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Letter to the Editor
This article originally appeared in the April 2001 Issue of INSIGHT
©2001 Collision Repair Industry INSIGHT All Rights Reserved
Mitchell International and Reynolds and Reynolds to Integrate ABS and ERA Management Systems
Boyd Acquires Car-Tech Collision Facilities in Atlanta GA
PPG, Safelite, and Apogee Bring Anti-Dumping Complaint Against Chinese Windshield Imports
Caliber Continues Acquisition Strategy in CA and TX
Collision Repair Specialists of Australia Launched by David Newton-Ross
Akzo Nobel Reports 2000 Net Income Up 25 Percent
FinishMaster Announces Flat Financial Results for 2000
Hertz Becomes Wholly Owned Subsidiary of Ford
INDUSTRY UPDATE
Mitchell International and The Reynolds and Reynolds Co. has announced they will develop an interface between Mitchell's ABS body shop management system and Reynolds and Reynolds' ERA® automotive retail management system. The aim of the integration of the two systems is to enable dealerships to more efficiently manage operations.
Mitchell’s ABS Windows(TM)-based business management system allows shops to import estimates and supplements, improve labor efficiencies, simplify parts management, track sales performance, quantify marketing efforts, and produce management reports and financial statements.
The ERA system allows dealerships to manage personnel issues, franchise and regulatory reporting, document management, and a wide range of other day-to-day activities.
Paul Gange, Mitchell's vice president, product management, commented, "This interface is a real 'win-win' for customers. It takes the two best systems in their respective areas -- Mitchell's industry-leading body shop management system and Reynolds and Reynolds' premier auto dealership management system -- and enables them to work together to better manage all dealership operations."
"Reynolds and Reynolds is excited to work with Mitchell on this effort," said Kurt Lieberman, vice president of Reynolds' Retail Management Solutions group. "Once completed, ABS and ERA will work together nearly as one product to more efficiently manage dealership operations. We see this as good news for both of our companies’ customers."
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The Boyd Group has announced that it has purchased the shares of Car-Tech Holdings, Inc., which operates four Car-Tech Collision repair facilities in metro Atlanta, Georgia. The option to purchase a fifth Atlanta facility has also been provided to Boyd.
The purchase price was undisclosed. Revenue from the four Car-Tech facilities is approximately $20 million Cdn for the current year. Boyd now estimates that 63 percent of annualized sales will be derived from U.S. operations. Boyd now operates 60 company-owned locations, and has seven third-party owned licensed locations.
PPG Industries, Inc., Apogee Enterprises, Inc., and Safelite Glass Corporation have petitioned the U.S. Department of Commerce and the U.S. International Trade Commission jointly for relief from dumping of automotive replacement glass (ARG) windshields imported from the People's Republic of China. The U.S.-based replacement windshield makers allege that Chinese producers have caused them material injury by importing ARG windshields at prices so low they violate U.S. law and international trade rules.
"We are bringing this action to obtain relief under our trade remedy laws from significant injury that is being caused by rapidly increasing imports of unfairly low-priced ARG windshields from China," said Patricia A. Beithon, corporate secretary and general counsel. "In the past three years, we have seen some U.S. producers ceasing operations, while others, including Apogee, have sustained substantial financial harm," she said.
"This is a mature market, with demand growing at a relatively slow pace. The imports from China last year were more than 50 percent higher than in 1999, and several times higher than three years ago. We believe the companies that are filing this petition are as efficient and competitive as anyone in our industry. We don't believe, however, that any company can produce and ship replacement windshields at the low prices we're seeing from China without losing money," Beithon commented.
"Let's be clear," she continued. "This isn't a matter of the U.S. industry not being able to compete with foreign producers who are simply more efficient or competitive. No industry can sustain the adverse effects that result from such rapid increases in unfairly low-priced product without experiencing substantial economic harm. U.S. trade remedy laws and international trade agreements condemn the kinds of practices engaged in by Chinese ARG windshield producers and exporters. We are exercising our right under those laws and agreements to restore fairness to our market."
The two U.S. agencies are expected to review the petition and investigate its allegations which, if confirmed, would result in imposition of antidumping duties on ARG windshields imported from China. Antidumping investigations usually take about a year to complete, but preliminary duties could be imposed within 160 days from the filing of the petition.
Caliber Collision Centers, an Irvine-based operator of collision repair facilities in California and Texas, has acquired Keystone Body Shops, with one location in Richland Hills and a second location in North Richland Hills, Texas.
The addition of Keystone Body Shops positions Caliber as one of the largest collision repair providers in North Texas, with 11 centers throughout the Dallas/Fort Worth Metroplex. It also further extends Caliber's position as the largest independently operated collision repair organization in the United States with annual revenues exceeding $170 million.
According to Matthew Ohrnstein, chief executive officer of Caliber Collision Centers, the acquisition continues to solidify Caliber's presence in Texas, particularly in the Northern Texas market. "Caliber has focused its acquisition growth strategy toward meeting the collision repair needs of our insurance partners and their insureds," said Ohrnstein.
"By acquiring Keystone Body Shops, we are adding two more first-rate centers with 50 top-notch employees that will substantially strengthen our presence in Texas, the second largest auto market in the United States."
The former owner of Keystone Body Shops, Glen Carlen, will be retiring, but his son Don will stay on as the center manager of the North Richland Hills location. "We are delighted to join Caliber's growing team," stated Carlen. "Having considered other offers, we believed Caliber's to be the fairest for our shareholders and the best for our employees."
Caliber also acquired Collision Repair Center Inc., a collision repair service provider in Oceanside, California, bringing Caliber’s San Diego County presence up to eleven centers in operation. According to Caliber's Vice President, San Diego Regional Manager Rick Reiss, the acquisition of Collision Repair Center enhances Caliber's presence in the rapidly growing North San Diego County market and fills the remaining void between Caliber's Carlsbad, San Marcos and Escondido centers.
"Caliber acquired the Oceanside center in direct response to the request of Caliber's insurance partners who identified an immediate need for additional high-quality collision repair in the North County area," said Reiss. "This new facility includes 18,500 square feet of capacity, which will ensure that Caliber's clients and consumers will be well served for years to come in this rapidly growing area."
Brian Anderson, former owner of Collision Repair Center, sold his company to Caliber so he can focus on his other business interest. "I'm proud to pass on my collision repair business to Caliber," stated Anderson. "I'm very confident that Caliber will maintain our tradition of superior quality and customer service. Moreover, my former employees are excited about joining such a fast-growing, industry-leading company."
Caliber entered the San Diego Market in August of 1999 through the acquisition of Chapparone Auto Body and Painting. With the addition of Collision Repair Center and the recent opening of a newly designed center in El Cajon, Caliber now operates 11 centers in the San Diego County marketplace with an additional center under construction in La Mesa.
Caliber Collision Centers has announced the addition of more than 10,000 square feet of production space through the acquisition of Innovative Autocraft Inc.'s collision repair assets and facility in Costa Mesa, Calif.
According to Caliber's operations manager for Orange County, Terry Lynch, Caliber Collision Centers is adding this second production location in Costa Mesa to meet the growing needs of its customers and insurance partners in that area.
"We are pleased to have expanded our capacity in Western Orange County and specifically in the Newport Beach/Costa Mesa marketplace," said Lynch. "The expansion will transform our Costa Mesa facility into one of the largest collision repair centers in Orange County." According to Ed Medvic, vice president of corporate development, this is one of several capacity expanding projects planned for completion this year.
Founded in 1991, with headquarters in Irvine, Caliber Collision Centers operates high-quality collision repair facilities in California and Texas. Caliber currently owns and operates 56 facilities and plans to continue acquiring, developing and integrating high-volume collision repair centers while providing innovative collision repair solutions and automobile physical damage claims support.
David Newton-Ross of Newton International Marketing, who participated in NACE2000’s International panel discussion, has set up the Collision Repair Specialists of Australia (CRSA).
"It all came about as a result of Jeff Hendler's recent visit to Australia," says Newton-Ross. "I knew Jeff had been very active in the U.S. with the CIC (Collision Industry Conference) for about 20 years and also with SCRS (Society of Collision Repair Specialists) for the last two years. Jeff looked at what was available in Australia to enable forward thinking collision repairers to network and meet regularly plus have access to information both local and overseas, and saw an opportunity to set up the CRSA."
With Hendler's assistance, the CRSA began with 25 founding participants, including well-known industry leaders Tony Farrugia and Richard Nathan. According to Newton-Ross, "You would have to be pleased to attract such respected industry leaders." Members of the initial group are able to nominate other like-minded individuals to become participants in CRSA.
CRSA participants have access to four conferences per year, professionally run and attracting motivational and educational speakers. The first conference was held in Sydney on February 24th with main speaker Glen Pattison, providing a seminar on stress management. "And boy do we all need that!" said Newton-Ross.
Also at the first conference was a round table discussion on Direct Repair Programs with representatives from NRMA and AAMI as invited guests and presentations on what is happening in Canada, the USA and UK.
CRSA participants member benefits include: monthly newsletters, quarterly bulk mailings, offers from service providers, marketing assistance and web site design at reduced rates. An annual tour to NACE with shop tours and attendance at CIC/SCRS meetings will also be available which will not be available to industry outside of CRSA.
INSIGHT extends congratulations and best wishes Down Under to David Newton-Ross and all participants in the new Collision Repair Specialists of Australia! We're looking forward to hearing great things about the CRSA.
In the Coatings division, sales were up six percent at EUR 5.6 billion and operating income was up three percent. Net income before extraordinary and nonrecurring items was up a record 25 percent to EUR 946 million from EUR 759 mln in 1999.
Cees van Lede, Chairman of the Board of Management, commented, "This was the first year of operation of the new Akzo Nobel after the divestment of Fibers. It has made us a more balanced company. Our company was clearly reaping the benefits of its improved portfolio. 2000 was the best year ever for Akzo Nobel. By organic growth and also through a number of acquisitions and divestments, we were able to further strengthen our industrial base. Geographically we were also able to strengthen our position by growing the business in the right places. In the United States, growth clearly surpassed our plans.
Coatings made a strong start but had to live with weakening market conditions in the second half of the year. Coatings also had to absorb significant increases in raw material prices., "In Coatings we will use our skills and imagination to further strengthen our world leader position. The target is a return on investment of 30 percent," commented van Lede. "This will enable us to reap the benefits of a generation of acquisitions... We will consolidate and further expand this position though optimal planning of production and logistics, and through innovative new product development. We will continue our active acquisition policy."
Meanwhile, Akzo Nobel has acquired the vehicle refinishes business of MAC Specialty Coatings in the U.S. The deal includes the U-Tech product line for the fleet, truck and bus markets, which Akzo Nobel has distributed exclusively since March 1999. Financial details were not disclosed.
"This acquisition strengthens Akzo Nobel's overall position in the U.S. market for vehicle refinishes," said Rudy van der Meer, Member of the Board of Management responsible for Coatings. "We pride ourselves on being a full-line supplier of products to the collision repair industry. This acquisition allows Akzo Nobel to offer our commercial customers in North America an even broader spectrum of refinishing products."
Rob Molenaar, Akzo Nobel Car Refinishes' North American General Manager, added, "U-Tech gives our distributors a broader product offering. Now they can offer our customers everything from Sikkens, which serves the High-segment, to Lesonal in the Med-segment market, to U-Tech for the light commercial and automotive markets."
U-Tech will be merged into Akzo Nobel's Car Refinishes organization. To ensure a seamless transition the current organization will remain intact. MAC Specialty Coatings, a privately held company started in 1979, is located in Carneys Point, NJ.
Akzo Nobel, based in the Netherlands currently employs 68,000 people in 75 countries. Akzo Nobel Car Refinishes' North America sub-business unit, which is headquartered in Atlanta, manufactures and markets the Sikkens and Lesonal paint refinishing systems to the collision repair and commercial market sectors.
FinishMaster, Inc. has reported that net income for the year ended December 31, 2000 was $3,727,000 on net sales of $337,213,000, compared to net income of $3,711,000 on net sales of $324,490,000 in the prior year. Earnings per share were $0.49 for both the current and prior year periods.
For the fourth quarter ended December 31, 2000, net income was $805,000 on net sales of $79,600,000, compared to net income of $182,000 on net sales of $78,712,000 in the prior year. Earnings per share were $0.11 compared to $0.02 in the prior year period. Year-end inventory and accounts payable, and fourth quarter gross margins were higher in the current year period as a result of large inventory purchases prior to manufacturers' price increases.
"2000 was a successful year for us with steady growth in both net sales and operating income, reduced debt levels through net working capital management, and the completion of six strategic acquisitions," said Wes Dearbaugh, President and Chief Operating Officer. "Higher interest expense which offsets the increase in operating income resulted in flat net income and earnings per share for the year."
FinishMaster is a leading national independent distributor of automotive paints, coatings, and related accessories to the automotive collision repair industry. FinishMaster is headquartered in Indianapolis, Indiana and operates three major distribution centers and 156 branches in 24 of the 35 largest metropolitan areas in the country.
Ford Motor Company has announced that the merger of The Hertz Corporation with a Ford subsidiary has become effective. As a result, Hertz is now an indirect, wholly owned subsidiary of Ford.
Ford reached an agreement with Hertz in January to acquire the remaining 18.5 percent of Hertz Class A common stock it did not already own at a price of $35.50 per share. A tender offer for the shares expired March 2, and resulted in about 19.3 million of the approximately 20 million publicly traded shares of Hertz Class A common stock being purchased.
The New York Stock Exchange has suspended trading in Hertz as of March 12.
Ford Motor Company is the world's second largest automaker, with approximately 345,000 employees on six continents. Its automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Credit, Quality Care, and Hertz.
The Hertz Corporation, based in Park Ridge, N.J., is the world's largest car rental company and also operates a leading equipment rental business. Hertz operates in 143 countries from approximately 6,500 locations.
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