Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
Industry Stocks
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the December 2001 Issue of INSIGHT
©2001 Collision Repair Industry INSIGHT All Rights Reserved
Toyota Forms Educational Partnership with Universal Technical Institute
LYNX Services to Add Collision Claims Management
OEConnection Joins Mopar Masters Guild
FinishMaster 3Q Net Income Up 69%
ABRA Receives $25 Million Investment
GM and DuPont Partner for Refinish Guide
Caliber Completes $40 Million Financing
California Autobody Association Voices Concern Over Insurer Investment in Caliber
INDUSTRY UPDATE
In a recent letter from the Michigan Chapter of Camp Mak-A- Dream, the Collision Repair Industry was praised for its ongoing efforts to help raise the $500,000 needed to help build a medical center on the grounds of the camp. Once built, the new medical center will be named in honor of the Collision Repair Industry. The National Auto Body Council (NABC) was also thanked for leading the effort.
Camp Mak-A-Dream, a Montana-based summer camp for young cancer patients, was chosen by the NABC because of its important mission and dedicated staff and volunteers.
In his letter, Brian Granader, the President of the Michigan Chapter wrote, "I would like to commend the tremendous efforts of everybody working together to help Camp Mak-A-Dream. Without the dedication and commitment of so many individuals something so monumental as building a new medical facility could not be accomplished."
Granader's letter continued, "Camp Mak-A-Dream is grateful to everybody involved. The efforts being put forth is something you can be proud of forever. The difference you will make in the life of a child or young adult with cancer will never be forgotten."
The fund raising efforts are paying off. Through the end of October, the NABC's Collision Industry Foundation reports that over $60,000 has already been raised. To participate as a contributor to this campaign through the Collision Industry Foundation, you may call the NABC at 888-667-7433 or download a pledge form from the NABC website.
Chuck Sulkala, owner of ACME Body and Paint in Jamaica Plain, Massachusetts, and campaign Chairman, commented, "We will look to all segments of this industry to help us raise at least $500,000, which will be matched by a challenge grant Camp Mak-A-Dream has already received."
"We have lots of brochures available for our partners in this effort," said Mark Claypool, Executive Director of the NABC. "Our shop partners have often requested them for use in telling their customers and vendors about this campaign, seeking their support and informing them of the opportunities for children with cancer to apply to attend camp."
Brochures are free and may be requested by calling the NABC or by email.
Marco Grossi, NABC President and owner of Collision Craftsmen in Michigan, introduced Camp Mak-A-Dream to the NABC Board of Directors and the industry.
According to Grossi, "These campers go free of cost to them for a week every summer, thanks to their sponsors."
Being the only camp of its type that accepts campers who are actively fighting cancer, from time to time emergency chemotherapy, isolation or other medical attention is needed. The desire to accommodate all of these deserving individuals has generated the need of improving the camp's current medical facilities.
"Upon completion of the new medical center, every child, every parent and every volunteer attending the camp, as long as that building stands, will know the collision repair industry cared enough to get involved. I cannot wait to see our industry name on the side of that medical center," said Grossi.
Founded in 1991, Camp Mak-A-Dream is located in Gold Creek, Montana on 87 acres of land, with direct access to Deer Lodge National Forest, a 1.1 million acre park. The camp facility includes 4 cabins, an 11,000 square foot main lodge, an art studio, a currently inadequate health center, maintenance building, fully-accessible pool, hot tub, archery range and ropes course.
Activities include a camp-out, swimming, horseback riding, sapphire mining, arts and crafts, archery, ropes course and climbing wall, small group discussions, cabin chat, guest speakers, workshops and more, all in the land of the "Big Sky".
o
Toyota Motor Sales U.S.A., Inc., has formed a new educational partnership with Universal Technical Institute (UTI), a national private career college.
Toyota Professional Colli-sion Training (TPCT), a program between the two organizations, is designed to recruit, train, and develop entry-level collision repair technicians exclusively for selected Toyota and Lexus dealerships.
Meeting the growing demand for entry-level collision repair technicians is an ongoing challenge as the number of vehicles on America's highways continues to increase. TPCT will help meet this growing need by preparing graduates to work in select Toyota Certified Collision Centers (TCCC).
"Toyota is very excited about the new educational partnership with UTI and the benefits the TPCT program will provide our TCCC shops," said Roger Foss, national dealer development manager, Toyota Cus-tomer Services. "UTI has a well-earned reputation as a leader in the recruitment, training and placement of collision repair specialists and will help Toyota provide our dealers with the qualified technicians necessary for excellent collision repair service."
Toyota worked closely with UTI to develop and implement the TPCT guidelines and graduation requirements. Additionally, Toyota will provide TPCT students with Toyota workbooks and pay the cost of their Automotive Service Excellence (ASE) testing fees.
Beginning November 26, TPCT recruits will be trained at the Collision Repair and Refinish Technology facility on UTI's campus in Houston, Texas. The program will be staffed by ASE-certified instructors and include an Inter-Industry Conference on Auto Collision Repair-based (I-CAR) curriculum.
Students of TPCT must complete an intensive 51-week (1,530 hours) training program in general and Toyota-specific collision repair and paint finish techniques, including structural and non-structural body repair, color matching, and advance painting.
UTI placement personnel will work closely with TCCC shops to facilitate the hiring and placement of program graduates.
TCCC shops also will provide tool scholarships to each hired graduate. UTI was founded in 1965 in Phoenix, Arizona, and is recognized as one of the top technical education institutions in the country.
UTI has graduated more than 65,000 students and offers accelerated career-specific training in automotive, diesel, collision repair, and other repair service areas.
UTI campuses are located in Phoenix, Ariz.; Rancho Cucamonga, Calif.; Glendale Heights, Ill., and Houston, Texas.
LYNX Services announced that it will add collision claims beginning next year.
According to Jim Latch, president, the company will roll out the program regionally, and build on procedures that have differentiated LYNX Services in the auto glass claims business.
"With more than 3 million claims handled annually, LYNX Services has the expertise to streamline the entire auto insurance claims process," Latch said. "We've proven that an end-to-end solution, assisted through leading-edge technology, can deliver a seamless process linking all the players in the automotive repair process. This will create 'win-win' outcomes for auto body repair shops, insurers and policyholders."
LYNX Services operates call centers in Fort Myers, Fla., and Paducah, Ky., that provide customer service 24 hours a day, seven days a week. The centers process first-notice-of-loss, verify coverage, schedule repairs, process parts orders, perform audits and manage warranty claims.
"Our fundamental strategy is to offer a broad range of insurance services using an open business model that honors consumer choice, while focusing on streamlining claims processing and information management in the diverse automotive collision marketplace," Latch said.
"Participating body shops will have access to repair work from multiple insurers, and consumers without a preference will be given a choice of participating body shops to complete their repair."
OEConnection announced a collaborative arrangement with the Mopar Masters Guild (MMG) to encourage two- way communication to create optimal dealership parts and service solutions.
Under the agreement, the MMG members will provide feedback on their current and anticipated needs while advising OEConnection of product needs and services that deliver value to dealerships that thrive in the wholesale parts business.
OEConnection is the new venture created by Daimler-Chrysler, Ford Motor Company, General Motors and Bell & Howell that provides automotive dealerships and their wholesale parts customers with eCommerce products and services for their parts and service information needs.
The Mopar Masters Guild is an exclusive organization representing the interests and ideas of Parts Managers from the top 100 DaimlerChrysler dealerships with the highest purchased parts volumes.
"The Mopar Masters Guild brings OEConnection direct customer feedback and guidance to deliver the most effective parts eCommerce products to the dealerships," said Kevin Weidinger, OEConnection Vice President, Sales and National Accounts. "OEConnection and the MMG are united by the common vision to maximize the dealer's wholesale parts business and to deliver quality service to parts buyers."
Gerry Oakes, Vendor Committee Chairman of the MMG and Parts Manager at Baxter Chrysler in Omaha, Nebraska,said,"OEConnec-tion's CollisionLink(TM) is the key to opening the door to improved communications be-tween our parts department and the wholesale customer."
Dan Hutton, Parts Manager, Tom O'Brien Chrysler, India-napolis, IN, said, "The VIN scrubbing feature in Colli-sionLink(TM) will greatly improve the accuracy of the parts order. This alone makes the product invaluable!"
CollisionLink(TM) enables collision shops to electronically submit parts orders to their parts-supplying automotive dealerships. CollisionLink(TM) scrubs the parts information for accuracy and completeness, enabling the dealership to respond more quickly and comprehensively in providing parts for collision repairs.
CollisionLink(TM) is now available nationally to dealerships and collision shops, and will be demonstrated at the upcoming NACE and NADA tradeshows.
FinishMaster, Inc. reported that net income for the quarter ended September 30, 2001 increased 69 percent to $1,619,000 on net sales of $83,706,000, compared to net income of $957,000 on net sales of $85,600,000 in the prior year. Earnings per share increased 62 percent to $0.21 from $0.13 in the prior year.
For the nine months ended September 30, 2001, net in-come increased 52 percent to $4,440,000 on net sales of $253,182,000, compared to net income of $2,922,000 on net sales of $257,613,000 in the prior year. Earnings per share increased 49 percent to $0.58 from $0.39 in the prior year.
Net income before extraordinary loss on early extinguishment of debt for the current year was $4,935,000 or $0.65 per share.
Increased operating income resulting from higher gross margins and lower overall expense levels, and reduced interest expense were the primary contributors to the improved financial performance for both the third quarter and year-to-date.
Gross margins benefited from large inventory purchases in late 2000 made prior to manufacturers' price increases, supplier purchasing incentive programs, and improved inventory management procedures.
Lower overall debt levels were the major contributor to the decrease in interest expense.
Continued weakness in de-mand for automotive paints and related accessories had an impact on the FinishMaster's quarterly net sales, which declined 2.2 percent compared to the prior year
Several factors contributed to this softness in demand. They include continued productivity improvements in the use of automotive paint, flat to declining number of automobiles being repaired, and slower overall economic conditions. These industry dynamics are not expected to reverse in the next several quarters.
"While our operating performance reflects solid improvement, we are concerned with our declining sales," said Wes Dearbaugh, President and Chief Operating Officer. "We have already initiated actions designed to improve customer service levels and to grow sales."
PPG Industries, in its Q3 filing, has reported that sales decreased seven percent for the quarter of 2001 to $2 billion compared to $2.14 billion for the third quarter of 2000.
The combination of a seven percent volume decline across all business segments and a one percent decline from the negative effects of foreign currency translation primarily in the coatings segment contributed to the sales decline. These negative factors were partially offset by a one percent increase due to higher selling prices primarily in the glass segment.
The gross profit percentage decreased to 36.9 percent for the third quarter of 2001 compared to 37.6 percent for the third quarter of 2000. The decrease in the gross profit percentage was due to unfavorable sales mix changes primarily in the coatings and glass businesses.
Net income and earnings per share, diluted, for the third quarter of 2001 were $93 million and $0.55, respectively, compared to $150 million and $0.86, respectively, for the same quarter in 2000. The decrease in net income was due to lower sales volumes across all business segments and higher environmental expenses offset, in part, by an increase in selling prices and by a lower effective tax rate.
Coatings sales decreased six percent to $1.07 billion. The combination of a decrease in sales volume of four percent, primarily in the North American automotive original, refinish and industrial coatings businesses, and a two percent decline from the negative effects of foreign currency translation contributed to the sales decline.
Operating income for the third quarter of 2001 was $123 million compared to $164 million for the same quarter of 2000, attributable primarily to lower sales volumes and higher environmental expenses.
Glass sales decreased eight percent to $554 million. A decrease in sales volume of ten percent across all of the glass businesses was offset, in part, by a two percent increase resulting from higher selling prices. Operating income for the third quarter of 2001 was $49 million compared to $94 million for the same quarter of 2000, attributable primarily to lower sales volume. Glass sales decreased five percent for the first nine months of 2001 to $6.26 billion.
Coatings sales decreased six percent to $3.34 billion. The combination of a decrease in sales volume of three percent, primarily in the North American automotive original, refinish and industrial businesses, and a three percent decline from the negative effects of foreign currency translation produced the sales decline.
Operating income was $359 million for the first nine months of 2001 compared to $536 million for the first nine months of 2000, with lower sales volumes and higher selling and environmental costs offset, in part, by improved manufacturing efficiencies.
ABRA Auto Body & Glass has announced that William Blair Capital Partners VII and National City Equity Partners have made a $25 million investment in ABRA. The funds will be used to continue the nationwide expansion of ABRA.
According to Rollie Benjamin, President and Chief Executive Officer of ABRA, "This infusion of capital represents the next step in our growth strategy. ABRA intends to be the volume and customer service leader in our target markets, and this financial transaction will allow us to gain market share while maintaining our exceptional customer satisfaction ratings."
Gregg Newmark, Managing Director of William Blair Capital Partners VII, stated, "We are impressed with the organization that ABRA has built, and know that going forward they will continue to lead the industry in innovation and quality. Our strategic alliance will not only allow growth for ABRA, but will enable the company to accept a larger role in simplifying the claims process for their insurance partners and their policyholders."
Duane Rouse, Senior Vice President and Chief Financial Officer of ABRA, stated, "We believe that we will prosper by providing the same outstanding performance standards that other industries provide."
The investment will allow ABRA to expand its base of operations through newly developed repair centers and acquisitions. Privately held, ABRA Auto Body & Glass currently operates sixty-seven company-owned and franchised repair facilities in ten states.
General Motors, with assistance from DuPont Perfor-mance Coatings (DPC), has produced a Refinish Paint Reference Guide that outlines causes and prevention of the most common automotive paint conditions.
The pocket-sized, spiral-bound booklet lists 28 refinishing problems, from adhesion to water spotting. Each condition is defined and illustrated with a photo, and causes, prevention and remedies are discussed in brief bullet points.
GM has distributed the booklet to its field and brand quality managers, who call on dealers.
"We have been working with DPC for many years, and we drew on their expertise and experience in developing the booklet," says Brian Dotterer, new materials and technologies development manager for GM. "We think it will be a valuable tool for anyone who refinishes GM vehicles."
Meanwhile, DuPont reported a drop of almost 75 percent in third-quarter net income, citing tough economic conditions and weaker demand for its chemicals and plastics.
Caliber Collision Centers has announced that Zurich Financial Services Group, Keystone Inc., an affiliate of Oak Hill Capital Management Inc. and The Interinsurance Exchange of the Automobile Club have invested $40 million in Caliber's Series E Preferred Stock.
This investment will further Caliber's effort to provide high-quality, cost-effective collision repair services to its client base of leading auto insurance companies and consumers, fueling continued acquisitions in its existing markets and future expansion into other geographic regions.
The $40 million investment follows a $20 million investment made by BNY Capital Partners L.P. and The 1818 Mezzanine Fund in August of 2000.
Matthew Ohrnstein, CEO and chairman of Caliber, stated, "This investment affirms the continued commitment of our existing investors and the confidence that the insurance industry has in our ability to consistently provide service, quality and price that differentiates Caliber from the collision repair industry norm. This $40 million investment will enable our company to continue executing its business plan into the foreseeable future."
Jim Gilmartin, senior vice president of The Interin-surance Exchange of the Automobile Club noted that the investment provides policyholders with access to high-quality collision repair through Caliber's continued participation in the Exchange's Imme-diate Repair Program (IRP). "While we will always support our customers' right to select a repair facility of their choice, we find that many of our policyholders and claimants request a referral for collision repair. Our IRP program provides a number of pre-screened, quality repair facility choices for our clients. Ensuring Caliber's continued participation in this service focused program will benefit our customers."
"We have observed Caliber's execution since early 1997 and have been impressed by the management team's blend of operating expertise in both the collision repair and insurance industries and with their ability to manage growth," said Brad Bernstein, a partner at Oak Hill Capital Management.
The Interinsurance Exchange of the Automobile Club has provided automobile insurance to members of the Automobile Club of Southern California since 1912. The Exchange will not have a board seat, and will have access only to information specifically related to the services Caliber provides to Inter-insurance Exchange's customers.
BNY Capital Partners L.P. is the private equity affiliate of the Bank of New York Co. Inc.
Caliber has acquired or developed 62 centers in California and Texas, and has annual revenues exceeding $190 million.
The California Autobody Association (CAA) has a number of major concerns about the recently announced minority investment by The Interinsurance Exchange of the Automobile Club of Southern California in Caliber Collision Centers. The CAA wants to maintain the consumers right to make a choice in the automotive repair process.
"The California Autobody Association has been aware of the possibility of insurance companies investing in the collision repair industry in California for a long time," states David McClune, Executive Director. "We have been in continual communication with the Department of Insurance, the Bureau of Automotive Repairs, and the office of Senator Jackie Speier's throughout this year about this kind of partnership. We want to know what the consumer issues are, what kind of anti-trust issues there might be, and what business process changes this might create.. . We have been positioning our association to address these kinds of issues for our members. We will not stop pushing till we get satisfactory responses from all concerned parties on this issue."
Feedback
Have a comment about this article? Send Email to Editor, INSIGHT's Editor
©2001 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
