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This article originally appeared in the July 2005 Issue of INSIGHT
©2005 Collision Repair Industry INSIGHT All Rights Reserved

Articles

Allstate Requires Adjusters to Obtain I-CAR Platinum Designation

Mitchell Publishes P-Pages Online

President and COO Scaminace Leaving Sherwin-Williams

Insurance Auto Auctions Announces Acquisition in PA and Closing of Company Purchase by Kelso & Co

Keystone Automotive Industries Q4 Net Sales Up But Net Income Down

DuPont Performance Alliance Offers Continuing Education Vouchers for Insurers

Progressive Files Suit Against Operators of Philadelphia Chiropractic Clinic

DCR Systems Teams with Classic Auto Group to Co-Brand Collision Repair Campus in Ohio

Five Major Paint Companies Show Support of NACE

Ford CCRN Program Now in 30 Major Markets

BASF Tech Support Center Exceeds One Million Hours of Safe Operation

INDUSTRY UPDATE

Allstate Requires Adjusters to Obtain I-CAR Platinum Designation

 

Allstate has announced that the insurer is now requiring its auto adjusters who write and re-inspect estimates to be trained in the I-CAR Platinum training program that provides enhanced technical knowledge of evolving repair technologies and processes. Allstate is the first major insurer to require this designation, which it hopes will help drive strong relationships with customers and help ensure their satisfaction with the company.

"We're requiring our employees who write auto estimates and re-inspect auto losses to have the I-CAR Platinum designation," said Bill Cox, Allstate strategy director for claims. "Allstate reviewed its previous training regimen and concluded it was on par with competitors. However, through research and tests, Allstate recognized that a requirement of this type helps our adjusters better serve customers via a faster, more efficient and hassle-free claim process.

"Allstate really cares about people. Our customers need to receive safe, high-quality repairs, and I-CAR Platinum training will help ensure that they do," Cox concluded.

"In addition," said Pat McCarthy, Allstate training director for claims, "auto manufacturers continue making quantum leaps in technologies, material applications and engineering concepts. I-CAR Platinum training helps ensure that Allstate employees are fluent in and knowledgeable about these rapid changes as they work with the collision repairers."

The I-CAR Platinum designation requires that employees complete a rigorous curriculum that focuses on current and changing repair technologies and processes, enhancing the accuracy of repair estimates for damaged vehicles and helping ensure the greatest possible estimate accuracy.

"We're always seeking improvements that make us smarter and more efficient about doing business," said McCarthy, "because that makes Allstate easier to do business with - not only for customers, but all parties involved in a claim."

During testing, from March through May 2005, Allstate employees completed 350 I-CAR programs and achieved a 99.4 percent average pass rate - approximately 15 percent higher than the industry's average pass rate. The company's goal is to have all of its 2,500 auto adjusters who regularly write auto estimates and re-inspect auto losses to complete the I-CAR Platinum designation curriculum within the next 24 to 36 months. Twenty-five percent of Allstate's adjusters currently hold the designation. All new auto adjusters will be required to attain the I-CAR Platinum designation within 24 months of hire.

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Mitchell Publishes P-Pages Online

 

Mitchell International, Inc. has announced procedural pages (P-pages) for its Collision Estimating Guides(TM) and Assembly Time Guides(TM) (CEG & ATG) are now available online at www.mitchell.com.

Publication is in direct response to recommendations issued by the Collision Industry Conference (CIC) Task Force during its April 2005 meeting in Charlotte, NC. Without access to the P-pages, non-Mitchell-equipped shops could not easily verify Mitchell-generated estimates received from insurance partners. The accuracy of Mitchell estimates is now easily verified, requiring only basic Internet access. Within Mitchell's website, P-pages are located on Product pages such as UltraMate(R) and UltraMate Premier Suite(R), and also in the Customer Support area. Spanish-language versions of the CEG P-pages are also available. Mitchell has enabled users to open, save, and print the pages directly from the website.

"By adding this information to the Mitchell Website, we hope to assist repairers without a direct relationship with Mitchell save time in verifying the estimates they receive are accurate and fair," said Tom Fleming, Vice President of Database Development. "The CIC Task Force helped open our eyes to the needs of these shops and we wanted to respond quickly and support the initiative. Helping the collision repair industry improve their estimating process is a top priority for Mitchell... regardless of what estimating system they use."

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President and COO Scaminace Leaving Sherwin-Williams

 

The Sherwin-Williams Company has announced that Joseph M. Scaminace, President and Chief Operating Officer, is leaving the company and resigning from the Board of Directors effective immediately. Scaminace has accepted the position of President and Chief Executive Officer of OM Group, a cobalt and nickel refiner.

Commenting on the news, Christopher M. Connor, Chairman and Chief Executive Officer, said, "We appreciate Joe's many contributions to our company over his 22 year career at Sherwin-Williams. Our customers, employees and shareholders have benefited from his good work and leadership. We wish him well with his new endeavor."

Effective with this change, Connor will assume the day-to-day management of the operating divisions of the company and is expected to add the title of President upon approval of the Board of Directors.

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Insurance Auto Auctions, Inc., a provider of automotive salvage auction and claims processing services in the United States, has announced that it has received the shareholder votes necessary to complete the acquisition of IAA by an affiliate of Kelso & Company, a New York based private equity firm, for approximately $400 million. As previously announced, IAA's stockholders will receive $28.25 per share in cash as a result of the transaction.

Tom O'Brien, President and Chief Executive Officer of IAA, said, "IAA has accomplished many of its financial, operational and strategic goals over the past few years. Looking ahead, we will continue to focus on improving the products we offer and the level of service we provide to both our insurance company suppliers and our growing network of buyers."

Michael B. Goldberg, Managing Director of Kelso & Company, said, "We are pleased to have the opportunity to invest in IAA. IAA has established itself as a leader in the automotive salvage industry, and we will support IAA's growth objectives, including the expansion of its geographic footprint, in the years ahead."

In other company news, IAA has acquired Insurance Recovery Center, Inc. located just outside Altoona, Pennsylvania. This 15-acre facility represents IAA's third location in the state and will leverage its existing locations in both Pittsburgh and Philadelphia.

"One of our ongoing endeavors at IAA has been to expand our footprint in the northeastern United States, and this acquisition aligns perfectly with that goal," said O'Brien. "As we identify opportunities such as this we will take action where we can leverage existing facilities to add new buyers to our growing network. We will continue to identify additional areas in which to supplement our current presence in order to expand our geographic reach."

Insurance Auto Auctions, Inc., founded in 1982, currently has 80 sites across the United States.

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Keystone Automotive Industries, Inc. has reported results for its fourth quarter and fiscal year ended April 1, 2005.

Net income for the fiscal fourth quarter was $3.8 million, or $0.24 per diluted share, compared with $6.3 million, or $0.41 per diluted share, a year ago. Net sales for the fiscal fourth quarter increased 8.9 percent to a record $152.5 million compared with $140.0 million last year.

For the full fiscal year, net income was $14.3 million, or $0.90 per diluted share, compared with $17.7 million, or $1.16 per diluted share, a year earlier. Net sales for the fiscal year climbed 11.3 percent to $557.7 million from $501.1 million in fiscal 2004. Same store sales growth for the fourth quarter and fiscal year were 7.6 percent and 6.4 percent, respectively.

Results for the fourth quarter and the fiscal year were negatively impacted by a number of factors. Lease expense of approximately $1.2 million was booked as a result of a SFAS No. 13 adjustment which requires straight-line lease expense over the term of a lease when a lease contains fixed escalation clauses. Of this amount, $900,000 is related to prior fiscal years.

As previously announced, the company wrote off $700,000 of wheel inventory in the quarter in addition to the $600,000 write-off during the third fiscal quarter.

Additional expenses included Sarbanes-Oxley compliance costs of $350,000 for the quarter and $565,000 for the year.

Other expenses totaling approximately $850,000 which were booked in the fourth quarter were accounts receivable write-offs, the pending sale of the Tijuana, Mexico facility, a sales tax audit and the accrual of additional fuel costs and performance bonuses.

The company also noted that fuel expenses in the fourth quarter were $700,000 higher compared with the same quarter a year earlier and $2.2 million higher for the full fiscal year.

"Fiscal 2005 was a transition year for the company. With that behind us, we are moving forward with enthusiasm. The market dynamics of the aftermarket collision replacement parts business remain strong and we have worked diligently this year to position Keystone to take full advantage of the anticipated growth which will come from greater use of aftermarket parts in the repair of damaged vehicles. Body shops and insurance companies continue to seek alternative products for automotive collision repair and Keystone's reputation and distribution network are major competitive strengths in this industry," said Richard L. Keister, president and chief executive officer.

"In the latter half of fiscal 2005, we put a lot of effort into making certain that our inside and outside sales representatives, general managers, regional managers, financial staff and the executive team were all in alignment and committed to increasing the leverage of Keystone's market position as the leader in the industry for fiscal 2006 and beyond. While the year-over-year profit numbers do not show improvement due primarily to the factors discussed above, I'm very proud of what we accomplished this past year and extremely optimistic about our future," Keister said.

He indicated that management is focusing on several key initiatives in fiscal 2006, including improving inventory turns, enhancing the fulfillment rate to our customers, improved gross margins and achieving a high, single-digit organic growth rate. He added that Keystone converted 61 locations to its new enterprise management systems during fiscal 2005.

"With the exception of our acquisition in Maine and the company's Canadian operations, all of our locations are now on a common system. We will continue to fine-tune and develop the system to maximize its utility. In addition, we are currently working on new IT initiatives which will add value to our business -- including a B2B solution for the collision repair industry," Keister commented.

Keister also noted that in April 2005, the company began selling the headlights for the Ford Taurus and Pontiac Grand Am which it had discontinued selling in September 2004.

"We have documented that these lights meet federal standards as tested by an independent laboratory also used by NHTSA. While several insurance companies continue to suspend the use of aftermarket lighting products, the lighting manufacturers and CAPA are working together to allow CAPA certification of the most popular lighting products. The company is optimistic that CAPA certified lights will be introduced into the market place before the end of the current fiscal year and that insurance companies will again specify aftermarket lighting in the repair of vehicles," Keister concluded.

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DuPont Performance Alliance shops will now be able to provide insurance agents with training vouchers for Continu-ing Education (CE) credits.

In most states, insurance agents are required to accrue a number of CE credits annually (the exact number and timing varies by state) to maintain their license to sell auto insurance.

Performance Alliance has designed a custom branded Internet-based system that offers online CE courses that are approved in most states. Performance Alliance shops can purchase CE training vouchers to present to agents. The agent then logs onto the Performance Alliance insurance and consumer website and enters the code on the voucher. Once the agent accesses the online course, the website is branded with the body shop's logo and will remain on the screen while the agent completes his/her training.

“This is an excellent way to assist our Performance Alliance shops in developing a relationship with their local agents,” said Troy Weaver, manager of the Performance Alliance. “And it’s great advertising for the shop.”

The voucher offering is the latest addition to Performance Alliance, DuPont’s network of collision repair centers, designed to increase referrals from consumers, insurers and fleet companies that was introduced in 2003.

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Several subsidiaries of The Progressive Group of Insurance Companies have filed suit against the owners and operators of All-Care Chiropractic P.C., a Philadelphia-based medical provider that the companies allege has been carrying out schemes in Pennsylvania designed to defraud them since 2001.

The suit, filed in Philadelphia federal court, alleges that All-Care owners and operators, Richard Walinsky and Eileen Means, conspired to commit fraud by, among other things, charging for medical services never performed and by administering, and billing for, unnecessary and excessive treatments. The suit also alleges that the defendants used improperly licensed and unsupervised personnel for in-home patient visits.

In August 2004 the Pennsylvania Attorney General's Office announced that 23 people had been arrested in connection with the insurance fraud schemes, including Walinsky and Means.

According to the suit, the defendants produced and submitted to Progressive fraudulent medical reports and bills that did not accurately reflect the treatment provided to patients. Allegedly the defendants misrepresented the location of the treatment in bills and records to disguise the fact that unsupervised treatment was performed off premises by support personnel, a violation of state law.

"The type of abuse alleged in the complaint is unconscionable," said Kurt Lloyd, special investigations manager, Progressive. "We have an obligation to fight fraud to keep the cost of insurance down for everyone. If we don't, premiums can skyrocket and we can all become victimized by fraud."

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Mentor, Ohio-based DCR Systems has reached an agreement with Classic Auto Group to build and co-brand an auto collision repair campus in Mentor on more than six acres of land co-owed by the two companies. The Classic Auto Group-DCR Systems accident repair center will employ 75 persons.

Initial plans call for three operating "production cells" to be built in an existing warehouse facility in Mentor. The facility build-out is slated to begin in 30 days and should be completed by year end, according to Bob Ringo, chief operating officer of Classic Auto Group. The shops will be designed, staffed, equipped, tooled and managed by DCR Systems under the Classic Auto Group-DCR Systems moniker.

The facilities will utilize DCR's patent-pending process using the latest advancements in collision repair techniques, tooling, equipment, and process-driven design, according to Michael Giarrizzo, Jr., president and CEO of DCR Systems. The process employs "lean manufacturing" principles in its approach to collision repair that uses task-specific, highly trained technicians working with cutting-edge equipment and tooling. This model is designed to streamline workflow and enable the repair operation to become highly dependable and offer consistency in guaranteed quality, customer service, and on-time vehicle delivery.

"It all boils down to a fundamentally better way of repairing an automobile," commented Giarrizzo.

The partnership brings together two organizations well known for their customer-centric business models, according to Giarrizzo.

"Classic Auto Group is often referred to as the 'Nordstrom's' of auto dealerships in their core philosophy of taking care of customers," Giarrizzo noted. "We are so proud to be associated with Jim Brown and his tremendous organization, and our shared commitment to customer care has resulted in an initial bond that has already facilitated a very effective and efficient working relationship."

Lauren Angie, chief operating officer for DCR, commented, "There's an immediate synergy between DCR and Classic that will have an immediate impact on the success of this venture. This solidifies the formation of a winning team that will continue to provide top-tier service for our customers."

Based in Northeast Ohio, Classic Auto Group is ranked among the top dealership groups in the nation. Founded in 1979 by company president James A. Brown, Classic began as a single Chevrolet dealership in Mentor, Ohio, and has grown to include 24 franchises at 15 locations throughout Northeast Ohio, selling over 19 major auto nameplates.

Commenting on the co-branding arrangement with DCR Systems, Ringo pointed out that as Classic expands its brand offerings, and subsequently its customer base, there is a need to respond to increasing demands on the collision repair side of the business.

"Not only can we better answer the demand, but we've aligned with a company that offers a better way to get the job done," Ringo said. "DCR Systems represents the future of collision repair. They've developed such a modern, progressive way of doing business, it puts us into a better situation than most dealers in providing quality collision repair services for our customers."

DCR Systems was founded by the Giarrizzo family, previously operators of Cleveland-based JSI Collision Centers which they established in 1946. The four-location business was acquired in 1999 by Sterling Autobody Centers and four years later grew to 39 locations. In 2001, Allstate acquired Sterling, and Giarrizzo became Chief Operating Officer for the Sterling division. Under his lead the company established an additional 21 greenfield stores in just two years.

Giarrizzo subsequently left his position in 2003 to start DCR Systems with a team and a vision of pioneering a needed change in the collision repair industry. The business model offers dealers ancillary customer care services.

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The International Autobody Congress & Exposition (NACE) has announced that five major paint companies will be at NACE 2005 and demonstrate their support by sponsoring special events, event transportation, and numerous Conference sessions. The list of majors includes: Akzo Nobel, BASF, DuPont Performance Coatings, Sherwin-Williams Automotive Finishes Corp., and Valspar.

Valspar will have a large presence on the trade show floor and will sponsor the shuttle service operating between NACE and SEMA. Valspar celebrates the company’s 200th Anniversary this year, and House of Kolor, a division of Valspar, celebrates its 50th Anniversary. Valspar will be offering two educational sessions specifically designed for its House of Kolor and DeBeer lines.

Shelly Cullen, Global Marketing Manager stated, “The two educational sessions offered by Valspar will showcase two of our many success stories. Jon Kosmoski, world-renowned founder of House of Kolor, will deliver one of the most energetic and exciting sessions about Kustom Painting, and Brian Lynch, Valspar’s North American Training Manager, will present the latest European addition to the Valspar family, DeBeer Car Refinishes, with emphasis on technical and application techniques.”

Sherwin-Williams Automotive Finishes Corp. will be sponsoring the Welcome Reception on Wednesday evening (Nov. 2) at the trendy House of Blues, located within The Mandalay Bay Resort & Casino. In addition to offering four sessions on a variety of collision repair topics, the company will present two user group meetings specifically for its Sherwin-Williams and Martin Senour brand customers.

DuPont Performance Coatings, sponsor of the Opening General Session featuring Rudy Giuliani as keynote on Thursday morning (Nov. 3), will offer six training sessions including “Implementing Effective Standard Operating Procedures (SOPs),” “Documentation: Become an Estimation Sensation” and “The Value of Color Science and Color Matching.”

BASF will offer six sessions that cover Management, Jobber, and Sales & Marketing issues, including “Paint Shop Productivity,” “Refinish Principles for Insurers,” plus a specialized session on its Carizzma brand. BASF will also be the exclusive sponsor of the official NACE Hotel Shuttle Service that provides complimentary round-trip transportation from all official NACE hotel properties and The Mandalay Bay Convention Center.

Akzo Nobel will sponsor Friday’s ‘Call to Action!’ Luncheon Program (Nov. 4), celebrating and challenging the entire collision repair industry. The comany will also deliver six dynamic sessions addressing industry-wide management issues, plus serve as the exclusive provider of insurance-specific education.

“The support we’re getting from these companies is outstanding and very much appreciated,” commented Ron Pyle, ASA president and chief staff executive. “The high profile they possess within the industry is important, and their backing of NACE and involvement in the Conference program is invaluable.”

NACE, the international collision repair event, annually draws an attendance of 30,000+ from around the globe. It features a variety of educational sessions addressing the needs of all industry segments, as well as an Exposition with approximately 500+ exhibiting companies.

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Ford Motor Company this summer and fall is enrolling Oregon, California, Wisconsin, Illinois, and Massachusetts dealerships into its Certified Collision Repair Network (CCRN), which will bring to 30 the total number of major markets in which the network is established.

The CCRN Program was initially rolled out in test markets in 2002, and has major penetration in Florida, Michigan, Texas, and Ohio. The national launch of the program in November 2003, after an impressive test year, has been well-received.

At a recent meeting for Oregon dealers, Ford's Dan Townsend said the goal of CCRN, launched in November of 2003, is to improve the quantity and quality of collision repair jobs moving through Ford dealership body shops and to improve customer satisfaction for both vehicle-owners and insurers. By helping its dealers capture more of the collision repair market. He said Ford also believes it will sell more OEM parts.

Of about 1,200 Ford-Lincoln-Mercury dealerships that have body shops, about 110 are currently enrolled in CCRN. Ford expects that number to grow to 150 to 200 - in an estimated 33 markets - by early next year.

"That would be very powerful," said Townsend, who manages the CCRN program. "The size and the scope of the network make it very appealing to insurance companies."

He described several success stories in which the CCRN program helped dealerships either gain new direct repair programs or move up in an existing tiered program to gain a higher percentage of the program's referrals.

Rather than a shotgun approach to the roll-out of CCRN, Ford has chosen to launch it on a market-by-market basis to bring on multiple dealers in a market at the same time to better attract the attention and interest of insurers.

In order to qualify for the CCRN, a dealership shop must complete a 10-week training and implementation process followed by an annual independent third-party onsite inspection of estimating procedures, repair quality, equipment availability, training levels, mandatory government licenses and customer satisfaction data. Equipment requirements include having an electronic frame measuring system. In-process vehicles are also inspected in detail during the certification process.

The program also has requirements for the attractiveness of the customer waiting area, lighting levels throughout the shop, and ongoing customer satisfaction measurement. Overall, Townsend said, the program requirements are designed to ensure that participating dealers are capable of complying with or exceeding any insurer's direct repair program requirements as well as meeting the needs and expectations of the dealer's customer base.

One key element of the CCRN program is a unique quality control program using an 8-point inspection and quality evaluation during the repair process. The process helped one CCRN dealer complete 40 cars in a row for Progressive without a single comeback, Townsend said.

Participating dealers receive a variety of performance reports, comparisons to similar sized shops, and extensive marketing materials and support. The reports generated through the quality control program, for example, are a powerful marketing tool of their own, Townsend said.

Enrollment in the program costs the dealer $12,000 to cover initial training and inspections, although the fee is reduced to $9,500 when four or more dealers in a market enroll. The annual recertification fee is $3,000.

The program is currently open only to shops owned by franchised dealers, not independent shops. A search engine to find current Ford CCRN shops can be found at the CCRN website.

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BASF’s Coatings Technical Support Center in Whitehouse, Ohio, recently marked more than one million hours of operation without a recordable injury or work-related illness.

According to Ken Perry, Technical Director, BASF Automotive Refinish, one million hours represents more than three and a half years of continuous operation at the site, which employs approximately 140 people.

“This is a remarkable achievement by our employees, and it shows what can be accomplished when all employees take personal responsibility for safety in everything they do,” said Perry. “Reaching this goal and maintaining it requires a thorough understanding of the importance of safe practices, a consistent safety-first attitude and constant vigilance in everything we do. It also requires close teamwork, with all employees looking out for each other and being constantly alert to the potential for injury. The kind of commitment to excellence and attention to detail that has enabled us to exceed a million hours of safe operation is also the kind of approach that we bring to everything else we do at this site.”

“Our Whitehouse staff can take great pride in attaining this milestone of more than one million hours without an injury or a work-related illness,” said Rainer Blair, Group Vice President for BASF’s coatings businesses in North America. “The site has an outstanding safety record, and this singular accomplishment offers further evidence of a deep and unwavering commitment to safety on the part of every member of the Whitehouse team.”

The Coatings Technical Support Center is the R&D site for BASF’s Automotive Refinish Coatings Solutions business in North America. The site also houses color information laboratories, a state-of-the-art refinish Application and Training Center, and BASF’s North American Customer Service Center that supports BASF’s refinish and industrial coatings customers in North America.

The Whitehouse facility has earned numerous awards, including the Ohio Chemistry Technology Council’s Award for Excellence in Responsible Care(R) and the Council’s Excellence in Environmental, Health, Safety and Security Performance Award.

BASF Launches Enhanced Glasurit Website

BASF has introduced an enhanced website for its premium Glasurit refinish systems. The website offers more information, including the interactive Glasurit Resource Center.

The new Glasurit website can be accessed at www.basfrefinish.com. The website offers a wide range of technical information and marketing materials for distributors of BASF refinish products and for end-users of Glasurit systems and tools.

One of the most important additions to the Glasurit website is the innovative Glasurit Resource Center, a newly improved interactive information and marketing tool. The Resource Center is also available as a CD-ROM and can be ordered via the BASF Refinish eStore, which can be entered through a link on the home page.

For BASF distributors, the Glasurit Resource Center provides all the technical and marketing information they need to sell and support Glasurit systems. For body shops, the tool is a comprehensive source of information to help them use Glasurit products most efficiently and to help them improve their productivity and profitability.

“One of our main objectives is to help our customers be more successful,” said Anthony Dyach, Glasurit Product Manager for BASF’s Automotive Refinish business in North America. “Glasurit products, and value-added offerings such as our training programs and the Small Damage Repair System, have a proven record of helping our customers succeed through improved productivity, lower total cost and customer satisfaction.”

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