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Letter to the Editor
This article originally appeared in the September, 1999 Issue of INSIGHT
©1999 Collision Repair Industry INSIGHTAll Rights Reserved
Estimating System Providers to Default with Two-Stage Paint Times
CCC International Launches On-Line Estimating Product for UK Market
PPG Completes Acquisition of ICI Refinish in Europe and Americas
Boyd Group Secures $15.7 Million Credit Facility
Akzo Nobel Appoints Rob Molenaar General Manager Car Refinishes North America
Jerry Dalton, Long-Time Industry Leader Dies
FinishMaster Announces Strong Q2 Results; Acquisitions
Securities Fraud Lawsuit Filed Against Unistar Financial
INDUSTRY UPDATE
Responding to shop requests, the three major North American estimating system providers, ADP, CCC and Mitchell, have announced that forthcoming versions of their estimating software will provide users with the option to default their systems wth two-stage refinish times.
ADP’s recently released Shoplink 6.1 is the first to offer users the ability to default with two-stage paint times for both interior and exterior surfaces.
Until now, all systems have used single-stage refinish times for their automatic refinish calculations. To obtain clear coat refinish times, the estimator had to specify, on a vehicle-by-vehicle basis, whether to determine refinish labor with two-stage.
Many repairers have complained in recent years that the system providers had fallen behind the prevalent refinish technology, given that the vast majority of vehicles produced for the last several years have had two-stage finishes applied at the factory.
Kevin Caldwell, collision division director of the Automotive Service Association, believes that the changes have not come soon enough.
According to Caldwell, "ASA met with all the major paint companies and system providers on this issue two years ago. At that time, most paint companies indicated that two-stage represented over 90 percent of the vehicles produced. And, all indicated that about 2-5 percent additional were considered three-stage systems."
Caldwell continues, "ADP has just now implemented two-stage for repairers. What has taken the industry so long to notice? This is a necessary procedure and a lot of time and money has been wasted to get the information out to those who need it."
Both CCC and Mitchell plan to modify their software to allow estimators to choose a two-stage refinish default. The chart below lists the version and expected release dates for two-stage default estimating systems. o
CCC International has announced the launch of what we believe is the industry’s first browser-based internet estimating product, Pathways On-Line. Pathways On-Line uses existing U.S. technology tailored for the UK and mainland Europe markets.
The system, currently in beta testing, will provide repair facilities without the necessary hardware the ability to create estimates and communicate electronically with insurers and fleets using the internet.
Doing so should lower the up front costs for repair facilities that may not write enough CCC estimates to justify purchase of an in-house estimating system or upgrade to the necessary hardware.
Pathways On-Line will create estimates in three modes:
- Thatcham only estimates using the UK-based insurance industry research firm Thatcham’s times for the most popular replacement items;
- Thatcham augmented estimates where Thatcham data will be supplemented with CCC database partner Motor’s information; and
- Motor only estimating.
The company does not currently have plans to launch a similar product in the U.S. market. INSIGHT anticipates, however, that if CCC doesn’t launch their online product in the U.S., one of the other two providers will beat them to the punch.
Internet-based applications, so-called Thin Client Applications in techno jargon, offer great promise to reduce software distribution and implementation costs. Providers can implement software updates as they are developed instead of waiting to hit the street with CD releases on a monthly or quarterly basis. Similarly, updates to parts and labor databases can occur in almost real-time. All this, without the expense of mastering, producing and shipping CDs.
This is not CCC’s first internet enabled application. In July CCC announced that they have introduced a new internet-based service for the storage and retrieval of image workfiles needed for claims review.
CCC’s new service, called Pathways Image Library, allows users to log onto the internet, enter their password and the relevant claim number, and view all images, estimates, administration and vehicle data needed to complete the claims review process.
According to the company, the product, in conjunction with their digital imaging software, eliminates the need to track down paper files and send image files between offices.
Users can view image files from any location, including from the field. In addition, users at multiple locations can view the same image file simultaneously, facilitating negotiation, and speeding claim settlement. Short-term, web-based storage and/or long-term backup storage is available.
The first user of the new Pathways Image Library is California-based 20th Century Insurance, a personal auto insurance company that serves consumers in Arizona, California, Nevada, Oregon and Washington.
According to John Bierer, 20th Century's property claim manager for material damage, "Our staff adjusters already use it and our direct repair partners will be using it soon. It saves time looking for pictures as well as money for buying and processing film. It's reliable. And it allows our adjusters instant access to the photographic documentation they need to do their job."
(Editor’s Note: CCC International, based in the UK, was formed from the CCC Information Services acquisition of Carter & Carter International’s Insurance Services Division as reported in the August, 1998 issue of INSIGHT.).
PPG Industries (NYSE: PPG) announced July 30 that it has completed the major elements of its previously announced acquisition of ICI’s automotive refinish and industrial coatings businesses, those operating in Europe and the Americas.
The entire acquisition, including Asian refinish and industrial coatings businesses to be purchased later this year, is valued at about US$684 million and the largest in PPG’s 116-year history. The units’ 1998 sales were nearly US$460 million.
The Boyd Group Inc. announced July 26 that it has renewed its credit facility with the Toronto-Dominion Bank under terms which will increase its available credit to approximately $15.7 million U.S. ($23.5 million Cdn) from its previous limit of roughly $11.3 million U.S. ($17 million Cdn).
This credit facility will be used primarily to finance future acquisitions as the company continues with its acquisition strategy. As is normal for financings of this nature, the credit facility will be secured by Boyd’s assets.
"This credit facility will provide us with the ability to continue to pay for a portion of our future acquisitions using debt and, in conjunction with our recently announced $25 million capital commitment from trading partners, will significantly stretch our contributed equity and minimize dilution to our shareholders," said Brock Bulbuck, Boyd’s Senior Vice President and CFO.
On July 6 Boyd announced that it has entered into arrangements with BASF, and their wholly-owned jobber operation Automotive Refinish Technologies, that could provide the company with approximately $18 million US ($25 million Cdn) in capital funding over the course of the next three to six years.
Akzo Nobel has announced Rob Molenaar has been named general manager of the company’s North American Car Refinishes operations effective September 1, 1999.
Molenaar, a 16-year veteran of Akzo Nobel and the collision repair industry, will be responsible for leading the company’s management team and ensuring that Akzo Nobel continues to develop innovative products and value-added services for the U.S. market.
Molenaar comes to North America from Singapore, where he has served as the car refinishes manager for Akzo Nobel’s Asia Pacific market since 1995.
Prior to his appointment to the Asia Pacific market, Molenaar served in several key positions, including product marketing, field sales and zone management. From 1993 to 1995 Molenaar was the Akzo Nobel sales manager in Canada.
Faced with a decline in student units and a shortfall in revenue, I-CAR’s newly elected Board of Directors has suspended development of its Uniform Procedures for Collision Repair product.
The main reason for the suspension was the poor sales of the product.
Further UPCR procedure development has been suspended pending decisions as to the best way to make this information available to the Collision Industry. Poor sales to collision repairers have plagued the product since its initial release.
Last month’s issue of INSIGHT included a news article detailing the addition of General Motor’s vehicle specific repair information to UPCR, just the latest effort to make the product more appealing to the industry. Even with product specific information, the product did not generate the anticipated revenue to justify the increased development expense.
To test the use of the internet to distribute procedures existing UPCR procedures are available on the I-CAR web site on a trial basis. I-CAR will measure their usage by the industry.
Also, I-CAR announced its 1999 2000 board of directors and executive committee at their International Annual Meeting in St. Charles, IL in July.
The 1999-2000 executive committee includes:
- Chair, Rick Tuuri, ADP/Claims Solutions Group;
- Vice Chair, Roger Foss, Toyota Motor Sales USA Inc.;
- Treasurer, Timothy M. Clark, SAFECO Insurance Company;
- Secretary, Clark Plucinski, True2Form for Automotive Service Association;
- Gene Hamilton, Sports and Imports; and
- Immediate Past Chair, Joseph A. Landolfi, Sentry Insurance Companies.
The Board also includes 15 Directors:
- Jack R. Aho, General Motors Corporation - Service Operations;
- Mike Davis, State Farm Insurance Co., Director at Large;
- Chris Johnson, Meguiar’s Inc.;
- Rodney M. Kohlhepp, Madison Area Technical College;
- Will Kukelko, Manitoba Public Insurance, Canada Representative;
- George Laurie, Copart, Inc.;
- Bill Lawrence, Caliber Collision Centers, Education Foundation Representative;
- Steven Przybylo, Nissan North America, Inc.;
- Kelly Roe, Carty’s Collision Center;
- Jeffrey V. Russell, Hein-Werner Corporation for Equipment & Tool Institute;
- Joseph L. Sanders, Caliber Collision Centers;
- Lyndsay Smits, L.J. Smits Ltd., New Zealand Representative;
- Ronnie Swygert, Greenwood County Career Center;
- Roger Wright, Collision Team of America;
- Israel Yzaguirre, USAA.
o
Jerry Dalton, Long-Time Industry Leader Dies
Member of WMABA Board for 25 Years
Jerry Dalton, a long-time leader in the collision repair industry, died August 18 in a Denver area hospital of a stroke. He was 56.
Dalton, the co-owner of the Craftsman Auto Body repair facilities in Maryland and Northern Virginia, served on the board of the Washington Metropolitan Auto Body Association (WMABA) for twenty-five consecutive years and was president from 1985 to 1987. His industry leadership extended to the national and international levels. He represented collision repairers before the United States Congress as well as in government forums in Maryland, North Carolina, Oregon, and other states. In addition, he participated in international forums in Australia and Canada and on a fact-finding mission to Taiwan.
Dalton’s contributions to the collision repair industry were extensive: He was recently appointed to the board of directors of the Automotive Service Association (ASA) and served on technical review committees for the Certified Automotive Parts Administration (CAPA) and the review committee for ADP. With WMABA, he worked on developing peer review of consumer complaints via a consumer resolution program while establishing repair facility standards for the association.
Dalton believed in contributing to his community, and he did this without fanfare. He was the founder of a program to help repair damaged police vehicles in the District of Columbia at no cost to the city. Within the first two years of the program, his company repaired 30 police vehicles.
Dalton began his career in the collision industry as a wash boy at his father’s shop, Craftsman Auto Body in Falls Church, Va. In 1973, Dalton and his partner, Frank Krauss, bought the shop from Walter Dalton and his partner, Emmett Early. Craftsman Auto Body was one of the founding members of WMABA.
"We were one of the people who helped get it started," Dalton said in February of 1989. "We have remained members all along because it stands for the right things: our code of ethics, our open rapport with the insurance industry, and our commitment to making the whole industry better."
Friends and colleagues from around the country praised Dalton as a solid leader and a civic-minded person.
"No one has been as much of a contributor to our industry over the last twenty-five years as Jerry Dalton," said Sheila Loftus, the executive director of WMABA. "The strong, steady guidance he gave to WMABA, other organizations, and individuals is irreplaceable. We’ll miss him badly."
Dalton was hiking in the Rocky Mountains in Colorado with several friends when he suffered his stroke.
He is survived by his wife, Connie; his daughter, Cara; his son, Jerrod; his two grandchildren, Pierce and Reese; his mother, Hilda; and brothers Wallace, Roy, and Kenneth; and his sister Carolyn Palmer. Dalton’s family plans to establish a charitable donation fund in his name.
(Editor’s Note: The preceding article is from Hammer & Dolly and is reprinted with permission.)
FinishMaster, Inc., reported August 5 that net income for the quarter ended June 30 increased 86 percent to $1,302,000 on net sales of $83,212,000, compared to net income of $699,000 on net sales of $76,758,000 in the prior year. Earnings per share increased 42 percent to $0.17 from $0.12.
For the six months ended June 30, 1999, net income increased 102 percent to $2,478,000 on net sales of $163,318,000, compared to net income of $1,227,000 on net sales of $152,782,000 in the prior year. Earnings per share increased 57 percent to $0.33 from $0.21. The increase in net sales between years for both the three and six month periods is due primarily to the June 1998 acquisition of LDI AutoPaints, Inc.
"Our second quarter performance is another positive indication of FinishMaster’s progress," said Thomas U. Young, vice chairman. "We continue to increase earnings while furthering our integration efforts which are designed to increase the value and service delivered to our customers. Current integration efforts are focused on implementing a new point-of-sale information technology system to all our store locations. Further, we launched several initiatives in the second quarter of 1999 including a new web site that will serve as a platform for establishing e-commerce links to our customer base in the year 2000. These initiatives should position FinishMaster to continue to generate earnings growth well after integration efficiencies have been fully realized."
On August 23, FinishMaster, Inc. announced it has acquired Topcoat Automotive Paint and Supply Company in Houston, TX, and the Spies Hecker, Inc. jobber operations in Dallas, TX.
Topcoat Automotive Paint and Supply Company will be consolidated into an existing FinishMaster sales outlet. The Spies Hecker acquisition will provide a new location to increase FinishMaster's presence in the Dallas market. o
A securities fraud lawsuits was filed August 19 against Unistar Financial Services by the law office of Steven E. Cauley in the United States District Court for the Northern District of Texas on behalf of purchasers of Unistar common stock during the period between October 15, 1998 and July 20, 1999. The complaint charges Unistar and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint filed by Steven E. Cauley alleges that, throughout the Class Period, the price of Unistar’s common stock was artificially inflated because:
- The company valued its Customer List well in excess of fair market value;
- The company amortized the customer list over an excessive period of time;
- Unistar’s website contained false statements regarding Unistar’s 1999 revenues; and
- Unistar had failed to comply with various legal requirements of the Texas Department of Insurance.
According to the lawsuit filed by Steven E. Cauley, when this information was disclosed to the securities markets, Unistar lost 55 percent of its value in two days, then halted trading on July 20, 1999 and has not traded since. o
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©1999 Collision Repair Industry INSIGHT
All Rights Reserved
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