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INSIGHT Inside this month's issue...

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Letter to the Editor

Articles

CIC Planning Meeting Report

Boyd Group to Acquire Service Body Shop in Kansas

Canadian Collision Industry Forum to Hold First Meeting

Ford to Introduce Advanced Crash Sensors to Safety Systems

INDUSTRY UPDATE

The Collision Industry Conference (CIC) Gold Pin Planning meeting, held January 14-16 in Palm Springs, CA, though focused on development of content for the coming year’s meetings included presentations on both parts and materials.

The CIC Parts and Airbag committee, chaired by Lou DiLisio, held another demonstration designed to highlight the problems associated with both aftermarket and OE replacement parts. Unlike previous demonstrations held over the past year, this time the committee conducted a blind test putting non-OE, CAPA-certified sheet metal head-to-head with OE. Parts were installed in two separate trials without any indication of the source of the parts.

The demo, conducted on committee member Kelly Roe’s personal 1996 Ford Windstar minivan, included both OE and CAPA left and right fenders. In addition, both OE and aftermarket right headlight assemblies were installed. Attendees of the meeting were then given the opportunity to judge the parts for both fit and finish and to judge whether the job was passable to the consumer.

While the right front fender was judged evenly in both CAPA-certified and OE variants, the best left front fender was judged to be the CAPA-certified part. (Editor’s Note: See the chart below for complete results.)

If the part fits...

DiLisio was quick to point out that many in the audience were certainly surprised by the outcome, but conclusions from this limited test should not be drawn. The demo was designed to provide many who do not see the fit and finish concerns on a first-hand basis the opportunity to do so.

Jack Gillis, gleefully playing off an earlier statement following a poor CAPA-certified part showing at the October CIC meeting, called this a “good day for CAPA,” echoing his oft quoted remark following October’s demonstration that he conceded was a “bad day for CAPA.”

Buck Haddock of Eagle, an aftermarket parts distributor, pointed out that the test highlighted what he feels shops have known all along. According to Art Dahm, of Southeast Toyota, an OE distributor, “The lack of consistency in quality is the real issue. This demonstration made that just as clear as previous demos.”

Dahm and other OE representative also pointed out that part performance issues, such as corrosion resistance and crash worthiness are not addressed by this type of test.

Though George Gilbert, of Ford’s Customer Service Division, was not present at the CIC planning meeting, INSIGHT spoke with him concerning the results of the test. He echoed a statement to INSIGHT last December, after a similar test where OE parts outperformed the CAPA-certified aftermarket parts.

After the demonstration in December, 1998 Gilbert told INSIGHT that he believed demonstrations regarding quality were not meaningful. At that time Gilbert said that Ford research showed that their best method of competing against non-OE crash parts is on price due to insurers’ focus on that single issue.

“For years Ford has demonstrated and tested OE crash parts versus aftermarket and the OE consistently performs better. To help shops that don’t want to use aftermarket sheet metal we will continue to reduce our pricing to match or beat the aftermarket competition removing price as a consideration,” stated Gilbert. Regarding the most recent test Gilbert reiterated, “The true test of non-OE sheet metal happens everyday in collision repair shops across the country. Our customers tell us and our research shows that OE parts fit better.”

DiLisio promised further demonstrations in 1999. Beyond the CIC meeting in April, the committee is currently developing plans for an on-going demonstration over several days at the Collision One-to-One trade show in Denver, CO on April 9-11.

Also, the CIC will look at the impact of non-OE replacement parts on production as part of normal committee business in the coming year- an outgrowth of the planning process that took place at the meeting. Many shop participants during the meeting felt that the percentage of non-OE parts found to not be of high enough quality to use in actual repairs causes unnecessary and costly delays in the repair process- the cost of which is not apparently considered by insurers that insist on aftermarket parts usage.

Charles Baker, publisher of INSIGHT and chair of the CIC’s Materials Estimating Task Force, presented a report on the recommendations of the task force concerning their future activity. The task force will continue on an ad hoc basis reporting on new developments related to alternatives to today’s dominant refinish hour based estimating methodology as necessary.

Baker presented detailed comparisons of actual refinish materials calculations using the refinish hours method based upon labor data from ADP, CCC and Mitchell estimating systems and calculations based upon Mitchell’s Materials Estimating Guide. These calculations were compared to the alternative area based system often suggested as a more accurate alternative.(Editor’s Note: See chart at right.)

The committee’s change of status to an ad hoc basis effectively terminates the active involvement of the CIC on the materials reimbursement issue.

During the planning meeting, the CIC attendees ranked the top issues that they would address in the coming year. The top issues included:

1. To identify, catalogue, promote and communicate available collision repair training programs and other support materials and make this information available to anyone involved in the Collision Industry.
2. To properly identify and document all repair procedures that are not included, but necessary.
3. Write-It-Right "best practices" and Uniform claims procedures widely practiced in the industry.
4. To explore and report on a new bodyshop operating model including an alternative to the estimate, with emphasis on service and cycle times and practices effect on production.
5. To eliminate cost shifting/fraud in the industry and increase accountability.
6. To establish and report on the use of aftermarket parts and their effect.
7. To discover and disseminate current insurers’ wants and needs including total losses.
8. To research and compare compensation with other trades and to report on personnel issues and the shrinking labor pools including a formalized journeyman program.

The next CIC meeting will take place April 8th in Denver, CO in conjunction with the Collision One-to-One trade show. For more information on this meeting, visit the CIC website at: www.ciclink.com.   o

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Boyd’s First Entry into U.S. Market and First Publicly Traded Collision Repair Consolidator

The Boyd Group, Inc. announced January 15 that it has entered into an agreement to purchase the shares of Service Collision Center, Inc. operating four repair facilities under the Service Body Shop name in Wichita, KS.

Service is Boyd’s first entry into the U.S. market and a platform acquisition into the midwestern United States. The acquisition also represents the first publicly traded collision repair industry consolidator.

The aggregate annual revenues of Service’s four locations are approximately $8.3 million (Cdn), which, when combined with existing operations, will increase Boyd’s annualized gross revenue to nearly $50 million (Cdn).

The undisclosed purchase price will be satisfied through the combination of cash, vendor notes, and shares. Approximately 288,500 Class A shares of Boyd will be issued to Service’s owners, representing approximately $460,000 of the purchase price. The deal is scheduled to close before the end of January.

Boyd also announced that plans to acquire Collision Specialists, Inc., also of Wichita, have been terminated.

“We are extremely excited about bringing Service Body Shop into the Boyd Group,” said Terry Smith, Boyd’s President and CEO. “We are even more excited that Mr. Todd Fox, Service’s former owner, has committed to work with us as we set out to expand from this platform acquisition.”

The Boyd Group, Inc., operates 32 company owned locations and is the largest repair facility operator in Canada. In addition to its company owned locations, Boyd also has 20 third party owned licensed locations trading under its tradenames. The company plans to aggressively acquire and open additional company owned locations as part of its plan to be a leader in the consolidation of the North American collision repair industry. (Editor’s Note: For more on the Boyd Group, see the Investment Update on page 15 of this issue.)

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 The Canadian collision repair industry has formed the Canadian collision Industry Forum (CCIF) to provide collision repairers with a CIC-like forum to address issues of importance to the Canadian collision industry.

The mission of the CCIF is to "provide a forum for the Collision Repair Industry, to share information, best practices, and means to develop solutions to common natural issues and challenges."

CCIF originated from a September 1, 1998 Human Resource Workshop in Toronto hosted by the Automotive Industries Association (AIA). At that workshop four key issues for the survival and growth of the autobody industry were identified.

As a result of these issues it was decided that the industry needed a national voice to address these and other issues. A steering committee was formed, comprised of ten collision repairers representing each province; two representatives from insurance, one public and one private; two representatives from education, one public and one private; and two representatives from AIA's Auto Body Council.

The steering committee met in late November in order to design the working model of the CCIF. CCIF is designed to be a forum for all participants of the Collision Repair Industry including:

• Repairers
• Insurers
• Parts and Materials Suppliers
• Manufacturers
• Information Providers
• General Service Providers
• Related Industries

CCIF is not an association; therefore, it will not have members, only participants. Meetings will have an assigned chairperson and an administrator will be contracted to handle all administrative duties.

"This will be a venue for all of the participants to discuss openly all issues of concern to all participants of the industry," says chairman Ken Friesen. The first meeting of CCIF will be held in conjunction with the I-CAR Canada annual general meeting in Edononton, Alberta, Saturday, March 27, 1999.

For further information, contact chairman, Ken Friesen, Concours auto Body, Calgary, Alberta. (403) 243-6062.   o

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 Ford Motor Company will introduce advanced technology crash sensors that enable their cars and trucks to analyze accident conditions and activate safety devices to help better protect a range of occupants in a variety of frontal crash situations.

Ford's Advanced Restraints System features nearly dozen technologically advanced components that work together to help front-seat occupants receive significantly enhanced protection during frontal crashes - taking into account their seating position, safety belt use, and accident severity.

Elements of the system, which features technologies such as crash severity sensors, a driver-seat position sensor, a passenger weight sensor, safety belt usage sensors, dual-stage inflating airbags, safety belt pretensioners, and energy management retractors, will debut on vehicles beginning this year.

The company will introduce these new technologies on new and significantly freshened models until all Ford passenger cars, trucks, and sport utility vehicles have the complete Advanced Restraints System.

"Ford is changing the very nature of vehicle safety," said Neil Ressler, vice president - Research and Vehicle Technlogy and Ford's chief technical officer. "We are moving beyond mechanical devices for occupant safety and are now adding to the mix a fully integrated, computer-driven system that thinks about and responds to different conditions. This truly marks an evolution in occupant protection.".   o

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