Overcoming Roadblocks
Three men - Bob Anderson, Jerry Kottschade and Joe Sanders - have devoted a great deal of time over the years to assume positions of leadership within their chosen field.
By Michael Regan
4/1/1997
All shop owners, they walk the walk in their own competitive markets,
and they work hard to get and maintain customers, repair vehicles
and deal with local insurance situations. They all have employee
problems, parts problems and not-getting-paid-for-what-they-do
problems.
Still, they strive to satisfy their
own needs for business success and to help better their industry.
Here, they share solutions to many problems facing shop owners
around the country - problems that are, most likely, identical
to those you face.
- Bob Anderson, AAM, owner and president of
Anderson's Automotive Service in Sheffield Village, Ohio. Anderson
is a 29-year veteran of the industry, the 1997 chairman of the
Automotive Service Association (ASA), an ASE master-certified
auto technician, an ASE-certified master auto-body/paint technician,
a two-term past president of ASA Ohio, a past chairman of the
International Autobody Congress and Exposition (NACE), an I-CAR
committee member and instructor and the 1994 BodyShop Business
Executive of the Year.
BSB: In your market, what's
the general climate between shops and insurers? Is it better or
worse than five years ago?
BA: ... Some insurers
are much more suppressive, some are much more dictative in what
they will or won't do, regardless of whether it's a proven, necessary
procedure. ... One of the top three [insurance companies] in our
area refuses to pay, as of recent, for blend. They won't pay for
tint; they won't pay for hazardous-waste disposal. They want to
blend within a panel, do spot repairs, things of that nature.
Totally inappropriate. ... I've had vehicles, for example, a Taurus
that had $8,000 damage: The core support was so severely pushed
back that it broke the pulley off the steering pump, actually
broke a motor mount. They wouldn't pay for unibody. They said,
"Because in your particular marketplace other shops don't
do that, they just measure it out, X-measure it, and put it in."
Contrary to the fact that I showed them in writing
through the I-CAR training manual that it's required and that
X-dimensions are not to replace unibody, 3-D measuring; contrary
to the fact that Ford Motor Company agrees it must be done; and
contrary to the [uniform collision-repair procedures] that have
been developed through I-CAR.
BSB: Did you go up the
ladder on that one?
BA: Didn't do any good.
I went all the way to headquarters.
BSB: And their position
remained the same?
BA: Absolutely! ... The
vehicle owner paid. I learned that, three weeks later, [the insurance company] did reimburse the
customer.
BSB: Is that encouraging?
BA: Well ... what they
do is try to make the shop look bad by saying, "Because you're
our customer, we don't want you to be victimized or penalized,"
so in the end, they still try to make the shop look like the bad
guy. ...
BSB: The diminished-value
issue comes to mind.
BA: Yes ... but I really
don't think (the field appraisers) have a true comprehension or
understanding of diminished value. Contrary to the need of the
repair, whether they recognize it or not ... I think direct-repair
programs have caused them to fear for their jobs because of downsizing
and reduction of staff and field personnel.
I think, in the case of one of the top three insurer's
programs, contrary to what's said, it's certainly a direct-repair
program. ... It started out on a fairly good note. The shop could
write its own estimate, etc. The shop was in full control within
agreements of its criteria. Now ... the good shops are falling
off the program. They don't want the good shops because good shops
are accustomed to charging for what is necessary and needed.
BSB: It raises their claim
costs.
BA: Absolutely. Most areas
are seeing that, instead of the true direct-repair environment
where there's some sort of a trust factor, there is no trust.
They inspect almost every job, and they chop every job to the
bone.
BSB: And there's also
the continued threat of, "One strike, and you're out."
BA: Yes. Very regimented.
And unfortunately, being one of the lead dogs, other insurance
companies watch them very closely, and if one of the big guys
can get away with what I call unfair claims practices, they'll
drive the industry back because the other insurers will look and
say, "They aren't paying, why should we?"
BSB: The consumer or vehicle
owner is the ultimate victim of unfair practices. Is consumer
education part of your day-to-day process?
BA: Absolutely. One thing
that I think separates me from anybody in my marketplace is the
amount of time I spend with customers. When I write an estimate,
I have a questionnaire they fill out. The questionnaire gives
me an inside track before I even look at the car. ... I ask them
if this is their first, second or third estimate. I want to know
how they heard of me. ... If they live locally. ... I ask them
if they plan on having the car repaired, if they plan on having
us do the repair. ... It gives me that ability to target their
concerns. What are they most concerned with? Warranty? Paint match?
Quality of repairs? Timeliness of repairs? From a selling standpoint,
it gives me my close. But it also gives me the opportunity to
address their needs and concerns.
BSB: I would guess that
gives them comfort and confidence?
BA: Yes. When I give them
that estimate, I go over every line of it with them. I explain
what I'm doing, how the times are derived ... right down to one-tenth
of an hour. ... I explain the repair process. ... If I'm going
to replace or repair a component, how I'm going to repair it.
... And I explain that if the insurance company writes an estimate,
it's likely to be much lower than ours. I assure them not to worry
about that, that I will work with their insurance company on their
behalf ... unless we come to an impasse. That's the only point
I'll involve my customer.
... I tell them about the laws, that they don't have
to go out and get three estimates. Even if a person has been sent
here on a direct-repair referral, if I feel he's uncomfortable
with that scenario, I tell him, "You don't have to have me
repair your vehicle. You can take your vehicle anywhere you want
to take it. No insurance company can coerce you in any way, shape
or form to bring your car to a shop you don't want to be at."
BSB: Do you have a follow-up
program with estimates? You do a lot of prequalifying, but there
must be a need for follow-up.
BA: ... In most cases,
I'm able to secure the job on the spot. ... If customers say
they need to contact their insurers, I contact them. [If an insurance
company says it needs multiple estimates], I'll say that they
know that's not true. I'm not intimidated by insurers at all.
But the customer is often very much intimidated, and we can turn
the tide. For those who will let me, I do that. If not, [a thank-you
letter is immediately sent to a customer for] giving us the opportunity
to write the estimate. In five days, if we've not heard anything,
we do a telephone follow-up to ask if there's anything we can
do, any questions we can answer. ... If we don't hear anything
in 14 days, I send out what I call my "last-ditch" letter.
It's assumed we didn't get the job, [so the letter states that]
we hope, in the future if the situation should arise, they would
reconsider us. Then we talk about the warranties we offer and
that we hope they've found a shop that offers comparable warranties.
[Then it states that] if they should have a change of heart, or
if the letter is premature, to please call us if we can be of
further assistance.
BSB: Is there a technician-availability
problem in your market?
BA: Yes. I was fortunate
that a shop in my market went out of business, so I was able to
pick up two of their people. A heavy-collision technician and
one good bodyman. We've also recently been lucky to find a painter.
... In the past year, I hate to think about what I've spent in
advertising, trying to attract people. In many cases, even with
carefully written ads, there's been no response. It's the worst
it's ever been.
BSB: What's going on with
vocational body shop programs in your market?
BA: I can't say there's
been anything positive. The local joint-vocational school has
a certified program; there's not a problem with that. The instructor
is a former shop owner and good friend. In talking with him, the
problem he sees is that the young folks who are going to vocational
schools to pick up a skill are there because they can't make it
academically. He told me that last year, the testing indicated
the vocational students in 12th grade scored at a fourth-grade,
sixth-month average. That's horrible! ... And of those kids, only
three out of 15 want to be there - the rest are there because
they can't make it academically and they had to be put someplace.
BSB: What can we, as an
industry, do to improve the quality of students who consider the
vocational choice up front?
BA: .... Anything we can
do to upgrade and improve our image is beneficial. Cleaning up
your storefront, looking more professional. ... Until parents
look at us as a professional occupation, they're going to discourage
their children to be involved in what they think is a degrading
industry.
- Jerry Kottschade, AAM, is president of Jerry's
Body Shop in Mankato, Minn. He served as ASA chairman in 1995,
was NACE chairman from 1990-1992 and has served on the Certified
Automotive Parts Association (CAPA) Technical Advisory Board.
BSB: Are you computerized?
Do you receive electronic assignments?
JK: Got it all! We have
two estimating systems and photo imaging. We do a lot of on-line
communicating. The cost of communications is prohibitive. Multiple
licensing of the different systems is costly.
BSB: Has your computerization
led to your having a significant market share?
JK: I think it's had an
effect. If a shop doesn't communicate electronically, have the
ability to communicate or have p-page logic estimating today -
if you want to participate in the market - it might be too late
already.
BSB: In some markets across
the country, we're reading about shop consolidation. Are you concerned?
JK: I have concerns about
it. Some of it might be good concerns. If it's a good concept,
we may participate. If it's not a good concept, we would choose
to ignore it. I compare it to networking in the glass industry.
It's definitely a concern.
... I think people have to continue to monitor their
businesses and the trends in the industry, whether it be local,
regional or national, because the industry is changing drastically.
If we don't adapt to it, we won't know what happened until it's
too late.
BSB: Do you feel the steps
you've taken to be a prominent shop in your market are giving
you some security there?
JK: I don't think there
are any guarantees. It helps, but somebody could walk in tomorrow
with bigger pockets than Jerry and rewrite the book.
BSB: Do you actively market
your business?
JK: You bet. No. 1 is
good customer relationships. Also, community involvement.
BSB: Do you follow up
with customers after a repair?
JK: Through [the CSI system].
And if we get a bad call, we follow it up immediately.
BSB: Do vocational body
shop programs exist in your area?
JK: Yes. ... My wife,
who is my office manager and partner, is actively involved working
with the local high schools trying to recruit kids into the trade
and encouraging them to go into the technical college for the
two-year program. We have kids who come in and do job shadowing.
For two to three hours, they observe the repair process. We also
have tours in our shop for high-school counselors ... and we
took three of our technicians and had a booth at a local career
fair.
BSB: Does your wife interface
with the school boards? The school administration?
JK: She was just at a
school-board meeting; she's trying to set up an apprentice program
at one of the schools. She's working on submitting a curriculum.
BSB: The former vocational
student who's been working in a shop for a few years, earning
a good living and driving a nice car makes a real impression on
young students.
JK: The problem we have
is the type of kid who's in school right now. In our immediate
market area, a lot of them are there to go to school but [won't]
continue in the industry when they get out. That's hurting both
ways. We try to get one or two first- and second-year students
so they can work part time while they go to school.
BSB: Do they have a work-study
or work-release program in your area?
JK: I think we have three
of them here right now. One in the body department and two in
the mechanical department.
BSB: It seems that if
we want new technicians, we have to drag them kicking and screaming
into our industry.
JK: The problem is getting
worse. We added another 5,500 square feet last summer, and it
took us until this week to finally get enough technicians.
- Joe Sanders, AAM, is the owner of PRO*CO Collision
Repair Centers in Colleyville, Texas. Sanders is currently the
ASA Collision Division director; a member of I-CAR, the Better
Business Bureau and the CIC; the 1995 BodyShop Business Executive
of the Year; on the board of directors for ASE and I-CAR; and
on advisory panels for Allstate PRO, NACE and Texas State College.
BSB: In your business
market, what's the general climate between shops and insurers?
Is it better or worse than five years ago?
JS: Today we're supposedly
in this relationship of partners, yet frequently, we have more
conflicts than we used to have over little items - and sometimes
some miscommunication. Five years ago, we had friction from each
side not trying to understand where the other was coming from.
Today, it's more pressure from each side trying to understand
each other's position.
BSB: Are there steps you're
taking to ensure your future viability?
JS: Yes. We spend a great
deal of time trying to educate up and through the different levels
of the insurance industry. For example, if we're having somewhat
of a conflict over a specific issue, I'll try to verify our position
by technical bulletins, and I'll solicit information from I-CAR
and the manufacturers, as well as from paint manufacturers, to
try to help explain our position.
BSB: Have you found your
sources, such as paint manufacturers, helpful in providing that
information?
JS: I do. I think the
paint manufacturers truly want us to be successful. We are the
customer. The only thing I wish they would do more of is make
the information more available to the entire industry.
BSB: Would you offer suggestions
as to how they might do that? And would that be at the manufacturer
level or through their distribution channels?
JS: Through a national
paint-manufacturers level. I very much would like to see the paint
manufacturers explain, in national magazines, their recommended
procedures. More specifically, I'd like to see them explain to
the world why they recommend we pull door handles before we refinish
a door. That's just one example. If they would take that information
on a national basis, I believe it would help alleviate much of
the conflict insurers may be having with shops.
BSB: In my experience,
and I'm a paint distributor as well as a former painter, when
we've made efforts to explain technique and procedure and included
the insurance side, the information has often been misquoted and
used against our customers: the paint-buying body shop. That has
left the paint-supply side a little gun shy.
JS: That's an excellent
point, and right now, I've been talking to the paint manufacturers,
trying to get them to be more open with their recommendations.
Currently, many of them are stepping up their efforts to train
more adjusters. What you said I couldn't support before, but it's
exactly what I anticipate will happen. They will be misquoted,
the adjuster will say he learned it at one of the respective paint
manufacturer's training centers, and it's going to make conflict
between us and the paint manufacturers, as well as the distributors.
A better way would be to buy space in national magazines and publish
their positions. Then, if I'm having a conflict with a local field
appraiser or an adjuster, I can go to a national magazine and
say, "Here is the recommended procedure."
BSB: Is the consolidation
of shops we keep reading about a concern for you in your market?
JS: I think it is. In
any major metropolitan area, it certainly needs to be a concern
- at least a consideration. I don't fully understand a lot of
the long-term benefits. ... I fear there are some really good
players in our industry who may get involved in too many things
too fast. And if the industry takes a downturn for a year or so,
it may take its toll on them financially. I'm equally concerned
about big players entering the industry, where instead of consolidation
of existing shops, you may have a new player just walk in and
open up 10 facilities in a major metropolitan area.
BSB: A new player who's
very well-funded?
JS: Very well funded.
Wall Street. And I think that's a possibility. It's probably a
tougher business than people realize, so I think as Wall-Street
types are looking at our industry in terms of major dollars and
some reasonably good profits that could be made, I suspect that
when they get more involved and find out it's really more a hands-on
management business, it may slow down some of that process.
BSB: Do you aggressively
follow up with customers on estimates, as well as on completed
ROs?
JS: We should do better
with that. We have customer-satisfaction return cards, we have
a word track that's very strong when we deliver a car and we'll
do a follow-up call if the marks are less than we anticipated.
We're looking at and considering the possibility of an outside
CSI program. We've been really fortunate for the last two years
in that our area has been really busy. I'm concerned we've become
somewhat lazy in following up estimates.
BSB: If vocational body
shop programs exist in your area, how is the local collision-repair
community involved?
JS: ... I think our industry
can benefit most by being a part of advisory committees. Without
industry involvement, vocational programs have a tendency to slide
behind times. The instructors have a tendency to not stay as sharp
as they should be, and the technology is difficult to keep up
with. ... In our shop, we're developing a career path so we can
show an entry-level employee the levels we'll bring him in at,
some of the training we'll provide, our pay levels ... the criteria
for a starting-level technician, including necessary tools, experience
and training.
BSB: Are the local schools
and their guidance counselors aware of your willingness to let
people view the opportunity?
JS: I'm just finishing
that project. And yes, we've worked with the local schools as
well as a post-secondary school. We have an excellent program
... and I'm on their advisory board. We currently have six employees
who we've gotten out of that program. ... I'm meeting with the
local secondary school; we're talking about sponsoring a student.
I want to meet some young people as they start school and have
them work at our shop. If they meet my criteria, we'll sponsor
them at the post-secondary school.
BSB: You've given us a
lot to think about.
JS: There's something
we didn't talk about ... ethics and integrity. When we talked
about marketing our shop, we really hang our hat talking to customers
about our professionalism. We make our places look comfortable
and professional, and we strive to make sure our shop has the
reputation for very high ethics and integrity. Insurers are aware
of that, and that sometimes helps alleviate conflicts. They know
we don't charge for what we don't do. I like our business being
known for that.
Make It Work for You
An interesting thing about our industry is the accessibility
of people in leadership positions - they're more than willing
to share their knowledge to better your position and that of the
industry itself. Why struggle with trial and error when you've
got a successful shop owner giving you the answers? Take what
these three industry leaders said, adapt it to your shop and make
it work for you.
Michael Regan is president of The J.J.R. Company
in Cleveland, Ohio, and a contributing editor to BodyShop Business.