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As we embark on yet another NACE, the industry turns its collective head toward the ever-increasing tension between shops and insurers and asks, “What will be done to make this a more productive, pleasurable and mutually profitable relationship? Because what we have today is simply an exercise in continuous frustration and turmoil.”

As if on cue, we find several sources of information nodding in agreement and providing us with hope.

First, this magazine will run a four-part “Industry Unity” series of articles starting in January 2008 that will examine in detail all of the circumstances, nuances and unique characteristics that have evolved and led us to this point. Next, we learned from a recently released Society of Collision Repair Specialists (SCRS) survey entitled “SCRS’ Report on Repair Facility and Insurance Company Relationships” that the business climate among shops in this industry is in desperate – yes, DESPERATE – need of change. And, finally, we were also recently made aware of an industry effort to publish a “Code of Ethics for Collision Repairers,” which proposes minimum requirements for training and facilities, standards for damage analysis, compensation and negotiation, and a form of industry self-regulation with sanctions for shops that don’t comply.

It certainly is no coincidence that these efforts are underway. In fact, many might say they’re long overdue. The degree of difficulty in owning, operating and sustaining a productive and profitable shop in today’s collision industry business environment has skyrocketed in just the past few years. Gone are the Wild West days of a body shop on every street corner and 10 more waiting to open as soon as just one shut down. It’s a fact that there are fewer body shops today than at any time over the past 15 years, and fewer still wanting to open a new shop any time soon. That’s not to say it doesn’t happen, but it’s few and far between nowadays!

A recent “Snapshot of the Collision Industry” survey conducted by the I-CAR Education Foundation and sponsored by Allstate revealed that there were 53,500 shops in business in 1995, and that number has decreased to 46,900 today, a drop of just over 12 percent. Looking at the past five years alone, the pace at which shops close has severely increased, so it looks like this trend will continue. If we trend this out to three years from now, you could project another 5 percent to 7 percent of shops will close, leaving the industry with just over 40,000 shops by 2010. And, according to the same survey, those that remain will be the bigger shops (from a square footage and sales volume point of view) that have been in business the longest and are well established in their markets.

If you’re relatively new (less than 10 years in business) and somewhat small (under $300,000 in annual sales with a shop of perhaps less than 8,000 square feet), your future looks bleak. The data from the I-CAR survey agree with our own market profiles, and clearly the near-term future of this industry belongs to larger, well-established, highly experienced shops.

This isn’t meant to discourage anyone who currently runs a small shop, nor the hopes of anyone wanting to open a new shop. More importantly, it’s meant to provide a clearer understanding of what types of shops have a better chance at succeeding in the tumultuous waters of today’s collision repair market. Based on everything we’re seeing, and in reviewing the data we’ve collected as well as data from other sources, the larger ships with the experienced captains at the helm are the ones that will survive and thrive in this current environment.

Of course, for every shop that evolves or transforms itself to embody the characteristics of the shops that are succeeding today, and for those that are already there, there’s an Edmund Fitzgerald or Titanic example to remind us that it takes a lot more than just power and might and size to succeed in rough seas.

Jon S.Owens,
Publisher