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This article originally appeared in the February 2004 Issue of INSIGHT
©2004 Collision Repair Industry INSIGHT All Rights Reserved

Articles

Boyd Group Acquires Gerber Auto Body and Glass

CIC Gold Pin Planning Meeting Report

Allstate Gets Injunction in Challenge of Texas Law Prohibiting Insurer-Owned Shops

BASF and Akzo Nobel Form Joint Venture

Kathleen Schmatz Selected President and CEO of AAIA

NAII and Alliance Members Vote to Merge

ADP Claims Services Group to Acquire ABZ of the Netherlands

PPG Reports Strong Earnings and Cash Flow in Q4

Allstate New Jersey and Encompass Sue New Jersey Chiropractor for Fraudulent Claims

3M to Acquire HighJump Software

DuPont Performance Coatings Appoints Donna Alves West Region Sales Manager

Progressive Press Release Calls Concierge Program a We'll Take Care of Everything Approach to Auto Repair

Keystone Comments on Rim Flange Thickness Standard

Canada Collision Industry Forum Draws Auto Recyclers

INDUSTRY UPDATE

Boyd Group Acquires Gerber Auto Body and Glass

 

Manitoba, Canada - based consolidator The Boyd Group has purchased Gerber Auto Collision and Glass, the regional consolidator of 17 Illinois facilities in the Chicago area, headed by Eddie Cheskis, Chief Executive Officer since 1998. INSIGHT will have more to report in the March issue.

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CIC Gold Pin Planning Meeting Report

 

Do the programs designed to identify top quality non-OEM parts actually do so?

That was the question a Collision Industry Conference (CIC) committee hoped to answer by asking such organizations as the Certified Automotive Parts Association (CAPA), the Manufacturer's Qualification and Validation Program (MQVP) and parts distributor Keystone Automotive - each of which certifies or brands certain non-OEM parts as superior - to fund and participate in an independent audit by a qualified third-party.

But at CIC in Palm Springs, California, in mid-January, CIC participants voted 40-6 (with at least an equal number not voting) to scrap the plan just days before it was set to launch.

The co-chair and members of the Parts and Airbags Committee maintained that CIC would be calling for the audit and setting its parameters. The audit itself, they said, would be conducted by an independent third-party - that met qualifications set by CIC - and would be funded by the parts organizations that chose to participate. The goal would be to determine whether the parts certification or compliance programs operate according to their own guidelines and if they accurately identify parts that are comparable to the OEM.

"CIC from a liability standpoint is simply recommending that this happen," said committee co-chairman Rod Enlow, who estimated the cost to CAPA or other participants between $42,000 and $56,000 each. "The participants voluntarily will agree to do this or not do this. If they don't agree to do it, it's over. If they choose to participate, however, then they will get together, they will select the auditor, and the auditor will do their thing. Those participants will pay that auditing firm to produce that data… It's not our audit. It's just an audit that we're recommending."

But opponents to the plan said the resulting report could be perceived as a CIC endorsement or indictment of one or more of the programs.

"There's no reason that CAPA, MQVP, Keystone or whoever wants to participate can't do exactly what you're saying [without CIC's involvement]," Rick Sherwood, owner of the Detroit-based consulting firm OEM Collision Repair Resources, said at CIC in Palm Springs. "My concern is CIC is going to be in the position at the end of the audit of having MQVP, CAPA and Keystone or whoever participates saying, 'The CIC audit process proved we deliver quality parts....' CIC is not in a position to have that happen."

George Gilbert of Ford Motor Company said he felt such an audit was unnecessary.

"My point is that a continuing audit process, along with a continuing fit test, as it were, goes on every single day in body shops across the country," Gilbert said. "And just like those [non-OEM] mechanical parts that are sitting out there on the shelf, they either perform or they get off the shelf...You don't need a certification program; you let the dynamics of the marketplace determine what parts get put on the car and what parts don't."

Others opposing the audit said the committee could meet its mandate to address non-OEM parts certification by enabling representatives of each of the programs to explain at CIC how their program differs from the others and is better at accurately identifying top-quality non-OEM parts.

But Parts and Airbags Committee member Keith Manich of CAPA's testing facility, Entela Inc., said some of the parts certification or compliance programs aren't as likely to share proprietary system information publicly as they would with an independent auditor with the appropriate non-disclosure agreements.

For his part, Enlow said he hopes the committee's efforts will result in an audit even without CIC's involvement.

"If not, it's going to put to us right back to square one, where you read the rhetoric, you go to the websites, you make your decision on who makes good parts and you use them," he said. "The hurtful part is, we've worked on this thing almost a year, and nobody had said anything [negative] about it until today. So you've wasted a committee's efforts for the better part of a year."

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Allstate Gets Injunction in Challenge of Texas Law Prohibiting Insurer-Owned Shops

 

Allstate Corp. won a temporary victory in its challenge of a Texas law that aims to prevent insurance companies from buying auto repair centers or favoring ones they already do own.

The company received a preliminary injunction that allows its Allstate Insurance Co. unit to resume joint-marketing campaigns with its auto-repair unit, Sterling Autobody Centers.

Allstate and Sterling also claim that Texas House Bill 1131 violates their free speech rights. The challenge, filed last August, won't go to trial until September, according to an Allstate press release.

Texas House Bill 1131, which became law last September, prevents insurance companies from participating in joint marketing programs or programs that favor their own repair centers. The law also prohibits insurance companies from buying new or building additional repair centers.

Allstate Corp.'s Sterling currently runs 14 repair centers in Texas.

The injunction allows Allstate to resume its practice of promoting Sterling's services during the referral process.

"The state cannot undertake to level the playing field for the purpose of protecting local business from competitors," the U.S District judge wrote in his decision.

Repairs done at Sterling account for less than 5 percent of Allstate's overall claim volume, both in Texas and the other 14 states in which Sterling operates.

The unit has about 60 repair centers in 15 states, and while there aren't yet similar laws in other states, legislation is being discussed elsewhere.

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Dutch chemical group Akzo Nobel NV and German chemical company BASF have formed a joint venture for the production of chelates in North America starting this month.

The joint venture will sell chelates exclusively to Akzo Nobel and BASF, while the sales and marketing of chelates in the United States will continue to be managed separately by the two companies, Akzo Nobel said in a statement.

No financial details of the deal were disclosed.

Chelates encapsulate metal ions and are used in a very wide range of applications such as chemical processes, household cleaning water treatment and scale prevention in industries including the paper, photography and agriculture sectors.

"This investment reinforces BASF's long-term commitment to the North American chelates markets," BASF's Executive Vice President Patrick Prevost said in a statement.

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Kathleen Schmatz has become the new president and CEO of the Automotive Aftermarket Industry Association (AAIA), the trade association representing more than 2,700 companies that manufacture, distribute and sell motor vehicle parts, accessories, tools, equipment, materials, supplies and services.

Schmatz, who has served as AAIA's executive vice president since January 2002, takes over the role from Alfred L. Gaspar, who retired after 30 years in the aftermarket industry.

Gaspar is president emeritus and will serve as a consultant to the association.

"Thrilled, excited, eager, humbled, nervous: Pick one or pick them all and that's how I feel about the privilege and one-of-a-kind opportunity I have to lead the most dynamic and powerful trade association in the automotive industry," Schmatz said. "I am honored to fill the shoes of an industry icon, one of the most respected and revered individuals in the business, Al Gaspar."

Schmatz, formerly vice president and group publisher of Babcox in Akron, Ohio, is a nationally recognized advocate of the automotive aftermarket, a sought-after speaker and presenter and an active volunteer on the boards and committees of several trade associations.

Schmatz has been active in many industry groups including AAIA, the Automotive Communications Council, Auto International Association, Car Care Council Women's Board and several community and civic organizations in Akron.

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Member companies of both the National Association of Independent Insurers (NAII) and the Alliance of American Insurers on January 7 voted overwhelmingly to merge and form a new trade association known as the Property Casualty Insurers Association of America (PCI).

The new organization represents more than 1,000 member companies that write 37 percent of the property and casualty insurance sold in the United States.

Jack Ramirez, former NAII president, is the president and chief executive officer of PCI, and Rodger Lawson, former president of the Alliance of American Insurers, will serve as executive vice president.

The new organization will be headquartered in the current home office of NAII in the Chicago suburb of Des Plaines, Illinois. PCI will also maintain a federal affairs office in Washington, DC and a network of regional offices in Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Pittsburgh, Pennsylvania; Sacramento, California; Tallahassee, Florida; and Trenton, New Jersey.

“This is an historic day for the members of both NAII and the Alliance,” said Ramirez. “This is the most significant development in unifying the industry to occur in decades. The merger creates not just a bigger organization, but also a better one. Our expanded market share and membership base will make us more effective advocates for our members in Congress and in statehouses across the country.”

“The merger will also allow PCI to take advantage of economies of scale and provide a greater number of products and services to members of all sizes and types. The overwhelming vote in favor of the merger underscore that members of both NAII and the Alliance understand the benefits that a merged organization can bring to them,” said Lawson.

Ramirez stressed that although PCI will have more members, the association leadership is committed to making sure that every member plays an equal and important role.

“PCI will present a responsible and effective voice on public policy questions affecting insurance products and services and will develop policy positions based on consensus in order to take into account the needs of all member companies – large and small, national and local, multi-line and niche,” said Ramirez.

Anthony Dickson, president of New Jersey Manufacturers Insurance Companies, will serve as chairman of the Board of Governors of PCI. Harvey Pierce, chairman and chief executive officer of American Family Insurance Group, is the vice chairman of the new organization.

The PCI Board of Governors is comprised of all 60 former members of both the NAII Board of Governors and the Alliance Board of Directors.

The Board will appoint a committee to review the size and composition of the Board and recommend changes to the corporate governance structure and procedures.

PCI is comprised of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write $154 billion in annual premium, or about 40 percent of the nation’s property/casualty insurance. Member companies write 47.1 percent of the U.S. automobile insurance market, 37 percent of the homeowners market, 31.1 percent of the commercial property and liability market, and approximately 38.8 percent of the private workers’ compensation market.

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ADP Claims Services Group, a division of Automatic Data Processing, Inc. has entered into a definitive agreement to acquire ABZ Group B.V., a privately held company in the Netherlands, Peter Op de Beeck, Division President, has announced.

The transaction is subject to ABZ Group B.V. shareholder approval and normal regulatory review. Completion is expected shortly.

ABZ, located in Zeist, with revenues of approximately EUR 40 million, is a leading business service provider in the Netherlands, offering web-based services mainly to the insurance and automotive industries.

ABZ has had a long and close relationship with ADP, having been a licensee of Audatex, a subsidiary of ADP Claims Services Group, since 1981.

Commenting on the transaction, Op de Beeck said, "ABZ is a perfect strategic fit to our service activities. It consolidates our extensive relationship with them in the claims services field and opens up exciting new opportunities, in particular in the insurance industry, where ABZ has had a proven track record for identifying and developing solutions based on solid value propositions."

"This transaction marks an important step in ABZ's development and will create tremendous opportunities for our clients and employees. Our current shareholder-clients have made a significant contribution to our leading position and their outspoken intention to continue the close cooperation is an important starting point for future growth," said Mr. Gerrit Schipper, Chief Executive Officer of ABZ.

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PPG Industries has reported fourth quarter net income of $122 million, or 71 cents a share, including an aftertax charge of $8 million, or 5 cents a share, to reflect the net increase in the current value of the company's obligation under the asbestos settlement agreement reported in May of 2002. Sales were $2.18 billion.

This compares with fourth quarter 2002 net income of $94 million, or 55 cents a share, including an aftertax charge of $4 million, or 2 cents a share, to reflect the net increase in the value of the company's obligation under the asbestos settlement agreement. Sales were $1.99 billion.

For all of 2003, PPG recorded net income of $494 million, or $2.89 per share. Sales for 2003 were $8.76 billion.

For all of 2002, PPG recorded a net loss of $69 million. Sales for 2002 were $8.07 billion.

"We generated cash from operating activities of about $350 million during the fourth quarter, representing an increase of about $75 million over last year's fourth quarter, as a result of stronger earnings and further reductions in working capital," said Raymond W. LeBoeuf, PPG chairman and chief executive officer. "...We produced solid earnings for the quarter thanks to improved cost performance, increased volumes across all of our businesses, stronger pricing in commodity chemicals, the growing success of our optical products business and the strengthening of the euro."

Looking to the future, LeBoeuf added, "Our optimism about the global economy grew throughout 2003 and that continues today... At the same time, we remain committed to making significant further reductions in costs, ensuring that an improving economy will produce even better results. Additionally, we will continue to develop new products and pursue growth."

Coatings sales increased $134 million, or 12 percent, due to the strengthening of foreign currencies and stronger volumes in the architectural, aerospace, automotive and industrial businesses.

Glass sales increased $18 million, or 4 percent, largely on the strengthening of foreign currencies. Stronger volumes in the automotive original equipment and flat glass businesses were offset by lower prices in the automotive original equipment, automotive replacement glass and fiber glass businesses.

Operating earnings were down by $18 million because of lower selling prices and higher energy, pension and retiree medical costs, which more than offset the benefit of higher volumes, improved manufacturing efficiencies and lower overhead.

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Under the New Jersey Insurance Fraud Prevention Act, Allstate New Jersey Insurance Company and Encompass Insurance have filed a multi-million dollar civil complaint in the Superior Court of Morris County against Scott Greenberg, D.C., a Central New Jersey-based chiropractor, and his various chiropractic businesses and associates.

Since 1993, Allstate New Jersey and Encompass have paid more than $17 million to the defendants. The legal action seeks restitution of all monies paid in violation of New Jersey statutes and regulations governing the delivery of health care, and also seeks treble damages. The suit also asks the court for a declaratory judgment against the medical practitioners in order to halt all claims being made by Drs. Greenberg, Brownstein and Sorin and the professional entities controlled by them.

Allstate New Jersey and Encompass continue to receive claims from the defendants.

The Allstate New Jersey-Encompass Insurance lawsuit alleges that Greenberg orchestrated a referral scheme to defraud the carriers. Specifically, the complaint accuses Greenberg of illegally self-referring his chiropractic patients to a mobile diagnostic facility in which he was the sole owner. In New Jersey, it is illegal for a chiropractor to own a diagnostic facility.

After Greenberg closed Middlesex Diagnostic, he referred his patients to Neuro Muscular Medical Group, a diagnostic facility owned by Sorin.

As alleged in the complaint, through a service agreement between Greenberg and Sorin, billing was exclusively done by Greenberg's Accurate Billing Company, which allegedly kept a 30 percent kickback.

The suit also alleges that unlicensed assistants administered physical therapy treatment in violation of New Jersey law and regulations.

Richard C. Crist, Jr., President of Allstate New Jersey, said, "The fact that can not be overlooked is that auto insurance fraud is not a victimless crime. It impacts everyone's car insurance costs."

Allstate New Jersey Insurance Company, headquartered in Bridgewater, NJ, was established in 1997 by the Allstate Insurance Company as a separate and distinct company in New Jersey.

Formerly CNA Personal Insurance, Encompass was launched in September 2000 as part of the Ivantage Group, a division of The Allstate Corporation.

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3M has entered into a definitive agreement to acquire HighJump Software Inc., a provider of supply chain execution software and solutions, including related trademarks and patents.

Terms of the transaction were not disclosed, and the transaction is subject to regulatory approval and approval by HighJump Software's shareholders.

"Adding HighJump Soft-ware's suite of supply chain execution solutions gives 3M a powerful new platform to grow our existing service and solutions business, focused on helping customers optimize their business processes," said John Pohl, division vice president, 3M Industrial Services and Solutions Division. "HighJump Software brings to 3M tremendous market knowledge and experience, strong industry and channel relationships, and proven business practices."

Demand for supply chain execution solutions is growing as customers across many markets face increasingly complex supply chains driven globally by customer and regulatory requirements.

HighJump Software provides a comprehensive suite of supply chain execution solutions, including integrated solutions for warehouse and yard management, transportation management, supply chain visibility and event management, trading partner collaboration, and data collection.

In January 2003, 3M launched the 3M Integrated Packaging Tool, a web-based, data-enabled packaging information management system. This tool integrates product information, package design, and production systems to better manage compliance, time to market, product surety, and packaging costs for customers.

Commenting on the transaction, Chris Heim, chief executive officer of HighJump Software, said, "We are very excited about our future with 3M. This is the right thing to do for our customers and our employees. We'll be located in the same place, with the same strong focus on serving our customers. Our business has a strong history of innovation and growth. 3M's global strength and brand leadership will make us even stronger."

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Donna Alves has been named sales manager for the West Region of DuPont Perfor-mance Coatings (DPC).

Alves served two years as sales manager of the Detroit District prior to her promotion to the regional manager position.

She joined DuPont in 1984 and worked several years in the Butacite business before moving to the DPC Wilmington, Del. headquarters staff in 1997 as global resin planning manager.

Alves was promoted to operations manager for DuPont Refinish in 2000 before going to Detroit.

Headquartered in Scottsdale, Ariz., Alves reports to John Gallagher, sales manager, U. S. Refinish.

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Progressive Insurance has issued a press release about the company's Concierge Program, a very hot topic for 2004, now with 19 locations. Following is the press release:

Having a vehicle repaired following a crash can be a confusing and time-consuming process. You generally have to get quotes from several body shops, contact your insurance company, arrange for a rental car, get your car to the body shop, check on the progress of the repairs, wait for the car to be fixed, then inspect the work and drop off the rental. And that's if everything goes well.

"It used to be that when we'd write a check for a claim, our work would end and the customer's work would begin," said Brian Passell, claims group president for the Progressive group of insurance companies, the third largest auto insurance group in the country. "Then we asked ourselves, 'why?' and changed it all. What used to be the customer's problems are now our problems, and that's the way it should be."

Progressive is the first in the industry to take responsibility for the entire vehicle repair claims process and provide customers with a simpler way of getting their cars fixed following a crash.

Here's how the process works:

  • The customer calls 1-800-PROGRESSIVE to report the claim any time of the day or night, and brings the vehicle to the new center. - At the claims center, the customer drops off the car, picks up a rental vehicle and leaves.
  • A Progressive claims representative prepares a repair estimate and selects a repair shop that has met strict quality requirements.
  • The vehicle is transported to the shop and the repairs start. The customer is kept informed of the status of the repair throughout the process.
  • When the work is finished, the vehicle is transported back to the Progressive claims center.
  • A Progressive claims representative and a shop representative inspect the quality of repairs and the customer is notified.
  • The customer and claims representative inspect the vehicle together and the customer drives off knowing the repairs are guaranteed by the shop and Progressive for as long as the customer owns the vehicle.

Today, in 17 U.S. markets, Progressive customers and others involved with a Progressive claim have a choice - manage the repair process themselves or have Progressive claim representatives and hand-selected auto body repair shops manage it on their behalf.

Progressive locates facilities closest to areas where its customers are concentrated to make the new standard of service available to as many as possible...

"We don't expect hugs every time," said Passell. "But the process is getting rave reviews, and we believe this is the future of auto insurance."

Progressive tested the concept in seven markets before it announced its national rollout on April 8, 2003. Existing test sites included Cleveland, OH, Philadelphia and Pittsburgh, PA, Virginia Beach, VA, Orlando, FL, New Orleans, LA, and Phoenix (Tempe), AZ.

In 2003, Progressive opened facilities in Columbus, OH, two in Atlanta GA, Washington, D.C., Richmond, VA, Tampa and Jacksonville, FL, Dallas, TX, two in Houston, TX, Indianapolis, IN, and Detroit, MI. Progressive has plans to continue rolling out more sites in 2004.

In addition to the new claims centers providing one-stop handling of vehicle repair claims, Progressive operates more than 350 claims offices in all 50 states. Although the existing offices are not equipped to offer the one-stop service, company representatives there continue to personally handle each customer's claim from start to finish and, in most states, offer them the choice of having the vehicle repaired in a shop where the work is guaranteed.

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INSIGHT has received the following letter from Keystone Automotive Industries President and CEO Charles Hogarty clarifying specifications for the thickness of the outer rim flange for aluminum wheels:

In answer to your question regarding specifications for the thickness of the outer rim flange of aluminum wheels, I offer the following:

The top OEM wheel manufacturers use a minimum flange wall thickness of 0.160 inches (4 mm), although the vast majority of wheels are thicker than that minimum.

Keystone has intentionally cut wheels for testing purposes as thin as 0.120 inches (3 mm), and subjected them to impact tests, which they passed. We therefore feel confident that the 0.160 inches (4 mm) minimum thickness standard for Keystone manufactured wheels is very adequate.

All our wheel plants have been instructed that any wheel that does not have a minimum outer rim flange thickness of 0.160 inches (4 mm) or higher after resurfacing must be scrapped.

Keystone has remanufactured over one million wheels and, to my knowledge, we have never had a safety-related incident due to insufficient rim flange thickness.

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Canada’s Collision Industry Forum (CCIF), held on January 10th at Hamilton’s Sheraton Hotel, was attended by 250 participants. Joining the mix of collision repairers, insurers, suppliers, trainers, and trade associations at this Forum was a large contingent of auto recyclers, keen to join the debate on the use of salvage parts and to network with industry stakeholders.

Hamilton Mayor Larry Di Ianni encouraged CCIF in its efforts to strengthen the industry and to provide careers for young people.

A presentation from Bev Cook, representing the Canadian Apprenticeship Forum and Skills Canada, detailed the concerted effort underway to position the skilled trades as a first career choice through an extensive promotional campaign.

Linda Brown of the CARS Network reported that the results from a recent survey indicated industry interest in televised satellite training, which could overcome the traditional barriers of availability, accessibility and work schedules.

“We’re on a mission,” says Mike Mario, chair of CCIF’s Communications Committee. “Our goal is to develop a positive image of our industry through constant exposure of positive messages.”

During the Parts & Materials Committee breakout session, Larry Jefferies kept the group firmly focused on the issues concerning choice of parts. “Our role is to be a voice for the parts segment of the industry,” says Jefferies, “and to present a balanced message on all issues.”

During the Open Forum session, Henning Norup, Vice President of Information Research and Analysis at the Insurance Bureau of Canada (IBC) pointed out the big challenge for the collision repair industry: new technology in materials like aluminum and high strength steel, in telematics, and even in more down-to-earth items like windshield replacement.

He praised the continuing movement of collision repair away from its traditional metal bashing image to a sophisticated, high technology business which provides interest and challenge of a new type for young people making their career choices.

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