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Business Tools | This article originally appeared in the March 2003 Issue of INSIGHT ©2003 Collision Repair Industry INSIGHT All Rights Reserved California BAR Suspends Use of Notices of Violation CIECA Elects 2003 Board of Trustee Officers Blowtherm USA and JBI Announce Merger Sherwin-Williams Q4 Profit Up 25 Percent BASF Pledges Support for AYES Initiative R.L. Polk Introduces Vehicle Identification Tool CARSTAR Names Bill Vance Director of Marketing AAI Hails OH Court Denial of Class-Action Status in Aftermarket Parts Case
INDUSTRY UPDATE
The California Department of Consumer Affairs, Bureau of Automotive Repair (DCA/BAR) has recently suspended the use of the Notice of Violation (NOV) and the public disclosure of consumer complaints that result in the issuance of an NOV. The DCA/BAR is currently reviewing BAR's use of this procedure, as well as the format and text used throughout the Department to provide information to the public. According to the bureau, BAR's use of NOVs has always been intended as a courtesy notice to licensees as a proactive enforcement effort to inform and to seek voluntary compliance with the relevant statutes and regulations. NOVs have typically been issued when less serious violations are confirmed in the course of investigating consumer complaints or performing licensed station inspections. There has never been a legal penalty attached to the issuance of an NOV. They have always been issued by BAR as a way of alerting the licensee of a need to take corrective action. NOVs have been issued when BAR investigators determined that a formal disciplinary action is not warranted and have been disclosed to the public pursuant to BAR regulations (Title 16, California Code of Regulations, Section 3303.1(b)(1)). In response to recent inquiries regarding BAR's use of NOVs (Editor's note: Caliber Collision filed suit against BAR - See last month's INSIGHT.) and some subsequent unintended use of NOV information by certain law firms to secure settlements in a rash of Business & Professions Code 17200 filings, BAR suspended the disclosure of consumer complaints with NOVs on its website on December 5, 2002. BAR also suspended the issuance of NOVs on January 15, 2003. Although BAR is not issuing NOVs, it will continue to advise licensees of less serious violations that are noted in the course of investigating consumer complaints and performing station inspections. A BAR statement indicated that: "BAR will continue to conduct office conferences with licensees when a pattern of these less serious violations develops. The office conference is used to alert the licensee of a developing pattern and to avoid the need for more formal disciplinary action. These are the same progressive enforcement policies that BAR has used in the past to address lower grade violations. The only thing that has been suspended is the actual issuance of the NOV and the public disclosure of consumer complaints with NOVs." o The CIECA Board of Trustees has elected the following officers for the year 2003:
Each of these officers will serve on the Executive Committee, which oversees CIECA business matters between board meetings and maintains the Board's agenda. Farzam Afshar, an industry consultant, will assume the title of Past Chairman on the CIECA Executive Committee after his term of office. CIECA assists the Collision Industry in the effective use of electronic commerce and the National Information Super Highway. It is directed by a Board of Trustees and has offices in Illinois. Its members jointly work on Action Teams addressing standards for Electronic Data Interchange, Interoperability, XML and Imaging.
Keystone Automotive Industries, Inc. reported record results for its third quarter ended December 27, 2002, reflecting continued momentum in its aftermarket collision parts business. Net income for the third quarter climbed 29.0 percent to $3.6 million, or $0.24 per diluted share, from $2.8 million, or $0.19 per diluted share, a year ago. Operating income for the same period climbed 27.6 percent to $5.7 million compared with $4.4 million a year earlier. Net sales for the third quarter increased 15.3 percent to $108.5 million from $94.1 million last year. For the nine months, net sales rose 15.3 percent to $316.4 million from $274.4 million a year ago. Net income for the same period was $9.8 million, or $0.65 per diluted share, compared with a net loss of $26.2 million, or $1.77 per diluted share, a year earlier. Operating income for the nine-month period increased more than fourfold to $15.4 million from $3.5 million a year earlier. "Operating results for the third fiscal quarter represent the eighth year-over-year increase in quarterly operating performance for Keystone," said Charles J. Hogarty, president and chief executive officer. He cited several factors that continue to have a positive impact on Keystone's financial performance, including more frequent specification of aftermarket parts by certain insurance companies and expanding market acceptance of Keystone's Platinum Plus private label products. Hogarty noted that same store sales for the third quarter and nine-month period increased approximately nine percent compared with a year ago. Gross margins for the third quarter were 43.8 percent compared with 43.2 percent for the same period in 2001, as a result of better product mix and pricing. The increase in inventory levels, compared with fiscal 2002 year end, reflects an inventory build-up to support the company's business given the pending West Coast port closure last year, which was subsequently settled, and the anticipated increased sales activity, along with inventory from acquisitions. He highlighted Keystone's continuing strategy to strengthen its distribution capabilities, citing several acquisitions made in the last fiscal quarter of 2002 and the opening of four greenfield operations. Subsequent to the end of the third fiscal quarter of 2003, the company completed an acquisition of Advance Bumper and Body Parts of Springfield, Missouri. It is Keystone's understanding that the major parties to a pending class action lawsuit against Erie Insurance Company for specifying aftermarket collision replacement parts, in which Keystone is an additional defendant, have reached an agreement in principle to settle the case. The settlement as proposed would result in the dismissal of all claims against Keystone without cost to the company. In other news, Kim D. Wood, a vice president of Keystone, has left the company to pursue other interests. Keystone Automotive Industries, Inc. operates 114 distribution facilities, of which 21 serve as regional hubs, located in 37 states, Vancouver, Canada and Tijuana, Mexico. Michael Curran of the Curran Group, owners of JBI, and Carlos Pippa, President and CEO of Blowtherm USA have announced that JBI, a leader in industrial spray booths, and Blowtherm USA, a leader in automotive and heavy duty truck spray booths, have agreed to merge the two companies, effective March 1, 2003. The new corporation's name is Global Finishing Solutions. Global Finishing Solutions L.L.C. has purchased from Blowtherm SpA Italy all of its interests in Blowtherm USA. Blowtherm Italy, a leading industrial group in Europe in automotive spray booths and owner of the "Blowtherm" trademark formed a 50/50 joint venture with Carlos Pippa in 1993 that in a few years has become a leading company in North America for the automotive spray booth market. Global Finishing Solutions L.L.C. will continue to enjoy a business relationship with Blowtherm SpA based on a license for the use of the trademark "Blowtherm" in North America and the supply of components for the manufacturing of spray booths. JBI has its headquarters and manufacturing facilities in Osseo, Wisconsin. Blowtherm USA headquarters in Dallas, Texas (Coppell, TX) and has manufacturing facilities in Barrie, Ontario with a technical training and research and development center in Atlanta, Georgia and a sales office in Mexico. JBI leads the industrial spray booth and finishing systems market with the largest and most developed network of distributors for industrial and custom finishing systems. Blowtherm USA is the leading spray booth manufacturer in the refinish market and has the largest network of distributors to the automotive and truck markets in the U.S. and Canada with a growing presence in Mexico and the Caribbean. Blowtherm USA is the recognized, exclusive supplier of refinishing systems to all of the major automotive manufacturer dealer equipment programs. All JBI and Blowtherm USA brands, customers, accounts, products and manufacturing facilities will be retained and operated by Global Finishing Solutions L.L.C. Carlos F. Pippa, President & CEO of Blowtherm USA will serve as President and Chief Executive Officer of the new company formed as a result of the merger. Pippa commented, "Instead of competing against each other, the merger of JBI and Blowtherm USA will allow each team to concentrate on its core competencies. The Barrie, Ontario manufacturing facility will focus on standard refinish automotive and truck systems. The manufacturing facility in Osseo, Wisconsin will focus on large industrial booths and finishing systems, allowing the new corporate entity to serve its distributors better, to be more competitive, to further increase its dominance in North America and to extend its reach globally." Pippa promised that the new company will further become more competitive by sharing technology, improving manufacturing efficiencies, eliminating duplication and acquiring additional economies of scale. CCC Information Services Group has reported a quarterly profit, reversing a year-ago loss with the help of slightly higher revenues and lower expenses. The company posted net income of $4.8 million, or 17 cents per share, for the fourth quarter, compared with a net loss of $3.5 million, or 16 cents per share, in the year ago period. Revenue for the fourth quarter was up 1.2 percent at $48.4 million, it said, adding that revenue should grow in the low to mid-single digit range during 2003. The company anticipates 2003 earnings at 92 cents to 96 cents per share. CCC has introduced version 2.1 of CCC Autoverse(TM) Claim Management, a Web-based claims application en-abling insurers, independent appraisers and collision repair facilities to exchange auto-physical damage claims information using established computer estimating systems that support the Collision Industry Electronic Commerce Association (CIECA) EMS standard for open technology. Based on CCC's open architecture, CCC Autoverse Claim Management 2.1 can integrate with multiple estimating systems, permitting the free-flow of communication between those who write damage estimates, and insurers, who process claims. This solution assists insurers and repair facilities in accelerating the claims handling process and returning vehicles back to their owners faster after an accident. "Insurers want a single, user-friendly solution to communicate and exchange information with their appraisal sources," said Jim Dickens, senior vice president of product management and marketing at CCC Information Services. "By utilizing open technology, CCC Autoverse Claim Management 2.1 connects insurers, independent appraisers and repair facilities, allowing for the more efficient handling of claims." CCC Autoverse Claim Management allows insurers to link with repair facilities, staff appraisers and independent appraisers. CCC Autoverse can work seamlessly with Pathways -- estimating tools that help insurers, repair facilities and independent appraisers manage aspects of their day-to-day automotive-claim activities - and complies with the CIECA EMS standard for open technology.
Sherwin-Williams Co. has reported that fourth quarter profits rose 25.7 percent, boosted by sales of paint to do-it-yourselfers and by cost cuts. The company posted quarterly profit of $57.1 million, or 38 cents a share, compared with $45.4 million, or 30 cents a share, a year ago. Sales rose 2 percent to $1.16 billion. The company expects 2003 will be a "low-growth, challenging year" due to uncertain worldwide economic conditions, the threat of war with Iraq and the slow, long-term recovery expected in the domestic economy. Sherwin-Williams is forecasting sales growth of three percent to five percent for the year, with earnings of $2.17 to $2.19 per share in 2003. In other company news, Susan J. Kropf was appointed to the Board of Directors of the Sherwin-Williams Company. Kropf is President and Chief Operating Officer of Avon Products, Inc., the world's leading direct seller of beauty and related products. In this capacity, Kropf is responsible for Avon's worldwide direct selling operations as well as all global functions in the areas of marketing, research and development, information technology, and supply chain. She is also a member of Avon's Board of Directors. o
BASF has announced a multi-year pledge in support of the Automotive Youth Educational Systems (AYES) initiative. AYES is a joint venture of automotive manufacturers, dealers, and selected high schools and technical schools with the objective of encouraging students to pursue careers in automotive service technology, collision repair or automotive refinish. The AYES initiative is now in place in 310 schools across 44 states; more that 4,400 students have participated to date in AYES internships. "We see AYES as a valuable program that will help attract and prepare young people for a rewarding career, and at the same time help to secure the future of an important and needed service industry," said Al Winterman, Group Vice President, BASF Automotive Refinish. "BASF has a long tradition of supporting the automotive service industry, and we have a vital stake in the success and growth of the automotive manufacturers and their dealer networks. We recognize the interdependence of manufacturers, suppliers and dealers, all of whom share the objective of satisfying the consumers who buy the vehicles. "The future of the industry depends on its ability to attract and retain skilled and motivated workers. That's why programs like AYES are so important, and why BASF is proud to be associated with the other fine companies that support this initiative," Winterman added. Founded in 1995, AYES was the first large-scale, collaborative school-to-career program to address the needs of retail automotive dealerships seeking to recruit and develop qualified technicians, who are in short supply. After-sales and service operations are becoming increasingly popular with auto dealers. These operations, which include collision repair, can make significant contributions to a dealer business. Skilled workers and managers are essential to the success of these businesses. State-of-the-art technology, Web-based tools and sophisticated management practices make the automotive service industry a challenging and rewarding career choice. More information about AYES can be found at the AYES website.
R. L. Polk & Co. has launched Polk CVINA (Complete Vehicle Identification Number Analysis), its latest automotive information solutions product. Polk CVINA is designed to provide the automotive insurance industry with a fast and efficient VIN analysis tool and insurance rating solution for commercial trucks, trailers and passenger vehicles. Polk CVINA also verifies and corrects VINs to ensure that accurate premiums are assigned. This new Polk product features precision VIN processing with detailed vehicle descriptive information to help companies build their databases with the most accurate specifications available. With Polk CVINA, insurance companies are able to verify VIN accuracy, validate the entire 17-digit VIN including the check digit, correct VIN errors, generate standard vehicle descriptions, return full spellings of vehicle make and series names, and obtain more than 20 other elements of vehicle data. The system also offers full correction of the VIN, heavy truck and commercial trailer information, historical data back to 1981, including Manufacturers Suggested Retail Pricing (MSRP), exact Gross Vehicle Weight (GVW) and Gross Combined Weight (GCW) dating back to 1992. "The Polk CVINA system offers unsurpassed VIN data accuracy," said Bill Weber, vice president of Polk's Software Services group. "CVINA is the most powerful and revolutionary VIN editing software in the industry and underscores Polk's commitment to provide our customers with the most accurate vehicle identification numbers, the most complete vehicle information descriptions and the largest amount of historical data." Polk CVINA can be used as a stand-alone product or it can be integrated into virtually any system. It is available in multiple platforms including batch and CICS for mainframe computers, PC-based systems and as an ASCII text flat file. CARSTAR, North America's largest collision repair network, has announced the appointment of Bill Vance as Director of Marketing. In his new role, Vance will manage strategic marketing and advertising programs for CARSTAR's company-owned and franchise collision repair centers. Vance's responsibilities will include corporate branding and co-op advertising initiatives as well as CARSTAR's internal and external communications programs. "Bill brings a tremendous depth of managerial expertise and strategic vision to our executive team," said George Hansen, Chief Executive Officer of CARSTAR. "He has created and managed marketing and advertising programs that contributed to the development and growth of industry-leading franchise operations. As we continue building our franchise network and adding new company-owned stores in select markets, Bill will guide our messaging and branding efforts while providing leadership for our corporate team and franchise community." Prior to joining CARSTAR, Vance was Vice-President, Franchise Development for Mr. Goodcents Franchise Systems, Inc. CARSTAR has more than 300 locations across the United States and Canada. The Alliance of American Insurers (AAI) has commented that a recent decision by the Court of Appeals of Ohio to deny class certification in a case challenging the use of non-original equipment manufacturer (non-OEM) parts is a reasonable ruling that brings an element of common sense to the aftermarket parts debate and the hearing of class actions. In affirming a trial court's ruling in Augustus v. Progressive Corp. (Ohio App. Jan. 23, 2003) the justices said they denied the request for class-action status because individual questions of fact outweighed common questions of fact. The court also ruled that it would be "inconceivable" that an automobile is not returned to its "pre-loss condition" because a non-OEM part is used in making a repair. "Granting of this class action would have further coerced insurers from using aftermarket parts, just as Avery v. State Farm, did in 1999," said Kirk Hansen, Alliance director of claims. "Too often the courts let multi-state class actions usurp state regulation of insurance, permitting judges to become de facto regulators of insurance industry practices." Hansen commented that the court's reasoning strengthens the insurance contract language permitting insurers to use non-OEM parts in repairs. "The court's ruling clearly suggests that people are recognizing the fact that generic aftermarket parts are of like kind and quality to OEM parts," he said. In the original case, plaintiff Eric Augustus brought a class action against Progressive and several affiliates alleging they used a company-wide policy that required the use of "imitation parts" in repairing and/or replacing damaged insured automobiles. He also alleged that use of these parts understates the amount necessary to repair the damaged automobile to its pre-loss condition, resulting in a breach of contractual obligation. The trial court hearing the case concluded that it could not be certified as a class action because it failed to meet the requirements of Ohio law. Augustus appealed. The appellate court affirmed the lower court's decision, noting that the case failed the most basic requirement under Ohio law to qualify as a class action: that a high degree of commonality exist among class members. The court found that Augustus failed to address the fact that specific policy language authorized the use of non-OEM parts to restore vehicles to pre-loss condition. Further, the policies required replacement parts to be "of like kind and quality" and limited liability to the amount needed to repair the damaged property to its pre-loss condition.
Mark Claypool's Mentoring at Work Addresses the Technician Shortage Crisis Head-OnBy Mark Claypool: The President and CEO of Mentors At Work, former Executive Director of the I-CAR Education Foundation and of the NABC shares his reasons for beginning his new mentoring program AND why all shops need to take care of apprentices When I was the Executive Director of the I-CAR Education Foundation I had the opportunity to travel around the country and visit hundreds of collision repair shops. This was one of the favorite parts of my job, meeting the individuals who make this industry so great, seeing how they run their operations, seeing if and how they partnered with schools and more. One common thread that nearly all of these shops had was their struggle with entry-level employment. At the I-CAR Education Foundation we conducted surveys every three years (They still do.) that gave a "Snapshot of the Industry". The alarming statistics we gathered confirmed what I was witnessing, first-hand, while touring shops. Turn-over rates of technicians were high, there weren't enough students coming out of the schools to meet the industry's needs, our workforce was aging, and the pool of qualified technicians was shrinking. Put all these factors together and you have a recipe for challenging times ahead. Even worse was the response most shops took to this challenge. They typically did one of two things, or a combination of both. They would either raid experienced technicians from each other's shops, creating a ripple effect throughout their area as one tech after another was hired away from a competitor, or they would hire someone from a school or off the street and have no system in place to train them. Both approaches are detrimental to the long-term health of the industry. Let's consider why. Hiring technicians away from other shops does nothing to fill the technician void on the back end. As employees leave this industry altogether, to retire or to work in another industry, we only fill a percentage of those vacancies each year. Taking a quick-fix approach and putting an experienced tech in place makes sense in the short term because of productivity, but leaves one less person to work on cars in the industry. As this cycle continues, experienced techs become all the more valuable and some are demanding signing bonuses, renegotiated contracts, extra benefits, and more. The independent contractor mentality is coming back to haunt some markets more than others and the situation is only getting worse. Hiring new people without a system in place to properly train them is also a flawed approach, as our industry's 70 percent failure rate with new people verifies. In fact, many shops tell me that they don't even succeed 30 percent of the time with new people. In examining why, you see that we make a terrible first impression with new hires. As an industry (the exceptions know who they are), we don't make new hires feel wanted or needed. We don't have a professional approach to training new people effectively, or moving them up the ladder if they already have some skills learned in school. Many of the guys back in the shop want nothing to do with new people so they make life so miserable for these new people that they leave. In some cases, management feels like they are held hostage by their techs. "If I force one of my techs to accept and train new people he might say forget it and leave," said one shop owner recently. "I can't afford to lose him." This fear keeps many shops doing what they have always done and adds to the problem. Managers are often afraid to lead, to let their passion show, to educate staff about all the reasons why a full-fledged apprenticeship program should be established in their shop. So they don't rock the boat, they keep the status quo, and if they need a new person, they feel their only option is to hire an experienced tech. How many ads in the paper go unanswered? How much money flies out the window? There are some leaders who are afraid to lead their people. However, many businesses outside of our field can view people as replaceable, because they take a proactive approach to attracting, training, and retaining new technicians, growing their own talent from the ground up. How can we let fear stop us from doing what is right? How long will we tolerate a 70 percent failure rate with human resources? Why can't this industry look beyond this coming Friday? There must be a better way. These are all the factors that led me to found Mentors At Work. I did 18 months of research, development and field testing to create a system the auto repair industry, both on the mechanical and collision side, could follow to greatly increase their chances for success. Both Sherwin-Williams and PPG are partnering with Mentors At Work, and other industry participants are also coming on board to help solve one of the greatest challenges our industry faces. The Mentors At Work system involves training at least three people in an individual shop to fulfill three specific roles: program coordinator (usually the owner or manager), mentor, and apprentice. The Mentors At Work Collision Program includes:
Ongoing results of the program are measured via the Internet and processed bi-weekly in a graph for immediate management use, showing the following:
Also included are key safety/health issues for the field, recommended pay plans for mentors and apprentices, tool recommendations, best practices, and new case studies. Where do we find new people? Too often shops think only of schools or the unemployed. If you have good schools that are providing quality training in this field, so much the better, and we have a learning module within Mentors At Work that tells you how to maximize your relationship with those schools. Instructors tell me, over and over, that they are tired of preparing students to enter this industry only to have shops do such a poor job taking these new hires to the next level that they leave our field for good. But not everyone has a good school in their area for partnering. The unemployed may or may not be the place to find new people. Some are unemployed for good reason. Others, that we might like to employ, don't give our industry a second thought and we do a poor job of reaching out to them. But what about those who have reached the peak of their earning potential and are looking for opportunities to expand? Their futures are all limited and we have opportunities for them, if they could only learn about them. I often hear from shop owners that young people today are lazy and don't want to work. That may be true for a percentage of them, but good kids are out there - we just need to identify them and tell them about us. Some of the ones who don't want to work now will change their attitude when they settle down, get married, and have families. When they realize the income they currently have isn't enough to live the kind of life they want they’ll go to a community college to learn a marketable skill for a new career. The average age of students in community colleges is in the upper 20s for just this reason. This age group (late 20s) is probably the richest source of new prospects in your community, those who have matured and are looking for opportunities to learn and earn and advance themselves, to provide for their families. You, with a professional apprenticeship program in place, offer just that. If you have a strong apprenticeship program in place, you'll see an increased retention rate, shortened learning curve, and decreased cycle time that can change the way a new person contributes to the shop. It pays a shop back over and over again, perhaps throughout the career of the new hire. The investment is small but the potential returns are huge. New hires can produce between $75,000-150,000 in shop revenue their first year alone if handled properly. Plan NOW for the FutureI keep hearing from shops, "But we're too busy, there's already too much to do, and the insurers are this and that." I want to hand them a cry towel. My response is, you can't afford NOT to deal with human resources. You need people to work on cars, and the future is clear IF you do the same thing you have always done. A 70 percent failure. What will separate the best from the rest over the next decade will be their approach to human capital development. Translation… effective apprenticeship programs, either in partnership with schools or not. Teresa Kostick, owner of All Line CARSTAR in Bolingbrook, Illinois (2002 franchise of the year) is currently using Mentors At Work. "The best part to me is what it has done for our apprentice as a human being," she said. "He's working with more confidence, which in return means he is moving in the right direction. Having a list of competencies and a sign-off process showed our apprentice what he needed to learn and motivates him to achieve." Mike Day, Production Manager for Sports and Imports in the Atlanta area agrees. "The Mentors At Work system will be helpful in organizing ourselves for bringing new techs on, staying on task and help me function as a better administrator. The Journal of Accomplishment task list has brought to light areas where our existing techs might need some additional training and we are looking into providing training in-house to fill some of these needs." Twelve ABRA collision repair facilities in the Atlanta market are using the Mentors At Work system to address their entry-level needs. ABRA Market Vice President, Andy Ingalls commented, "It is a system that can be duplicated to create consistency over time and if utilized, could conceivably produce a stream of trained technical workers to supplement the skill and expertise currently in the industry with our present Technicians." According to Matt Cline, an apprentice at ABRA in Lilburn, Georgia: "Thanks to my mentor Pat Dorman, I am able to perform projects that I never thought I would have ever been able to do when I first started this job. I feel very confident in my abilities and Pat is doing a good job as my mentor." At Mentors At Work, our vision of the future is to have this industry institute the changes necessary to meet the entry-level technician challenge. That means building a game plan to follow, choosing the right people to be mentors, successfully recruiting apprentices and then having a road map to follow and a tracking system. Whether you use Mentors At Work or develop your own mentoring procedures, take the time, learn, invest in the future through employee development, and you'll make a new future for yourself, your business and your employees. FeedbackHave a comment about this article? Send Email to Editor, INSIGHT's Editor ©2003 Collision Repair Industry INSIGHT | FEATURED
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