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Letter to the Editor
This article originally appeared in the June 2009 Issue of INSIGHT
©2009 Collision Repair Industry INSIGHT All Rights Reserved
Sherwin-Williams A-Plus Network Awards Top Collision Repairers
CEI Insurance Services Partners with ClaimHub
AASP/NJ Member Earns First Heavy-Duty Truck License Endorsement
Spears to Leave LKQ Corporation
Repair Option Excluded from House Energy and Commerce Committee Cash for Clunkers Program
BASF Redefines Partnership with FinishMaster
Chief Automotive and Rotary Partner for Vehicle Service Group
ABRA’s Cathy Embry Appointed to Georgia’s Child Passenger Safety Board
AutoNation Supports GM Consolidation Plan
SCRS Joins Industry in Outreach to U.S. Attorney General
CIC Discussion highlights benefits and potential pitfalls for development of repair standards
INDUSTRY UPDATE
The Sherwin-Williams Automotive Finishes Corp (SWAFC) A-Plus(TM) Network, the brand’s value added program, has announced the recipients of its annual A-Plus Vision Group Collision Center of the Year:
- Jim Thompson, Bob Mickey Collision, Cedar Rapids, Iowa
- Brandon Gary, Champion Collision, Houston, Texas
- David Shirley, Toyota of Irving, Irving, Texas.
“We are very proud to announce our three A-Plus Network Vision Group Collision Center of the Year’ recipients for 2008. It is a great honor to present these two Owners’ and one Dealership Collision Center Manager with this prestigious award,” said Brandon Devis, SWAFC A-Plus Network Program Manager. “Their hard work and determination to succeed all drove their respective organizations and individual groups to new heights in 2008. Their financial performance was outstanding; driving improved sales, gross profits and bottom line net profit.”
“Jim’s leadership at Bob Mickey Collision helped his organization finish with its strongest performance since joining our Vision Group in 2002. This success catapulted his organization to open a second location in 2009. Jim believes in his people and provides them with all the tools necessary to get the job done,” noted Devis. “In addition, he was a driving force in the establishment of our separate Vision Group for Shop Managers, which was established in 2008. Understanding the features and benefits of the program, Jim regularly sent several of his key staff members to each meeting, to help groom them as future leaders of Bob Mickey Collision.”
“Brandon had a great 2008 at Champion Collision, and is poised to again exceed his goals for 2009. Since joining the group Brandon has been an established leader and has been very influential in bringing new members to meetings and welcoming them into our Vision Groups,” said Devis. “Champion Collision was also the first Sherwin-Williams A-Plus Member to implement AWX waterborne in the Houston metropolitan market.”
“Obviously 2008 was a difficult year for dealerships, and yet we were fortunate to have a number of strong performances in our Dealership Group in 2008. One that stood out was Toyota of Irving,” said Devis. “David Shirley is one of the top dealership collision center managers in the country and posts outstanding performances. He was runner-up for the Toyota Certified Collision Center of the Year Award and is a strong leader in his group and in his facility. Toyota of Irving was a founding member of the Dealership Vision Group in 2003.”
SWAFC began the A-Plus Vision Group Program in 2000 and now has two independent owners groups, one independent managers group, and one dealership collision center group. These groups consist of both single and multiple shop owners and managers. Square One Systems, Inc., an independent “20-Group” provider in the industry, administers and moderates the Vision Group Program.
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CEI Insurance Services, a business unit of The CEI Group, Inc., has established a strategic alliance with ClaimHub, Inc., to offer a turnkey claims processing and direct repair solution for automobile insurance carriers.
The companies’ combined technology and direct repair expertise now enable carriers and their agents to make seamless online connections from existing claims systems to shops in CEI’s managed network of some 4,000 collision repair centers across the United States and Canada.
A CEI press release noted that the partnership has created an easy-to-use, robust web-based solution for managing auto physical damage and property claims.
ClaimHub(TM) provides a centralized claims platform for dispatching, tracking, and reporting on all assignments and work involved in the auto claims process. ClaimHub enables company staff, independent adjusters, glass shops, body shops, and other service providers to send, receive, store, and view work and estimates regardless of users’ system differences.
“In our market, we’ve seen growing demand for our web-based platform to be connected to a first-rate, managed direct repair network,” said Sabrina Hightower, senior vice president, for Overland Park, Kansas-based ClaimHub, Inc. “We conducted a long search to be sure were allying ourselves with the best-in-class direct repair provider. CEI was the clear choice.”
Domenic Brusco, director of CEI Insurance Services, said the partnership with ClaimHub is the first step in the execution of its new marketing strategy to target mid-sized and smaller auto insurance carriers, while it continues to serve large carriers.
“For more than 15 years, we’ve been a direct repair network provider for some of the largest auto insurance companies in North America,” said Brusco. “Our partnership with ClaimHub enables us to combine solutions with a proven integration provider that can drive down insurers’ costs while improving customer service and policyholder retention. It provides a successful DRP solution for carriers who haven’t had access to a high-quality nationwide repair network or who are looking to compliment their own network.”
CEI, founded in 1983, with headquarters near Philadel-phia, Pennsylvania, is North America’s largest third-party provider of accident management and direct repair services to self-insured fleets and insurance companies. It handles more than 100,000 vehicle collision claims a year. CEI has been providing vehicle direct repair program outsourcing to leading property and casualty insurance companies since 1993.
Founded in 2000, ClaimHub, Inc. is focused on delivering state-of-the-art claims workflow solutions to property and casualty insurance companies, self-insureds, third-party administrators, and adjusters for auto physical damage, property, flood and catastrophic loss claims.
Alliance of Automotive Service Providers of New Jersey (AASP/NJ) Legislative Committee Chairman Brian Vesley, owner of Valtek, Inc. in Paterson, is the first Garden State-based operator to receive the recently enacted heavy-duty repair endorsement in the New Jersey Auto Body License Law.
The endorsement, officially in effect since April, holds heavy-duty repair facilities accountable to comparable standards established for regular auto repairers when the License Law went into effect in 2001.
Pleased to see the endorsement finally implemented, Vesley noted that the revisions came after years of exhaustive campaigning by association members.
“When the original Auto Body License Law went into effect in 2001, there was a provision in the law that the Motor Vehicle Commission would provide for a separate heavy-duty enforcement for the license that would govern the repair of trucks and heavy-duty vehicles,” he said. “That wasn’t acted on by the Motor Vehicle Commission until this April.
“Without some kind of a distinction between a shop that’s equipped to repair large trucks or trucks over 14,000 GVW and shops that are better equipped to handle automobiles rather than trucks, there is no protection for the public,” he added. “There were no standards that governed the repair of heavy-duty vehicles compared to cars.”
Vesley is hopeful that the new endorsement will clear up any existing ambiguity over a heavy-duty shop’s legal responsibilities when operating in the state.
“Some heavy-truck shops took the position that the regulations and requirements didn’t apply to them because they didn’t repair cars – they only repaired trucks,” he said. “Now, the Motor Vehicle Commission has made it clear that if you do auto body work on trucks you have to have an auto body license with this endorsement. You have to meet the auto body standards and the heavy duty standards in order to qualify for a license.”
Mark T. Spears, Executive Vice President and Chief Financial Officer of LKQ Corporation, has decided to resign at or about the end of 2009 to pursue personal interests. LKQ has begun a search for his successor.
Spears confirmed that he will continue his duties until a successor is in place. “I will assist with the selection of our new CFO and will help train the new CFO to make the transition as smooth as possible. My target date is December 31, 2009, but I have pledged to remain as CFO as long as my services are needed.”
Speaking of Spears’s many contributions to LKQ, Joseph M. Holsten, President and CEO said, “Mark has been an integral part of LKQ for 10 years, and we greatly appreciate his professionalism, his service and his friendship. He is handing over his department in excellent shape, which should make this transition seamless.”
In addition, LKQ and Spears have entered into a Consulting Agreement that begins on the date of his resignation and continues for five years thereafter. Under the agreement, Spears will provide consulting services as needed with respect to financial matters, including the company's financial statements and capital structure.
LKQ Corporation operates approximately 280 facilities offering a broad range of replacement systems, components, and parts to repair automobiles, light-duty trucks, and heavy-duty trucks.
The Automotive Service Association (ASA) has reported that the U.S. House of Representatives Committee on Energy and Commerce has accepted the fleet modernization amendment into the language of House Bill 2454, the American Clean Energy and Security Act of 2009, by a vote of 50-4. The amendment’s goal is to replace older, less-fuel-efficient vehicles with new, more-fuel-efficient vehicles – thus spurring new car sales in the United States. The program is commonly referred to as “Cash for Clunkers.”
This new provision states that consumers may receive vouchers worth up to $4,500 to help pay for new, more-fuel-efficient cars with a goal of selling 1 million cars in one year. Specifically, the text states:
- The old vehicle must get less than 18 miles per gallon (mpg).
- New passenger cars with mileage of at least 22 mpg are eligible for vouchers.
- If the mileage of the new car is at least 4 mpg higher than the old vehicle, the voucher will be worth $3,500.
- If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $4,500.
The ASA supports a Cash for Clunkers program with a repair option. Further, the ASA supports a Cash for Clunkers program with these key points:
- Includes a vehicle repair option for consumers.
- Programs should be administered by the states.
- Vehicle participation should be tied to emissions and improving air quality.
- Repair cost allowances should be sufficient to address emissions repairs.
The amendment, accepted by the Committee, excludes a vehicle repair option, which could be devastating to independent repairers.
Robert L. Redding Jr., ASA’s Washington, D.C., representative, said: “Arbitrarily removing older vehicles from America’s highways would take vehicles out of independent repair bays, costing jobs and potentially closing small businesses. A repair option tied to higher-emitting vehicles is the most cost-efficient, consumer-friendly approach to a fleet modernization program. This option will also allow low-income vehicle owners who don’t have the resources for a new vehicle to now have a dependable, lower emission vehicle. This legislation has a long way to go and hopefully will improve as it moves forward.”
BASF Automotive Refinish U.S. has redefined an element of its relationship with its fulfillment partner, FinishMaster, to include e-commerce.
BASF has long offered e-commerce capabilities to its customers through its website, bodyshopmall.com, and will continue to do so. However, over the next several weeks, BASF will transition some of its bodyshopmall.com customers to FinishMaster’s pbeconnection.com e-commerce site.
“This expanded arrangement brings the strong relationship between BASF and FinishMaster to a new level of partnership and mutual benefit,” said Chuck Soeder, BASF Business Director, Automotive Refinish and Industrial Coat-ings.
The transition of some e-commerce customers from BASF to FinishMaster has begun.
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In a move designed to better serve customers in the vehicle service and repair markets, and to leverage inherent scale and technology, Rotary and Chief Automotive’s parent company, Dover Industrial Products, has announced the formation of an innovative Vehicle Service Group (VSG). Tom Giacomini, Dover Industrial Products president and CEO said, “This newly formed group includes two Dover companies, Rotary and Chief Automotive Technol-ogies, and will greatly enhance our ability to provide superior levels of service and support to our automotive customers while leveraging the company’s facilities, personnel, and resources.”
VSG will be located in Madison, Indiana, the current location of Rotary’s world headquarters and North American manufacturing facility. Chief will relocate its operations to Madison from its current Grand Island, Nebraska location.
“Chief and Rotary are both world leaders in the automotive industry,” Randy Gard, president of Chief Automotive Technologies explained. “Both companies are known as the quality providers within their respective segments, and both have exceptional and well-established sales channels, service training, and support infrastructures.”
By blending Chief’s product portfolio, service philosophy, and training capabilities with Rotary’s existing family of lift brands, the newly formed VSG aims to be a stronger, more dynamic, and diverse leader in the vehicle service industry. The creation of VSG will also allow the companies to further leverage its global manufacturing footprint into the collision repair market. In addition to its North American manufacturing facility, Rotary maintains additional ISO 9001 certified plants in Asia and Europe.
“We are extremely excited about the potential of this newly formed group, as well as the opportunities it offers for providing our global customers with a level of service and support that’s unmatched in this industry,” stated Gary Kennon, President of the Vehicle Service Group.
Chief is a manufacturer of vehicle frame pulling and anchoring equipment, computerized frame measuring systems, and comprehensive vehicle specification data for the worldwide collision repair industry.
Rotary manufactures vehicle service and storage lifts, and is the only North American lift manufacturer certified to ISO 9001 quality standards.
Cathy Embry, Account Executive for ABRA-Georgia, has been selected as a member of Georgia’s Child Passenger Safety (CPS) Board. She was chosen by the Governor’s Office of Highway Safety to serve as the Board’s At Large Repre-sentative for a three-year term.
The mission of the CPS is to maintain the quality and integrity of the National Child Passenger Safety Program for Georgia practitioners. The work of the Board is a collaborative effort to keep Georgia’s CPS technicians and instructors properly informed about correct child restraint systems.
In March 2008, Embry earned the National Standardized Child Passenger Safety Training Program certification. This program certifies individuals as child passenger safety technicians and instructors. Since the receipt of this certificate, she has been able to train and conduct child safety seat checks where parents and caregivers receive education and hands-on assistance with the proper use of child restraint systems and safety belts.
“As a company, ABRA is very involved in various aspects of vehicle, driver and passenger safety,” stated Embry. “I am proud that I will be able to represent ABRA as I serve on the CPS Board, and to personally be able to help the children in Georgia remain safely restrained while in passenger vehicles.”
ABRA Auto Body & Glass is a national damaged vehicle repair company with 96 facilities in eleven states.
AutoNation, Inc., America's largest automotive retailer, has announced that General Motors notified AutoNation that six of its dealerships were identified for potential closing by GM. The notification is part of GM's communication to approximately 1,100 dealers that GM does not expect to continue as GM dealerships past October 2010. The AutoNation stores marked by GM will not adversely impact AutoNation's 2008 operating incomenor hurt its continuing operations
Commenting on the consolidation plan, Mike Jackson, Chairman and CEO, said, "We believe GM's consolidation plan is a difficult but positive step that will strengthen America's dealer network and improve dealer profitability over the long term. The consolidation plan is consistent with AutoNation's long-term strategy that we implemented in 2000 to consolidate domestic dealerships and realign our brand mix more towards import and premium luxury franchises. With our financial and operational strength and diversified brand mix, we are well-positioned to succeed in the rapidly changing automotive retail landscape."
The Society of Collision Repair Specialists (SCRS) has joined efforts currently supported by a number of collision repair organizations across the country in a request to the Department of Justice, and U.S. Attorney General Eric Holder, to investigate violations of federal antitrust laws that seemingly take place in today's marketplace.
"Stemming from the circulation of a petition designed for leaders of state associations, SCRS felt compelled to offer our support of the efforts underway," stated Barry Dorn, SCRS Chairman. "Our board believed that a letter from the only national trade association dedicated to representing the collision repairer which articulated similar perspectives as those outlined in the petition would help to highlight the importance of the issues raised."
SCRS Executive Director Aaron Schulenburg added, "SCRS has long claimed that our members and affiliate associations are the heartbeat of our organization. We are very confident in our approach and support of this issue because direct correspondences with those members have confirmed the importance of such efforts, and we believe that grassroots efforts such as those that demonstrate the unified voice of the collision repairer are an imperative element in moving this industry forward."
The SCRS letter, which will be sent directly to Attorney General Holder, is as follows:
Dear Attorney General Holder:
In the early 1960s, Attorney General Robert F. Kennedy directed the United States Department of Justice to investigate the market conduct activity of certain insurers and insurance sponsored associations with respect to appraisals and repairs of insured damaged automobiles. The investigation found that 265 insurance companies, represented primarily by three national associations, were in violation of the Sherman Antitrust Act. The Department of Justice filed a civil suit in U.S. District Court in New York against the insurers, and charged them with violation of Sections 1 and 3 of the Sherman Act.
Prior to trial, the parties agreed to a Consent Order which was approved by the court and signed on October 23, 1963. Section IV of the Final Judgment, as approved by the court, stated the defendants and co-conspirators would not operate or participate in any plan, program or practice that recommended appraisers, steer to any business or person, or away from any appraiser or repairer, control activities of appraisers, allocate customers-markets-business of appraisers, or fix, establish or control prices paid for appraisals or charged by repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.
The relevant passage states: (A) Each defendant is enjoined from placing into effect any plan, program or practice which has the purpose or effect of: (1) sponsoring, endorsing or otherwise recommending any appraiser of damage to automobile vehicles: (2) directing, advising or otherwise suggesting that any person or firm do business or refuse to do business with (a) any appraiser of damage to automobile vehicles with respect to the appraisal of such damage, or (b) any independent or dealer franchised automotive repair shop with respect to the repair of damage to automobile vehicles; (3) exercising any control over the activities of any appraiser of damage to automotive vehicles; (4) allocating or dividing customers, territories, markets or business among any appraisers of damage to automotive vehicles; or (5) fixing, establishing, maintaining or otherwise controlling the prices to be paid for the appraisal of damage to automotive vehicles, or to be charged by independent or dealer franchised automotive repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott, or intimidation or by the use of flat rate or parts manuals or otherwise.
It is our understanding the 1963 Consent Decree, so-called, remains in effect today and is enforceable by the Department of Justice, who has sole standing privileges. As such, we also understand that several organizations and individuals have tried to get the U.S. Department of Justice to enforce the Decree over the years, and that a renewed effort is underway by many representatives of the collision repair industry. We wish to express to you our support of the concerns of these entities, and make a request of our own.
The Society of Collision Repair Specialists (SCRS) is a twenty-seven year old national collision repair association, and the only national association in the United States dedicated solely to advance the collision repair professional. Through its direct members and 35 affiliate associations, SCRS is comprised of over 6,000 collision repair businesses and 58,500 specialized professionals who work with consumers and insurance companies to repair collision-damaged vehicles. On behalf of our membership, we are asking that you not only investigate whether the tenants of the 1963 Consent Decree are being violated, but initiate a parallel investigation into probable violations of the Sherman Act and related federal anti-trust and/or restraint of trade statutes by entities which are operating within the collision repair industry currently. Today's market conduct seemingly is unfortunately very similar to that of the 1960s.
It is not the intention of SCRS to accuse all who participate in the collision repair process of illegal behavior; however such participants may include, but are not limited to, insurance companies, appraisers, repair facilities, dealers, and more, and there is no doubt that certain entities today operate in a manner that is clearly inconsistent with the intent, if not the letter, of the law. In part, our industry is being held captive by the market conduct practices of certain insurers who seemingly control almost all facets of the collision repair process. In addition to steering, or deceptively referring, consumers to shops they favor, they dictate what they will pay for labor, parts, procedures, storage, sublet items, towing, and more; with no regulatory accountability or intervention. These practices, in fact, are those which the insurers who signed the 1963 Consent Decree agreed were unacceptable and illegal behavior which they would not resort to in the future.
SCRS is prepared to assist your office with any requests or inquiries you may have to help facilitate a thorough investigation of these practices. Please feel free to have your staff contact our executive director, Aaron Schulenburg, by calling him at 1-302-423-3537 or via e-mail at aaron@scrs.com.
We thank you for your time, and hope you look favorably upon our request.
(Letter signed by SCRS Chairman Barry Dorn)
SCRS encourages all who support this initiative, or who have directly experienced the activities outlined within this letter and press release, to make sure your voices are heard.
In a speech delivered on May 12th by Assistant Attorney General of the Antitrust Division, Christine A. Varney, a key point was made that the current administration is hoping to encourage smaller companies to bring their complaints to the Justice Department about potentially improper business practices. If you have concerns over the practices taking place in your market, or would like to support the request for further investigation into the practices of insurers as it relates to the Sherman Anti Trust regulations, SCRS encourages you to contact the U.S. Department of Justice at the following address:
Department of Justice
Antitrust Division
Office of Operations
950 Pennsylvania Avenue, NW Room 3322
Washington, DC 20530.
As also evidenced in the recent presentation to SCRS members by Connecticut Attorney General Richard Blumenthal, it is possible to build meaningful and effective relationships with local enforcement agencies and officials. SCRS believes that "working together" with these agencies to build a broad understanding of our businesses, and the market activities that exist, is a positive step for both the collision repair industry, and the consumers we serve.
Are formalized industry repair standards something the Collision Industry Conference (CIC) can and should develop?
As chairman of the CIC Repair Standards Committee, Jeff Patti believes the answer is “yes.” Patti took the helm of the committee this year, two years after it was initially formed. The committee previously identified the various patch-work of standards already in place in the industry – here and in other countries – and held panel discussions at CIC to flesh out what would be involved in developing a more centralized and complete set of standards.
At the CIC meeting held in Hartford, Connecticut, in April, Patti briefly outlined more than a dozen “milestones” the committee will seek to hit as the project moves forward. He also outlined what the committee sees as the benefits of standards development for each of the stakeholder groups involved, including shops, consumers, insurers and vendors.
But although no CIC participant in Hartford questioned the intent or criticized the committee’s effort, a number spoke with some skepticism of its chances for succeeding with what they saw as a mammoth undertaking.
“I was involved many years ago in the creation of the UPCR (Uniform Procedures for Collision Repair) that is sitting in the archives of I-CAR somewhere,” industry consultant and former CIC Chairman Lou DiLisio said. “Millions of dollars were spent, and repair standards were created through the inter-industry. But at the end of the day, no one embraced them. So for everybody to go through this effort again, into even more detail – I applaud it and I support it – but at the end of the day, there’s people even in this room who were involved in the creation of UPCR that refused to apply the standards once they were created.”
Scott Biggs of the Assured Performance Network, and Massachusetts shop owner Chuck Sulkala, each questioned how such voluntary standards would ever get implemented.
“If you don’t deal with how you’re going to enforce the standards today and what (standards) you’re going to have some day, what’s the point?” Biggs said.
Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), said the industry would be as well-served by just a consensus among all industry segments – a consensus he said doesn’t appear to exist today – that OEM procedures need to be followed.
“If we can simplify it down to that simple fact, I think this could be very successful,” Schulenburg said. “And it will take a lot less work.”
Others voiced more support and optimism for the committee’s effort. Rick Sherwood of OEM Collision Repair Resources said it will require “proactive outreach” to the industry and to regulators once the standards are developed in order to support implementation. CIC Chairman Russell Thrall said that although CIC cannot enforce any standards, those that it has developed, such as its definition of a “Class A shop,” have been adopted by various entities within the industry and government.
“So it is a massive undertaking,” Thrall said, pointing to the committee’s 118-page outline of the standards that do and should exist. “But will this help point to solutions for some of those friction points? That is the hope of the committee.”
“The idea here it try to get the playing field leveled so cars get fixed properly,” Patti said. “That’s it. Plain and simple. We’re trying to get everyone to agree on the same procedures, so if you have to do ‘XYZ’, you have to do ‘XYZ’. Trying to get every insurance carrier and every repair shop follow the same set of rules. I can’t guarantee that’s going to happen, but we have to try.”
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