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Letter to the Editor
This article originally appeared in the July 2007 Issue of INSIGHT
©2007 Collision Repair Industry INSIGHT All Rights Reserved
ITC Denies Keystone Automotive Motion to Reconsider Ford Patents Ruling
BASF Coatings Receives Japan’s First Eco Mark for Automotive Refinish Paint
American Honda Announces Daily Parts Delivery
Global Paint Company Chemspec Acquires Montana Products
Auto Industry Associations Applaud Nevada State Senate Repair Resolution
Massachusetts State Representative Pedone Introduces Right to Repair Act
ICI Rejects Akzo Nobel Takeover Bid
Third Annual Allstate America’s Best Drivers Report Signals Where Safest Drivers in U.S. Cruise
Nationwide Hosts Inaugural Blue Ribbon Advisory Group
Michael Condon Forms Auto Physical Damage Consulting Firm
INDUSTRY UPDATE
Keystone Automotive Industries, Inc. has received notification from the International Trade Commission (ITC) denying the respondents' petition for reconsideration, terminating its investigation, and issuing a general exclusion order.
The general exclusion order prohibits the importation by any importer of aftermarket collision parts that violate any of Ford's seven design patents that were previously determined to be valid.
The final determination by the ITC represents the beginning of the mandatory 60-day Presidential review period. Ultimately, the respondents believe they will need to appeal to the United States Circuit Court of Appeals for the Federal Circuit.
Keystone and the other respondents filed the petition for reconsideration with the Commission one day after the United States Supreme Court's April 30, 2007 decision in KSR International Co. v. Teleflex Inc.
"As we have continuously stated, the industry and consumers greatly benefit from the utilization of quality replacement parts and a competitive marketplace. There are clearly broader issues related to the validity of design patents in the collision industry, and they need to be addressed. The International Trade Commission's determination was not surprising and we intend to vigorously defend our position on behalf of our shareholders and consumers. We look forward to a successful resolution of this matter," said Rick Keister, chief executive officer of Keystone.
Keister indicated that parts currently offered by Keystone related to this ruling represented less than 0.1 percent of the company's total sales in fiscal 2007.
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Eco-friendly products from the R-M(R) automotive refinish coatings system by BASF Coatings have been certified as "Eco Mark Paints" and recognized as suitable for environmental preservation by the Eco Mark Office of the Japan Environment Association. The R-M brand is the first automotive refinish paint in Japan to receive the Eco Mark certification.
The emission of volatile organic compounds (VOC) is used as the measure for Eco Mark certification of automotive refinish paints, and the European VOC emissions regulation standard was adopted as the reference value for certification (enacted by the Japan Environment Association in April 2007). Certification was granted to the R-M brand because it has already cleared the VOC emissions regulation standard in Europe.
“We are very proud of our eco-friendly products certified as Japan's first eco-mark refinish paints,” stated Kazuyuki Nakatsubo, Business Manager, Automotive Refinish and Commercial Transport Coat-ings Solutions, BASF Coatings Japan Ltd. "Boosted by this Eco Mark certification, we intend to position eco-friendly products as the main line of our portfolio. The advantages for all parties are obvious. Consumers can now easily decide on environmentally friendly products. We will further support the widespread use of eco-friendly coatings in the Japanese refinish market."
Although Japan's automotive refinish coatings market is the second largest in the world following the market in the U.S., the dissemination rate of low VOC paint including waterborne paint is 4 percent. Compared to the 48 percent dissemination rate in the automotive OEM coatings industry and to the dissemination rate in all other coatings industry segments, environmental measures are the most delayed in the automotive refinish coatings industry.
New VOC regulations in Japan were enforced on April 1, 2006, but most of the approximately 40,000 bodyshops located throughout Japan are not regulated by law but are the target of voluntary initiatives. Therefore it still falls short of the widespread changeover to waterborne paints.
Japan's Eco Mark program is one of the oldest eco-labeling programs after the Blue Angel and was introduced in 1989 as a certification program that aims to spread information on the environmental effects of products and to encourage consumers to choose environmentally friendly products. The Japan Environment Association, a not-for-profit organization operates the program.
The Eco Mark program is managed in accordance with ISO 14020 and 14024 and currently has 47 product categories and has awarded 5,239 products as of March 31, 2007.
American Honda Motor Company, Inc. has launched its Daily Stock Order (DSO) system, providing Honda and Acura dealers with daily parts delivery. The enhanced service level to dealers is designed to provide superior parts availability across the spectrum of parts consumers including collision repairers and independent mechanical repair shops.
Honda’s Troy, Ohio Parts Center (PC) was the first to launch DSO on November 6, 2006. Subsequent PCs launched the new system averaging about one PC per month. The last three will be Mount Laurel, N.J. launching later in June, followed by Windsor Locks, Conn. in July, and Alpharetta, Ga. in August.
Prior to the roll-out of DSO, dealers typically placed Scheduled Stock Orders on a weekly basis, supplemented with Daily and Urgent parts orders, the latter two incurring freight charges borne by the dealer. Under the new system, dealers can order parts on a daily basis at no additional cost. Depending on a dealer’s proximity to its PC, the majority of dealers can order parts as late as 3:00 in the afternoon and receive them by 7:00 the following morning at no additional cost to the dealer. American Honda calculates that 88 percent of dealers will receive their parts order by 7:00, while up to 95 percent of dealers will receive their order by 9:00 that morning.
As the DSO program is rolled out, dealership parts managers are being trained by American Honda on how to best take advantage of a new parts stocking strategy: reducing inventory depth while increasing breadth to optimize parts availability resulting in higher customer satisfaction for all parts-consuming market sectors.
The new system will inherently provide a better array of parts in stock at the dealer level and will better facilitate the acquisition of those odd or finish parts sometimes needed on collision repair supplements or on a vehicle-down situation for mechanical repairs.
The launch of the new system has been pending for over five years as Honda made internal infrastructure and logistics enhancements, including a $25 million upgrade to its warehouse management system enabling more efficient processing of parts orders. The result is a system-wide parts fill-rate of 98.5 percent.
The DSO roll-out will be completed by summer’s end, encompassing every PC serving all Honda and Acura dealers across the country.
Thirty-one Manheim Total Resource Auctions locations have contributed to the I-CAR Education Foundation $100 per Collision Repair Facility per Year Campaign.
Craig Roberts, Director of Insurance Sales for Manheim Total Resource Auctions, stated, “On behalf of Bill Tied-emann and the Total Resource Auctions team, we are pleased to support the I-CAR Educa-tion Foundation and do our part to invest in the future of the collision industry.”
“The Manheim group has shown a genuine interest in supporting the collision industry’s efforts to bring entry level employees into the industry,” said Jeff Peevy, I-CAR Field Operations Manager. “We truly appreciate their leadership role in this effort.”
Eighty-five percent of every dollar raised from the $100 per Collision Repair Facility per Year Campaign goes back to improve career and technical schools and colleges in the regions where the funds originated. Funds provide curriculum materials and other programs to collision repair instructors, career and technical schools and colleges, and students preparing to enter the collision industry.
Chemspec, one of the largest paint companies in South Africa, has announced the acquisition of Ohio paint manufacturer Montana Products, Inc. Chemspec, which celebrates its fiftieth anniversary this year, has been on an aggressive global expansion drive in recent years. This goal continues with the just announced purchase of the Montana Products manufacturing facility in Ohio.
This facility will manufacture the Metalux2(TM) and Metalux CV(TM) ranges of automotive products, and fulfills Chemspec’s strategy of increasing the company's manufacturing resources in the northern hemisphere. The world-class facility also boasts sophisticated R&D capabilities to complement the group’s strategy of continual innovation. Montana’s existing infrastructure and sales force will also provide a significant asset to the penetration of the Metalux lines in the U.S. market.
Montana’s existing line of automotive refinish products will continue to be offered with new and innovative products to be added.
Chemspec CEO Strath Wood commented, “The purchase of the American facility brings us one step closer to realizing our goal of being a truly global paint company. The U.S. plant will service our rapidly expanding markets in this region – the Metalux ranges are already making inroads into the American, Canadian, Mexican, and Puerto Rican markets, where our quality and value propositions are making a difference to bodyshop profitability.”
Wood further noted, “Although South Africa will always provide a stable base for the Chemspec group, our export markets represent a $250 billion opportunity for our lines. The introduction of the Montana Products business to the group will add significant emphasis to our U.S. market penetration, as well as our technical prowess and product innovation. Expect many great new products in the future.”
The Alliance of Automobile Manufacturers (AAM), the Association of International Automobile Manufacturers (AIAM), and the Automotive Service Association (ASA) have applauded Nevada State Senator Warren Hardy for his efforts to ensure that consumers have access to the vehicle repair facility of their choice. A recently passed resolution, sponsored by Hardy, clarifies the automakers' commitment to providing the same service and training information to independent repairers as made available to franchised dealers.
Dave McCurdy, AAM CEO, stated, "Manufacturers recognize the importance of the independent repair industry and want to make sure that consumers have the option of having their vehicles serviced by the repairer of their choice."
Roughly 75 percent of all post-warranty repairs are performed by independent repair facilities. This resolution ensures the continuing viability of the automotive service industry and eliminates the need for current and future legislation.
Mike Stanton, AIAM president and CEO, said, "We believe our customers should seek vehicle repair services wherever reliable and first-rate service is offered. Automakers work very hard to make high-quality cars and trucks, and their reputations could be jeopardized if customers felt they could not go to the service and repair store of their choosing."
To help resolve service and repair related issues, Nevada repairers are encouraged to work through the National Automotive Service Task Force (NASTF). NASTF serves as a forum to identify and resolve gaps involving motor vehicle repair information and tools. This national, voluntary solution has proven to be an effective resource for repairers and manufacturers alike, and over the course of the past six years, has managed to develop an effective forum to point independent repairers to the information and tools they need and to provide a mechanism to report and resolve the few gaps that remain.
Ron Pyle, ASA president and chief staff executive, added,"ASA is proud of the progress made for independent repairers relative to service, training and tool information. The 2002 ASA-Automaker agreement provides our industry a model for information that will ensure repairers the necessary information for the foreseeable future. This model is indicative of the industry's ability to resolve many important issues in the marketplace without government intervention when the automotive industry works together."
This resolution underscores the longstanding and important role that independent repair facilities play in the automotive industry.
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Massachusetts’ motoring consumers continue to encoun-ter the growing problem of the inability to have their 1994 and newer vehicles repaired at the shop of their choice. Due to computers in the vehicles that contain repair information codes on vital systems such as brakes, steering mechanisms, tire pressure, batteries, electronics, and more, consumers are frequently forced back to the dealerships for complete repairs rather than their independent shop of choice.
To protect consumers' rights and ensure that vehicles remain as safe as possible, Representative Vincent A. Pedone (D- Worcester) has introduced House Bill 296, The Motor Vehicle Owners' Right to Repair Act. This pro-consumer, pro-small business, pro-safety legislation allows motorists to choose where, how, and by whom to have their vehicles repaired, ensuring competitive pricing, quick, affordable repairs, and cleaner-running vehicles.
Anne Mack, of Harding Tire Company in Worcester, has stated that the lack of information given to tire dealers by automotive manufacturers is a deliberate tactic to eliminate some repair shops and forces consumers to have virtually no choice in decision making regarding repairs to their vehicles.
“Automobile manufacturers have created an obvious unfair advantage for new car dealerships, and it is time for the playing field to be leveled,” she said.
Stan Morin, director of the Campaign for the Right to Repair Act in Massachusetts, said, "Representative Pedone's legislation is paramount in protecting consumers from the road blocks placed in the way of repairing their vehicles."
The Right to Repair Act is supported by the Alliance of Automotive Service Providers of Massachusetts (AASP-MA/RI), the American Automobile Association (AAA), the Nation-al Federation of Independent Business (NFIB), RetireSafe (which represents 400,000 seniors nationwide), and the National Grange.
Imperial Chemical Industries PLC (ICI), in the United Kingdom, rejected an informal 7.2 billion pound ($14.2 billion) takeover bid by Dutch chemical giant Akzo Nobel NV.
ICI's per share stock price on the London Stock Exchange rose more than 16 percent as analysts saw higher bids as a possibility.
The ICI board unanimously rejected the approach noting that the proposed bid undervalued ICI.
Akzo Nobel will be selling its Organon BioSciences subsidiary by the end of 2007, and the 11 billion euros ($14.8 billion) that the deal is expected to generate will give Akzo plenty of cash for further acquisitions in paints and coatings.
It was no fluke last year - residents of Sioux Falls, South Dakota have maintained their status as the safest drivers in the U.S., according to the third annual "Allstate America's Best Drivers Report(TM)." The average driver in Sioux Falls will experience an auto collision every 13.7 years. Compared to the national likelihood of a driver experiencing a crash every 10 years, Sioux Falls motorists are 27 percent less likely to get into a car accident.
"The fact that Sioux Falls drivers retained the standing as America's safest drivers for two years in a row is an accomplishment for which all Sioux Falls residents should be proud," said Sioux Falls Mayor Dave Munson. "The quality of our community driver education programs combined with the careful consideration of our traffic engineering department goes a long way to make our roadways safe for everyone."
Parked in the runner-up position for the second consecutive year is Fort Collins, Colorado. Motorists in Fort Collins experience a car crash every 13.6 years, on average.
For the past three years, Allstate actuaries have conducted an in-depth analysis of company claims data to determine the likelihood of drivers in America's 200 largest cities to experience a vehicle collision compared to the national average. Allstate's auto policies represent about 12 percent of the U.S. population, making this report a realistic snapshot of what is happening on America's roadways.
"The primary purpose of this study is to elevate the safe driving discussion by sharing Allstate's report regarding motorists' driving habits with the public. We hope that our findings can help shed light on communities with drivers that could be more tolerant and attentive behind the wheel as well as provide a platform to recognize cities with drivers that have collectively improved over time," noted Mike Roche, senior vice president, Allstate's Claim Organization.
This year, Allstate's best drivers report delivered a new category recognizing "America's Most Improved-Motorists." Allstate compared all three years of report data to identify cities with the most-improved drivers since 2005. A flock of Michigan cities landed in the top five slots, these include: Sterling Heights, Detroit, Grand Rapids, Warren, and, in first place, Flint. With remarkable progress, Flint improved its average years between accidents from 9.8 years in 2005 to 13.4 years or 25.4 percent better than the national medium in 2007, and leaped from the number 73 spot in 2005 to number three overall in 2007 in three years.
For the third consecutive year, drivers in Phoenix, Arizona are the safest big city commuters according to Allstate. Phoenix motorists can expect to bump into another vehicle on the roadway every 9.8 years - slightly more frequently than the national average.
Milwaukee drivers topped the list of safest drivers in mid-sized cities with populations between 500,000 to 1,000,000 residents. This is the third consecutive year that the Wisconsin city has claimed this honor. Milwaukee drivers experience a car accident once every 12.7 years on average, 21 percent less likely than the average American driver.
Allstate pumped out free gas on June 14 to reward safe driving habits in Sioux Falls, to reward the 2007 Best Drivers, and in the Motor City metro area to congratulate the 2007 Most-Improved Motorists. The mayor of Sioux Falls and other city officials joined local Allstate agents in Sioux Falls and in winning Michigan hometowns to pump gasoline for happy commuters - delivering some unexpected relief from near record high gas prices.
Nationwide Mutual Insurance Company recently hosted its inaugural Blue Ribbon Advisory Group, comprised of 21 Blue Ribbon Repair Facilities nominated by Nationwide’s Field Operations. The 21 facilities, representing states and regions across the country, met at Nationwide’s Columbus, Ohio headquarters.
“Bringing these individual facilities together sets precedent for the industry,” said Jim Gadberry Nationwide director of Blue Ribbon repair services. “It was a unique opportunity to create healthy dialogue around current processes and procedures as well as work together to determine how we can best serve the customer.”
Acknowledging there are three parties involved during the repair process – the insurer, repair shop and the customer– the unprecedented meeting brought two of the groups together to discuss the process of working together and potential opportunities to better the experience for the customer.
“The advisory meeting was instrumental in getting to the next level of openness,” said Jeff McFadden of Service King Collision Repair Centers. “Nationwide organizing a meeting of this magnitude, with all key decision makers in attendance, was key to making important suggestions for changes within the Blue Ribbon Program. All cards were on the table in this meeting between all parties, which was fundamental in recognizing everyone’s needs. With this team approach it’s a win-win for all parties.”
The Blue Ribbon program continues to be an integral part of the Nationwide claims service. Nationwide provides a written guarantee on all repairs for as long as the customer owns the vehicle and will not compensate the repair facility until the services meet the customer’s standards, when the car is fixed at a Blue Ribbon repair shop.
“Nationwide’s Blue Ribbon Claims Service is committed to ensuring the very best for our valued customers,” added Terry Fortner, Nationwide associate vice president of Claims. “We maintain a vast network of collision repair providers – prescreened, pre-qualified, and endorsed by Nationwide. We also monitor them, ensuring customers are getting the service they deserve.”
Nationwide’s Blue Ribbon program currently consists of approximately 2,400 Repair Facilities across the country.
Michael Condon, a 33 year industry veteran, has established Condon Consulting LLC, a consulting firm focused on Auto Physical Damage and servicing the collision repair inter-industry.
Condon founded his firm following a highly successful career with Allstate Insurance Company, the second largest P&C insurer in the United States. Condon played a key role in the development of Allstate’s strategic, tactical, and operational APD initiatives during his 20+ years in its Home Office Claims organization. In addition, Condon has been an active participant in numerous industry organizations, including CIC, CIECA, NACE and various advisory councils.
Known for his thoughtful and balanced approach to inter-industry issues, Condon enjoys an unusual combination of business, technology, and supplier relations expertise – and how the three are likely to shape the industry over the coming years. Services offered to insurers, repairers, and suppliers by Condon Consulting LLC include:
- Strategic Planning & Thought Leadership
- APD Business Architecture & Technology Assessments
- Management Information – Design & Implementation
- Executive / Key Manager Mentoring
- Customer Relationship Management
- Process Development & Implementation
- Process Compliance Assessments
- DRP Programs – Theory, Design, Structure & Performance Assessments
- Special Project/Pilot Design & Management
- Speaking Engagements & Meeting Facilitation.
For further information visit www.condonconsulting.net online or contact Mike Condon by phone at 630-841-7399.
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