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Business Tools | This article originally appeared in the October 2009 Issue of INSIGHT ©2009 Collision Repair Industry INSIGHT All Rights Reserved CCAR-GreenLink Adds EPA Paint Rule Training Video to Website AAIA Brings Shop of Tomorrow Technology to AAPEX AMI Live Online Training Course Shows How to Fix a Struggling Business AutobodyMIS to Unveil Materials Invoicing System at NACE 2009 Sherwin-Williams Plans Strong Presence at NACE 2009 Mitchell International Releases Latest Edition of Industry Trends Report ASA MO/KN Members Discuss Heijunka Concept to Decrease Cycle Time and Improve Bottom Line SCRS State Affiliate Groups Meet to Exchange Information and to Discuss National Issues PPG and Penske Racing Mark 25-Year Relationship
INDUSTRY UPDATE
LKQ Corporation has acquired Greenleaf Auto Recyclers, LLC from Schnitzer Steel Industries, Inc. (SSI). Greenleaf is the entity through which SSI operated in the late model automotive parts recycling business. In addition, SSI has acquired from LKQ four retail oriented self-service recycling facilities in Oregon and Washington. LKQ also sold certain business assets to SSI related to two self-service facilities in Northern California and a self-service facility in Portland, Oregon. LKQ will close the two self-service facilities in Northern California and convert the self-service operation in Portland to a wholesale recycling business. LKQ has also agreed, subject to customary closing conditions, to sell SSI two self-service recycling facilities in Dallas, Texas, with an anticipated closing date in mid-January 2010. Terms of these transactions were not disclosed. "These transactions provide us with additional wholesale recycling capacity and enhanced customer penetration in numerous markets in our late model recycled auto parts business line, and provide our initial entry to the northern Virginia market," said Joe Holsten, LKQ's President and Chief Executive Officer. Holsten added, "While the self-service operations we are disposing of are good businesses, they fit better with SSI's operations and business model." The wholesale recycling business acquired consists of 17 operating locations. These facilities are located in Michigan, Ohio, Massachu-setts, Virginia, North Carolina, Georgia, Florida, Texas, and Nevada. LKQ plans to merge certain locations together with its existing wholesale recycling operations, which will result in the elimination of approximately 11 operating locations. LKQ expects to incur restructuring expenses in 2009 and 2010 related to the Greenleaf consolidation efforts. In addition there will be restructuring expenses related to the closing of the self-service businesses in 2009. In looking at the effect of acquiring Greenleaf and selling or closing the self-service businesses, LKQ expects operating results excluding any restructuring expenses or transaction gains or losses to be dilutive in 2009 by approximately $0.01 in diluted earnings per share. However LKQ expects the effects of these transactions on operating results excluding any restructuring expenses or transaction gains or losses over the next four years to be accretive to diluted earnings per share by almost $0.02 in 2010, and by $0.03 to $0.04 after all synergies are implemented. LKQ Corporation is the largest nationwide provider of aftermarket collision replacement products, recycled OEM products, and refurbished OEM collision replacement products. LKQ operates approximately 280 facilities across the U.S. o
The Assured Performance Network, a national co-op group, and General Motors are conducting a pilot program designed to provide body shops with rebates, consumer certificates, shop identification, and promotion when using 100 percent Genuine GM Collision Parts for non-insurer paid repairs. The Assured Performance Co-op is working with General Motors to offer reward rebate to Member body shops for using Genuine GM Collision Parts exclusively when repairing a consumer’s vehicle. The pilot program is called “100% Write.” The program is leveraging the thousands of member body shops participating in the Assured Performance Co-op Network to drive the use of genuine GM Collision Parts where and when the shop and consumer have the discretion. Unlike past parts initiatives, this program provides a rebate incentive directly to the collision repair business when it uses OEM parts entirely for select repairs. The program allows the shop to gain a reward without changing dealers, altering its normal parts procurement process, or changing its local discounts. This special program is designed to assist the shop in providing the highest level of fit and finish and even includes a certificate highlighting the shop’s use of 100 percent Genuine GM Collision Parts to present to the customer. As an added benefit, participating body shops that have been qualified or certified by Assured Performance are able to gain a special designation as a “Genuine Collision Repair Provider” complete with shop identification from GM and promotion by Assured Performance. Scott Biggs, Assured Performance Network CEO, said, “The program is directed at giving the consumer the best quality repair and rewarding the shop for making the right choice. It is also about helping the shop remain profitable. This is a huge opportunity and victory for the independent collision repair business.” The pilot program has been introduced across the country with participating Assured Performance Co-op Members. “The 100% Write program gives us the ability to swap out the imitation parts and put on new OE parts, so the consumer gets a far better repair,” said Kenny Moran, of Master Crafters in Rockville, Maryland, and Assured Performance Co-op Member. “Getting an extra rebate directly from GM is incredible. Now, GM repairs are our most profitable.” Assured Performance Network is the largest network of independently owned shops, with approximately 3,500 qualified, collision repair businesses across the US. The network features both a legal cooperative and the non-profit consumer advocacy organization.
The Coordinating Committee For Automotive Repair (CCAR) has posted a new “Paint Rule” training video featuring NASCAR champion Jeff Gordon on the CCAR-GreenLink(R) Environmental Compliance Assistance Center website in streaming video format. CCAR-GreenLink is the National Environmental Compliance Assistance Center for Auto Repair, operated by CCAR in cooperation with the U.S. EPA, and available free of charge at www.ccar-greenlink.org. The CCAR-GreenLink site is recognized globally as a leading source of environmental compliance and pollution prevention information for automotive operations. The new training video, featuring NASCAR driver Jeff Gordon, is an outreach effort from the EPA’s “Collision Repair Campaign,” an effort to reduce auto body emissions at the national level based on recent EPA regulations applying to Hazardous Air Pollutants (HAPs) in collision shop paint operations, also known as the “Paint Rule.” “The EPA’s new video is an informative and entertaining look into the national Paint Rule and how it will affect painting operations at collision shops in the near future,” said Rod Enlow, CCAR Vice President of Industry Relations. “I encourage everyone in the auto body repair industry to take a look at the video and other resources cited on the CCAR-GreenLink site.” The Coordinating Committee For Automotive Repair, established in 1994, is a 501(c)(3) not-for-profit organization whose 200+ affiliates represent all segments of the automotive industry. CCAR’s mission is to work with the industry around the world, with career/technical schools, governments and other organizations to provide best practice information and training, and to measure improvements related to:
The video and additional information may be found at http://www.ccar-greenlink.org/paintrule.html.
The Automotive Aftermarket Industry Association (AAIA) will feature its Shop of Tomorrow display at the upcoming AAPEX show in Las Vegas, Nevada, November 3-5. The booth will showcase integrated technology solutions that improve workflow in an automotive service shop and demonstrate an application of telematics for remote vehicle diagnostics – all available today. "The Shop of Tomorrow will demonstrate that the independent aftermarket can bring innovative and pioneering technology to the market and address critical vehicle service needs," said Scott Luckett, AAIA vice president, technology standards. "By demonstrating the application of telematics and shop interconnectivity available today, we hope to inspire a new generation of standards-based products in the aftermarket tomorrow." The AAIA technology standard called i.SHOP enables shop equipment and systems to share information about the customer, the vehicle and the service work being performed. The major benefit of i.SHOP is eliminating the paper chase and transforming shop workflow. The Shop of Tomorrow demonstration will feature i.SHOP version 3 products from ALLDATA, Garage Operator, Hunter Engineering, and WHI Solutions as they manage a service work order; retrieve diagnostic and service information; service a vehicle; and order the necessary parts – all using open industry standards. In addition, the Shop of Tomorrow will demonstrate that the aftermarket has all of the technology and tools to diagnose and service vehicles before they even come into the shop. Wireless remote diagnostics and telematics are no longer the exclusive domain of the car manufacturers. A micro-compact "smart fortwo" equipped with a "black box" from Drew Technologies, which adheres to the SAE J2534 recommended practice, will be wirelessly diagnosed and serviced without a technician ever touching the vehicle. "By combining SAE International standards with wireless technology, GPS and the features of i.SHOP, the aftermarket can deliver telematics to any vehicle equipped with on-board diagnostics," Luckett said. The Shop of Tomorrow will be located in booth #2866 on the upper level at AAPEX and live demonstrations will be performed regularly throughout the show. AAIA is a Bethesda, Maryland-based association whose more than 23,000 member and affiliates manufacture, distribute, and sell motor vehicle parts, accessories, service, tool, equipment, materials, and supplies. Through its membership, AAIA represents more than 100,000 repair shops, parts stores, and distribution outlets.
The Automotive Management Institute (AMI) and R. L. O’Connor & Associates, Inc. have teamed up to offer a new live online training course that shows how to turn a struggling automotive service business into a business that meets or exceeds earnings and profit goals. “Business Struggling? Fix it Now … Guaranteed!” is designed specifically for shop owners and managers, and will be offered October 7-8, November 11-12, and December 2-3, 2009, from 10:30 a.m. to 12:30 p.m. CDT. The course will be led by AMI instructor Robert “Bob” O’Connor, R. L. O’Connor & Associates, Inc. It will demonstrate proven methods to increase earnings, improve finances, maximize production from advisors and technicians, and establish and achieve benchmarking goals. The course will allow live interaction with the instructor and other participants, and will consist of two sessions of two hours each for a total of four hours of business improvement training. Participants working toward the Institute’s Accredited Automotive Manager (AAM) designation will earn eight credits for this course. “We know that many shop owners struggle to earn little more than wages, especially in this current economy,” said AMI Executive Director Toni Slaton, AAM. “This course will help them build a roadmap in order to earn a salary and profits suitable for their investment of time and money.” The course is being offered at a special price of $99 with a limit of 25 participants. Tuition includes instruction, workbooks, handout materials, and one each Internet and teleconference connection. To register, call (800) 272-7467, ext. 241, e-mail Linda Ferguson, AMI program administrator, at: lferguson@amionline.org, or register at the AMI website, www.amionline.org. AMI was established in 1989 to answer the demand for continuing education tailored specifically for the business needs of the automotive service industry. To date, AMI programs have attracted more than 184,000 enrollments throughout North America.
AutobodyMIS has scheduled the highly anticipated release of its “Materials Invoicing System” (MIS) to the collision repair industry during NACE 2009. According to AutobodyMIS Chief Architect and Managing Director, Joe Hinkens, “While MIS has been a long time in the making, NACE in Las Vegas on November 5 - 7 comes at a very opportune time and is the perfect platform to officially unveil the latest release.” Hinkens continued, “It’s not surprising there has been so much excitement generated around the industry. Collision repair industry professionals from coast to coast were quick to realize that MIS was built by practicing body shop professionals. Everyone involved in the research and development as well as the original design concepts of the MIS program understands the real world of collision repair. “The outdated ‘hourly multiplier’ method of calculating refinish materials has run its course and no longer meets the requirements of today’s body shops. The Materials Invoicing System fills the need and provides a fast, accurate, and simple method of calculating material costs. Indeed, it is the ongoing quest to maintain profitability in such a fiscally challenging industry that has always been at the heart of MIS and the very reason for its existence.” AutobodyMIS Production Director; Brian Evison added, “Throughout the development and testing process, there were a couple of key features that proved to be of paramount importance to the industry. First, with all the hoops that body shops have to jump through to satisfy the requirements of insurance companies, creating an accurate materials invoice didn’t need to add to the already time consuming administrative process. Consequently, in thirty seconds or less, MIS will print out a detailed, accurate, and job specific invoice. “Secondly, MIS had to stand up to the toughest scrutiny, so extensive shop floor data verification was a must,” Evison continued. “This requirement ultimately led to one of our primary goals of becoming the premier data provider for this highly important area of our business. The relationships we are cultivating with the manufacturers of all reputable body shop products will mean that we are able to combine up to date, verifiable product pricing with actual usage data that we gather on the shop floor of a real live body shop. “The net result, a fast, detailed and irrefutably accurate materials invoice,” Evison concluded. Hands on demonstrations of this latest release can be seen at the AutobodyMIS exhibit in booth # N8602 at the NACE Expo in the Mandalay Bay Convention Center. o
Sherwin-Williams Automotive Finishes Corp. (SWAFC) will again be exhibiting and making a strong presence at the upcoming NACE International Autobody Con-gress & Exposition, November 5 – 7, 2009. The company has long recognized the benefits of partnering with the autobody collision industry and noted the annual show is the largest gathering of automotive repair professionals in the country. “We are excited to again commit and even expand our presence at the NACE/CARS show this year,” said David Sewell, Vice President, Mar-keting, SWAFC. “Despite the challenging economic times, we feel it is imperative to demonstrate a continued leadership position in our support of this first-class industry event.” “The NACE show continues to endure because it's been a great place to meet with customers and market new products and innovations, as well as take part in some of the finest educational sessions in the industry," Sewell added. “The level of participation within the paint company community at NACE has undoubtedly evolved over the years. However, Sherwin-Williams’ support has remained strong. During their 24 years as a NACE exhibitor, they’ve continued to provide true value to our attendees while demonstrating industry support to both current and prospective Sherwin-Williams’ customers,” said Ron Pyle, president of Automotive Service Association (ASA), the sponsor of NACE. With its NACE presence marked by one of the largest exhibition spaces at Mandalay Bay in Las Vegas, the SWAFC booth will be an almost exact replica of its more than 200 leading automotive sales and service branches. SWAFC’s branches incorporate the philosophy of enhancing its customers’ purchasing experience. Each facility offers more than 10,000 SKUs of available automotive paint and associated products. This includes a greater selection of SWAFC-branded products as well as its lean production systems like the HP Process (TM) and its increased profitability maker like Express Scratch Repair(TM). There will also be an extensive line-up of sundries such as sandpapers, body fillers, spray guns, tapes, and safety equipment on display in the SWAFC booth from a number of SWAFC’s leading associated product technical and solutions providers. “We look forward to NACE to again show our commitment to the collision repair industry, by demonstrating the development and continuous improvement of our automotive branches offering the best product mix, technology and services to our customers,” said Sewell. “We will continue to invest in our branches and constantly look for opportunities to improve the SWAFC product and service offerings to coincide with the productivity of our customers as our primary objective.” The Sherwin-Williams Company, founded in 1866, is one of the world's leading companies in the manufacture, distribution and sale of coatings and related products to professional, industrial, commercial and retail customers. Sherwin-Williams Automotive Finishes Corporation, a wholly-owned subsidiary of The Sherwin-Williams Company, manufactures and distributes a complete line of advanced technology paint and coating systems for automotive and fleet refinishing industries.
Mitchell International, Inc., a provider of information, workflow, and performance management solutions to the Property & Casualty claims and Collision Repair industries, recently released the third quarter 2009 edition of its Industry Trends Report (ITR), the company’s quarterly publication that highlights industry-related trends, news items and statistics. This edition's Quarterly Feature, "Looking at Europe to Predict the Future of U.S. Collision Repair," by Mitchell's Vice President of Industry Relations, Greg Horn, compellingly argues that Europe's experience with advanced vehicle technology clearly predicts the future changes in the U.S. collision repair industry. European manufacturers are tackling increased fuel efficiency and mileage targets and mandated side impact standards that will soon reach the U.S. market, which insurance companies must be prepared to estimate and shops expertly trained to repair. Repairers and estimators in the U.S. cannot risk being caught off guard when high-tech vehicles demand highly specialized and very costly repairs—there will be no room for on the job training when safety is at stake in an era of rising prices for parts and labor. Europe’s experience with both high-end and more commonly repaired vehicles, such as Jaguar's new XJ and Volkswagen's new Rabbit, is instructive. Both types of vehicles will soon come to U.S. shops for repair and present challenges to those unfamiliar with their advanced materials and construction. For example, the estimating and repair of new VW Rabbits requires knowledge of Ultra High Strength Steel alloys and the proper techniques to safely repair them. In the case of the Jaguar XJ, its unique new door frame construction is complex enough that the manufacturer will sponsor a door exchange program where the damaged door must be exchanged through the dealer for a rebuilt unit rather than risking a faulty repair. "This is a remarkable time in the collision repair industry. The technological advances taking place are transforming today’s vehicles into increasingly complex pieces of machinery," said Horn. "Just as it did in the 1970s, the high-tech vehicle revolution occurring today in Europe offers a clear and compelling view of the challenges ahead in the U.S. collision repair industry. In the competitive U.S. market, we cannot afford the risk of being left behind. We have to seize the opportunity and prepare to meet our customers’ high expectations for performing advanced repair techniques." Other valuable points of interest in the current issue of Mitchell's ITR include:
Complete content is available in the latest Industry Trends Report, which may be downloaded in PDF format by visiting www.mitchell.com. First published in April 2001, Mitchell's Trends Report has grown in both content and circulation, now reaching more than 23,000 collision and casualty industry professionals.
The Kansas City Collision Group of ASA Missouri/Kansas met September 24, 2009 at Herndon Career Center for a presentation of Heijunka from David McCreight of Collision Resources, Inc. Local Kansas City area shop owners, as well as shop owners as far away as Springfield, Missouri and Ottawa, Kansas attended the presentation. Attendees learned how to reduce operational waste brought on by batching repair work. McCreight demonstrated how the “old-fashion” way of taking cars in on Monday and trying to get them out on Friday was resulting in longer repair times. He provided recent reports from Mitchell International, showing the average repair (keys to keys) taking more than nine days. He pointed out in the current state that most cars carry over at least one weekend giving the repairer leverage to schedule cars in evenly throughout the week. Leveling out the intake of damaged cars throughout the week can easily improve cycle time by two days, improve cash flow and lower expenses for both the repairer and the insurer. As McCreight put it, “Good cycle time is a function of two factors, production capacity and cars on site - your inventory.” He challenged repairers to even out the number of cars to repair during the week. “If the shop repairs 25 cars per week, then the shop should move toward bringing in five cars and delivering five cars each day. The repairers of tomorrow will compete on cycle time and CSI.” He asked the repairers how they will compete with competitors who are twice as fast as they are. Then he asked how they would market being twice as fast as the market and challenged those present to think beyond the industry current state of 2.3 hours of production a day per car. McCreight said that he has helped many repairs move beyond 4.5 hours per day. David Baltz of Herndon Career Center stated, “I ask my students who can to attend these educational meetings because of the real world exposure they get to what is needed in the industry they are training for.” Herndon Career Center works together with local industry leaders to stay abreast of reality in the industry and not just the theory. The center’s goal is to produce students that needs a minimal amount of mentoring when they enter the market place.” “We are happy to work with such a forward looking educational group to help provide our industry with both education and entry level technicians. Herndon’s mechanical and collision programs are both top level programs in which we are proud to assist,” said Sheri Hamilton, Executive Director for ASA Missouri/Kansas. ASA Missouri/Kansas provides monthly education on relevant and timely topics to both mechanical and collision professionals. Future educational opportunities will be available in a web-based setting where more individuals can participate. “In this ever-changing industry, we want to arm our members with the best information we can give them,” said Ben Steinman, State Treasurer and ASA Missouri/Kansas Collision Division Director. The Automotive Service Association is the largest not-for-profit trade association of its kind, internationally serving more than 12,000 businesses and approximately 65,000 professionals from all segments of the automotive service industry. ASA advances professionalism and excellence in the automotive repair industry through education, representation, and member services.
Representatives from many of the 33 state associations affiliated with the Society of Collision Repair Specialists (SCRS) gathered in Chicago in September to share ideas, discuss state legislative successes and efforts, and exchange information with SCRS national board members. SCRS Chairman Barry Dorn said the fourth annual event was designed to help the national association gather input from its state affiliates on its direction and efforts, as well as to help those groups work with one another and with the national organization. “There’s a lot of things that collectively we can do with relative ease if we’re all rowing in one direction,” Dorn said in opening the meeting. “The problem is we sometimes have people rowing in different directions thinking they have a better way to row, but regardless of what stance you take, you’re never going to get anywhere. So our goal is make sure we all talk with each other.” One segment of the two-day meeting consisted of reports from each of the affiliate groups on its recent activities at a state level. For example, Pat Gisler, executive director of the Automotive Service Councils of Kentucky, reported that new legislation in her state says a vehicle with damage exceeding 75 percent of its actual cash value must be declared a salvage vehicle, but the costs for parts and labor related to airbag replacement is not to be factored into this calculation. Gisler said the change should decrease the percentage of vehicles crossing the threshold. There was discussion at the meeting, however, that in some states with similar laws, salvage values have insurers totaling cars below the threshold in order to be able to sell the salvage with an unbranded title. Jordan Hendler of the Washington Metropolitan Auto Body Association said that’s an issue her association is working to address after Maryland enacted legislation last year requiring insurers to submit for branding the title of any vehicle it has acquired when damages exceed 75 percent of the vehicle's actual cash value prior to the loss. Gisler said the Kentucky association is working on an anti-steering bill it hopes to get introduced into the state legislature later this year. Roger Bonn, a Minnesota shop owner and collision division chairman of the Alliance of Automotive Service Providers of Minnesota (AASP-MN), said a year-old association-backed state law prohibiting an insurer from “unilaterally and arbitrarily disregard(ing) a repair operation or cost identified by an estimating system” has benefited many shops in the state. “If something is listed as a mechanical operation in the book, for example, you get paid mechanical rate. No bickering, no discussion,” Bonn said. “It’s had a tremendous effect on our business.” Judell Anderson, executive director of the AASP-MN, said use of the new law does vary somewhat by shop and market in the state, and it may not apply in a shop’s dealings with an insurer with which the shop has a direct repair agreement. “But overall it’s been very effective, a very positive thing,” Anderson said. Anderson said the association has for now shelved plans for a shop licensing bill, but will again attempt to get a ban on insurer-owned shops enacted (such a bill failed to move in the state legislature earlier this year). Jeff Leatherock of the Oklahoma Auto Body Association said his group is expecting a 3-year process to get its shop licensing bill enacted. Aaron Schulenburg, executive director of SCRS, briefly summarized some of the association’s efforts on a national level in 2008, including supporting the Database Enhancement Gateway, the Collision Industry Conference Database Committee, and the effort to push U.S. Attorney General Eric Holder to investigate insurer actions the association believes are "clearly inconsistent with the intent, if not the letter, of the law." The association had recently begun hosting business management seminars around the country, and has actively voiced concerns about airbag- and parts-related draft legislation proposed by the National Conference of Insurance Legislators (NCOIL).
Last summer, PPG and Penske Racing celebrated a successful 25-year relationship. The two companies established their partnership in 1984 through PPG’s participation in motorsports and sponsorship of the PPG Cup from 1979 to 1999 in the CART Series, where Penske Racing teams competed. The opportunities between the two companies started with PPG providing paint for Penske race cars. Over the years, the relationship has grown and PPG has become Penske Corporation’s largest supplier of refinish coatings for its racing, truck leasing and automotive collision repair subsidiaries. “We are very proud of the partnership we have with PPG,” said Roger Penske, founder and chairman of Penske Corporation. “Working together as we do in so many areas of our business has been beneficial for all of us. PPG’s quality products, services and continuous innovations have helped us throughout our racing activities, as well as in our automotive and truck leasing businesses.” “The Penske success story has been remarkable,” commented John Outcalt, vice president Auto Refinish Americas for PPG. “Being a part of it for 25 years means maintaining a continuous commitment to the teamwork that ensures both partners prosper. Our organizations work together well and it shows, and we believe this partnership will only grow stronger in the years to come.” In celebration of this relationship, three PPG business units were featured on the No. 77 Dodge Charger driven by Sam Hornish, Jr. at the August 2 NASCAR Cup Series race at Pocono Raceway in Long Pond, PA. This vehicle was painted with PPG’s Envirobase(R) High Performance waterborne paint. PPG Automotive Refinish recently assisted Penske Racing in its efforts to become more environmentally conscious by switching the organization’s Mooresville, North Carolina NASCAR facility to Envirobase High Performance waterborne paint. Now Penske NASCAR race cars are painted in this environmentally-friendly product. Envirobase High Performance has lower volatile organic compounds (VOCs), which results in reduced pollution and a safer working environment for paint technicians.
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