Consolidators: Classic Collision Adds Third Location in Minnesota
Brunori talks about how QAP is positioning itself in the marketplace, the supply chain, consolidation, and the company’s charitable efforts.
BodyShop Business recently spoke with David Brunori, president of Quest Automotive Products (QAP), about some of the activities the company has undertaken in the year and a half that has passed since it acquired U.S. Chemical in June 2013.
In the discussion, Brunori talked about how QAP is positioning itself in the marketplace, the supply chain, consolidation, and the company’s charitable efforts toward helping young students establish careers in the collision repair industry.
BodyShop Business: What are some of the significant things you have focused on as a company since acquiring U.S. Chemical?
David Brunori: To sum it up, my focus has been on four key areas: people, product/pricing, programs and culture.
The people aspect was critical, and our employees have always been my priority. With a large integration, like ours, fear of the unknown and anxiety can cause a lot of stress and disruption. I spent as much time as necessary building relationships and simply making sure people understood that Quest is a positive, dynamic and growing organization.
Culture was another key focus for me. The most difficult aspect of this large acquisition was the cultural differences between the two organizations – they were very different. One company was more entrepreneurial and flexible, while the other was more structured and hierarchical. But after 15 months, I’m proud to say that the resulting organization has embraced the best of both companies; we’re entrepreneurial, strategic and polished. The relationships with the employees continue to evolve as we build an understanding of trust and credibility. We have an open door policy in the organization, and our people are honest with criticisms and congratulations – it makes our company stronger.
With regards to product/pricing, the refinish market has evolved over the last four years and, moving forward, we knew QAP had to reevaluate our technologies, products and positions. The Matrix product line has been in the coatings market longer and therefore has had its share of headwinds and lessons learned. Matrix also had 20-plus years of experience formulating and manufacturing low-VOC compliant and National platform basecoats. That technical acumen allowed us to easily identify the gaps and adjust accordingly. Our development and product management teams spent the last year optimizing the Pro-Spray low-VOC solvent technology and product offering as well as the U.S. Chemical (USC) value coatings lineup. There is no doubt that the Pro-Spray brand will accelerate during 2015.
A final key area for me was programs. Fifteen months ago, we ran the coatings commercial teams, Matrix and Pro-Spray, totally separate. Today, a team of regional managers supervises both brands. This format helps with channel management and potential conflicts in the marketplace. Our tech reps support both brands as well, but the sales staff remains separate to respect and help grow current distribution. The USC product line has open distribution, and our focus was on optimizing programs and relationships.
While I focused on people, pricing/product, programs and culture, my marketing and operations leaders focused on integration and synergies in their respective areas.
I wanted to understand how the market perceived QAP. We reached out to third-party consultants, and the feedback that came back was eye-opening. If you sat down with our marketing team, they would show you a 2015 strategic plan that will focus on brand awareness and the perception the market has of our brands. So I think the opportunity for us in 2015 is to really change the perception of QAP and our brands out in the market. QAP is the largest non-OE paint manufacturer – we are a large manufacturer and have fought hard to earn that credibility.
Our operations team has worked diligently since the acquisition to fully integrate the QAP manufacturing sites. Today, the operations team is almost to the finish line with a strategic integration of the manufacturing sites. We have successfully closed two sites, one in Gnadenhutten, Ohio, and the previous headquarters in Walled Lake. In Massillon, QAP invested $2.2 million on a finished goods warehouse expansion and another $1.1 million to align the paint and coatings area, all to better serve our customers across all brands.
BSB: Going forward, do you see any product assimilation or differentiation between the Matrix and Pro-Spray brands to keep them separate?
Brunori: QAP has great brands that appeal to different customer bases. There is substantial market opportunity to support all of the brands. U.S. Chemical & Plastics was the original body filler manufacturer in the U.S. They have great brand equity, awareness and perception. Going forward with the coatings brands, we have a solid strategy that focuses on customer segments. When I think of Matrix, words and phrases that come to mind are born in the USA, American muscle, jeans and work shirts, and American pride. Matrix offers the Variant Color Selector and a larger product offering. When we talk about Pro-Spray, descriptors such as European-based technology, streamlined, task-oriented product line, universal activators and thinners, chromatic color mapping and waterborne come to mind. One brand isn’t better than the other; it just means we know there’s a market channel opportunity to grow our business using all brands.
BSB: Do you have responsibility across the pond?
Brunori: I’m responsible for the entire QAP portfolio, which includes our U.S. and UK businesses. Before the acquisition, the facility in Biggleswade, UK, only manufactured and distributed the Pro-Spray brand. Today, our UK division has access to all QAP products: Pro-Spray, Matrix and USC. The European market is a huge opportunity for QAP – we’ve already begun to expand the commercial team. In addition, there is some reach into the rest of the world through acquisition activities and organic growth.
BSB: What is the state of waterborne to you right now in the industry?
Brunori: We’ve always gone to market with a ‘Choice to Compliance’ perspective. Our low-VOC solvent basecoat platforms in both Matrix and Pro-Spray brands have been hugely successful, however the waterborne platform is an important part of our strategy too. We have one of the industry’s best-performing and preferred waterborne systems, and we market Pro-Spray waterborne basecoat to those customers who prefer this technology. We’re in position to move as the market moves. That’s important to QAP.
BSB: Is there more of a thirst for water among A and B shops versus C and D shops? And if so, why?
Brunori: Definitely. When you look at the typical Pro-Spray waterborne collision repair shop, they’re larger (A or B shop, MSO), more progressive and many times are more involved in the community and branding their businesses. Being green is seen as a strategic advantage, and that’s why many of our waterborne shops are in non-regulated areas. But in the majority of our shops, we find that the painters just want to spray what they’ve been spraying for the last 30 years: solvent. With our Matrix MPB-LV and Pro-Spray low-VOC solvent lineup, they get what they want.
How do we determine the best fit? Our sales reps perform due diligence to understand what the shops are using, where they want to go and how they feel about water technologies. The rep builds their recommendation around that intelligence.
BSB: Does all the consolidation and private equity interest going on in the industry play into your hand?
Brunori: I would come at the question from a different angle and address how it’s impacting our customers. Yes, there has been a lot of private equity interest in our industry, and it’s really driving the consolidation movement at all levels. A major concern for the distribution network centers is the reduced margins to serve the large accounts that the major paint companies are securing. QAP, with our brands and expertise, is perfectly positioned for the opportunity to help.
BSB: From a manufacturer’s perspective, what trends are you seeing in the collision repair industry?
Brunori: I’m seeing the same things you guys are: consolidation at the jobber and shop level, and the majors, through private equity deals, buying and integrating some collision repair centers into their operations. But from my perspective, the reality is that smaller paint manufacturers represent a small percentage of a $1.8 billion market. So, although consolidation may continue on, we welcome the change. The goal for my team is to think outside the box and predict what the industry will look like in the future. Sometimes we’re right, and sometimes we’re wrong. It’s a fluid conversation we have frequently. I have no control over market dynamics, but I do have control over the diversified approach we take to run our business.
BSB: What did you think when the same company that bought Service King then bought DuPont (and renamed it Axalta Coating Systems)?
Brunori: While the sale of DuPont refinish was a shock to many, it wasn’t really a surprise to me. Wall Street has their eye on our market and is causing constriction and transformation. Disruption and change is the new normal. Long-trusted name brands could be gone tomorrow. This has created the perfect opportunity for QAP because distributors and shops are more willing than ever to consider our brands. And once they switch, they’re hooked on our service, performance and, quite honestly, improved profitability. We’ve benefited for sure, but so have the customers. So although there is this disruption going on, we look at it like, how do we take advantage of that? And that’s what we’re really good at.
BSB: Does Ford’s launch of the aluminum F-150 affect you at all? Do you have any products tailored to aluminum?
Brunori: New substrates affect all of us. At QAP, we’re ready. If you visited the Ford booth at SEMA, you saw a custom F-150 completely sprayed in Pro-Spray coatings — from surface prep, to color, to clearcoat. Our global technical team is abreast of new substrates and, in 2015, I think you’ll see QAP releasing aluminum repair product solutions and education to help our customers become better at what they do.
BSB: How active is your company on social media, and has it been effective for you?
Brunori: I think our organization sets the standard for social media engagement – between all of the brands, we have more social media outlets than any other manufacturer. In fact, our Pro-Spray YouTube channel has more subscribers, more than double the second place holder, than any other paint manufacturer (including OE). Our marketing department has a passion for the industry and our customers — they’re in the distributor stores, they’re in the body shops and they understand what type of content our customer likes as well as when and how they like it served. They’re dedicated to helping our customers by educating, entertaining and enlightening. This has increased brand interaction and provided opportunity at the body shop level.
BSB: Explain what Artists 4 Education is, why you got involved and who it benefits.
Brunori: The mission of Artists 4 Education is to raise money for the Collision Repair Education Foundation (CREF) through product-in-kind donations, monetary donations and fundraising activities involving the expert skills of the automotive industry’s top artists across the country. This year was our second year hosting the benefit auction. The first year, we were just trying to figure out how to get this project launched, auctioning almost 40 items and raising $26,000 that was donated to CREF. This year, our goal was $50,000, and I think we’ll exceed that number. We had 17 artists working on some amazing custom creations. We’re fortunate that one of our Matrix reps, Ron Fleenor (a.k.a. “Flea”), is an accomplished custom artist and stepped up this year as a leader of the project. He created more than 70 pieces himself!