August 1999 Editor's Page
There's No Free Lunch - Revisited

This month we receive public confirmation that competition is driving refinish paint manufacturers and their jobbers to take whatever means necessary to expand and/or protect their marketshare.

It started with a free computer system, or the subsidized spray booth, to secure a repairer's business. Today, this has progressed to the level of multi-million dollar payments and loan guarantees directly from the manufacturers.

On the first page, we detail the early July announcement by BASF that, through their wholly-owned jobber group Automotive Refinish Technologies (ART), they will invest up to $17 million in the Canada-based Boyd Group repair chain. Investment, though, is not exactly the whole story.

BASF will take no equity or debt holder position with the Boyd Group. Instead, BASF receives all of Boyd's paint and materials business during the six-year term of the agreement. For Boyd to receive the full $17 million, they must meet certain performance and growth goals. Basically, the $17 million is tied to expansion.

The question for many repairers is now, "Where's mine?"

BASF customers will be posing that question the next time their jobber or manufacturer's rep walks through the door. Customers of competing brands will also attempt to leverage BASF's largesse to secure better deals for themselves.

Don't take this statement the wrong way. INSIGHT has not retreated from our position that there is no Free Lunch. Repairers will pay for the freebies they receive in the form of higher paint prices and reduced service. For many repairers, a better return might come from a supported, productive product at a fair price.

Occasional bouts of technological change, such as the switch to urethane and higher solids materials in the early 1990s, presented momentary opportunities for suppliers to differentiate their products. Today, rightly or wrongly, most shops view paint brands as interchangeable.

Paint companies, for their part, have fought this commoditization through the introduction of value-added programs, formula retrieval computer systems, and color matching tools they hope will set them apart in a crowded field.