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Letter to the Editor

July 2000 Publisher's Page
The Big Picture Is, Well...Big!

The big news this month is the CARA crash. The big question is "What went wrong?" and we have listed some of the contributing reasons in these pages. Our industry needs to take heed. Perhaps lessons learned now will prevent disasters down the road. Rumors are flying, with talk (hopefully just talk) that at least two other national consolidators may not last the year.

When I was young and rushing about, a wise man told me, "Plan your work and work your plan." A good motto for us today.

The initial fever of consolidation in the Collision Repair Industry seems to have cooled off during the first half of 2000. Consolidators have been pacing their purchases a bit, due in large part to the inflated pricetags shopowners have put on facilities in markets where consolidators have been spotted looking around. Consolidators are also realizing that while a single keystroke at the virtual reality of the main office computer can make the latest acquisition part of the big corporate picture, it takes months of cooperation and hard work in the real world to transform a shop into a productive part of the big picture.

Big plans - big operations, ideas, money; big corporate staff, contracts, big egos; big deals, buildings, salaries; big distances, big expenses - big headaches, too, if small problems are allowed to grow.

Big can be better - but not just because it’s big. That is the lesson here for consolidators. Make sure to look for better ways to do things while you’re making big plans. Get big money investors that want to stick around and grow the business long-term. Buy wisely: only consider the best shops. Anything less brings big headaches and usually big expenses. Formulate a corporate framework that works, and apply it throughout the organization. Streamline and stress efficiency throughout the operation. Always watch the bottom line. Sound financial principles apply no matter the size of the numbers involved.

Speaking of big - insurers are looking for ways to cut expenses after the huge catastrophe costs incurred this past year. In addition, this year’s first quarter seems to be showing some remarkable increases in accident severity across the U.S. These numbers are difficult to track, but seem to be tied to a combination of parts price increases and "fuller sheets" at the repair aorder estimating level. INSIGHT’S Market Watch has not shown shop labor rate increases at all out of line with small cost-of-living adjustments. I would be willing to wager a big amount that insurers will be taking a look at the costs of paint and materials, labor, and parts, and an even closer look at the collision repair facility.

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