News: Consolidator Report
More than 100 collision industry professionals gather to hear about repairers’ experience so far with PartsTrader.
More than 100 attendees participated in a meeting held by the Mississippi Collision Repair Association on May 23 in Pearl, Miss., to discuss, among other things, the potential impact of State Farm’s parts procurement program on the collision repair industry.
The group was comprised of attorneys, shop owners, OEM and used part vendors, and paint vendors. Also in attendance were Mississippi Attorney General Jim Hood, Patrick Beasley from the Attorney General’s Consumer Protection Division, and John Wells of the Mississippi Insurance Department.
Some of the shop owners and parts distributors traveled from Birmingham, Ala., to share their experience with PartsTrader, which is the name of New Zealand firm that created the parts-ordering/bidding software
that State Farm has been using in its pilot testing of the program. Birmingham is one of the markets where the program is being tested, the others being Grand Rapids, Mich., Tucson, Ariz., and Charlotte, North Carolina.
John Mosley, owner of two-store Clinton Body Shop in Jackson, Miss., opened the meeting with a prayer and the Pledge of Allegiance. Speaker after speaker approached the podium, each expressing concern to the standing-room-only crowd over the intrusiveness of the program to the repair process.
Lloyd Bush, owner of Bush Auto Collision Repair in Gardendale, Ala., admitted he had not tried the program personally. However, after meeting with local and corporate State Farm representatives, he deemed the program “incredibly time consuming” and costly from an administrative standpoint. While he did not determine that there would be a drop in part profitability from those discussions, he did believe that there would be significant delays in procuring parts that he said could otherwise be obtained by conventional methods in much shorter time something that contradicts State Farm’s assertion that the program serves to streamline and expedite the parts procurement process. Bush predicted that discounts and further intrusion will occur once the initial shock of the program subsides.
Willie Myers, owner of Myers Auto Collision in Trussville, Ala., addressed the difficulty in getting direct answers to specific questions about the program in the meetings he had with State Farm. Despite trying to determine how this program would benefit his business and his customers, he failed to extract any information that was positive.
"This program will be as destructive to our businesses as the riots in the ’60s were to the city of Birmingham,” Myers predicted.
Moose Simmons addressed the audience as a representative of Overnight Parts Alliance (OPA), a wholesale parts distribution company that serves 31 OEMs. OPA had several meetings with State Farm and representatives of PartsTrader, and Simmons, echoing Myers’ comments, said they only got evasive and vague answers to the question of how the program was going to benefit others besides State Farm and PartsTrader.
Steve Plier, president of Consumer Auto Repair Excellence, assessed the parts program from his perspective as a former 23-year State Farm employee. At the time he left State Farm, he was the estimatics team manager for the Birmingham market. Plier said he left State Farm because the relationship between the insurer and repairers had morphed into something he was uncomfortable with. He currently serves as a consultant and industry advocate, and has been instrumental in establishing paint and material calculating programs as the prevailing method of billing in several Alabama market areas. He has also helped shops increase productivity and profitability. At the meeting, he stressed the importance of forming and participating in associations and discussing and addressing industry issues as a group, rather than unilaterally.
Attorney General Hood expressed amazement at the size of the crowd and the passion he heard from each of the speakers, saying he only expected to see 18 to 20 people. He and Beasley from the Consumer Protection Division both made a point of telling the audience how much more insight into the collision repair industry they gained as a result of their attendance. They also expressed their belief that the parts procurement program is not in the best interest of the collision repair industry or consumers.
John Wells of the Mississippi Insurance Department closed the meeting by observing that State Farm’s new parts procurement process is more than just an industry issue: “When profitability has been compromised to the extent that collision repair shops no longer have the financial wherewithal to invest in the proper training and tools and pay a decent wage, the consumer unwittingly has been affected because they have no idea that repairs to their vehicles have been compromised as a result.”
This article was written with assistance from Bill Fowler of Bill Fowler’s Bodyworks in Southaven, Miss.