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Letter to the Editor
This article originally appeared in the January 2008 Issue of INSIGHT
©2008 Collision Repair Industry INSIGHT All Rights Reserved
CIECA Publishes First Subrogation Message Standard
AIG Fined $20,000 by Minnesota Department of Commerce
Archinaco Rejoins PPG to Head Auto Glass and Services
Paint Companies File Response to Rhode Island’s Lead Paint Clean-Up Plan
Seven Schools Benefit from Allstate and Sterling Autobody Contribution for I-CAR Live Curriculum
Doug Reinke Named ASE/PPG Master Refinish Technician of 2007
Original Fit Opens New Warehouse in Detroit
ASA Offers Customizable Profit Calculator to Members
True2Form Opens Facility Number 40
NABC Invited Back to Speak at Arizona State University
House Committee Approves Child Safety Act Requiring New Vehicle Safety Equipment
INDUSTRY UPDATE
The Collision Industry Electronic Commerce Association (CIECA) has completed and published its eighth BMS Standards Release, 2007R2. Part of this new Release is the Subrogation Assignment message.
“Development of the Subrogation Assignment is a milestone for CIECA. It represents the first standard developed as a direct result of CIECA Strategic Initiatives. Until the 2007R2, the BMS standards addressed collision industry issues solely. One of the CIECA Strategic Initiatives is to expand into other claims processing areas,” said Fred Iantorno, CIECA’s Executive Director.
“Subrogation is tangential to Collision claims processing. The information and data collected during the repair process, such as Estimates and Invoices, are part of subrogation documentation. Addressing electronic exchange message standards was a natural extension of the work CIECA already has completed,” added Iantorno.
“The Subrogation Assignment Message addresses an important industry need: to enable standardized electronic interactions between carriers and vendors. This will save time and expense for all involved parties and ultimately improve policyholder service,” said Alan Aleia, CIECA Subrogation Committee Chair and independent consultant to the insurance industry on subrogation and claim automation matters.
Aleia added, “Our work group is composed of a cross section of industry participants whose efforts and contributions were vital to the successful completion the Subrogation Assignment Message. This is the first of several messages our work group has planned for subrogation transactions.”
CIECA publishes and provides two BMS releases annually. New messages are added and existing messages are enhanced as a direct result of the changing needs of the industry. CIECA also publishes and provides a robust Road Map of its BMS messages program, available on the CIECA website.
More information about CIECA and its standards can be viewed at its website: www.cieca.com.
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Minnesota Commissioner of Commerce Glenn Wilson recently issued a Consent Order to AIG Personal Lines Claims alleging that the company violated Minnesota Statute # 72A.201, subd. 6(2)(a) (2006). AIG was ordered to pay a civil penalty of $20,000 and to cease and desist from any further violations of the Statute.
The Order was issued based on allegations that AIG paid an alleged “prevailing rate” to Minnesota body shops that was less than the total charged by the body shops for certain repair costs and this practice resulted in certain insureds or claimants paying claim amounts that should have been paid by the insurer. The Order cited Minn. Stat. # 72A.201, subd. 6(2)(a) (2006), which requires insurers “…to pay all costs for the satisfactory repair to the insured’s or claimant’s vehicles.”
AIG agreed to informal disposition of the matter without a hearing and accepted the terms of the Consent Order.
During the past year, the Alliance of Automotive Service Providers, Minnesota (AASP-MN) has submitted dozens of unfair claims practice reports to the Minnesota Department of Commerce, many of which documented AIG’s “short paying” the hourly rate for paint and materials.
The association has continually encouraged its members to document cases of improper insurance company practices. In the case of short pays, AASP-MN has urged its members to stop absorbing these costs and to inform their customers that they will be responsible for their insurance companies’ failure to pay reasonable costs.
“When these practices result in harm to consumers, regulatory agencies are much more likely to intervene and take corrective action,” said Judell Anderson, AASP-MN Executive Director. “Unfortunately, in an effort to protect their customers, shops inadvertently perpetuate insurer practices that are detrimental to the repair industry and consumers in the long run. This is an example of how the repair industry can make a difference – provided they’re willing to take the time to document instances of insurer misconduct.”
The Commissioner also ordered AIG to provide reimbursement to insureds or claimants referenced in the Order for the amount they were required to pay out-of-pocket to body shops.
PPG Industries has announced that Frank A. Archinaco has rejoined the company as president and chief executive officer of the company’s auto glass and services businesses.
“Frank’s deep experience in the automotive glass business will serve us well as we continue to explore strategic alternatives for this business,” said Charles E. Bunch, PPG chairman and chief executive officer.
Archinaco was appointed vice president, automotive original equipment manufacture (OEM) glass, in 1986; assumed responsibility for PPG’s total glass business in 1994; and was elected executive vice president in 1997. He retired from PPG as executive vice president for glass and chemicals in 2002.
In December, PPG announced it had been notified that affiliates of Platinum Equity, Beverly Hills, Calif., intended to terminate their contract under which they agreed to purchase PPG’s automotive OEM glass and automotive replacement glass (ARG) and services businesses. PPG stated that it would continue to explore divestiture, restructuring and other strategic alternatives for the automotive OEM and ARG and services businesses with the goal of maximizing shareholder value.
A state plan in Rhode Island that would force three former lead paint manufacturers to pay $2.4 billion to clean up tens of thousands of homes containing the toxic substance is unworkable, overly broad, and could even put children at risk, the companies argued in a mid-December filing.
The state presented the companies with a multibillion dollar proposal - projected to take four years, require 10,000 workers, and involve the inspection and cleanup of roughly 240,000 older homes - after winning a landmark lawsuit against the paint manufacturers in 2006.
The companies - Sherwin-Williams Co., NL Industries Inc., and Millennium Holdings LLC - are appealing the verdict to the state Supreme Court. They asked a judge in November to strike down the state's proposal and, in December, filed a new round of challenges to the plan.
The companies contend the plan is unnecessary since Rhode Island already has successful programs to prevent childhood lead poisoning. The companies said the incidence of childhood lead poisoning in Rhode Island has rapidly decreased in the last decade, with elevated blood lead levels now at a historic low.
The manufacturers also cite testimony from the state's witnesses, who said lead paint was not dangerous unless it was peeling or chipping. They said children could be harmed if previously intact lead paint is removed or disturbed, producing dangerous particles.
"Make no mistake about it: what the Attorney General seeks is not only economically dangerous, but may well result in higher, not lower, blood lead levels in children and others across the state," lawyers for Sherwin-Williams wrote, calling the state's plan "the most elaborate, invasive, gold-plated experiment in lead abatement ever conceived."
A Superior Court jury in February 2006 found the companies liable for creating a public nuisance by manufacturing lead pigment used in paint. The verdict made Rhode Island the first state to successfully sue former lead paint makers.
Lead paint was banned from homes in the U.S. in 1978. Studies have shown children exposed to flaking paint chips or dust can suffer reduced intelligence, stomach problems, brain damage and, in extreme cases, death.
Jack McConnell, a lawyer representing the state, said he had not had an opportunity to review the companies' filings yet.
The Supreme Court will hear arguments in the case this year.
Allstate Insurance Company and Sterling Autobody Centers contributed $40,000 to purchase the I-CAR(R) Live curriculum for seven schools over the past three years. These seven schools were selected based on their proximity and ability to develop a working relationship with local Sterling Autobody Centers.
The three most recent schools to receive the curriculum are Lynn Vocational Tech School in Lynn, MA; Alvin High School in Alvin, TX; and Rio Hondo Community College in Whittier, CA.
Noel Welsh, collision repair instructor at Alvin High School stated, “I would like to thank Allstate Insurance Company and Sterling Autobody Centers for their generous donation of the I-CAR Live curriculum. The curriculum is great and will make a tremendous impact on the level of training I am able to provide my students.”
Previous schools to receive curriculum and corresponding props from the contribution by Allstate Insurance Company and Sterling Autobody Centers include Edison Tech in Rochester, NY; Automotive Training Center in Exton, PA; Hillborough Community College in Tampa, FL; and Cuyahoga Valley Career Center in Brecksville, OH.
“We believe it’s important to introduce the collision repair industry to young men and women who are in the process of choosing their future careers. By partnering with the I-CAR Education Foundation, we are bringing students the very best information and curriculum available. Sterling is proud to be part of this initiative and to support the efforts of the participating schools,” said Tim Swift, Process Development Leader of Sterling Autobody Centers.
Doug Reinke, of Imperial, Nebraska, was awarded the ASE/PPG Master Refinish Technician of the Year Award at ASE’s annual Board of Directors Industry Awards Dinner held in Scottsdale, Arizona, in November. Bill Troyer, Manager of Training for PPG Automotive Refinish, presented Reinke with the award. The annual award is given to the PPG collision center technician who receives the highest score on the ASE Painting and Refinish test, which is administered twice each year.
Reinke has been a refinish painter for 25 years and has been employed for the last 18 years at Harchelroad Motors, Inc., in Imperial, Nebraska. He is a PPG Certified Technician, an ASE Master Technician, has received I-CAR refinish training, and holds multiple certificates from General Motors. He is also President of “Car Nutz” car club, and has been restoring and customizing vehicles since he purchased his first car at age 14. He has won awards for his restoration work at car shows across the Midwest, including a custom 1950 Olds 88.
“It is always a pleasure to recognize someone who has achieved this level of success in their profession,” said Troyer. “Literally thousands of technicians take the ASE test each year, and to be among the highest scoring is a remarkable achievement.”
According to Janet Schroeder, owner of MidPlains Auto Finishes in North Platte, Nebraska, a PPG Platinum Distributor, “I have known Doug for many years and have found him to be very conscientious and meticulous with his work. He has always been interested in learning to do things the right way, so this award confirms his knowledge and commitment to performing a quality repair.”
“I have been a car nut almost since I can remember,” said Reinke. “I decided to become a technician after attending car shows with my Uncle, and admiring all the beautiful cars. I really enjoy making cars look good.”
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Original Fit Corporation has opened its first master warehouse in Troy, Michigan for the distribution of automotive plastic bumper fascia throughout the Midwest. According to a company press release, the new facility in Troy is stocked with CAPA certified bumper fascia for the most popular domestic and import models. Each part is carefully inspected for quality, primed ready for finish paint and individually wrapped for protection until it is ready for installation.
“The effort to distinguish Original Fit in the marketplace begins with quality,” commented Dr. Robert Bedrosian, Original Fit’s President and CEO. “We know we have to offer extremely high quality at a very competitive price in order to expand.”
“We are leveraging our excellent relationships with distributors of automotive restyling products and our extensive background in the crash parts industry to create a niche marketing opportunity. As our business continues to grow, we anticipate opening additional warehouses through-out the United States to serve our customers,” concluded Bedrosian.
Before starting Original Fit Corporation, Bedrosian served as past Chairman, President and CEO of AutoLign Manufacturing Group, the largest independent automotive aftermarket manufacturer of collision repair parts in North America.
The Automotive Service Association (ASA) has offered another new tool to assist its members who specialize in collision repair. ASA, under the direction of Collision Division Operations Committee member Michael Anderson, AAM, owner, Wagonwork Collision, Alexandria, Virginia, has created a customizable gross profit calculator to help ASA collision repair members determine their profit margins based on percentage comparisons.
“It is imperative as business owners that we run our collision repair shops as ‘businesses.’ To do that we need to have a better understanding of the financial aspects of our businesses,” said Anderson, co-chairman of ASA’s Estimating Subcommittee. “Understanding the difference between markup and gross profit is certainly an area that has the potential to be misunderstood in our industry – especially by our insurance partners. Using this new tool provided by ASA will allow us as business owners to ensure that we are collecting and maintaining our desired gross profit – which as we all know is the key to building a budget and financial forecasting.”
Carroll Proctor, owner, A.C. Proctor Paint & Body Shop Inc., in Augusta, Georgia, and chairman of ASA’s Estimating Subcommittee, said, “In order for any business to become – and remain – successful, knowing your numbers is key. Using ASA’s gross profit calculator tool allows body shops the opportunity to easily calculate the necessary numbers to be profitable.”
The calculator is created in a Microsoft Excel format and includes two worksheets. Specific line items on the ASA calculator are customizable so users may create a calculator that matches their business practices. In addition, the calculator is set up to show users the various gross profit amounts by displaying results in several percentage increments.
Other tools available to members include a customizable supplement form and the recently developed refinish worksheet, a companion piece to an ASA flier. ASA’s three fliers include: repaired vs. new panel, LKQ vs. new panel, and blend vs. new panel.
The ASA calculator is available as a downloadable document in the Members Only section of the ASA website: www.ASAshop.org. Non-members interested in learning more about ASA may contact ASA’s membership department at (800) 272-7467, ext. 295.
True2Form Collision Repair Centers, LLC, has announced the grand opening of its newest 20,000 square-foot facility, located in Gaithersburg, Maryland. This is True2Form’s second center in the Rockville/ Gaithersburg area and the sixth in the Metro, DC market.
Rex Dunn, True2Form’s president and CEO, said, “This store was purchased from Kent Miles (of the former Miles Auto Body Shop) because of his comfort that True2Form would continue to grow and support the current business and the team of excellent employees he has built over the years.”
Clark Plucinski, True2Form’s executive VP commented, “This shop is unique in that it has a fully integrated mechanical repair business plus the collision repair business. This full service facility was designed to produce high levels of productivity and customer satisfaction. This is consistent with our model to provide the highest quality, most cost-effective collision repair services for both our customers and our insurance partners.”
Founded in 1996 and headquartered in Cleveland, Ohio, True2Form Collision Repair Centers operates forty centers in Ohio, Pennsylvania, Mary-land, and North Carolina. The company's 41st facility is scheduled to open in eastern Baltimore in March 2008.
Last spring representatives from the National Auto Body Council (NABC) were invited to make presentations as part of the curriculum for Arizona State University's Certificate for Automotive Entrepreneurs and Leaders program (CAEL).
The engagement was so successful that the speakers, Bob Schubert of Impact Auto Body in Mesa, Arizona; and Mike Quinn, of 911 Collision Centers in Tucson, Arizona and Las Vegas, Nevada, have been asked to participate in a special offering of the CAEL program, the Leadership Education for Automotive Dealerships program (LEAD). NABC Secretary Janet Chaney will also participate.
The CAEL program is an accredited program offered by the W. P. Carey School of Business at Arizona State, one of the largest business schools in the United States. CAEL provides Arizona State students with the opportunity to apply business acumen to the automotive industry and build leadership skills to help instigate changes in dealership management. LEAD provides a conduit through which those at other universities can enroll in CAEL. A prerequisite for any student in the program is a business degree or enrollment in a business major.
CAEL was initiated in part by Ford Motor Company's Dealer Development Office, which wanted to develop a program at a leading university that focused on the automotive industry. Retired Ford executive, John Whelan, is an Arizona State faculty associate for the CAEL program. In addition to teaching, he works with the school to develop relevant curriculum.
From Whelan's perspective, NABC's participation is a key to the success of CAEL and LEAD. "The collision repair element of a dealership operation is not only growing in importance as a profit center, it is getting increasingly sophisticated to manage," he said. "We knew that if we wanted to provide a well-rounded course of study, body shop management needed to be a significant part of the mix."
Whelan began to research the collision repair industry and, after reading an article about the NABC, he asked Chaney if she would speak to Arizona State students.
"John was looking for a two-hour presentation showing a broad overview of the collision industry," said Chaney. "This opened up a great opportunity for NABC - to speak at a prestigious school to high-level students with a desire to come into our industry. That's a vital piece of our future."
This year, the NABC presentation, "Auto Body Overview and Profitability Opportunities," remains the first and only collision repair presentation ever used at the school.
"Part of the uniqueness of CAEL is that we bring together guest speakers, who are experts in their respective fields, that can offer first-hand insights about automotive customer service," commented Gail Christian, assistant director of the W. P. Carey School of Business. "NABC fits this profile perfectly and we are more than pleased that representatives from their organization are back to contribute this year."
LEAD consists of one intensive seven-day session in two consecutive winter terms at Arizona State with a summer internship arranged during the summer between the two winter sessions. Some of the required work is completed by students through remote communication.
The opportunity to be part of LEAD falls directly in line with the goals of NABC. "Speaking to students and being recognized as an authority in the collision industry helps broaden NABC's scope," stated NABC Executive Director Chuck Sulkala. "More importantly, it addresses a core component of our mission: attracting and encouraging highly qualified professionals to enter our industry. It is an honor to be part of this prestigious program, and we look forward to having a long and fruitful relationship with Arizona State University."
More information about the CAEL and LEAD programs may be found at the following Web sites: www.dd.ford.com and www.wpcarey.asu.edu/cael.
The Automotive Service Association (ASA) has reported out of Washington, DC that the House Committee on Energy and Commerce held a committee markup Dec. 18. During the markup, the committee reviewed H.R. 1216, the Cameron Gulbran-sen Kids Transportation Safety Act of 2007. This bill, named for a child who lost his life in a 2003 accident, directs the secretary of transportation to issue regulations to reduce the incidence of child injury and death occurring inside or outside of light motor vehicles.
Specifically, the bill asks the secretary of transportation to initiate a rulemaking, pertaining to light motor vehicles, requiring power windows and panels to automatically reverse direction when they detect an obstruction – to prevent children from being trapped, injured or killed.
Additionally, it calls for a rulemaking requiring a rearward visibility performance standard to provide drivers with a means for detecting the presence of a person behind the vehicle to prevent death and injury resulting from backing incidents. It also calls for the vehicle service brake pedal to be engaged when the car is shifted out of “park” to prevent vehicles from unintentionally rolling away.
Finally, the bill establishes a child safety information program to provide information to parents about potential hazards and ways to avoid them. Since the bill’s introduction in 2003, more than 1,013 children have died in preventable accidents.
Rep. Janice D. Schakowsky, D-Ill., vice chair of the subcommittee on Commerce, Trade and Consumer Protection, offered an amendment that was adopted by a voice vote. The bill was then approved by the committee.
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