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Letter to the Editor
This article originally appeared in the April 2005 Issue of INSIGHT
©2005 Collision Repair Industry INSIGHT All Rights Reserved
BASF’s North American Region Delivers Strong Financial Performance in 2004
United Recyclers Group Launches Nationwide Salvage Disposition Solution for Insurance Industry
ASA Asks NCOIL to Drop Aftermarket Crash Parts Certification Legislation
AMI Announces New Memorial Scholarships
Copart Posts Higher Q2 Earnings
Mitchell Releases Enhanced Collision Repair Series
Allstate Matching-Donation Program Raises Over $1.5 Million for Tsunami Disaster Recovery
Insurance Auto Auctions Reports Higher Q4 Net Earnings
David Zelch Appointed Director, Customer Service Operations for PPG Automotive Refinish
TeamUSA Heads to World Skills Competition in Finland
INDUSTRY UPDATE
BASF Aktiengesellschaft has announced its fourth quarter and full-year 2004 results in Ludwigshafen, Germany.
BASF's financial results for 2004 in the North American region were strong. Income from operations in the region increased more than twentyfold over 2003, and fourth quarter earnings showed continued impressive improvement compared to the same period a year ago.
Sales in North America for 2004 were euro 8.165 billion (about $11.104 billion), up 13.2 percent over euro 7.214 billion in fiscal 2003. Income from operations in 2004 was euro 246 million (about $335 million) up over twentyfold from euro 10 million in 2003. Income from operations before special items for the year increased to euro 404 million (about $549 million) an increase of 393 percent from euro 82 million in 2003. The performance marks the third consecutive year BASF's North American results have improved.
Fourth quarter sales in North America were euro 2.001 billion (about $2.721 billion), up 23.6 percent over the fourth quarter of 2003." rather than "Fourth quarter sales in North America were euro 2.001 million (about $2.721 million), up 23.6 percent over the fourth quarter of 2003. Income from operations in the fourth quarter 2004 was euro 42 million (about $57 million) up 367 percent from euro 9 million in the fourth quarter 2003. Income from operations before special items increased to euro 42 million (about $57 million) an increase of 82.6 percent from euro 23 million compared with the same period a year ago.
BASF is continuing to successfully implement its North American restructuring program and has made significant progress toward its goal of reducing costs by at least $250 million by 2006. As of year-end, the company has achieved annual cost savings of $175 million. The program includes optimizing administrative functions, manufacturing site operations and business processes.
"These financial results illustrate that our restructuring initiative is proving to be successful in positioning us to fully benefit from the current upswing in the U.S. economy and the chemical industry," said Klaus Peter Loebbe, Chairman and Chief Executive Officer of BASF Corporation, BASF's North American affiliate. "Our goal is to strengthen BASF's North American presence to be able to sustain the downturns, and prosper in the upturns."
Loebbe said that the company's strong financial performance was driven by aggressive cost reduction coupled with a diligent approach to passing along increases in energy and feedstock prices. "We must continue to rebuild margins if we are to reach re-investment levels for our businesses," he said.
Loebbe added that BASF is committed to the North American market, which is the largest chemicals market in the world. "The North American chemical sector continues to be strong, vibrant and growing. It is a critical market to BASF's global presence, and our strategies are designed to support long-term profitability despite changing market conditions," he said. "I am optimistic that the North American chemical industry will stay competitive through innovation, customer and industry focus, and smart portfolio management."
BASF's strategy going into 2005 will continue a keen focus on programs to enhance competitiveness by reducing fixed costs, enhancing margins, strategically improving the company's business portfolio, and in delivering greater customer value through innovation.
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United Recyclers Group, LLC (URG) has unveiled its Premium Salvage(TM) program for the insurance industry to dispose of total loss vehicles.
With close to 300 auto recyclers across the country, United Recyclers Group, LLC can offer a 48 hour guarantee for picking up vehicles for the insurance industry on a nationwide level. Expediting pickup reduces costs to the insurer. The vehicles are then stored for free which further reduces costs.
The URG network of auto recyclers then takes digital images of the total loss and displays them on the URG state of the art salvage auction acquisition website for a weekly sale reaching hundreds of bidders across the country.
In a press release, United Recyclers Group said that the company has implemented the necessary processes to make this program very cost-effective and convenient for the insurance carrier regardless of company size.
With a minimal fee to the insurance company to handle all of the work from the first call of picking up the vehicle -- to the final process of selling the vehicle and processing the title, the URG salvage acquisition program promises to increase the margin of return for the insurance company by minimizing fees to both the seller and the buyer. This should result in better salvage returns to the insurer and lower costs to the recycler.
URG has devoted substantial resources to the Premium Salvage(TM) program. URG claims that the program is a win-win for the insurance and auto recycling industries by reducing expenses and margins normally associated with the salvage disposition process.
"We have worked for close to a year with several insurance companies developing this exciting new program. We waited until we were certain we had all the processes in place to handle a large volume of salvage vehicles," said Sharon Galan, URG General Manager.
URG is a partnership of close to 300 auto recyclers that have worked to make changes in the automotive recycling industry. Changes they have been made include developing their own inventory management system, Pinnacle, creating a buying cooperative, offering group marketing options, and forming the Premium Recycled Parts Program.
The Automotive Service Association (ASA) has sent a letter to the National Conference of Insurance Legislators (NCOIL) responding to its consideration of aftermarket crash parts certification.
Bob Redding, ASA's Washington, D.C., representative, said in the letter, "Collision repairers are on the front lines when consumer questions arise concerning parts. To ensure adequate consumer notice and education, it is imperative that written consent by the vehicle owner be part of the collision repair process."
ASA supports disclosure laws that require insurers and collision repair facilities to obtain the written consent of vehicle owners before installing replacement crash parts.
ASA asserts that state-by-state parts certification programs will encourage all types of regulatory burdens, including enforcement, the lack of assurance of quality control and increased government bureaucracies.
"We ask that you oppose the suggested aftermarket crash parts certification legislation," said Redding.
The Automotive Manage-ment Institute (AMI) is accepting applications for its two new scholarships: the Richard Cossette Memorial Scholarship and the Gale Westerlund Memorial Scholarship. The scholarships, offered in conjunction with the Automotive Service Association (ASA), honor the contributions these individuals made to AMI, ASA, and the collision repair industry.
Richard Cossette owned Lehman’s Garage in Minneapolis, Minn., and was a charter founder of AMI and a $50,000 Charter Counsellor contributor to AMI’s EXCEL program. He was the first chairman of EXCEL and was the recipient of AMI’s Annual Recognition Award in 1994. He was awarded an honorary Accredited Automotive Manager (AAM) designation in 1997 to further recognize his commitment and dedication to AMI. He was active in several industry organizations until his death in 2002.
Gale Westerlund owned Gale’s Auto Center in Blaine, Minn., and was a $25,000 Guarantor contributor to EXCEL. He earned the Institute’s AAM designation in 1993, and also served on the ASA board of directors for many years. He was an active member of ASA and other collision industry organizations until his recent death.
Scholarship recipients will receive $500 to help cover expenses to attend AMI seminars offered during the International Autobody Congress & Exposition (NACE), Nov. 2-5, 2005, in Las Vegas.
To be eligible for the award, the following requirements must be met: applicants must work in the collision repair industry; must demonstrate an interest in self-improvement through management education; must own or work for a business that is an ASA Collision Division member in good standing; and, if the applicant is not the business owner, must be recommended by the business owner. AMI Trustees and their employees, and the Scholarship Selection Commit-tee and their employees are not eligible to apply.
To request a scholarship application, call AMI at (800) 272-7467, ext. 239, or fill out a scholarship application online at the AMI website. Applications must be received by AMI on or before Aug. 15, 2005. The scholarship recipients will be notified by AMI on or before Sept. 6, 2005.
Copart, Inc., the largest provider of vehicle salvage disposition services in the United States, has reported results for the second quarter ended January 31, 2005.
During the second quarter ended January 31, 2005, Copart earned net income of $23.6 million on revenues of $110.0 million. In the same period last year the company earned $17.4 million on revenues of $92.6 million. These represent increases in net income and revenue of 36 percent and 19 percent, respectively. Fully diluted earnings per share (EPS) for the quarter was $.25 compared to $.19 last year, an increase of 32 percent.
For the first six months of fiscal 2005, Copart earned net income of $46.2 million on revenues of $214.1 million. In the same period last year the company earned $32.6 million on revenues of $184.1 million. These represent increases in net income and revenue of 42 percent and 16 percent, respectively. Fully diluted earnings per share (EPS) for the six months was $.50 compared to $.36 last year, an increase of 39 percent.
During this quarter same store sales, sales from stores owned or open more than twelve months, increased by 18 percent.
Sales of vehicles during the second quarter, to buyers outside the state where the vehicle is located, accounted for 47 percent of total vehicles sold; 25 percent were sold out of state and 22 percent were sold out of country. This is up 15 percent from the same period last year. The company attributes the growth in out of state and international buyers to Copart's proprietary auction technology and software, VB2, which creates a virtual selling marketplace, allowing buyers with Internet access to bid on vehicles from any point in the world.
Copart, founded in 1982, operates 110 facilities in the United States and Canada.
Mitchell International, Inc. has announced the release of the newly upgraded Collision Repair Series (CRS) v5.0. This release includes redesigned navigation that helps users find the information they need more quickly and easily, and includes useful new and expanded print functions.
The Collision Repair Series provides access to collision-specific repair information needed by shops at a fraction of the cost of maintaining multiple online subscriptions or other mechanical repair products.
With up to four updates a year, CRS equips shops with a library of repair information vital to their work. Data sets include vehicle dimensions, airbag service and repair information, wiring diagrams, TSBs, and more.
CRS v5.0 is also integrated with Mitchell's flagship estimating and claims-workflow solution, UltraMate Premier Suite.
This latest release also includes four additional years of Vehicle Dimension Data, bringing the total coverage to 14 years. The upgraded product is available on 17 CDs or 2 DVDs.
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Allstate Corporation has joined the outpouring of private contributions offered throughout the United States to help bring relief to the victims of the Indian Ocean tsunami by raising more than $1.5 million, including employee and agency donations as well as company-matched contributions.
"One of the most rewarding aspects of working at Allstate is to see the way our employees and agencies help others in a time of crisis. I know it is what we do as a business, but it's more than a business for Allstaters," explained Edward M. Liddy, chairman, president, and chief executive officer. "I am proud of the generosity of our employees and agencies. Together, our employees, agencies, and Allstate made a sizable contribution of $1.5 million to the International Response Fund for tsunami relief."
On Jan. 5, Allstate notified its nearly 40,000-employee base and its 13,600 agency owners that the company would match donations dollar-for-dollar with no upward limit for a 30-day time period. Allstate employees and agencies responded by making personal contributions to the relief effort through a secure Web site the American Red Cross created for Allstate.
These charitable donations collected by Allstate will provide relief and long-term support for the devastated parts of South Asia and Southern India through personnel, financial assistance and supplies, such as tents, blankets and hygiene kits to those in need.
Insurance Auto Auctions, Inc. has reported higher net earnings for the quarter ended December 26, 2004. The company recorded net earnings of $4.0 million, or $0.33 per diluted share, versus a net loss of $0.3 million, or $0.03 per diluted share, for the same quarter a year ago. Revenues for the quarter were $62.2 million compared with $51.1 million in the fourth quarter of 2003. Fee income in the fourth quarter increased to $53.7 million versus $43.5 million in the fourth quarter of last year.
"In the fourth quarter we were once again able to grow sales and earnings as our products and service offerings continued to be well received in the marketplace," said Tom O'Brien, CEO. "Our customers have been pleased with the improvements we have made to the business over the past several quarters and we have been rewarded with another quarter of double-digit volume growth over the prior year, both on a same-store as well as on an overall basis. This volume growth was the result of market share gains made earlier in the year combined with our ability to generate higher net returns for our suppliers."
The company reported full-year 2004 net earnings of $12.3 million, or $1.04 per diluted share, versus net earnings of $2.3 million, or $0.20 cents per diluted share, for 2003. Revenues for the year were $240.2 million, a 15 percent increase over revenues of $209.7 million in 2003. Fee income during the year increased to $208.7 million versus $169.7 million in 2003.
"We are pleased with our 2004 results, not only from a financial perspective, but also because of the customer relationships we were able to solidify throughout the year," said O'Brien. "The initiatives we had implemented in prior years had a direct impact on our success in generating higher volumes, increasing our market share and driving higher net returns, each of which translated into better results for IAA. We also kept our eye on growing strategically, adding four new locations during the year that all fit our acquisition and greenfield investment criteria. Furthermore, a portion of our success is attributable to a strong commitment to our comprehensive bidding philosophy in which we supplement live auctions throughout our nationwide network of branches with proxy as well as real-time, Internet bidding capabilities, which our customers continue to strongly support."
Insurance Auto Auctions previously announced that it signed a definitive merger agreement to be acquired by affiliates of Kelso & Company, a New York based private equity investment firm. The closing of the transaction is subject to certain terms and conditions customary for transactions of this type, including stockholder approval and the completion of financing.
Stockholder approval will be solicited by IAA by means of a proxy statement, which will be mailed to IAA stockholders upon the completion of the required Securities and Exchange Commission filing and review process.
Insurance Auto Auctions, Inc., founded in 1982, is a provider of automotive total loss and specialty salvage services in the United States, and currently has 78 sites across the United States.
David T. Zelch has been appointed to the position of Director, Customer Service Operations, PPG Automotive Refinish. The announcement was made by Jeff Oravitz, director of sales, Refinish North America for PPG.
Zelch will be responsible for developing an enhanced customer service model designed to simplify refinish business processes and improve service to PPG customers.
Zelch began his career with PPG in 1990 as a production scheduler in the Industrial Business Unit at the coatings plant in Springdale, Pennsylvania. Since that time he has held various customer service and sales management positions within the Architectural Finishes Bus-iness Unit. His most recent assignment of Manager, Sales Operations North America brought him to the Automotive Refinish group in 2002.
Zelch will maintain an office at Refinish headquarters in Strongsville, Ohio.
Mark Claypool, President and CEO of Mentors At Work, has written the following to the Industry:
For several decades, SkillsUSA, formerly known as VICA, has been sending some of America’s finest to compete against the best in the world in an international skill contest, the Olympics of occupational skill training. TeamUSA, with the financial help of the collision repair industry, will once again have two competitors representing our industry at the World Skills Competition.
In May of 2005, two of America’s finest will travel to Helsinki, Finland to compete against the best in the world, and I, for one, am thrilled that our industry will be represented.
In 2003, I was honored by SkillsUSA to serve as the volunteer leader of TeamUSA. I was disappointed, however, that the collision repair industry was not sending competitors that year. We did have a fine competitor on the automotive service side and he got the silver medal in his competition, but we didn’t have a body tech or painter there to represent us.
Due to the absence of competitors from our field in the 2003 event, upon my return I issued a written challenge to this industry, through the trade press, to never go to the World Skills Competition again without a representative from our industry. Thankfully, the National Auto Body Council (NABC) and the Collision Industry Foundation stepped up to the plate and took on this challenge.
ASE’s Teresa Bolton volunteered to head up the effort, and what a great job she has done. I want to thank each and every one of the companies who contributed, for helping make it possible for the USA to send two competitors to the World Skills Competition this year.
The two competitors in the Collision Repair contests are:
- Bodie Smith of Spanish Fork, UT
Bodie will be competing in the automotive refinishing contest (known as Car Painting in the World Skills Competition). Bodie attended Utah Valley State College. - Nicolaus Ranker from Lakewood, CO
Nicolaus will be competing in Auto Body Repair. Nicolaus attended Warren Occupational Tech Center.
Both Bodie and Nicolaus competed in the SkillsUSA Championships at the national level and earned the privilege of representing us on TeamUSA.
SkillsUSA has asked me if I would, once again, be the TeamUSA Leader and I have agreed to serve in that role. I’m volunteering more than two weeks of my time to take these wonderful young people to the pinnacle event of their lives, and this time, happily, we will have representatives from our industry thanks to the generous support of many in this industry.
The $50,000 required to be represented in this event covers the USA dues to belong to the World Skills Organization, the coordination of sending TeamUSA to the international event, and the travel costs. Selecting the competitors and providing them with additional training isn’t included in this total, either. No one is lining their pockets with this support, it all goes to the important cause of sending America’s finest to compete with the best from around the world.
As an industry, we can now leverage our support of TeamUSA by holding our competitors up for the nation to see. We can tell parents and teachers and principals and guidance counselors and others what our industry is all about, what it takes to be as good as the TeamUSA competitors are what it takes to be an instructor that trains a student to this high level of achievement and more. What great, positive role models these competitors can be for us! We need lots more like them in this industry.
To follow along online with how TeamUSA is doing in Finland, go to www.skillsusa.org.
Northwood University has announced a first-of-its-kind Global Automotive MBA (GAMBA) through the Richard DeVos Graduate School of Management. The announcement was made by Dr. William T. Busby, dean and COO of the graduate school.
GAMBA is targeted toward mid-level executives anywhere in the automotive supply chain from suppliers to manufacturers to dealers, world wide. A unique aspect is that it will not be marketed to individuals but to company partners who will sponsor high potential managers for the program.
The program seeks to admit no more than forty people from different countries and companies for the two-year program. It meets for an intensive week, then students go back to home and jobs for about fourteen weeks during which time work is done via the internet, then the group gathers for a week again, and so forth. The current plan is to meet for the weekly sessions in Michigan, Florida, Texas, Stuttgart, and Shanghai, but that may change with the cohort group if warranted.
International academics from several institutions will help Northwood teach and mentor along with world class business executives from the auto industry worldwide. The object is to create a group of professionally, globally educated, auto skilled leaders who will be fully engaged in the transformation now taking place in the industry.
Northwood President Dr. David E. Fry commented, “The Global Automotive MBA is a one-of-a-kind program using the CASE system whereby students learn the basics of twelve disciplines, then apply them to complex cases designed to use dialogue to stretch application ability to the maximum to identify problems, construct solutions, and highlight the managerial behavior necessary to meet the requirements the constructed solutions demand. This process is rigorous and students will be forever changed by it, by their colleagues, and the locations of the study adventure. Graduates will have a network of international classmates and will be able to break every standard for advancing to highly compensated leadership positions in their companies.”
For additional information regarding the DeVos Global Automotive MBA, contact Dr. William Busby at 800.MBA.9000 or via email at mba@northwood.edu.
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