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This article originally appeared in the November 2008 Issue of INSIGHT
©2008 Collision Repair Industry INSIGHT All Rights Reserved
Mitchell to Introduce Hosted Shop Management Solution at NACE 2008
Greg Dehnke Joins CARSTAR to Direct Franchise Development
DuPont Performance Coatings Offers Lean Training Schedule
BASF Automotive Refinish Solutions Launches Lean Customer Program
LKQ Corporation Acquires Recycled Truck Parts Business
I-CAR Celebrates 25 Years in Canada at Annual Meeting
Allstate Reports $923 Million Net Loss in 3Q
PPG Wins R&D 100 Awards for Two Green Innovations
SCRS National Board Meets with State Affiliate Groups
CCAR Adds Paint Rule Module to S/P2 Collision Repair Training
INDUSTRY UPDATE
Mitchell International, Inc., a provider of information, workflow, and performance management solutions to the collision claims and repair industries, will showcase ABS(TM) Enterprise Express Edition at this year's NACE.
ABS Enterprise Express Edition is a hosted shop management solution that meets the unique needs of single-location collision repair facilities that don’t require the comprehensive capabilities of ABS Enterprise.
The ABS Enterprise Express Edition is designed to give collision repair facilities the proven core capabilities of ABS Enterprise without the need for costly IT investments typically associated with installing and maintaining a management solution. A company press release says it is easy-to-use and quick to implement, helping repair facilities to rapidly realize benefits of an industry-leading shop management solution.
The ABS Enterprise Express Edition provides key benefits such as enhanced operational efficiencies, insight into key performance indicators for improved business decision making and customer satisfaction, job costing, parts management, and repair order management. The solution will include Mitchell's UltraMate(R) estimating interface and one additional interface to any one of the other major estimating systems and QuickBooks(R) accounting applications.
"ABS Enterprise Express Edition's core shop capabilities provide collision repair facilities with a shop management solution that’s the right fit for their business needs today. Shops can also choose to add capabilities as their business needs evolve over time, ensuring that day to day operations become more efficient in an economical way," said Jason Bertellotti, Mitchell International's Vice President of Repair Solutions.
Bertellotti added, "Offering the ABS Enterprise Express Edition affirms our commitment to the collision repair market — and to providing viable solutions for collision repair facilities of all sizes. Now smaller scale facilities that may not have prior experience using a management system will have a practical and affordable way to automate processes and implement best practices throughout their entire operation, while leveraging the proven capabilities that ABS Enterprise was founded on."
Mitchell International facilitates millions of electronic transactions between more than 25,000 business partners each month.
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To take charge of the company's planned surge of growth, CARSTAR has announced that Greg Dehnke has joined its management ranks as the new Senior Sales Executive. He will be responsible for the development of all new franchise operators.
“Sure, it’s gotten harder and harder to compete and survive in this industry," said CARSTAR CEO and Chairman of the Board, Dick Cross III. “That’s why we are generating more attention from other collision repair owners than ever before. They see CARSTAR as a total solution to help meet the growing demands we face as an industry.”
Dehnke was formerly with FinishMaster, Inc, a distributor of paint and associated products. As the Director of National Accounts, Dehnke was in charge of growing the company’s national and strategic account business. He was with the company for two and a half years, based at the Corporate Headquarters in Indianapolis.
Dehnke has a strong and successful record of sales team development, leadership, and key account management. Prior to FinishMaster, he held key positions at Texas Instruments as a Strategic Account Manager, at W.W. Grainger, Inc. as Vice President of National Accounts, and at SupplyForce.com. as Vice Pres-ident of Sales.
“There’s only one company I would have considered making this career change for,” noted Dehnke, “and that’s CARSTAR. They are a first-class organization and I look forward to building upon their outstanding reputation.”
Dehnke helps to round out what Cross calls his “dream team” of senior management executives.
“I couldn’t be more pleased with our management team today. And we are truly blessed to have a sales professional of Greg’s caliber join our team. His expertise will add a key accelerant in the trajectory of our business,” Cross commented.
Dehnke’s initial focus will be to take over the direction of field sales operations where CARSTAR recently added eight additional stores in the past two months. With a strong outlook for a repeat performance in the coming months, Dehnke intend to build upon this momentum.
Headquartered in Overland Park, Kansas, CARSTAR is the largest group of independently owned and operated auto body repair stores in North America. The privately-held company currently has 280 stores in 27 states, and expects to double this number in the next four years.
DuPont Performance Coatings (DPC) has announced an aggressive training initiative focused on lean process implementation.
“We’ve created a multi-tiered approach to lean implementation for collision shops,” said Jim Evans, national training manager of DuPont Performance Coatings. “We understand that each shop has individual needs, so this program is designed to provide lean information and tools appropriate for each shop’s requirements.”
Lean process is an improvement methodology that considers the expenditure of re-sources for any means other than the creation of value for the customer to be wasteful, and thus a target for elimination.
The DPC lean initiative will begin with “SMART Cycle Time II: A Lean Approach,” in most major markets in December 2008, and January, February and March of 2009. This one-day seminar provides the basics of lean concepts as well as management by constraints.
“By running this excellent SMART Seminar in most major markets in early 2009, DPC will be able to respond quickly to the industry’s need for lean information,” Evans said.
Evans noted that all SMART Seminars are AMI and I-CAR approved.
Additional lean implementation tools are available to shops through the DPC lean implementation program. Trained consultants are available to assist shops with lean process management.
CarMax, Inc. has announced that, as a part of its ongoing plan to control costs and enhance its long-term competitive position, it is reducing its service operations workforce by more than 600 associates. The reductions are being made in a majority of the company’s production superstores, where vehicles are reconditioned.
About a third of the reductions are being made in response to the company’s previously reported lower sales.
"Since Memorial Day, we have taken significant steps forward in aligning our costs with current sales levels," said Tom Folliard, president and chief executive officer. "Since that time, we have achieved our store staffing objectives in most departments, but it was necessary to make further reductions in service operations in order to reach these staffing goals."
As part of the company’s long-term initiative to decrease costs in the reconditioning area, CarMax is restructuring its cosmetic operations, which resulted in the remaining reductions.
"We believe the steps announced today represent important progress toward our multi-year goal of taking costs out of the reconditioning process while maintaining vehicle quality," said Folliard.
"This was a difficult but necessary decision for us to make," said Folliard. "To ease the transition into the job market for these associates, we are offering severance packages, meeting with them individually to explain the decision and providing them with important information about benefits and pay."
In connection with the reductions, the company estimates that it will incur approximately $7 million of severance costs, which will be included in selling, general and administrative costs in the third quarter ended November 30, 2008.
CarMax, a Fortune 500 company, and one of the Fortune 2008 “100 Best Companies to Work For,” is the nation’s largest retailer of used cars. Headquartered in Richmond, Virginia, the company currently operate 99 used car superstores in 46 markets.
BASF Automotive Refinish Solutions has launched a nationwide Lean training program for its collision repair customers. BASF emphasizes to customers the Lean principle of “more value with less work.”
Specifically, BASF wants this program to help its customers implement Lean principles of reducing waste and developing a culture of continuous improvement in a collision repair center. In addition, the Lean training program was delivered to the market in conjunction with BASF’s “Change is in the Air” event, designed to help collision repairers learn about the benefits of BASF’s waterborne technologies and ways these refinish systems can help shop owners reduce waste, improve efficiencies, and meet ever-increasing environmental regulations.
“One of the four pillars that guides BASF every day is the dedication to helping make customers more successful,” said Michael Foldvary, BASF Marketing Manager. “Bringing the benefits of Lean principles and eco-friendly products to our customers is one of the ways we are doing just that.”
Two of the most recent “Change is in the Air” programs were held at the Aquarium in Atlanta, Georgia and at the Country Music Hall of Fame in Tennessee, and featured keynote speakers Tim Wilder and Sam Malatesta, both of whom are collision repair industry experts.
BASF will continue to bring these Lean programs to customers across the nation over the coming months.
BASF Corporation, headquartered in Florham Park, New Jersey, is the North American affiliate of BASF SE, Ludwigshafen, Germany. BASF has more than 15,000 employees in North America, and had sales of approximately $16.4 billion in 2007.
LKQ Corporation has acquired the assets of Automotive Rebuilders Supply Co., Inc., a heavy-duty truck recycled parts business. The business is located in metro-Chicago and realized revenue of approximately $9.5 million on a trailing twelve month basis. The purchase price was funded through cash on hand.
Although not dilutive, this business acquisition is not expected to contribute to 2008 diluted earnings per share.
"We believe the heavy-duty truck recycled parts industry offers LKQ an opportunity for growth and will benefit from our experience in recycled automobile replacement parts," commented Joe Holsten, President and Chief Executive Officer of LKQ. "ARSCO, our third acquisition in the recycled truck industry, provides us with a Midwestern distribution point."
LKQ Corporation is North America's largest nationwide provider of alternative parts for automobiles and light-duty trucks requiring collision or mechanical repair. The company is the leading provider of recycled original equipment (OEM) automobile parts and aftermarket collision replacement parts. LKQ also distributes refurbished OEM parts such as wheels, bumper covers and lights used to repair cars and light-duty trucks. LKQ operates approximately 300 facilities.
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The Inter-Industry Conference on Auto Collision Repair (I-CAR) held its Canadian Annual Meeting on October 17 in Dorval, Quebec. The day-long event, which attracted nearly 200 collision repair professionals, was held in conjunction with the meeting of the Canadian Collision Industry Forum (CCIF).
The I-CAR event offered technical training, special sessions for instructors and volunteers, an industry Town Hall meeting for a discussion of I-CAR’s potential future in Canada, and a dinner program that recognized the contributions and achievements of Canadian volunteers.
The I-CAR training event provided an opportunity for participants to attend Electric and Electric Hybrid Vehicles and Aluminum Panels and Structures Damage Analysis courses, conducted in French. Other courses, Steel Unitized Structures, Technology and Repair, and Steel Full Frame Technologies and Repair, were offered in English.
The Town Hall meeting, at which the results of a market study sponsored by I-CAR and conducted by Creative Partners in Performance, Inc., of Tor-onto, were presented, was well-attended by about 100 participants.
I-CAR President and CEO, John Edelen, expressed his thanks to the volunteers and staff who made the event possible.
“The Québec committee, under the leadership of Patrice Marcil, has done an outstanding job of ensuring the success of this event,” Edelen said, adding that I-CAR Area Training Coordinator Joe DaCunha and his assistant, Marilyn Jones-Sooman, "have worked diligently with this team, as well as instructors Raymond Bourgeois and Claude Fortier, to engage both the local Québec market along with representation from the national audience.”
The day’s events concluded with a dinner at which four original members of the Québec committee — Claude Lapointe, Philippe Fugère, Denis Barriault, and Normand Laurendeau — were honored for their contribution in bringing I-CAR training to Québec 25 years ago.
DaCunha also acknowledged Canadian achievements that had been previously recognized at the July, 2008 I-CAR International Annual Meeting.
Those awards included the Superior Performer Award, presented to Patrice Marcil of the Québec Committee for achieving the highest percentage over goal attainment in students taught and setting a high standard for consistently offering I-CAR classes to the industry; the Instructor of the Year Award, presented to Saeed Ahmed, who most exemplified the I-CAR presence in the classroom, a commitment to excellence, and keeping pace with technology; and the Founders Award presented to Claude Lapointe for his commitment to the I-CAR Volunteer spirit.
The Allstate Corporation has reported results for the third quarter of 2008, posting a $923 million net loss for the quarter. Catastrophe losses of $1.8 billion, including losses from Hurricanes Ike and Gustav, were partially mitigated by exposure reduction actions and reinsurance. Pre-tax net realized capital losses of $1.3 billion reflect unprecedented declines in credit markets, partially offset by positive impact of risk mitigation programs. However, profitability from underlying underwriting remains strong and within full-year outlook range, according to a company press release.
Consolidated revenues were $7.3 billion in the third quarter of 2008 compared to $9.0 billion in the third quarter of 2007, reflecting net realized capital losses in the third quarter of 2008 compared to net realized capital gains in the third quarter of 2007.
Property-Liability premiums written declined 1.5 percent in the third quarter of 2008 from the third quarter of 2007. Excluding the impact of the catastrophe reinsurance program, Property-Liability premiums written declined 2.4 percent in the quarter. Allstate brand standard auto premiums written declined 0.7% in the third quarter of 2008 from the third quarter of 2007.
“Catastrophes, including two of the ten costliest hurricanes in U.S. history, and the impact of a global financial crisis contributed to a quarterly net loss for our company. In this environment, our proactive and decisive approach to risk reduction has benefitted Allstate,” said Thomas J. Wilson, chairman, president and chief executive officer of The Allstate Corporation. “Hurricane losses would have been twice as high without our catastrophe management programs. Our investment portfolio initiatives enabled us to avoid large losses in financial companies and helped protect the value of our equity investments. Our property-casualty business continued to deliver good underlying margins and operating cash flow, which is extremely important in this economic climate. As a result, Allstate has maintained strong liquidity and capital positions which protect our customers and shareholders in these difficult times.”
Allstate’s operating loss of $190 million for the third quarter of 2008 is primarily attributable to catastrophe pre-tax losses of $1.8 billion from 35 events, including the recent hurricanes. The $923 million net loss for the third quarter of 2008 reflects the operating loss and net realized capital losses of $728 million.
Losses from Hurricanes Ike and Gustav were mitigated by catastrophe exposure management actions taken over the last several years, which include reductions in policies in force, reinsurance and policy changes. Reflecting the combination of reduced policies in force and ceded wind coverage in the coastal regions of Texas and Louisiana, at the beginning of the third quarter of 2008, Allstate’s catastrophe exposure was 42 percent and 33 percent, respectively, below 2006 levels. Reinsurance recoverables during the quarter offset losses by $246 million. Allstate’s analysis shows that the company’s losses from Hurricanes Ike and Gustav would have been approximately twice the amount recorded in the third quarter without the catastrophe exposure management actions and reinsurance programs put into place beginning in 2005.
As of September 30, 2008, Allstate's consolidated total investments were $105 billion, with more than two-thirds in investment grade fixed income securities. From June 30, 2008 to September 30, 2008, the company’s portfolio value declined by approximately $8.6 billion, primarily reflecting reduced market valuations of $4.6 billion and net sales of $3.8 billion to fund net reductions in liabilities. The $4.6 billion decline in market valuations during the period was predominantly due to the widening of credit spreads and, to a lesser extent, equity market value declines. The decline was reflected through a $3.3 billion increase in net unrealized losses and $1.3 billion of realized capital losses.
Net realized capital losses for the third quarter of $1.3 billion on a pre-tax basis reduced net income by $728 million. Net realized capital losses primarily consisted of impairment write-downs of $666 million and change in intent write-downs of $453 million.
Net unrealized losses, primarily reflecting depressed valuations from widening credit spreads, were $4.1 billion as of September 30, 2008. Gross unrealized losses as of September 30 were $6.3 billion, $2.5 billion higher than June 30, 2008. Given its current level of liquidity, the company intends and believes it has the ability to hold these assets to recovery and therefore does not anticipate significant conversion from unrealized to realized losses.
During the third quarter, Allstate sold 33 percent of securities identified as part of the targeted $3.3 billion risk mitigation program. These assets were sold at approximately 95 percent of the fair values reported at June 30, 2008.
PPG Industries, a leading manufacturer of transportation coatings, has earned two 2008 R&D 100 Awards for its Green Logic paint detackifier and Zircobond pretreatment technology. The awards, bestowed annually by R&D Magazine, recognize the 100 most technologically significant innovations each year.
"We are extremely honored to have two of our green technologies recognized in the R&D 100 Awards program," said Dennis Kovalsky, PPG vice president, automotive coatings. "This underscores the importance and commitment PPG places on innovation and forward thinking. We are dedicated to providing customers with inventive products that help save time and reduce cost while being environmentally responsible."
Green Logic paint detackifier is used by North American, European, and Japanese automakers to denature and remove over-sprayed paint from the water wash system in automotive paint spray booths. The patented formula, which incorporates chitosan derived from crab, lobster, and shrimp shells, provides an environmentally responsible alternative to detackifiers derived from non-renewable, petroleum-based raw materials or chemistries containing residual-free formaldehyde. Green Logic detackifier helps automakers realize performance gains in paint detackification and overall spray booth operations, while offering greater ease of operation and savings from reduced maintenance, chemical and wastewater treatment, and waste disposal costs.
Zircobond pretreatment offers significant environmental and cost advantages over traditional zinc-phosphate pretreatments without sacrificing product performance. Compared with traditional products, Zircobond pretreatment significantly reduces energy consumption, reduces overall water consumption, decreases sludge byproduct from the pretreatment process and is formulated without zinc, nickel or manganese, thereby reducing wastewater treatment costs.
CAMI, an independently incorporated joint venture of Suzuki Motor Corporation and General Motors of Canada Ltd. located in Ingersoll, Ont., Canada, began processing vehicles with Zircobond pretreatment in early January and moved to full-scale production by mid-January.
According to GM global process pretreatment lead Kevin Cunningham, "PPG has developed an innovative pretreatment coating material that offers advantages including energy savings, water conservation and a smaller footprint. GM is aggressively pursuing global implementation opportunities, and we are pleased with PPG's development of the new Zircobond pretreatment technology."
In May 2008, Ford Motor Company began using Zircobond pretreatment by PPG at its Saint Thomas Assembly Plant as a sustainable pretreatment coating system. Mike Vandelinder, chief engineer for global paint engineering at Ford, cited this material as a significant element of Ford's push toward using environmentally friendly technologies. He highlighted the advantages of this technology as water conservation, elimination of sludge, energy reduction and the elimination of two bio-accumulating heavy metals. The technology also delivers a lean process by reducing the number of stages in the typical pretreatment process from thirteen to eight. With this new pretreatment technology, Vandelinder said Ford continues its push to drive environmental solutions for manufacturing processes.
For 45 years the R&D 100 Awards program has provided a mark of excellence to winning products, acknowledging them to industry, government and academia as the most innovative ideas of the year.
Representatives from more than fifteen state associations – all affiliates of the Society of Collision Repair Specialists (SCRS) – gathered in Chicago in late September to share ideas, discuss state legislative successes and efforts, and exchange information with SCRS national board members.
The day-long meeting was then split between two activities: Discussion of industry issues or projects on which SCRS is currently or is considering addressing and for which it wanted input from affiliates, and brief reports from each of the affiliate groups on its recent activities at a state level.
For example, Bruce Halcro, a shop owner in Helena, Montana, and president of the Montana Collision Repair Specialists, said that state organization was able to strengthen the Montana anti-steering law with wording that prohibits insurers from requiring a vehicle-owner to go to a particular shop for either an estimate or repair. Prior to the change, he said, the law only prevented insurers from requiring the “use” of a particular shop, which some insurers skirted by saying they were sending consumers to a particular shop only for an estimate.
Halcro also said Montana insurers are, if only reluctantly, abiding by a 3-year-old law that the association backed which requires any shop meeting the requirements of a direct repair program to be allowed to participate.
“They’re not opening their arms and saying welcome to the fold. It still takes some effort,” Halcro said. But he cited some examples of shops that with some persistence had been able to participate in insurer DRPs from which they’d previously been excluded.
Jordan Hendler, executive director of the Washington (D.C.) Metropolitan Auto Body Association, said the November issue of the group’s well-known “Hammer & Dolly” publication would be aimed at consumers, with information designed to educate vehicle-owners about issues related to auto insurance and collision repair. She said it will be designed as something a shop could leave in its customer area, and that the association expects to do a similar consumer-focused issue each year.
Representatives of other SCRS state affiliate groups shared ideas that others may find helpful for their associations. Jim Thompson of the Iowa Collision Repair Association said his group has worked to inform state representatives of the National Federation of Independent Businesses (NFIB) about repairer concerns, which has helped get the support and help of NFIB at the state Legislature. Dale Matsumoto of the Automotive Body Painting Association of Hawaii said that group has worked with Geico Insurance on a program in which the insurer pays a portion of the shop wages of apprentice technicians. And Tony Passwater, executive director of the Indiana Auto Body Association, said he’d like to see state groups work jointly on a website (www.myconsumerrights.info) designed to provide consumers with information about collision repair and insurance claims.
During the second half of the meeting, SCRS board members outlined several industry issues in order to discuss with the state affiliate groups what, if any, position or action they feel the national association should take.
SCRS board member Stephen Regan, for example, explained some of the arguments supporting and opposing a proposed shift toward federal rather than state regulation of insurers. Regan said it was unlikely that proposed federal legislation on the issue would move forward this year, but that it was something SCRS and the industry could expect the new Congress to consider next year.
Industry consultant Lou DiLisio said SCRS and its affiliate groups should also consider the possible ramifications of automaker efforts to obtain design patents on body parts that would prohibit production and sale of non-OEM versions of those parts. The International Trade Commission ruled in Ford’s favor when the automaker cited patent infringement by non-OEM parts makers and distributors selling parts for the Ford F-150. DiLisio said that ruling is under appeal but has led to large increases in the number of design patent applications by the automakers for current and upcoming model year vehicle parts.
Attendees at the event appeared somewhat divided over whether OEM design patents would likely have primarily positive or negative implications for the repair industry, making it an issue the SCRS board is likely to continue to research and follow in the coming year.
The Coordinating Committee For Automotive Repair (CCAR) has added a “Paint Rule” module to its S/P2 e-learning program. The new module is available at no additional cost to users of the S/P2 Collision Repair training. Collision shop subscribers can find the module in the “Pollution Prevention” course.
The purpose of the module is to increase awareness of new U.S. Environmental Protection Agency (EPA) regulations applying to Hazardous Air Pollutants (HAPs) in collision shop paint operations. Topics include proper spray gun and spray booth procedures, compliance, training and required recordkeeping for paint-stripping and surface-coating operations.
“It is so important that our auto refinish technicians understand the HAP rule as it applies to their jobs,” said Rod Enlow, CCAR Vice President, Industry Relations. “With the introduction of this module at no additional charge to the S/P2 Collision Pollution Prevention course, all affected personnel have access to awareness training and can pursue compliance well in advance of any mandated completion dates.”
S/P2 (www.sp2.org) is an e-learning program developed by CCAR to address key safety and pollution prevention issues for automotive repair professionals. The training is based on U.S. Environmental Protection Agency (EPA) and U.S. Department of Labor, Occupational Safety, and Health Administration (OSHA) standards, which require that personnel be trained on safety and environmental regulations at the beginning of their employment, and at least annually thereafter.
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