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Letter to the Editor
This article originally appeared in the June 2008 Issue of INSIGHT
©2008 Collision Repair Industry INSIGHT All Rights Reserved
American Honda Issues Position Statement on Use of Salvage Parts
Anti-Steering Video Public Service Announcement Available to SCRS Affiliates
Safeco Wins Silver Anvil Award for Excellence in Teensurance Public Relations Campaign
House Subcommittee Considers Creation of Federal Insurance Office
LKQ 1Q Net Income Up Over 95 Percent
PPG to Build Its First Coatings Plant in Russia
CIECA Announces New Release of BMS Standards
LaFontaine Automotive Group Goes Green
Metro Detroit Market Rates and Allowances Need a Lift
ASA Makes Changes to CAPA Policy, Gets Legislative Update at Annual Meeting
INDUSTRY UPDATE
The following position statement has been released by American Honda:
American Honda recognizes the importance of recycling, but the use of salvage / recycled parts to repair collision-damaged vehicles raises serious concerns about quality, suitability, safety, and warranty.
Many factors can influence the quality and / or suitability of salvage / recycled parts including but not limited to, exposure to weather, improper removal or transfer of parts, possible mis-match of vehicle electrical components or other safety-related items, as well as excessive wear on vital mechanical parts such as steering or suspension parts.
In cases where the donor vehicle was repaired due to a prior collision, salvage / recycle parts may not be an original or Honda Genuine replacement part. At this time, there is no generally accepted process or system in place to regulate the quality or suitability of salvage / recycle parts.
American Honda believes the interests of vehicle owners and collision repairers are best served when Honda Genuine replacement parts are used in the repair of a Honda vehicle.
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A broadcast-quality video public service announcement (PSA) informing consumers of the illegality of insurance company steering is being made available by the Society of Collision Repair Specialists (SCRS) to its affiliate associations.
The 30-second spots were developed by Ozone Adver- tising, Design and Strategy, a San Francisco Bay Area firm. Developed to be aired on local television stations, the videos can be customized to include information specific to each association, including branding and related material such as member shop footage, a market-specific approach that serves to raise consumer awareness.
The videos were brought to the attention of SCRS by the California Autobody Association (CAA), an SCRS affiliate. CAA has had great success getting the PSA aired on local television for free, which is extremely important, given that a survey conducted by CSi Complete for SCRS identified insurer steering as the number one issue adversely affecting the collision repair industry.
The commercial makes it clear to the viewer that body and paint work does not have to be done at a shop authorized by the insurance company, yet it does so in an entertaining way.
Because Ozone Advertising can leverage the production costs for the content it has created across its association client base, and only has to cut in the audio and visuals that relate to a specific association, the firm has been able to keep the purchase price reasonable, making it even more attractive for potential buyers.
"We hope that our affiliates take advantage of this tremendous opportunity by using this commercial to both raise their profile and educate consumers in their respective states," said SCRS Executive Director Dan Risley. "I'd also like to thank CAA and their Executive Director David McClune for helping us make this product available."
Those interested in obtaining the PSA can contact Dan Risley at (708) 598-3384, or by email: danrisley@scrs.com. The clip itself can be accessed at: http://ozoneads.com.
Safeco is the recipient of this year’s prestigious Silver Anvil Award, sponsored by the Public Relations Society of America (PRSA). The Silver Anvil, which recognizes outstanding achievement in strategic public relations planning and implementation, was presented during the Silver Anvil Awards Evening held June 5 in New York City.
Safeco received the 2008 Silver Anvil Award for its Teensurance(TM) campaign in the Marketing Consumer Services-Technology category. Teensurance offers a comprehensive set of online tools to encourage safe driving, including a GPS-based device, the Safety Beacon(TM), that can notify parents when a driver exceeds a pre-set speed limit or travels outside predetermined boundaries. Teensurance allows parents to have positive dialogue with teens about the responsibilities that come with a driver’s license.
“This is a great honor for Safeco,” said David M. Monfried, Safeco’s senior vice president of Corporate Communications. “Safeco’s research and development group, Open Seas, developed Teensurance to help parents and teens manage one of life’s most challenging times. We’re pleased that our effort in spreading the word has helped change the way families talk about being safe behind the wheel.”
Safeco enlisted the help of the public relations agency Porter Novelli to help develop the Teensurance communications plan.
“The finalists in this year's Silver Anvil Awards represent some of the most strategic, creative and finest public relations campaigns in our industry,” said Joice Truban Curry, 2008 PRSA Silver Anvil Committee chair and President/CEO of c3 Communica-tions, Inc. “The Silver Anvils are the Oscars of the public relations profession and these finalists exemplify the best practices in the country.”
Safeco, in business since 1923, is a Fortune 500 property and casualty insurance company based in Seattle.
The Public Relations Society of America, headquartered in New York City, is the world’s largest organization for public relations professionals with nearly 32,000 professional and student members. PRSA is organized into 109 Chapters and 10 Districts nationwide, and 19 Professional Interest Sections and Affinity Groups, which represent business and industry, counseling firms, independent practitioners, military, government, associations, hospitals, schools, professional services firms and nonprofit organizations.
The Subcommittee on Capi-tal Markets, Insurance, and Government Sponsored Enterprises held a hearing June 10 to discuss the creation of a federal Office of Insurance Information (OII).
H.R. 5840, the Insurance Information Act of 2008, was introduced April 17 by Rep. Paul E. Kanjorski, D-Pa., subcommittee chairman, along with four other members of the House Financial Services Committee. The purpose of the hearing was to gather information from insurance industry stakeholders regarding the creation of such an office.
Jeremiah O. Norton, deputy assistant secretary, U.S. Department of Treasury, outlined the need for insurance regulatory modernization and discussed the U.S. Treasury Department’s Blueprint for a Modernized Financial Regula-tory Structure (Blueprint). In the Blueprint, the Treasury calls for the establishment of an optional federal charter (OFC) for insurance and the establishment of an Office of Insurance Oversight within the U.S. Department of Treasury.
According to Norton, “The Office of Insurance Oversight would focus immediately on key areas of federal interest by serving as an adviser to the secretary of the treasury on major domestic and international insurance regulatory issues. The office would also be provided with authority to address international regulatory issues.”
Though the Treasury does have some concerns with the creation of the Office of Insurance Information, it welcomes the introduction of H.R. 5840. Norton explained that the bill would “create an office within the Treasury very similar to that recommended in the Blueprint,” and that the department will continue to work with the subcommittee as the legislation moves forward.
Neal Wolin, president and chief operating officer of Property Casualty Operations for The Hartford Financial Services Group, also presented testimony. Wolin expressed his support on behalf of the American Insurance Association (AIA) for H.R. 5840 and the establishment of a federal Office of Insurance Informa-tion.
According to Wolin, this would “create an insurance expert who serves as the principal federal adviser on domestic and international policy issues for all lines of insurance but health. In one stroke, we would answer the call for a single national voice on these important matters. Equally important, the bill would give the federal government the authority it needs to engage with its counterparts around the globe on international insurance matters, with targeted authority to back up any formal commitments made by the United States.”
Voicing some concerns about the legislation was David A. Sampson, president and CEO of the Property Casualty Insurers Association of America. Sampson believes the legislation needs additional clarity and should avoid overregulation.
“The draft bill would, for the first time, give this potential federal entity pre-emptive authority over state insurance laws as an administrative process, rather than as a legislative one,” Sampson said. “This could create an uncertainty in the industry about the regulatory environment in which we operate.”
The Office of Insurance Information would be organized within the Department of the Treasury to provide expertise on insurance policy to the administration and to Con-gress. Within the OII, the legislation proposes an advisory group of up to 13 members including representatives of the administration, the National Association of Insurance Commissioners and other representatives of the insurance industry that the secretary of the treasury deems appropriate.
The text of H.R. 5840 can be found at ASA’s legislative website: www.TakingTheHill.com. The bill can be found by clicking on “Track Current Legislation” under “Key Bills in Congress.”
LKQ Corporation has announced results for its first quarter ended March 31, 2008, with revenue of $491.9 million, net income of $30.9 million and diluted earnings per share of $0.22.
"We reported record revenue and earnings for the quarter with revenue growth at 109 percent and net income growth at just over 95 percent. Our operating margin improved this quarter over the first quarter of 2007 by 90 basis points and, excluding restructuring expenses, by 110 basis points. Our diluted earnings per share for the quarter puts us on track to exceed the earnings guidance that we previously issued by approximately $0.02 per share," said Joe Holsten, President and Chief Executive Officer.
Commenting on business acquisitions, Holsten said, "We continue to be pleased with our progress to date related to combining our aftermarket businesses with Keystone Automotive Industries, Inc. In addition we acquired a heavy truck recycling business in Houston, Texas that gives us a solid platform from which to expand into a new type of product line."
For the first quarter of 2008, revenue increased 109 percent to $491.9 million compared with $235.3 million for the first quarter of 2007. Net income for the quarter increased 95.5 percent to $30.9 million compared with $15.8 million for the first quarter of 2007.
Revenue from aftermarket collision replacement parts, paint, shop supplies, refurbished bumpers, refurbished wheels, and refurbished lighting for the first quarter was $272.3 million.
During the quarter, $1.2 million of restructuring expenses were recorded, which were included in operating expenses and are all related to the Keystone acquisition in October 2007.
In February LKQ acquired a retail-oriented recycled parts business located in Orlando, Florida, that operates on property adjoining LKQ’s existing retail-oriented recycled parts business. In March the company acquired Texas Best Diesel, a heavy duty truck recycled parts business in Houston, Texas. These two businesses reported approximately $10.6 million in trailing annual revenue just prior to their acquisitions.
LKQ expects that 2008 revenue growth will be approximately ten percent. The company expect full year 2008 net income to be within a range of $106.0 million to $111.0 million.
LKQ Corporation is the largest nationwide provider of aftermarket collision replacement products, recycled OEM products, and refurbished OEM collision replacement products. LKQ operates approximately 300 facilities.
PPG Industries is planning to build its first manufacturing plant in Russia. The Pittsburgh-based coatings manufacturer has signed an investment agreement with the administration of the Kaluga Region, Russia, to build an automotive coatings and industrial coatings plant about 70 kilometers southwest of Moscow.
The plant will manufacture coatings for automotive and other industrial customers. The facility, which will be fully owned by PPG, will employ about 70 people and be located just north of the city of Kaluga in the Vorsino Industrial Park, according to Bill Wulfsohn, PPG senior vice president, coatings.
"The Russian economy is booming and automotive production is growing quickly. To best serve the market, we must have local manufacturing capabilities," Wulfsohn said. Currently, seven new automotive assembly plants are in the planning or construction phase in Russia and are expected to come online within the next three years.
"Our new plant will enable PPG to quickly respond with high quality standards to meet global and Russian customers' growing needs and requirements," Wulfsohn said. The new PPG facility will be located centrally in Russia, close to the new and existing automotive plants.
The Kaluga authorities "are particularly helpful for new investors," he said, and have attracted foreign investment from leading international companies such as VW, PSA, Volvo Truck, Samsung, John Deere, L’Oréal and Nestlé.
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CIECA has completed and published its ninth BMS (Business Message Specification) Standards Release, 2008R1. The new BMS Release includes ninety-four (94) messages/transactions for Vehicle Damage, Glass, Rental, Salvage, and Subrogation assignments, Estimates, Dispositions, Attachments (images), Parts and Materials, Repair Status, Authorizations, Locations, Invoices, Statements, and Remittances.
Fred Iantorno, CIECA Executive Director, said, “The BMS is a single standard to exchange business messages and data across multiple organizations and systems/networks. It provides the data security and privacy that is demanded by today’s business environment and supports the transmission of only the data necessary to perform a business function. The BMS will save everyone in the industry time and money.”
CIECA publishes two BMS Releases annually. New messages are added and existing messages are enhanced/modified as a result of the changing needs of the industry. CIECA has also published a Road Map of its BMS messages, which is available on its website.
The LaFontaine Automotive Group, headquartered in Highland, Michigan, has converted from using a solvent-based system to using Envirobase High Performance waterborne basecoat by PPG for vehicle paint repairs. The transition is part of an overall initiative to sell, service, and repair vehicles in environmentally responsible ways, according to LaFontaine. The company is one of the first in Michigan to move to a waterborne system.
“This decision was the right thing to do,” said Todd McCallum, fixed operations director for LaFontaine. “We’re very conscious of the need to safeguard our environment. We’re going for gold-level LEED1 certification and doing all we can to be genuinely ‘green.’ We’re very pleased to be working with PPG to make this change.”
Automotive collision centers in California and Canada are making the transition to waterborne basecoats in anticipation of new air quality regulations requiring the use of waterborne basecoat to reduce volatile organic compound (VOC) atmospheric emissions and improve air quality. To date, Michigan has no plans for more stringent VOC regulations. LaFontaine is making the change on its own initiative.
The company operates a new, $15 million flagship facility in Highland, and another collision center in Dexter, Michigan. The switch to waterborne coatings at both locations coincided with the recent grand opening of the new Highland center.
Elson Dolliver, PPG business development manager, said, “The green commitment LaFontaine is making is impressive. They’ve got our support and products to help them succeed. Their vision puts them on the cutting edge.”
“We’re very pleased to be partnering with PPG and the LaFontaine Automotive Group,” said Patrick Mayette, director of sales and marketing for Painters Supply & Equipment Company. “Delivering environmentally-friendly green technology to support LaFontaine’s LEED certification efforts is rewarding and exciting.”
The LaFontaine Automotive Group consists of five auto dealerships covering 14 domestic and foreign franchises and two collision centers. The company was established in 1980 by the LaFontaine family and remains family-owned and operated. Over the years, the company has earned a number of prestigious awards including the Cadillac Master Dealer Award and the General Motors Mark of Excellence awards for Pontiac, Cadillac and GMC.
Painters Supply & Equipment Company (PSE), founded in 1952 and headquartered in Taylor, Michigan, is the largest single-line PPG distributor in the U.S., operating 23 stores in Michigan and Ohio.
INSIGHT recently conducted a Market Watch survey of collision repair facilities in the counties that comprise the Detroit, Michigan metropolitan marketplace. Telephone contact was made with the nearly 900 licensed collision repair operations listed by the state’s Automotive Bureau of Regulatory Services. The body shops contacted are located in the three Motor City counties of Macomb, Oakland, and Wayne, as well as in sizeable portions of Livingston, Monroe, St. Clair, and Washtenaw counties. Data from the Consumer Price Index was used for some resulting calculations. All respondents were asked for their posted door rates.
We analyzed the results using the mean (average), the median (middle response), and the mode (the most common response), for the entire Detroit Metro area, and for each county. The chart below gives some of the data.
The survey results show that 35 percent of the responding shops have recently had a rate increase and 40 percent have had the same rates for about one year. It has been over two years since the last rate increase for 15 percent of the respondents, and over three years for ten percent of the shops participating in the survey. Considering that paint and materials costs alone have risen an average 17 percent nationally since mid-2006, and other overhead “costs of doing business,” such as energy, health care, and shipping have risen steeply, it is no surprise that Detroit-area body shops are hurting. How has the largest local insurance carrier, AAA, determined a prevailing competitive price for Metro-Detroit collision repairers, and then asked shops to bill AAA for $2 less than that? Metal/Refinish Labor Paint & Materials Average Rate Median Mode Average Rate EntireMetro Detroit $39.38 $38.00 $38.00 $21.34 Livingston $38.80 $21.60 Macomb $38.37 $21.17 Monroe $42.00 $23.00 Oakland $43.24 $23.24 St. Clair $42.00 $20.00 Washtenaw $41.70 $22.95 Wayne $38.46 $21.00 National $44 - $46 $25 - $27
| Location | Metal/Refinish Average Labor Rate | Median | Mode | Paint & Materials Average Rate |
| Entire Metro Detroit | $39.38 | $38.00 | $38.00 | $21.34 |
| Livingston | $38.80 | $21.60 | ||
| Macomb | $38.37 | $21.17 | ||
| Monroe | $42.00 | $23.00 | ||
| Oakland | $43.24 | $23.24 | ||
| St. Clair | $42.00 | $20.00 | ||
| Washtenaw | $41.70 | $22.95 | ||
| Wayne | $38.46 | $21.00 | ||
| National | $44 - $46 | $25 - $27 |
In his “state of the association” address at the Automotive Service Association’s meeting in May, ASA President and chief executive Ron Pyle called the organization “financially strong” and “in good shape.”
“We had a good financial performance this past year,” he said.
At just over $7 million, association revenues were virtually unchanged in 2007 from the preceding year, but unlike in 2006 when ASA posted a net lost of about $205,000, the association had a 2007 net profit of about $20,000. Its cash reserves for year-end 2007 were about $3.7 million.
The meeting, this year held in Santa Clara, Calif., also is an opportunity for association members to sit in on an “open” meeting of ASA’s national board of directors, which this year included votes on a number of measures that could impact the industry.
The board of directors voted to create an ad hoc committee to “discuss and research a shop rating (or) classification system with the goal of potentially formulating a structure that will provide a measurable shop designation system based on (but not limited to) equipment, training and association participation.”
In another unanimous vote, the board reversed a 10-year policy statement that said ASA “does not support the Certified Automotive Parts Association (CAPA).” That policy was adopted in 1998 at which time ASA also relinquished its seat on CAPA’s board of directors.
Charlie Elder, immediate past chairman of ASA, told the board that policy was adopted in an effort to “make a statement” that the “direction and motivation (of CAPA) wasn’t what we were looking for.” Elder said that since that time the CAPA certification program has changed.
“It really isn’t as encompassing as we would like for it to be, but improvement has occurred and a lot of members are using the parts, so the (1998) policy really doesn’t make sense now,” he said.
Two board members asked if ASA planned to develop a different policy statement, such as one supporting CAPA or parts certification.
“I don’t think we’re quite ready to make that statement,” said board member Darrell Amberson, who also was elected at the meeting to a second term as ASA’s Collision Division Director. “We’re still looking at the performance of CAPA and have a few concerns. While we didn’t want to have this adversarial position stating that we’re removing a person from their board, we are not yet ready to take that step (of adopting a new policy statement about CAPA).”
In other news and discussion at ASA’s annual meeting:
- ASA’s lobbyist Bob Redding said that although some additional hearings may be held, federal insurance reform will not be among the topics Congress addresses before adjourning this year. He also said he does not believe that patent reform legislation, being pushed by non-OEM parts suppliers, is likely to move this year.
- After meeting with the ASA’s Collision Division Operations Committee, Progressive Insurance said it had revised its stance on partial paint/full clear. Chris Andreoli, corporate physical damage process manager for Progressive, said that although “we strongly believe that reducing refinish times on a more widespread basis is an acceptable practice and reflects operations that allow the shop to restore the vehicle to its pre-loss condition, the decision to limit the use of partial refinish was made in large part to improve our working relationships with shops, and thereby improve the customer’s experience.”
- Denise Caspersen, manager of ASA’s Collision Division, said this year’s International Autobody Congress and Exposition, being held November 5-8 in Las Vegas, will include a type of “boxing match,” with an insurer and repairer commenting back and forth on various issues.
The Automotive Service Association and the 2008 International Autobody Congress & Exposition have announced that Darrell Amberson, the current ASA Collision Division Director, has once again accepted the appointment as the 2008 Event Chairman which includes serving as Chairman of the 20+ member NACE Attendee Advisory Council. Returning as the Exhibitor Advisory Council Chairman is Katie Henwood, Marketing Communications Manager for Standox, a DuPont Performance Coatings brand. NACE 2008 will be held at the Mandalay Bay Convention Center in Las Vegas, Nevada during the recently created Automotive Repair & Service Week (ASRW), November 5-8.
Amberson is president of Lehman’s Garage located in Bloomington, Minnesota. A 37-year veteran of the industry, Amberson’s career began in the dealership sector of the business where he worked 22 years before managing an independent shop. Amberson currently serves on a number of industry-wide committees including the CIC Database Task Force (joint effort of ASA, SCRS and AASP), the URG Advisory Committee, the CCC/Motor Industry Forum Group, and as the AASP-MN Workforce Task Group and Government Affairs Committee Chairman.
Since joining DuPont five years ago, Henwood has worked in the Marketing Services Group. Currently, she is responsible for the development, implementation and management of marketing, branding, communications and loyalty program initiatives for Standox. Henwood has been an active member of Women in the Industry (WIN) for two years.
Archie Manning, All-American Quarterback and NFL MVP, will be the 2008 keynote speaker at the Opening General Session taking place Thursday morning, November 6. DuPont Performance Coatings is the sponsor of the Opening General Session that will be held during the NACE and CARS co-located events at the Mandalay Bay Convention Center in Las Vegas, Nevada.
"When people think of Archie Manning, they think football. But Manning’s appeal transcends his athletic achievements and it is with great pride that DuPont will sponsor him as this year’s keynote speaker,” said Mark Wagner, Vice President Refinish Americas, DuPont Performance Coatings.
People far and wide have been inspired by Manning’s warm personality, drive, and sense of humor. He was recently selected as one of ten outstanding New Orleanians by Family Service of Greater New Orleans, and named Hornblower of the Year by the Public Relations Society of America. He currently serves in public relations and consulting capacities for several local, regional, and national companies. For 25 years he has hosted Archie Manning Cystic Fibrosis benefit golf tournaments in Louisiana and Mississippi, and is active in a wide variety of charitable and civic causes.
While attending the University of Mississippi, Manning was named an All-American Quarterback and is the only Ole Miss player to have his number retired. He was voted Mississippi’s Greatest All-Time Athlete in 1992, and recently named Mississippi’s Most Popular Athlete of the Century. He was elected to the 50-Year All-South Team (1940-1990), named one of the Top 25 Athletes of the Century in Louisiana and along with his son Peyton, Manning was named among the 100 All-Time Greatest College Football Players. Manning was inducted into the National Football Foundation College Hall of Fame and is a member of other Halls of Fame including Louisiana and Mississippi.
In 1971, Manning was the number one draft choice of the New Orleans Saints. He was named the NFL Most Valuable Player in 1978. While in pro football, he received the Byron “Whizzer” White Humanitarian Award, the Bart Starr Humanitarian Award, the Spirit of Good Sports Award from the National Sportscasters and Sportswriters Association, and the U.S. Jaycees named him one of 10 Outstanding Young Americans. In 2005 Manning received the Legends award from the Davey O’Brien Foundation and the Aspire award, a tribute to life’s coaches, from the Cal Ripken Foundation.
Archie Manning is certainly capable of motivating outstanding work. Sons Peyton, quarterback of the Indianapolis Colts, and Eli, quarterback of the New York Giants, have inherited their dad’s talent, drive, and team leadership abilities.
NACE 2008 will be held November 5-8, at the Mandalay Bay Convention Center in Las Vegas, Nevada, USA. The educational Conference will begin on November 5 (Wednesday) and run through Saturday, November 8. The Exposition will take place November 6-8 (Thursday-Saturday). The event takes place within the recently created Automotive Repair & Service Week, and is co-located with CARS (Congress of Automotive Repair & Service – serving the mechanical segment of the industry). Both events also take place during the Automotive Aftermarket Industry Week (AAIW), taking place that same week in Las Vegas.
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