with estimated sales for the year ending December 31, 1997 of approximately $2.5 million.

According to Hogarty, "We are extremely pleased with the company’s performance in the second quarter and first half of this fiscal year. Our acquisitions are being integrated smoothly into the Keystone system and performing on plan, as is the entire business."

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California Adopts Equipment Standards

On October 20, California adopted uniform equipment standards for the collision repair industry into law. These are the first state mandated equipment standards for collision repair shops. Any collision repair shops performing structural repair must have the minimum equipment types included in the law. These include:

• Three-dimensional measuring system;
• Four-point anchoring system;
• Frame equipment capable of multi-pulls;
• MIG Welder with 110 amp output for unibody repairs or 200 amp for conventional frame repairs; and
• Corrosion protection equipment for treating enclosed areas.

The law also states that the repair procedures performed, including but not limited to structural sectioning, must be performed in accordance with OEM service specifications or nationally distributed and updated service specifications. OEM or nationally distributed procedures are also required for corrosion protection.

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Caliber Announces Two Staff Appointments

Caliber Collision Centers, the California based collision repair consoldator, has announced two key staff appointments. On October 29, Caliber named Daniel Pettigrew vice president of center conversions.

A graduate of Princeton University and the University of Chicago Graduate School of Business, Pettigrew most recently worked with George Group Inc., a management consulting and acquisition/turn around firm in Chicago.

In his new position, Pettigrew will lead the Caliber conversion team, coordinating the integration of newly acquired centers into the Caliber organization.

On November 3, Caliber announced the appointment of Peter J. Richter as vice president of finance.

Richter brings more than five years of experience as controller of Chicago’s Vistar Inc., the largest auto glass replacement and repair company in the United States, to his new position.

In his new position, Richter will oversee financial system design and implementation, corporate reporting and strategic financial planning.

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PPG Owns Coatings Ventures; To Build Plants in Argentina, Brazil

PPG Industries announced November 12 that it has acquired Akzo Nobel Coatings International BV’s remaining 20 percent interest in a Brazilian automotive original equipment coatings company, and is establishing production facilities in Argentina and Brazil.

PPG held a 45 percent interest in the company when it was established in 1995 and increased its share to 80 percent in early 1997; 100 percent of a related company in Argentina was acquired earlier this year.

Richard Zahren, PPG’s vice president of automotive coatings, said current arrangements with Akzo Nobel for contract production in Argentina and leased production facilities in Brazil will be phased out as production increases at PPG’s plants.

Zahren stated that an idle plant at Sumare, Brazil, about 60 miles northwest of Sao Paulo, has been acquired, and manufacture of automotive original equipment (OEM) coatings and related products is targeted to begin there by year’s end.

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Environmental Compliance Information Available on the Internet

The Coordination Committee for Automotive Repair has made available all federal environmental compliance assistance information contained in their GreenLink database on their web site (www.ccar-greenlink.org). Visitors to the site can search for specific environmental information or use their virtual shop interface to find compliance information for specific shop areas.

CCAR-GreenLink provides callers with environmental program and pollution prevention materials detailing how to best handle federal environmental problems such as chemical spills, or how to properly dispose of used oil or used batteries and collision repair topics such as VOCs and hazardous waste disposal. It will also refer the caller to sources of state and local compliance information.

In addition to the web site, shop operators can call CCAR at (888)GRN-LINK and speak to a representative who will assist in finding the specific information requested or use an automated, menu driven response system.

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Farmers Sells Direct in Pennsylvania

Farmers Insurance announced October 30 that it is selling auto insurance direct to consumers in Pennsylvania through its member company, Farmers Direct Insurance Company.

The new auto insurance product will be marketed through a toll free 800 number (800-448-4866) and direct mail. Consumers can receive quotes within 10 minutes. Customer service and claims reporting will be available 24 hours/7 days a week.

Farmers reports that over 2,000 policies already have been sold. Farmers plans to follow the auto insurance introduction with additional lines of coverage including homeowners, life, and commercial insurance. At a later date, customers will have the option of buying insurance from their local Farmers agent.

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I-CAR States Purpose for Analyzing Transfer Efficiency; Releases Enhancements to UPCR

I-CAR is currently in the process of verifying information contained in the I-CAR Finish Matching Course and the ADVANCE-TECH curriculum related to the transfer efficiency of conventional high-pressure and HVLP spray guns. The study is being conducted as part of a regular update process and was prompted by questions raised by I-CAR Instructors and Students.

According to the release, "I-CAR’s only intent of the study, being conducted by MGA, is to determine if the transfer efficiency percentages stated in our course material are correct and up-to-date.

"Although the test is being conducted simultaneously with a material consumption study being conducted between Mitchell and MGA, I-CAR has no intent to, and will not, move into labor times, rates, or material costs and does not have any interest in the results of the material consumption portion of the study. I-CAR is only involved in the study to update the information in our course material related to transfer efficiency. Conducting the test simultaneously with the study being conducted by Mitchell and MGA provided us with the opportunity to ensure the accuracy of our course material while reducing the cost to I-CAR."

I-CAR also recently announced enhancements to their Uniform Procedures for Collision Repair (UPCR). Sherwin-Williams and Martin-Senour product specific information has been added to the October release of the UPCR.

According to Tom McGee, I-CAR Technical Director, "There is a tremendous need for technical information in the Collision Repair Industry. We are hoping that I-CAR and organizations such as Sherwin-Williams and Martin Senour working together to provide the Industry with electronic product data and MSDS sheets will improve the quality of repairs, and most importantly improve customer satisfaction."

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DOT Announces New Policy for Air Bag On-Off Switches

The U.S. Department of Transportation announced November 18 that consumers fitting certain risk profiles will be able to purchase an on-off switch to temporarily deactivate the device under a plan announced today. Collision repair centers may wish to make this information available to their customers.

In addition to making air bag on-off switches available under limited circumstances, it was announced that a national public-private educational campaign is being launched to help consumers make informed decisions concerning switches.

"This is the practical solution that allows you to turn off the air bag for someone at risk and turn it back on to preserve the lifesaving benefits for everyone else," said Transportation Secretary Rodney E. Slater.

Secretary Slater cautioned, however, that few people will need the new air bag on-off switches. Airbags provide lifesaving benefits for the vast majority of people, who can virtually eliminate any risk from deployments by following basic safety rules:

• Buckle your seat belt.
• Never place a rear-facing infant seat in front of an air bag.
• Keep approximately 10 inches between your breastbone and the air bag.
• Place children in the back seat and make sure they are properly restrained, either in a seat belt or a child safety seat appropriate for their size and weight.

Under the new rule developed by the National Highway Traffic Safety Administration, auto dealers and service outlets can begin installing on-off switches on Jan. 19, 1998.

To obtain a switch, consumers must follow a simple four-step process.

1. They must obtain a NHTSA information brochure and a request form, both of which will be available from the agency and at vehicle dealerships, repair shops, state motor vehicle offices, and other locations.
2. They must fill out the request form and send it to NHTSA. Vehicle owners must certify on the form that they have read the information brochure and that they fit one of four profiles.
3. NHTSA will send an authorization letter to the vehicle owner.
4. The vehicle owner will take the letter to a dealership or other service outlet to have an on-off switch installed.

The four eligibility profiles are:

1. Those who cannot avoid placing rear-facing infant seats in the front passenger seat
2. Those who have a medical condition that places them at specific risk
3. Those who cannot adjust their driver’s position to keep back approximately 10 inches from the steering wheel
4. Those who cannot avoid situations (such as a car pool) that require a child 12 or under to ride in the front seat.

The rule addresses the risks from the current generation of air bags in vehicles already on the road and those that will be built during the next few years. Continued changes and emerging technologies will lead to air bags with improved performance that eliminate risks to all vehicle passengers. NHTSA is leading an aggressive research effort with the goal of issuing a proposal on advanced air bags in 1998.

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NABC Launches Membership Drive

At its October 2 meeting in Cleveland, OH, the Board of Trustees for the National Auto Body Council voted to become a membership-supported organization. The following are the different categories and fees:

Corporate Suppliers & Insurers

$500

Distributor/Regional Office

$250

Collision Repair Facility

$100

Individual

$50

Individual (sponsored)

$25 (Sponsored individuals are those employed by a corporation or repair facility that is a member of the NABC.

While it was originally setting up its structure and goals, and initial programs such as the Pride Awards, the NABC relied on donations. Now that it is expanding its public relations program and media and community outreach, the board feels it’s important to have the widespread support of the industry.

Membership in the organization also provides members the opportunity to communicate to their customers the positive aspects of this industry. A number of benefits are available based on the level or category of membership. For more information and an application, contact the National Auto Body Council at 888-66-PRIDE or 313-697-2093.

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© 1997 Collision Repair Industry INSIGHT. All Rights Reserved