If you haven’t noticed, many things are changing for the body shop glass business – and, in my opinion, it’s not all good.

Some years back, a married couple I knew taught me quite a lesson in financial management. You see, Diane – who paid all the bills and kept the checkbook tucked away neatly in her purse – kept my friend, Frank, always begging for money. Diane always asked 20 questions: "Do you really need the money?" "Aren’t you paying too much?" "Why can’t you golf at a cheaper course?" "You should buy the house brand. It’s cheaper."

Now Diane, on the other hand, never consulted Frank on any expenses. She just took care of them as cheaply as she could. She didn’t think she was compromising quality for price. She worked hard to cut deals and to get the most for her money, even if it lacked just a little in quality.

The moral of the story? The person with the money can control the person who wants the money.Frank and Diane are just like the insurance company/body shop relationship – they have the checkbook and we want the money.

And it seems that lately, the checks we’re getting for glass repairs are getting smaller all the time. Yet there are so many technical issues to be aware of: structural integrity, shear strength on sealants, rollover crush resistance and the ability to help passive restraints (airbags) deploy correctly.

For example, improperly cured sealants can endanger passengers and drivers lives. If the curing process – especially on a one-part sealant – isn’t long enough, you could then be held liable.

Even if a glass company installs the glass, you’re still liable for the repairs. You need to speak to your attorney, but it’s my understanding that if you hire the subcontractor, you could still be held accountable for the installation because it was your repair job. Ultimately, the buck stops with you.

Considering your responsibilities, you might decide – like we did at our shop – to take control of your own glass installations.

Think about all of those R&R rear, front and side glass panels. When the "glass man" comes out and says he’ll try his best but won’t be responsible if he breaks the glass, you’re now responsible for the repair either way. So I say, why pay him to break it when I can break it myself? Just kidding.

Seriously, if you have a man trained to properly install glass, your odds of breaking the glass aren’t any worse than the official "glass man’s." So again, why not make this a profit center instead of giving all the glass dollars away?

Is Training an Issue?
Today, with clearcoat finishes and tight moldings around the side, front and back glass, many insurance companies require that the glass be removed before painting to decrease problems with clear paints peeling.

Many times, these operations require that you install a new gasket around the window because the old or original one was destroyed while doing the cutout. This makes for additional cost and allows for more risk of totaling out the car.

The biggest risk is breaking the glass – and some of these side windows are very expensive. But on the bright side, you do get to charge R&I on these operations, and you can make good money. (More on that in a minute.)

On the downside, according to I-CAR, even with all the new information out there for us to soak up, they say that 90 percent of the windshields installed are still installed improperly, possibly endangering the occupants. To put the severity in perspective, the National Glass Association (NGA) says that at least 60 percent of the strength in roof crash resistance comes from the windshield and 100 percent of the structural support for airbag deployment.

Also according to the NGA, the technical knowledge needed to do a windshield replacement has increased by 50 times. There are so many decisions and mistakes that can be made: wrong sealants, too short dry times, gasket types, one- or two-part sealants, OEM glass or aftermarket, safety issues with proper primers and pinch weld treatments, etc.

This may sound fairly simple, but it’s actually highly technical and takes one or two good technicians with proper training. Our main glass installer, Phil, went to a one-week intensive glass installation program put on by Ford’s Carlite Division. I also went to this class, and we each installed many windshields during our week in Detroit. Also, Phil, two helpers and I have all gone to two separate I-CAR glass programs, including the newest Enhanced Delivery Program that just came out. Also, we get the latest bulletins from our glass distributor on installations and difficult installations. We also document all our installations, time of day, type of sealant, customer name, make and model of vehicle.

Training and certifications also are available through the Auto Glass Technical Institute. Classes can be found at www.glass.org. Ford’s Carlite Division and PPG’s Glass division also offer training – tricks of the trade, short cuts that are no longer appropriate due to safety issues, etc. These are all things you need to know to do the job because you need to put the glass in correctly the first time. Someone’s life may depend on it.

Common Installation Mistakes We’ve Made
The most common mistake we used to make was putting in the windshield too late in the day and still delivering it the same day. Some of the sealants used didn’t cure as fast as others. For a standard sealant – not "fast cure" – eight hours would be a minimum. Some urethane sealants today claim to have a fast cure time of one to three hours. But if the windshield isn’t cured and the customer takes it out on the road after our installation and has a wreck, the airbag on the passenger side might not deploy properly – blowing the glass out.

Another mistake we made on a regular basis a few years back was painting the pinch weld area of the car before installing the new windshield. We all believed that if the area wasn’t painted, the pinch weld area would rust. I wish I had a dollar for every time I said, "Hurry it up! Get that pinch weld painted! We need this car to go tonight."

Now with proper training, we know that the urethane should only be applied to a special primered surface – a primer that’s usually hand-painted on and made by the manufacturer of the sealant, just for this application. Also, save some of the original sealant if possible. Urethane will adhere properly to other like urethane or urethane primer. A painted surface will only support about 15 percent of the adhesion needed for proper crash and airbag resistance. When was the last time you saw a windshield lying on the ground after a collision? I hope it was a long time ago. If you did see one and it wasn’t a vintage car, the windshield might have been improperly installed or the urethane never completely cured.

I once got a call from a glass vender who said he had a deal for me on some fast-cure cartridges of urethane sealant. He said he’d let me have all I wanted for $3 a tube.

I thought to myself, "This is too good to be true, but why kick a gift horse in the face?"

I’d been paying about $9.50 a tube for the same material, so I told the vender to send me five cases. When they arrived, I was proud as a new father about my big savings. I gave the supplies to Phil, my glass installer, and told him about my good deal.

Later in the day, Phil came down to the office and said, "Boss, are you sure you want me to use this sealant?"

I said, "Yeah, that’s what I bought it for, so we could save some money!"

Phil said, "Boss, this urethane is expired. The shelf life is over."

I asked, "How far over could it be?" I’m thinking that, like milk, you can look at the date on the carton and squeeze an extra day or two out of it.

Phil said it was four months expired.

I had Phil throw it all away. It was an expensive lesson to learn, but shelf life is an important factor in glass safety and adhesion.

Many installers also make the mistake of not fitting the glass before installation. Aftermarket glass doesn’t always fit as well as OEM glass, but it probably fits – just be sure to check it for clearances and curvature. If the repaired windshield post isn’t exactly true, the windshield might crack or leak if the glass isn’t fit before adding sealant. Once you set the glass and give it a friendly pat or two for good measure – crackkkk – now it’s too late. You just lost all your profit on that job. Next time, my installer will fit the glass first. Also, always protect the fenders, hood and roof from being scratched.

The Good and the Bad
You can make lots of extra labor if you just remember to put the labor on your bid. Because of the new clearcoat finishes, you have to clear the full panels and remove (rather than mask off) all rubber gaskets, door handles, moldings and emblems. If you don’t remove these parts, the clear paint could flake off at the edge of the moldings and glass seals, since they fit so tightly to the panel that needs to be painted.

We recently had an ’03 Chrysler Town and Country minivan in our shop. The van had a small 1.5-hour repair down low behind the rear wheel well. We figured 1.0 hour blend time and .5 clearcoat time – a $230 repair. This was a tough blue metallic color van so we wanted to try the "reverse" blend technique to avoid all that extra labor in favor of getting the customer out the door one to two days quicker.

Along comes the insurance company inspector. While we’re still repairing the damage, the inspector said his company didn’t like to blend within the panel because it wasn’t an accepted practice. I agreed with this – knowing he was right – but part of our original rationale was that we were putting our lifetime guarantee on the blended repair as well.

The adjuster insisted on full paint and full blend time. Now we needed to R&R the stationary side window, replace the side window moldings, R&I the bumper, R&I the left quarter trim panel, R&I the left rear door time panel, R&I the left rear door belt molding and R&I the left rear door handle – all for the blend we’d be doing on the left rear door. All these extras cost $600 in labor and materials, so now the repair cost was $829.11 instead of $230. I guess I must be a fool not being happy to make more money, but here’s what happened on this job:

The technician was using a wire to cut out the quarter glass, with the help of another technician. Somewhere in the cut-out process, the quarter glass got scratched, not too badly but enough that the scratch might be noticeable. Unfortunately, a new window wasn’t available; it had to be special ordered at a cost of $175, and it took six working days to get. A two-day job just became a 12-day job including weekends.

We gave the customer a free rental at a $120 cost. Plus we billed the insurance company for the glass since they were the ones that wanted it taken out. Remember, even when a glass shop professional comes out to R&R the glass, they don’t guarantee against breakage or damage. That’s why we billed the insurance company.

Regardless, the bottom line was the customer was out of his car an extra 10 days – not good for CSI. We made good money, but it wasn’t really a happy ending if you ask me.

One more story. About a month ago, we had to cut out a rear glass when installing a quarter panel, and the technician was worried about breaking the glass after he cut it out. Our glass rack was full so he carefully sat the glass outside in a cardboard box to protect it from breakage. As luck would have it, the trash man came the next day during lunch while the employees were gone. He saw the cardboard box sitting against the building outside, not too far from the dumpster, so he did us a favor and threw the box with our glass in the trash-compacting compartment of his truck.

Need I say more?

Not much profit on that job.

You know the saying, "Does a bear live in the woods?" Well, the other saying is "glass breaks," so don’t mess with it if you don’t have to.

NAGS List Pricing
Considering what a high-tech trade glass installation has become, how come there’s so much price fluctuation and labor negotiation on such a technical process? I made many calls to determine where pricing comes from and how it’s negotiated.

What I found is that there are almost as many opinions on the pricing as there are prices. Many times, the discount structure depends on the size of your town or the number of glass shops in your area – competition drives discounts up and profits down.

In my research, I learned that Mitchell International owns the rights to NAGS glass list pricing and parts numbering systems. Mitchell sells the books and manuals and sets list prices. When the list prices were lowered last year, it was a compromise to keep all the manufacturers happy.

These other countries that sell glass to U.S. distributors would naturally have a lower cost than OEM or American aftermarket manufacturers, so the price decrease was done to avoid a very confusing list price system. For example, glass in China would have its own pricing and list prices, American manufacturers would have their own cost and list prices, and

so on. Think about it. Glass made all over the world has the same part number and, therefore, the same NAGS list price. The glass could have been made in Sweden, New Zealand, Zimbabwe, Kuwait, Fuji Islands, Italy, Malaysia or Wichita, Kansas. But, they all have the same list price.

Although the manufacturers don’t really want their list prices lowered, they do want an even playing field. So the NAGS pricing came about. But because the NAGS list prices were so high, insurance companies would demand deep discounts on NAGS list prices, and these prices, many times, after discounting even included the labor cost to install.

The NAGS list pricing calculator was determined long before Mitchell bought NAGS in 1991. The OEM manufacturers list prices are actually much lower than NAGS, but many OEM vendors don’t like selling glass; it’s hard to handle and store. It’s also hard to get an OEM windshield. You can buy from the manufacturer’s glass vendors, but most use NAGS pricing.

However, NAGS new revaluated pricing – the "R" part as it was named – doesn’t seem to be working. According to an article in the August 2003 Auto Glass Repair and Replacement magazine, NAGS Vice President Catherine Howard said, "Now our

customers are complaining, as is everyone else in the supply chain. Pricing addenda are the norm with more and more net-prices parts. We’ve been through two revaluations already, in 1989 and 1999. Discounts are already more than 60 percent, 70 percent and even 80 percent. We can’t make it another seven years. It isn’t working for us – any of us. People are milling about scratching their heads, trying to figure out what went wrong with the system. What are we to do? What are our options?"

Howard talked about the options:

1. The "R" part strategy – The list prices would be marked with an "R" so people could negotiate a better buy or sell price on these parts, particularly if it involved getting more value for labor. "Great in theory, poor in practice," according to Howard. "Few retailers have the market
2. Get the glass manufactures to establish a suggested retail selling price for their branded products. "Huge system changes are needed to accommodate this model," said Howard.
3. Stop all revaluated pricing and use product-only list pricing, excluding labor – just like all the other parts in the industry are priced. Shops could charge their own labor and sell the glass only at list price or at whatever price they elected to sell it for.

Everyone wants the deep discounting and inflated pricing to end. The NAGS pricing is an antiquated system of calculations that’s gone on for years, and it’s an all-inclusive-type pricing that encourages discounting because the list prices are so high. The list prices are sometimes three or four times the list price of the same part listed as OEM in the estimating guides. The list pricing is bizarre at best. You can make very good money on some windshields, and on others, you’ll barely break even.

Because many of the windshields and other car glass have such high list prices, it encourages big discounting by insurance companies that spend a lot on glass replacement. It’d be nice if all glass was sold at a dealer price, and we were able to mark it up and add labor, other molding and sealants and do away with the pricing structure.

List pricing is a large part of the problem but not entirely the problem. Last week we installed a 2000 Dodge Caravan windshield. The list price was $657.55. It was discounted 60 percent to $263.02 plus $40 labor and $22 materials and molding. The sales price including installation was $325.02. That glass cost us $73.95.

Before the "R" revaluation, that windshield had a list price of $1,176.20 with similar discounts. If you could charge the real labor charges as per estimating systems, the labor would be 2.5 hours at your labor rate – much more than $40. But because the list prices aren’t realistic, it drives down labor charges.

On a 2000 quad cab Dakota, we replaced the left rear door glass – a list price per NAGS of $555.25 at 50 percent discount and 4/10 of an hour to put it in. Our cost on that glass was $163. The OEM list price was only $157 list. Either way, we could make money on this glass. Our cost was $122.

The way the system is now, you make more on NAGS, which is why the insurance industry pushes for bigger discounts.

Who’s the Problem?
But list pricing isn’t the only problem. Insurance companies, the larger glass manufacturer/installer companies or even we – the guys at the end of the tunnel – are also to blame.

For example, let’s say you’re the glass shop or body shop doing glass. Mrs. Insurance Company calls one day and says, "We really like doing business with you, but the guy across town is installing glass for 61 percent off NAGS and you’re at 59 percent."

So you ask Mrs. Insurance Company, "Are you sending them all the work?"

Mrs. Insurance company says, "Not all, but most of it. You know my boss. Price is all he cares about."

Then you ask, "If I drop my prices or raise my discount to 62 percent, will I get all the work?"

Mrs. Insurance says, "I can’t guarantee anything, but it might help."

So you say, "My new discount on NAGS is now 62 percent. Thanks for the tip."

Ouch! You just shot yourself in the foot and haven’t even felt the pain yet.

We, as an industry, have been shooting ourselves in the foot day after day. Sure, some try to hold the line, but now some of the larger installer/manufacturers have cut all of us out of the loop and have cut deals for themselves. For example, Farmers Insurance cut a deal with Safelite Auto Glass for 75 percent off NAGS. Wow, were we all asleep that day?

So when Mrs. Insurance Company calls you up next time, she may want 76 percent off NAGS to even consider you. (I’ll venture to bet that Safelite’s system might be a tiered system. The more they sell, the higher the discount. Volume is where it is.)

Shops shouldn’t just give in because the insurance company says to give in. Try to negotiate since you’re having to fit the glass instead of just install it in most cases.

If we don’t slow the spiraling downward trend, it’ll be the end of the automotive glass industry as we know it. At least try to say no! Shops keep saying yes, and once it starts, the discounts keep going up.

As for the glass manufacturers, they could stop dumping bulk product into the system and could develop their own cost and list structures. As it is now, they’d rather let NAGS do it for them, and they’ll continue to cut deals themselves, further eroding the system with their one net discounting.

Then there’s the insurance industry. As far as discounting, the insurance industry is no worse than the shop owner who says he’ll work for a new higher discounted price. Everybody wants to make more money or keep more of it for themselves. The insurance company wants to keep more of theirs, and we keep letting them get away with our profits.

Almost daily, some insurance company faxes me its new discount structure. (See State Farm glass letter.) Let’s look at the State Farm program. It’s one of those love-it-or-leave-it deals. In other words, there’s no negotiating. The discount is what it says in their "Offer and Acceptance Participant" agreement. In May 2002, the NAGS discount was 38 percent, and in August of 2003, the NAGS discount – "the love-it-or-leave-it deal" – is now 56 percent off NAGS with $50 to install it.

It’s strictly a business decision whether you love this or decide to leave it. (Plus, if you don’t go on Lynx direct deposit, they charge you $7.50 to mail you the check for payment. What a deal!)

We ended up dropping the State Farm program because we found it hard to make money the way their system was set up – and you had to wait a month for a check. We still, however, do our own glass work but at a lower discount because we have to fit most of our glass and many times, we take out the windshield long before we put it back in. A glass company’s installer wouldn’t like coming out twice on the same glass. So, bottom line, we aren’t on the program, but we do our own glass work. We don’t get any outside work, but that’s OK because we have plenty to keep us busy.

Many of the other insurers are with the Safelite glass program – where a whole other roller coaster ride exists. Safelite negotiates all their deals on discounts on our behalf. We have no real say in the matter except, "I’ll do it for that" or you’re forced to outsource it to the people who "cut" this great deal for you. They’ll take up your space while putting in your windshield, and if it leaks, the customer comes back to you, not the glass installer.

We no longer participate in programs that won’t allow us to install our own glass. You see, body shops are in a unique position in the glass arena. We can always say the glass has to be fit before installation – and it really should be fit to any opening to the body before installing. So we can charge a little more sometimes or at least reap the profits from the glass work versus subbing it out.

Can You Make Money?
If you can put in your own glass, you still have hope of making money. There are lots of discounters that sell windshields in quantities of three at a time for some tremendous savings.

Example:

2001 Blazer/S10	$49
2002 Chevy P U	$53
2000 Caravan	$69
2001 F150	$59
2001 Ranger	$55

Many of these companies will deliver right to your door or ship you the glass. You can make a little more on the higher discounts if you purchase in the discount glass aftermarket. Many of these discount companies make the glass in other countries, but they still must meet Federal Glass Standards.

Despite all the challenges, we still make decent money on most windshields. But I do see myself giving it up if the insurance companies keep pushing for deeper discounts. I’ll sit home and watch TV before I’ll lose money in the shop.

All that being said, I hope I’ve shown you how complicated the glass issues are. The NAGS pricing, the highly technical nature of the installation process, preserving structural integrity, a leak-proof seal and the ability to direct a passenger airbag in the correct direction at just the right moment are crucial to the installation and safety of the product at hand.

Then there’s the mind-boggling downward spiral of the list pricing discount structure, the low labor payments, some kind of flat rate (old as the Rockies) material caps, deals behind our backs and all the liability that can become our problem if the job isn’t done properly.

Don’t play with people’s lives. Be sure to get proper training to install glass correctly and/or to oversee all glass installers for proper installations. Many of them are paid a flat fee no matter how long it takes, so I honestly doubt they have your best interest at heart. Your customers trust you, so treat them as if you were fixing your mother’s car.

Remember, the buck stops with you.

Andy Batchelor owns Andy’s Auto Body of Alton, Inc. in Alton, Ill., and has been a self-employed automotive repair owner for nearly 30 years. He’s a certified Automotive Specialist with training from Rankin Technical School and a Platinum-certified I-CAR member, and has Master Collision Certification from ASE and a degree in Business Administration from Lewis and Clark Community College. Batchelor also serves as I-CAR’s Southern Illinois Training Chairman. Batchelor and his wife, Nancy, reside in Alton, Ill., and have two children, both married and living in the suburbs of Chicago. Batchelor can be reached at [email protected]