More than 200 collision repairers from across the Southeast showed up for the inaugural Southern Auto Repair Industry Conference and Expo, co-hosted by the Alabama Automotive Repair Industry Society of Excellence (ALARISE) and the Mississippi Collision Repair Association. The event was held April 26-27 at the Beau Rivage Casino and Hotel in Biloxi, Miss.
The event kicked off with a reception and exhibition Friday night featuring a buffet and more than 18 vendors demonstrating their products and services.
On Saturday morning, attendees were treated to a continental breakfast, followed by breakout sessions for both vendors and collision repair shop owners and managers. While the vendors focused on marketing strategies, the shop side heard presentations by Tony Nethery, business development manager for Colormatch, and Mike Ganske, regional business development manager for PPG.
Increasing the Bottom Line
Nethery’s presentation focused on increasing the shop’s bottom line by recognizing that the insignificant can be significant when several operations and parts that are typically overlooked or skipped are added to the repair estimate and final bill. Something as minor as a half hour here and two-tenths there can produce surprisingly large amounts of profit, not sales, when properly documented, said Nethery. Clips, bulbs, seam sealer and many other parts frequently dismissed as unimportant can also fatten the bottom line impressively. Nethery also told the crowd that streamlining processes and blueprinting repairs can also streamline the workflow and increase sales.
Ganske’s segment was titled, “Leading Change 2013," and offered statistical evidence to support the need to recognize the changes in the collision repair industry and various methods to keep a shop up to date and competitive.
According to Ganske, the industry is currently $16 billion over capacity, meaning there are too many shops competing for the same dollar, which will lead to even more shops leaving the marketplace in the near future. Assuming each shop has average annual sales of $1 million, this would mean that 16,000 shops would have to go away in order for shops to maintain those average sales and remain viable. Factoring in the emerging collision avoidance systems newer vehicles will be equipped with, and there will be even less work to go around. Ganske emphasized that investing in training, tools and equipment, and polishing business and marketing skills, is imperative if a shop is to remain viable in an increasingly complex industry.
Parts Programs/Repair Standards
After lunch, Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), reported on topical issues currently filling the trade publication headlines. The first topic was insurance-mandated parts procurement programs such as PartsTrader, and Schulenburg discussed the feedback SCRS has received on how the various programs have been received in various markets. He pointed out that, despite being in place for more than a year in some markets, there has still been no evidence presented that the programs are providing any of the suggested benefits to collision repairers. Looking at a variety of carriers utilizing different procurement platforms and repair facilities operating under their program, Schulenburg indicated how cumbersome and intrusive these mandated programs can be to the shop when it comes to managing vendors and parts. In one instance, the carrier communication recognized the “frustration” repair facilities felt from being obligated to order a variety of parts, each from a different supplier, each in a different state.
Schulenburg also addressed the ongoing dialogue between I-CAR and repair organizations regarding the recognition of OEM published repair procedures as the industry’s standard of repair. His presentation demonstrated the importance of such discussion as he pointed out contrasts between “standard” programs in the U.K. and the U.S. In light of recent legislation filed in the U.S. House and Senate seeking to repeal parts patent laws, he offered a slideshow presentation illustrating common problems shops experience when procuring both used and aftermarket parts that lead to parts returns, exposing the incredible waste of time and money shops are subjected to when attempting to incorporate unfit parts into the repair process.
Predictive Estimating
Rick Leos, Toyota Motor Sales collision repair program developer, gave the audience a peek behind the curtain by offering a brief demonstration of how their predictive estimating program works and the significance it will have on the estimating process. The program is more comprehensive than any estimating program currently in use, adding a myriad of operations and parts currently overlooked and unaccounted for. Additional information on the program will be released later this year, with interest in the program being expressed by several other automakers. Many in the industry believe it could be a game changer in the estimating process by increasing efficiency in both part procurement and cycle times.
Paint & Materials Compensation
Consultant Steve Lanza, along with his shop owner father Frank, addressed the need for a change in the way collision repair shops collect compensation for paint and body materials consumed during the repair process. Steve, who has published a study on the subject, observed that, since 2005, shops have experienced a 61.9 percent increase in the cost of materials while only realizing a 27.1 percent increase in compensation. He pointed to the antiquated and inexact method most in the industry use to calculate material reimbursements, which has led to this decline. He referenced the urgent need to abandon the old method and incorporate one of several material calculating programs that are currently available. Failure to change could ultimately lead to failure to remain in business, he concluded.
Frank Lanza gave a colorful lesson in negotiating skills, stressing the importance of never losing one’s temper but keeping what he referred to as one of his “Frankisms” in the back of your mind at all times: “I love you, but I love me more.”
David vs. Goliath
Ray Gunder, joined by his attorney and friend, Brent Geohagen, rounded out the conference by discussing his long journey of taking on the insurance industry in a modern day David and Goliath battle to get a reasonable resolution to an industry-wide problem: short pays. Gunder spoke of his days of desperation that led him to make the decision that he had two choices: stand and fight back, or close his doors and go home.
Plans are already underway to hold the conference again next year. The date and location will be announced once the arrangements have been finalized.
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