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Letter to the Editor
This article originally appeared in the August 2009 Issue of INSIGHT
©2009 Collision Repair Industry INSIGHT All Rights Reserved
Minnesota Auto Glass Companies Win State Supreme Court Decision
LKQ Creates Program to Support Cash for Clunkers
NASTF Improves Information Request System
Service Station Association Says Right to Repair Act Levels Playing Field for Small Independents
I-CAR Education Foundation Calls for Applications for 2009 Instructor of the Year Award
ASA Sherwin-Williams to Offer Estimator Certification Program for Lexus College
Automotive Recyclers Stand Ready to Process CARS Trade-in Vehicles
Sherwin-Williams 2Q Profit Falls 7 Percent
CCAR Administers Over 1.2 Million S/P2 Online Tests to Students in 2008-09 School Year
I-CAR Names New Regional Managers
ASA Collision Division Continues Time Study to Address Feather, Edge, and Fill Issues
INDUSTRY UPDATE
The Minnesota Supreme Court has issued its long awaited decision on a case involving the ability of auto glass companies to receive assignments of insurance proceeds and pursue short payments from insurers. The justices who sat on the case agreed that assignments of insurance proceeds after auto glass has been damaged are valid even if the insurance policy contains an anti-assignment clause. This is a huge victory for glass companies in Minnesota that have been among the most active in seeking additional payments for short paid invoices.
Earlier, the Minnesota Court of Appeals had held in two separate cases that anti-assignment clauses in auto policies invalidated assignments received by glass companies. Without an assignment of the insurance proceeds, glass companies lack legal standing to pursue their claims for additional payment.
Rick Rosar, owner of Rapid Glass, a member of the International Glass Association (IGA) Board of Directors from Minnesota, called the decision very important in the ongoing battle by glass companies to be paid fair and reasonable amounts. "Everyone in this industry knows that the insurance companies generally have been squeezing us on their reimbursements. Our only ability to fight back is through the courts and through arbitration. The key to the courthouse door, however, is the assignment of insurance proceeds. When the Court of Appeals said our assignments were invalid, they took away our only effective recourse for collecting short payments. The Supreme Court rightly gave us back the key and now we can again take up the fight."
The Supreme Court decision comes out of four separate trial court decisions involving three Minnesota glass companies, including IGA member Jerry Mattison's Star Windshield Repair, and four insurance companies (Western National, Austin Mutual, State Farm, and Auto Owners). In three of the cases, glass companies had initially won short pay arbitrations against the insurers.
The losing insurers all went to court seeking to set aside the awards claiming that the assignments were invalid. The fourth case involved an effort by Auto Owners, which had lost three previous arbitrations with Star Windshield, to block additional arbitrations with that company. Again, the issue presented was the validity of the assignment of proceeds.
Ultimately, the Minnesota Court of Appeals held that the assignments were invalid and that the glass companies could not force the insurers into arbitration. Over a year ago, the Minnesota Supreme Court decided to take review of the cases.
In an opinion authored by Justice Alan Page, the court held that even though the insurance policies contain anti-assignment language, the public policy in Minnesota, as expressed by the Minnesota Legislature, is that insurers must deal with glass companies directly. As a result, assignments of insurance proceeds, at least as they relate to auto glass claims, are valid even if the insurance policy has language in it that could be interpreted as invalidating the assignments.
Although the court relied on Minnesota Statutes as the foundation for its decision, it noted that "our decision today fits squarely with the majority rule, which limits the validity of anti-assignment clauses to pre-loss assignments in insurance contracts."
The case was argued on January 6 of this year. The glass companies were represented by Chuck Lloyd of the Minneapolis law firm of Livgard & Lloyd, who is also the attorney for the IGA. The appeals were pursued by a grouping of glass companies representing both the Minnesota Chapter of the IGA and members of the Minnesota Glass Association.
The IGA's Rick Rosar spearheaded the effort to bring the rival companies together for a common cause. "We haven't always seen things the same way as competitors, but on this issue, we were able to set aside our disagreements and act in the best interests of our entire industry. This is a great victory for all glass companies in Minnesota and shows how the IGA helps protect our industry and advance our causes."
The IGA is the only association dedicated to the needs of the independent glass companies in North America. IGA members are located in all 50 U.S. states and ten countries.
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LKQ Corporation and its vehicle recycling operations have created the LKQ Assured CARS Disposal Program to assist automobile dealers that accept trade-in vehicles under the Car Allowance Rebate System (CARS). LKQ will provide certification of proper destruction, free towing services and payment upon pick up of the trade-in units accepted by automobile dealers.
Under the CARS program, consumers will receive up to $4,500 in credit toward the purchase of new, more fuel efficient vehicles if their trade-in vehicles meet strict eligibility guidelines. The CARS Act requires that participating dealers must arrange for the trade-in vehicles to be crushed or shredded. They may not be sold as used-cars.
"The CARS program could result in up to 250,000 late model vehicles being traded in for new automobiles," said Lenny Damron, Vice President of Operations - Self Service Division. "Automobile dealers will need to ensure that the trade-in vehicles they accept are disposed of properly by having them crushed or shredded. LKQ has the facilities and process in place to guarantee the proper recycling of the vehicles."
LKQ's footprint of Self Service and Full Service vehicle recycling locations in many markets across the U.S. can provide disposal services to participating automobile dealers. Auto dealers should call the LKQ Program Vehicle Center to locate the nearest LKQ location.
LKQ has 39 Self Service vehicle recycling locations and 63 Full Service vehicle recycling locations operating in the U.S. and Canada. In 2008, the company acquired more than 440,000 end-of-life vehicles to be recycled.
The National Automotive Service Task Force (NASTF) has made a new, more accessible Information Request System available to allow individuals to submit information requests for any incidents of missing service information they may encounter. The new module also allows anyone to view the history of information request submissions since December 2004.
“We are always looking for ways to make the NASTF process more accessible, and the changes to the existing Information Request System do just that,” said Charlie Gorman, chairman of NASTF.
Users can access the information request system through the NASTF website at www.nastf.org/informationrequest.
“Technicians need to have a way to access critical OEM service information and address any shortcomings in what is available quickly and efficiently,” Gorman continued. “Pro-viding this access and a process for identifying gaps in service information is at the heart of the NASTF mission.”
Gorman also thanked the International Automotive Technicians Network (IATN) for its support in hosting the Information Request process up to this point. “We are grateful for the support of all of our industry partners and wish to offer a special thanks to the folks at IATN who have been invaluable in getting the NASTF process established and facilitating its growth and acceptance within the service industry,” he concluded.
NASTF was established in 2000 to identify, communicate and resolve gaps in the availability and accessibility of automotive service information, service training, diagnostic tools, and equipment for the benefit of automotive service professionals and their customers.
Passage of the Motor Vehicle Owners’ Right to Repair Act (HR 2057) will allow small businesses to compete on a level playing field and ensure the long term survival of a competitive automotive repair industry, according to Paul Fiore, executive vice president of the Service Station Dealers of America and Allied Trades (SSDA-AT).
"We often hear members of Congress talk about the challenges facing small businesses and the need to help them compete. Passage of the Right to Repair Act is a chance for Congress to demonstrate their commitment to small businesses throughout the country,” said Fiore. “Millions of car owners trust local repair shops to provide affordable and convenient automotive repair service. The Right to Repair Act ensures that these small businesses can complete fairly by requiring equitable access to the tools, software, safety alerts and repair information required to diagnose and repair today’s vehicles.”
Because vehicles are becoming increasingly sophisticated with virtually every system either monitored or controlled by computers, servicing these vehicle systems to keep them in safe working condition requires ready access to complete and accurate information, tools and software from the car companies. The Right to Repair Act offers protections for vehicle owners and their trusted repair facilities by making it illegal for vehicle manufacturers to withhold information necessary to diagnose, service or repair motor vehicles.
“Many of our members have small businesses that have been in their family for generations. They are not seeking an unfair advantage, nor are they looking for access to the proprietary information protected by the bill. Instead, they are asking Congress to ensure that they are able to compete fairly now and in the future,” continued Fiore.
A complete list of Congressional co-sponsors and a copy of the Motor Vehicle Owners’ Right to Repair Act (HR 2057) can be found by visiting www.righttorepair.org.
The Motor Vehicle Owners’ Right to Repair Act, which was introduced by Reps. Edolphus Towns (D-NY), Anna Eshoo (D-CA) and George Miller (D-CA), would require car companies to make the same service information and tools capabilities available to independent repair shops that they provide to their franchised dealer networks. The legislation further provides car companies with strong protections for their trade secrets unless that information is provided to the franchised new car dealers. The bill clarifies the responsibilities of the Federal Trade Commission in enforcing the bill’s requirements.
The I-CAR Education Foundation will open the call for applications for the I CAR Education Foundation's Instructor of the Year award on August 3, 2009. The winner of the award will receive an expense-paid trip to NACE 2009 where the instructor will be recognized for his/her achievement.
This award is open to all collision repair instructors teaching at career and technical schools and colleges that utilize the I-CAR Live Curriculum. Members of the industry and fellow educators can nominate an instructor for this award by visiting www.ed-foundation.org and downloading the I-CAR Education Foundation Instructor of the Year Award application. Collision repair instructors are welcome to nominate themselves for the award as well. Applications will be available after August 3, 2009.
“Education is vital to the collision industry, be it the continuing education a senior technician receives or that first class an aspiring entry-level technician attends in high school,” said Scott Kruger, I-CAR Education Foundation Exec-utive Director. “The I-CAR Education Foundation is proud to recognize those collision repair instructors who successfully inform, excite, and enable a young person’s skill and curiosity, transforming a passion for cars into a successful career.”
Applications must be submitted by September 30, 2009 in order to be considered for the award. Winners will be notified in early October in order to schedule their trip to NACE.
Lexus will partner with Sherwin-Williams Automotive Finishes Corp. (SWAFC) to offer the Estimating Solutions for Profit class as part of its Lexus College estimator certification program.
The program is a seven-hour, hands-on workshop, provides estimators with the techniques, skills, and information necessary to write more profitable estimates.The class comprises real world estimating scenarios and industry-specific issues pertaining to Lexus body shop operations and insurance company relations.
The damage estimators participating in Lexus College’s new estimator certification program will be challenged to move away from the traditional method of estimating and embrace a more comprehensive approach, called “blueprinting” the repair plan.
“Sherwin-Williams’ Estimating Solutions for Profit class is a great fit for our Lexus estimators, because it integrates the Lexus ‘Customer First’ philosophy and raises the customer’s experience level in the Lexus Collision Center,” said Matt Monahan, Lexus Senior Dealer Operations Consultant.
“Our partnership with Toyota Motor Sales USA has provided an effective training program for their dealership collision center estimators for the past eight years, and we are excited to extend the Estimating Solutions for Profit program to Lexus College,” said Steve Feltovich, SWAFC Business Consulting Services Manager.
SWAFC’s Estimating Solu-tions for Profit class is approved and accredited by the Automotive Management Institute (AMI) and offers twelve credits toward AMI’s diploma program.
The course will be available to all of Lexus’s 200 dealership partners nationwide, which represent approximately 55 collision centers within its dealer network.
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With automobile dealerships around the country heavily marketing to the consumer the benefits of the “clunker” trade-in under the federal government Car Allowance Rebate System (CARS) program in hopes to boost sales, there may be some question as to what happens to those tens of thousands of vehicles that are expected to be received for new, more environmentally efficient ones. According to a press release from the Automotive Recylers Association (ARA) automotive recyclers throughout the United States are prepared to process those vehicles and handle them according to the rules set forth under the CARS program to achieve the highest of environmental standards. With protecting the environment being a major component in this legislation, recycling these vehicles is the next logical step.
The automotive recycling industry is dedicated to the efficient removal and reuse of “green” automotive parts, and the proper recycling of inoperable motor vehicles. With strong participation in best-in-class programs such as the Certified Automotive Recycler program and other partnerships, members of the ARA provide consumers with quality, low-cost alternatives for vehicle replacement parts, while preserving our environment for a “greener” tomorrow.
“ARA-member automotive recyclers stand ready to maximize the recycled parts reuse in an environmentally sound way, and get the vehicle through to the scrap process efficiently and effectively,” said Michael Wilson, ARA executive vice president. “ARA members have access to the most current environmental regulations, as required by the Environmental Protection Agency and other local and state agencies, and we encourage members to uphold, and even surpass, those standards while processing retired cars. Furthermore, our members will provide the best possible service to all parties – peace of mind for the consumer trading in a car, speed of service to the dealership requiring help with vehicle disposal, and excellence in customer service to potential buyers of recycled parts – all the way to processing the vehicle for scrap.”
Established in 1943, the Automotive Recyclers Associ-ation represents over 4,500 auto recycling facilities in the United States and in fourteen other countries around the world.
Paint maker Sherwin-Williams has announced that its profit in the second quarter dropped seven percent as the economic downturn cut into its paint sales, but its earnings exceeded what analysts expected.
The company reported earnings of $158 million in the second quarter of 2009 compared with $171.7 million in the second quarter of 2008. Revenue dropped by 12.6 percent to $1.95 billion, from $2.23 billion a year earlier.
The Global Finishes Group's net sales stated in U.S. dollars decreased 16.2 percent to $409.7 million in the quarter and 18.8 percent to $772.2 million in six months, due primarily to lower paint sales volume and unfavorable currency translation rate changes that were partially offset by acquisitions and selling price increases. In the quarter and six months, unfavorable currency translation rate changes decreased net sales of the Global Finishes Group in U.S. dollars by 8.5 percent and 9.5 percent, respectively, and acquisitions increased net sales by 1.6 percent and 2.0 percent, respectively. Stated in U.S. dollars, Global Finishes Group segment profit in the quarter decreased to $31.2 million from $48.0 million and decreased in six months to $36.5 million from $91.1 million last year.
Segment profit declined in the quarter and six months primarily due to reductions in sales and unfavorable operating efficiencies related to lower manufacturing volume partially offset by good expense control. As a percent to net external sales, segment profit was 7.6 percent in the quarter versus 9.8 percent last year and 4.7 percent in six months compared to 9.6 percent in 2008.
"We continue to manage through this unprecedented downturn in global paint demand that has affected virtually every segment of the market," Christopher M. Connor, chairman and chief executive, said in a statement.
The Coordinating Committee For Automotive Repair (CCAR) recorded more than 1.2 million online exams for its Safety and Pollution Prevention (S/P2) e-learning program to students from automotive training programs in the U.S. during the 2008-09 school year.
“CCAR is proud of our role in improving the industry through environmental and safety and environmental awareness training provided to schools,” said Lin Peacock, CCAR Chairman and Senior Director, Insurance Plans and Programs for the National Automobile Dealers Association (NADA). “Year by year, we know that these students are taking an increased awareness of best practices into the workplace, and the cumulative result can only benefit the automotive industry through safer work habits and strengthened environmental compliance.”
Daren Fristoe, CCAR President and Chief Operating Officer, commented, “CCAR continues to focus on improving the safety and environmental practices of today’s working technicians, as well as students preparing for their upcoming careers.”
The Inter-Industry Conference on Auto Collision Repair (I-CAR) has named six individuals that will move into the newly-created Regional Manager roles for the not-for-profit training organization on August 1.
Gene Lopez will join I-CAR to head the Southwest region and will be located in Glendora, California. Since 1998 Lopez has been the Director of Development for Seidner’s Collision Centers and has also been an active part-time instructor for I-CAR. His experience extends from material inventory management in aerospace and medical implant devices to automotive refinish sales. Lopez has received numerous awards and recognition in management, sales, and personal development. He is the recipient of the Automotive Management Institute (AMI) “Tom Babcox Award” for his desire to improve the automotive service industry through management education. He has been certified by the California department of Insurance to facilitate Continuing Education course work to insurance agents. Lopez has earned the AMI accreditation AAM (Accredited Automotive Manager). He has also held several volunteer positions in the collision repair industry including serving as a committee chairperson for I-CAR, participating on several high school and college advisory boards, and serving as a member of the South Coast Air Quality Management District’s task force on Monitoring, Recording, and Reporting Volatile Organic Compounds.
German Mejia will head the Southeast region from Atlanta, Georgia. Since 1990, Mejia has been active in marketing and sales in the southeast U.S., Latin America, and Caribbean markets, developing channels of distribution for resins, dispersions, automotive refinish paint, and collision repair equipment and products. Mejia’s experience includes roles with AK Finishes, Valspar, and Akzo Nobel. In 2005, he founded Automotriz Colisiones a magazine dedicated to the automotive refinish and collision repair industry for the Caribbean and Latin America. Mejia holds a degree in International Business from Florida Atlantic University, and specialized in international economics at Cambridge University in Cambridge, England.
Bob Mickey, currently with I-CAR as the Western Zone Manager, will head the Northwest region based in Mukilteo, Washington. Mickey has been with I-CAR for 15 years, managing I-CAR training for the western and northwestern regions of the U.S. Prior to coming on board with I-CAR, Mickey served as Executive Director for the Autobody Craftsman Association for eight years. Mickey holds a degree in Management from the University of Oregon.
Keith Risley will become Regional Manager of the Northcentral region and will be based in Aurora, Illinois. Risley has joined I-CAR with experience in the collision repair industry and over fifteen years of experience in the insurance industry, at both Nationwide and Allstate. In addition to serving as Auto Claims Manager and Claims Trainer for Nationwide, he also was successful heading a start-up agency.
Doug Schlueter will manage the Southcentral region and will be based in Overland Park, Kansas. Schlueter brings over twenty years of operations and sales management leadership to the organization and most recently served as Vice President of Sales and Marketing for a national cleaning company. Prior to that he held positions as Director of Auctions for Yellow Corporation, General Manager for Copart and IAA, and Manager for Hertz and Enterprise Rent-A-Car. Schlueter received his bachelor’s degree in marketing from the University of North Texas.
Allan Smith will lead the Northeast region and will be based in Media, PA. Smith comes to I-CAR with extensive Automotive Paint Sales experience. His recent experience includes his role as Regional Sales Manager for Sharpe Spray Equipment (a division of Graco) where he worked directly with NAPA stores, Snap-on dealers, as well as automotive warehouse distributors along the east coast. Smith also held Territory Manager and Trainer positions for PPG Industries and for Sherwin-Williams.
“Ultimately this new structure is for the benefit of the inter-industry,” said Jeff Peevy, I-CAR Director of Field Operations. “This will allow for greater efficiency and an even better support structure for volunteers and instructors as they receive the added support they deserve.”
“The Mission and Vision of I-CAR are key in this move,” said John Edelen, I-CAR President and CEO. “By providing a framework that meets and exceeds the needs of the inter-industry, the inter-industry will have an even greater capacity to achieve safe, cost-effective repairs and to provide a quality experience for the collision repair consumer.”
The new Regional Managers will spend a month in training with I-CAR and will officially assume their new roles on August 1.
The Automotive Service Association’s Collision Division Operations Committee continues its study on time requirements to properly handle quality repairs. Part of this effort includes ASA’s current feather, edge and fill time study.
“The issue of proper compensation for feather, edge and fill continues to hamper the efficiencies of the repair shop and strain the relationship between the repairer and the insurer. The goal is to have an automated process to compensate for the overlooked steps necessary to complete a quality repair. This could be based on the area of the repair involving feather, edge and fill or a percentage of the straightening time, similar to the concept of paint and material calculations,” said Darrell Amberson, AAM, ASA Collision Division director and president of Lehman’s Garage in Bloomington, Minnesota.
ASA’s previous study was conducted in 2005 and included more than 100 records. To continue to explore this topic, strengthen the necessity of compensation for work performed, and bring feather, edge, and fill back into the forefront of the industry, ASA is asking its collision members to become involved in a nationwide effort to systematically gather this data.
“Participation is critical to this project; yet, the effort is simple and systematic. It requires photographs and completing an official feather, edge and fill form for each vehicle report submitted for the project,” said Denise Caspersen, ASA’s Collision Division manager. “ASA’s Estimating Subcommittee and members of its operations committee are encouraging each ASA member willing to participate to complete 10 time studies. Through their participation and the sharing of information, perhaps the feather, edge and fill issue can be resolved.”
To participate, ASA members may download the project kit (a three-page Adobe Acrobat PDF) in the Members Only section of the ASA Web site (www.ASAshop.org). The kit includes the following items:
- The 2009 Feather, Edge and Fill Project sheet, which explains the project and the process.
- The 2009 Feather, Edge and Fill Project time study form, which is used to collect the data for each time study.
- The 2009 Feather, Edge and Fill Time Study example form, which provides a sample of a completed time study.
Photographs and documentation submitted for the study should be sent to denisec@asashop.org. Forms may be submitted through Aug. 31, 2009. For more information, contact Caspersen at 800.272.7467, ext. 236, or via e-mail.
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