September 2020 Southwest Edition by Autobody News

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Survey Finds Shop Sales Down, but Employment Steady, Optimism Improving by John Yoswick

An industry survey this summer not surprisingly found a significant decline in shop revenues this spring, but it also found shops were not continuing to lay off employees and were actually growing less concerned about weathering the storm. About 250 shops responding to a survey in June reported data on the number of full-time employees they had in June compared to pre-pandemic. Those shops combined said they had 3,718 full-time employees, an average of about 15 employees per

shop, in early March, but had dropped to 3,293 employees in June, a decline of about 11%, to an average of about 13 employees per shop. That was an improvement from earlier months, when surveys found employee counts were down as much as 18% in April and 15% in May. Additionally, nearly three in five shops in June had the same number of fulltime employees as they did pre-pandemic. “This is a family business, and the owner cares greatly for his staff and their families, and is committed See Survey Finds, Page 16

PPP Forgiveness: No Need to Rush, and Other Tips by Jeff Drew and Ken Tysiak, Journal of Accountancy

Although forgiveness for Paycheck Protection Program (PPP) loans is a foremost topic on the minds of borrowers and the CPAs who advise them, experts are saying borrowers should not rush to apply for forgiveness. Long-expected FAQs expected to clarify many PPP-related issues are still awaited from the U.S. Small Business Administration (SBA) and Treasury. In addition, the loan forgiveness application has not been updated to reflect the recent five-

week extension of the program’s deadline to Aug. 8. A big reason for these delays is that Congress is debating a new round of COVID-19 relief, which is expected to include a second PPP initiative more targeted than the first one, said Mark Peterson, the executive vice president who heads the AICPA’s advocacy team in Washington, D.C. Those discussions also may include major changes relaxing the forgiveness requirements for the smallest loans, possibly those up to $100,000 or $150,000. “The situation is very dynamSee PPP Forgiveness, Page 14

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AUTOBODYNEWS.COM Vol. 39 / Issue 9 / September 2020

Focus Advisors Releases Midyear Updates on Collision Repair Industry David Roberts, Focus Advisors’ managing director, sent an email Aug. 7 reviewing the advisory firm’s updates on the collision industry. “It’s August and we are more than halfway through a most extraordinary year,” Roberts said. “The Great Pause continues. What follows is our midyear update.” Operations Average shop revenues are down 25% to 30% across the country, though it varies by region and by the intensity of regional COVID cases. Most shops are slowly returning to

higher volumes. The best news—many operators have figured out how to maintain close to normal margins on dramatically reduced revenues. The recession of 2009 taught operators how to both survive and then improve operations while under financial duress. Lessons well-learned then are helping the best operators weather this even more extraordinary downturn. PPP loans have had a universally positive impact for those operators who were successful in their applications. The relaxation of repayment See Midyear Updates, Page 20

New CIC ‘Industry Relations’ Committee Seeks Progress by Expanding Beyond Shops, Insurers by John Huetter, Repairer Driven News

The CIC has replaced its Insurer-Repairer Committee with an Industry Relations Committee, seeking progress and greater understanding on issues that affect all other segments of the industry as well. The committee presented the virtual CIC on July 23 a slide showing all the potential stakeholders when a vehicle owner or lessee crashes a car. The list included not just the motorist, insurer and repairer, but also the OEM; dealership; sublet providers like glass, PDR and towing interests; suppliers; educators; regulators; information and tech providers like estimating systems, management systems and diagnostic providers; trade groups; and trade press. Co-Chairman Jim Keller, of 1Collision, said the panel now has “about 35 total” participants, and it seeks a “great cross-section” of representation. Core members today include representatives from four insurers,

five repairers—counting Keller’s 1Collision—Audi, SCRS, Fayetteville Technical Community College and I-CAR, Enterprise, CCC, 3M and Auto Techcelerators.

Collision Industry Conference Industry Relations Committee member Jonathan Chase, of National General, speaks to the July 23 virtual CIC. Credit: Screenshot from CIC video

Asked at one point about recyclers, Keller encouraged them to get in touch; he’d love to have some on the panel. Committee member Mark Algie, of 3M, challenged his other paint and materials colleagues to participate and noted that some supplier issues deserved attention. Co-Chairman Mark Allen, of Audi, said both he and former Insurer-Repairer Relations Committee Co-Chairman Clint Marlow, of See ‘Industry Relations’, Page 46

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CONTENTS

Hertz Settlement Calls for Disposal of 182,521 Vehicles by ARN staff

REGIONAL

NATIONAL

98th Soldier Wins Dream Automotive Job at

AAPEX 2020 to Be Virtual Experience ................12

Auto Insurance Refunds Save New Mexicans $60 Million ...................................................13 Cancer Survivor Receives Christmas in July Gift from CARSTAR Sheer Metal ......................6 Gerber, Enterprise Expand in Arizona as Local Development Remains Bullish .......................23 Karma Automotive Expands Retail Presence in TX ...............................................................6 Navistar Virtually Breaks Ground on San Antonio Manufacturing Facility...................................12 Tesla Selects Texas as Home to Its Next U.S. Factory ..................................................13 Teslas from Austin Factory Will Have to Be Shipped Off-State Before Being Sold in TX ......8 Texas Man Accused of Buying Lamborghini Urus With COVID Relief Funds .......................24 Tulsa’s Non-Gigafactory Future Isn’t All Gloom and Doom ..........................................16 Woman Charged with Body Shop Embezzling......6

American Views 2020: Trust, Media and Democracy .....................................................4 ARA Takes Summer Road Trip Virtual, Annual Convention to Follow Suit..............................48 Asbury Announces Record Q2 Results ...............48

of OEM Certification ......................................51 Dean Fisher Now I-CAR Board Member .............43 FCA, Waymo Expand Autonomous Driving Tech ...43 Focus Advisors Releases Midyear Updates on Collision Repair Industry.............................1 Hertz Settlement Calls for Disposal of 182,521 Vehicles ............................................3 Honda is Asking Office Staff to Work on Assembly Line ..............................................51 Hurricane Isaias Insured Losses Estimated to Top $4.2B in U.S. and Caribbean ...............48 LKQ Corp. Appoints Jacob H. Welch to its

Chess - An Overview of Corrosion Protection Products: Part 2 of 2 .....................................32 Ledoux - The Advent of the Computer Age ........30 Phillips - SCRS Open Board Meeting Highlights Include Presentations About Pressing Industry Topics......................44 Phillips - The Importance of Creating Lifelong Learners and Implementing Hands-on Efficiency Training ...........................................3

Accudraft Paint Booths.................................... 52

Haldon Company ............................................ 25

American Icon Automotive Finishes ................. 16

Honda-Acura Wholesale Parts Dealers .......26-27

Audi South Austin ........................................... 39

Hyundai Wholesale Parts Dealers .................... 42

Audi Wholesale Parts Dealers .......................... 49

Innovative Tools & Technologies ...................... 37

AutoMart Mitsubishi ........................................ 35

Kia Motors Wholesale Parts Dealers ................ 47

AutoNation Chrysler-Jeep-Dodge-Ram

Malco ............................................................. 13

Autobody News P.O. Box 1516 Carlsbad, CA 92018 (800) 699-8251 (760) 603-3229 Fax www.autobodynews.com editor@autobodynews.com

of North Phoenix ......................................... 21

Matrix Automotive Finishes ............................... 7 Mazda Wholesale Parts Dealers ...................... 46

McPherson College Matching Gift Challenge .....43

Big Mike Naughton Ford.................................. 35

Mitsubishi Wholesale Parts ............................. 40

Bill Luke Chrysler-Jeep-Dodge-Ram ............... 22

MOPAR Wholesale Parts Dealers ..................... 31

BMW of South Austin ...................................... 39

NOROO Paint & Coatings ................................. 19

BMW Wholesale Parts Dealers ........................ 36

North Freeway Hyundai ................................... 34

Bob Howard PDC ............................................ 41

Part of the Club ............................................... 35

Bob Utter Kia .................................................. 32

Peak Kia ......................................................... 35

Car-O-Liner..................................................... 29

PPG Refinish ..................................................... 9

Certified Automotive Parts Association ............ 14

RGI Spray Booth Company .............................. 12

Chevyland....................................................... 24

Santa Fe Kia ................................................... 22

Christopher’s Dodge World .............................. 35

SATA Dan-Am Company .................................... 5

Classic BMW................................................... 23

Schmelz Countryside ...................................... 35

Classifieds ...................................................... 50

Schomp Mazda ............................................... 20

Eagle Abrasives, Inc ........................................ 17

Scoggin-Dickey Parts Center......................10-11

Emich Chevrolet.............................................. 35

Spanesi Americas ............................................. 8

Equalizer Industries, Inc .................................... 6

Steck Manufacturing Company ....................... 18

Finnegan Chrysler-Jeep-Dodge ......................... 2

Stevinson Toyota West .................................... 35

Fisher Acura.................................................... 35

Subaru Wholesale Parts Dealers...................... 43

Fisher Honda .................................................. 35

Toyota of Laredo ............................................. 28

Flatirons Subaru ............................................. 35

Toyota Wholesale Parts Dealers....................... 38

Ford Wholesale Parts Dealers .......................... 45

Volkswagen Wholesale Parts Dealers .............. 46

Fowler Honda ................................................. 22

Young Chevrolet .............................................. 30

New CIC ‘Industry Relations’ Committee

Response to COVID-19..................................40

Serving Texas, Oklahoma, Louisiana, New Mexico, Arkansas, Colorado, Arizona, Utah and adjacent metro areas. Autobody News is a monthly publication for the autobody industry. Permission to reproduce in any form the material published in Autobody News must be obtained in writing from the publisher. ©2020 Adamantine Media LLC.

AutoNation Collision Parts ............................... 15

Woman Charged with Body Shop

AI-Supported Claims Spike in

Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Contributing Writers: John Yoswick, Janet Chaney, Toby Chess, Ed Attanasio, Chasidy Sisk, David Luehr, Stacey Phillips, Victoria Antonelli, Gary Ledoux Advertising Sales: Joe Momber, Bill Doyle, Norman Morano (800) 699-8251 Office Manager: Louise Tedesco Digital Marketing Manager: Bryan Malinski Art Director: Rodolfo Garcia Graphic Designer: Vicki Sitarz Online and Web Content Editor: Abby Andrews Accounting Manager: Heather Priddy Editorial/Sales Assistant: Randi Scholtes Office Assistant: Dianne Pray

Board of Directors .........................................34

MSO Symposium Going Virtual ..........................42

Attanasio - CCC Photo Estimates and

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CIECA Webinar Highlights the Importance

COLUMNISTS

Embezzling ...................................................28

We thank Auto Rental News for reprint permission.

www.autobodynews.com

CES 2021 Is All-Digital ......................................50

INDEX OF ADVERTISERS

Kindig-it Design ............................................18

Hertz Global Holdings has reached an interim settlement with debtors to suspend litigation related to the car rental company’s plan to reduce its leased ﬂeet of rental cars, according to an SEC ﬁling on July 24. Under the terms of the agreement, Hertz agrees to pay $650 million of rent in equal monthly installments from July to December of this year and dispose of at

least 182,521 leased vehicles between June 1 and Dec. 31. In return, litigation relating to the leases under the asset-backed ﬁnance facility (ABS) will be suspended.

Seeks Progress by Expanding Beyond Shops, Insurers ...............................................1 NICB: Thousands Left to Rebuild After Isaias .....51 Nikola Scores Landmark Order For 2,500 Battery-Electric Garbage Trucks ....................46 PPP Forgiveness: No Need to Rush, and Other Tips .......................................................1 SBA Suggests Getting Help With Loan Forgiveness Applications...............................14 SEMA Show Canceled .......................................50 Subaru Reports July Sales ................................42 Survey Finds Shop Sales Down, but Employment Steady, Optimism Improving ...............................1

GM Wholesale Parts Dealers ........................... 33 autobodynews.com / SEPTEMBER 2020 AUTOBODY NEWS 3

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American Views 2020: Trust, Media and Democracy The following is an executive summary of Gallup and the Knight Foundation’s annual report on American views on trust, media and democracy. The full report can be downloaded here. https://knightfoundation. org/wp-content/uploads/2020/08/ American-Views-2020-Trust-Media-and-Democracy.pdf Americans still value the media’s traditional roles in society, such as providing accurate news and holding powerful interests accountable for their actions. The vast majority of Americans (84%) say that, in general, the news media is “critical” (49%) or “very important” (35%) to democracy. Americans are more likely today to say the media’s role in democracy is “critical,” up five percentage points since 2017. Large majorities say it is “critical” or “very important” for the news media to provide accurate and fair news reports (92%), ensure Americans are informed about public affairs (91%) and hold leaders accountable for their actions (85%). More Americans say the media is performing poorly rather than well in accomplishing these goals than did in 2017. However, Americans see increasing levels of bias in the news media; majorities see bias in the news source they rely on most. A majority of Americans currently see “a great deal” (49%) or “a fair amount” (37%) of political bias in news coverage. The percentage seeing a great deal of bias is up from 45% in 2017. Most Americans see bias in their go-to news source; 20% see “a great deal” and another 36% see “a fair amount” of bias in the news source they rely on most often. Given the choice, however, more Americans say they are concerned about bias in the news other people are getting (69%) than say they worry about their own news being biased (29%). Nearly three-quarters of Americans say they see too much bias in the reporting of news that is supposed to be objective as “a major problem” (73%), up from 65% in the 2017 study. Americans suspect inaccuracies in reporting are designed to push a specific agenda. Americans perceive inaccurate news to be intentional— either because the reporter is misrep-

resenting the facts (54%) or making them up entirely (28%). Nearly eight in 10 Americans (79%) say news organizations they distrust are trying to persuade people to adopt a certain viewpoint, while 12% say they are trying to report the news accurately and fairly but are unable to do so. Eight percent of Americans say distrusted media are trying to ruin the country, driven largely by the 1 in 5 Americans who identify as “very conservative” and 1

in 10 Republicans who feel this way. Differences in Americans’ opinions of the news media are most pronounced by political party affiliation. Almost three-fourths of Republicans (71%) have a “very” or “somewhat” unfavorable opinion of the news media, compared to 22% of Democrats and 52% of independents. Democrats and Republicans differ greatly in their ratings of the media on every aspect of performance, including providing objective news reports, holding political and business leaders accountable for their actions and helping Americans stay informed about current affairs. Sixty-nine percent of Americans, including 61% of Democrats, say the increasing number of news sources reporting from a particular point of view is “a major problem.” In contrast, 77% of Republicans say the same. While a majority of Americans across the political spectrum (80%) say the media is under attack politically, they are divided as to whether those attacks are merited. Whereas 70% of Democrats say the media is under attack and those attacks are not justified, 61% of Republicans say such attacks are justified. In addition to partisan differences in media attitudes, views also vary by age, with older Americans generally more favorable toward the news

media than younger Americans. Whereas 44% of Americans aged 65 and older have “very” or “somewhat” favorable views of the media, less than 1 in 5 Americans under age 30 (19%) say the same. Majorities of Americans say noews organizations should diversify their reporting staffs, but they differ—largely by politics—on the focus of diversity efforts. A strong majority of Americans (79%) say news organizations should hire to increase the diversity of their reporting staffs. However, while majorities say it is important for the news media to reflect the diversity of America, this ranks lowest of the priorities among the roles for media to play in society. The priorities cited by Americans who say news organizations should hire for more diversity differ greatly by race and political party. Democrats (49%) and Blacks (60%) prioritize racial/ethnic diversity in hiring, while Republicans (51%) and whites (35%) are most apt to prioritize diversity in political views. Americans commonly feel overwhelmed by the volume and speed of news, but say misinformation is media’s greatest problem. Those overwhelmed are most likely to turn to one or two trusted news sources as a solution. Four in five Americans (78%) say the spread of misinformation online is “a major problem,” exceeding all other challenges posed by the media environment. Seventy-three percent of Americans want to see major internet companies find ways to exclude false/hateful information online. More Americans say it is harder (62%) rather than easier (36%) to be well-informed because of all the sources of information available. In 2017, 58% said it was harder to be informed. Reasons Americans who say it is harder to stay informed cite for feeling overwhelmed include the mix of news interspersed with non-news on the web (72%), followed by the pace

or speed of news reporting (63%) and the increased number of organizations reporting the news (63%). More Americans (54%) say there are enough media sources to sort out the facts than say there is so much bias it’s difficult to sort out the facts (43%), an improvement from 2017 when the split was 50% to 47%, respectively. Republicans (65%) are much more likely than independents (48%) and Democrats (21%) to say there is too much bias to sort out the facts. In response to feeling overwhelmed, 41% of Americans say they only pay attention to one or two trusted sources; 31% try to consult a variety of sources to see where they agree; 17% go to the extreme of ceasing to pay attention to news altogether; and 8% rely on others to help them sort out what they need to know. Local news plays a key role in political and civic engagement. Thirty-one percent of Americans say they follow news about issues affecting their local community “very closely,” an increase from 25% in 2017. However, most Americans are not very confident in their knowledge relating to public affairs in their community. Americans who follow local news closely are more likely to vote in local elections and to feel attached to their communities. They are less likely to say that “people like me don’t have any say in what the government does.” Americans who primarily access their news online—predominantly, younger Americans—are less likely to be knowledgeable about their local communities and to feel attached to their communities. In a deeply divided nation, majorities of Americans say the media bears blame for political division. But they also see the potential for the media to heal the divide. Forty-eight percent of Americans say the media bears “a great deal” of blame for political division in this country, while 36% say they bear “a moderate amount.” But nearly identical percentages say the media could do “a great deal” (49%) or “a moderate amount” (35%) to heal those divisions. We thank the Knight Foundation for reprint permission.

4 SEPTEMBER 2020 AUTOBODY NEWS / autobodynews.com

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Woman Charged with Body Shop Embezzling A Fort Gibson, OK, woman was charged Aug. 13 with embezzling more than $200,000 from a Muskogee, OK, business over a period of about seven years. Deanna Joy Aldridge, 57, is accused of “fraudulently appropriating the sum of $200,345.92 that belonged to Collision Center of Muskogee,” the criminal information states. According to court documents, Aldridge worked at Collision Center of Muskogee, 404 N. Cherokee St., and the embezzlement took place between Jan. 1, 2012 and June 20, 2018. The owners discovered “unauthorized usage of the company credit card by the suspect without permission.” Aldridge was booked into the Muskogee County/City Detention Facility, and her bond was set at $5,000. She will be back in Muskogee County District Court on Sept. 2. We thank the Muskogee Phoenix for reprint permission.

Karma Automotive Expands Retail Presence in TX by Auto Remarketing staff

Karma Automotive is growing its footprint in the Lone Star State. Last week, the Southern California-based creator of luxury electric vehicles and developer of advanced technologies announced the addition of a new North American retail partner. The company said Karma DFW, operated by Principle Luxury Collection, is the second retailer to be added to Karma’s Texas retail network, with an additional retailer already located in Houston. The store initially will be located in Irving, TX, with intentions to relocate into a new facility in Grapevine, TX. Karma Automotive indicated the new dealer will further the brand’s growth plans as it continues to expand across five continents this year. The retailer will offer Karma’s new luxury electric Revero GT, named Green Car Journal’s 2020 Luxury Green Car of the Year for blending its environmental performance with high levels of luxury and an exceptional driving experi-

ma DFW we have the right partner to support us in growing our business.” The 2020 Karma Revero GT is currently available through all of Karma’s North American retailers. All Revero vehicles are assembled largely by hand at Karma’s Innovation and Customization Center (KICC), the company’s manufacturing facility in Moreno Valley, CA. And now they can be retailed in more places in Texas. “Principle Luxury Collection was founded with the desire to change the automotive The 2020 Karma Revero GT is currently available industry through exceptional through a new retailer located in Irving, TX. Credit: customer care, community Photo courtesy of Karma Automotive involvement and sustainability,” said Tyler Mitch “We look forward to offering ell, general manager of Principle Karma’s sustainable luxury driving Luxury Collection. “We are excited experience, customization opportu- to offer Karma’s luxury electric venities and artful design to customers hicles to our customers, providing in the Dallas-Fort Worth market,” our them with a truly unique driving said Joost de Vries, vice president experience.” of global sales and customer experi- We thank Auto Remarketing for ence at Karma Automotive. “In Kar- reprint permission. ence. The new Revero GT Sports further elevates performance levels by eclipsing 60 mph in less than 4 seconds and adds electronic torque vectoring for an even more exhilarating drive.

Cancer Survivor Receives Christmas in July Gift from CARSTAR Sheer Metal The “CARSTAR Christmas in July” gift aimed to bring some holiday cheer to the Dallas–Fort Worth area by giving away a $1,000 VISA gift card to a deserving individual within the community. The winner of “CARSTAR Christmas in July” is Julie Mora. Mora was nominated by her friend, Connie Adamson. Her nomination included the following:

“Julie spent eight years battling breast cancer, among other medical conditions. After coming out of this exceptional journey as a survivor, Julie was committed to still becoming a mother however she could. Although signing up to become a foster parent was not the initial plan, Julie and her husband did, and quickly built a connection with their then 3-day-old foster child. Now, Julie and her husband have made their adopted daughter an official part of their family, as they gear up to celebrate her first

birthday.” Mora was presented her prize, along with a gift basket of toddler supplies, at CARSTAR Sheer Metal on July 25—also known as July’s Christmas. “We are happy to give back to our Dallas–Fort Worth community and hope this small gesture brings some cheer to this incredibly strong family,” said Pat Allen, manager, CARSTAR Sheer Metal. “Coming together to give back to the community we serve is incredibly important to us, especially during these challenging times we are all facing. We were grateful to have the support of our industry partners as well to make this possible.” Hosted by CARSTAR, this program included the generous support of BASF, along with the support of All-Star Auto Lights, FindPigtails and Team Safety. CARSTAR is North America’s leader in collision repair excellence, visit CARSTAR.com to find a location near you. Source: CARSTAR

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Teslas from Austin Factory Will Have to Be Shipped Off-State Before Being Sold in TX by Simon Alvarez, Teslarati

If everything goes as planned and if work on the site progresses at a similar pace as Gigafactory Shanghai and Giga Berlin, Tesla’s upcoming Austin factory could start producing Cybertrucks by the end of next year.

If Texas laws remain unchanged, however, the all-electric pickups would have to be shipped beyond state lines first, before they could be brought back for delivery to Texas-based customers. Such a detour sounds quite ridiculous, of course, but this scenario could actually happen unless Texas changes a law that prohibits auto manufacturers from selling new vehicles to buyers without the use of a franchised dealership. Tesla is one of the few carmakers in the industry that does not use dealerships for its sales, with the company using a direct-to-customer

internet sales model instead. This potential challenge was related by Wedbush Securities analyst Daniel Ives in a recent comment. According to a report from The Statesman, Ives noted that ultimately, “There are some hoops [Tesla] will have to go through” before it could sell its Texas made vehicles in Texas. That being said, the Wedbush analyst also stated he does not see much of a problem since Giga Austin’s output will likely be substantial, and thus, the facility will be shipping vehicles to other areas of the U.S. Of course, it is also possible that even prior to the final decision of picking Austin as the site of its next vehicle factory, Tesla and Texas already had a deal that would allow the electric car maker to sell its vehicles directly to customers residing in the state. It’s very difficult to imagine Tesla and executives such as Elon Musk would be amenable to a direct sales ban, after all, since the company would be producing vehicles in Texas. This is especially true considering Texas actively sought out Tesla when the electric car maker was

looking to establish a site for its Cybertruck Gigafactory. During a meeting among Travis County officials, Commissioner Jeﬀ Travillion outlined the urgency for the approval of Tesla’s tax breaks, citing the risk of losing such a high profile project to other locations.

These efforts have been unsuccessful so far, amidst a strong defense of the existing law from organizations such as the Texas Automobile Dealers Association, which argue dealerships help safeguard customers from manufacturers’ potential monopolies.

“Tesla has long used an online model for the sale of their vehicles, and nothing in Texas law prevents a Texas consumer from purchasing a Tesla online and having it delivered to them in the state,” — Jennifer Stevens Among these is Tulsa, OK, which put up an impressive effort to attract the electric car maker. Musk remarked during the Q2 2020 earnings call that Tulsa will definitely be considered strongly for the company’s next projects. Tesla has spent much of the past decade trying to mount an unsuccessful political battle at the state capitol to urge Texas to change its law and enable direct-to-customer vehicle sales.

Jennifer Stevens, a spokeswoman for the Texas Automobile Dealers Association, described the organization’s state for Tesla’s operations in the Texas. “Tesla has long used an online model for the sale of their vehicles, and nothing in Texas law prevents a Texas consumer from purchasing a Tesla online and having it delivered to them in the state,” Stevens said. We thank Teslarati for reprint permission.

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Blending Ease Given that refinishing most often calls for blending, how efficient and easy a painter can perform a color-accurate blend and eliminate chances for re-dos is especially important. To ensure color accuracy, the PPG basecoat’s latex particles orient metallic flakes smoothly to accurately match the color travel from face to flop. A final control coat eliminates any blotchiness, mottling or halos that can occur with solvent basecoat. In terms of throughput, the basecoat’s thin film build enables it to dry fast. Only 2-3 minutes flash time is needed between coats, and Color Matching Efficiency

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Navistar Virtually Breaks Ground on San Antonio Manufacturing Facility Navistar International Corporation, a leading maker of International® brand commercial trucks, proprietary diesel engines and IC Bus® brand school and commercial buses, joined the City of San Antonio, Bexar County and the San Antonio Economic Development Foundation (SAEDF) in a virtual groundbreaking ceremony June 25 to celebrate construction of Navistar’s new industry-leading manufacturing facility in San Antonio. The virtual groundbreaking ceremony can be viewed at https://youtu.be/CoqC6erF-x8. Ceremony speakers include Navistar executives Troy A. Clarke, chairman, president and CEO; Persio Lisboa, executive vice president and COO; and Mark Hernandez, senior vice president, global manufacturing. Texas leaders Gov. Greg Abbott; City of San Antonio Mayor Ron Nirenberg; Bexar County Judge Nelson Wolﬀ; City of San Antonio Councilwoman Rebecca Viagran; San Antonio City Manager Erik Walsh; and SAEDF CEO Jenna Saucedo-Herrera also joined in the celebration. “This groundbreaking ceremo-

ny marks a milestone for us in the development of our new state-ofthe-art manufacturing facility,” said Clarke. “We are excited to become part of the San Antonio community and we’re conﬁdent this facility will reinforce Navistar’s gains in the marketplace.” Located near Interstate 35, oﬀ U.S. Highway 281 and the frontage road connecting to Mitchell Lake Trailhead, the new 900,000-square foot plant will have the capacity to produce Class 6-8 vehicles. Vehicle production at the facility is scheduled to begin early 2022, bringing more than 600 jobs to the San Antonio area. “It’s an honor to welcome Navistar into the Lone Star State’s thriving community of innovation, technology and economic momentum,” said Abbott. “The state’s partnership with a leader in commercial vehicle innovation will fuel Texas’ COVID-19 recovery by providing great job opportunities to our diverse and highly skilled manufacturing workforce.” The more than $250 million investment in Texas is a key component to the company’s “Navistar 4.0” growth strategy. The location of

the San Antonio plant allows for significant logistics improvements and a consolidation of the company’s supply base. The new facility will also incorporate the latest manufacturing principles—digital factory, connected machinery, robust lean manufacturing processes and cloud analytics—to enable predictive quality and maintenance, and allow data-driven decisions to be made on the shop floor in real time. “We are excited to launch Manufacturing 4.0 concepts at our new facility, as these advancements will reduce manufacturing complexity and increase quality,” said Lisboa. “Sharing these new industrial advances and Manufacturing 4.0 concepts with our existing plants is an additional benefit we anticipate from our experience with this new facility.” The industry-leading facility will include a general assembly line, body shop, paint shop and logistics center, as well as a truck specialty center, to make aftermarket modifications onsite.

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Auto Insurance Refunds Save New Mexicans $60 Million by Carol A. Clark, Los Alamos Daily Post

The New Mexico Office of Superintendent of Insurance (OSI) announced New Mexicans have saved more than $60 million in auto insurance premiums since March 1. Recognizing that COVID-19 significantly reduced how often people were driving, Superintendent Russell Toal called on auto insurers to provide refunds in March. “New Mexico’s families are experiencing deep economic struggles as we work together to limit the spread of the novel Coronavirus,” Toal said. “We have been doing all we can to deliver economic relief to New Mexicans whose lives have been disrupted by the pandemic.” $60.4 million was returned directly to consumers by their respective insurers for personal auto insurance between March and July. Insurers that responded to OSI’s data request also reported an additional $4.1 million will go into consumers’ pockets. $3.1

million has been returned to commercial entities during the same time period. In total, more than $67.6 million will be returned to individuals and businesses in New Mexico this year. Most consumers will or have received relief in the form of refunds, credits or one-time payments. In most cases, consumers do not need to contact their insurer to claim the discount, but if someone has not received a premium reduction, they should contact their insurer directly to inquire about the company’s policy. If an issue cannot be resolved with an insurer, New Mexicans can file a complaint with OSI. Toal thanked auto insurers for cooperating with his directive. “The vast majority of insurers provided timely and critical relief for their customers and I commend them for doing so,” he said. We thank the Los Alamos Daily Post for reprint permission.

Tesla Selects Texas as Home to Its Next U.S. Factory by Joey Klender, Teslarati

Tesla has selected Texas as the location for its next U.S. factory. The factory will be the company’s second in North America, located about 15 minutes from downtown Austin, near the Colorado River. Billed as Tesla’s “Cybertruck Gigafactory,” the facility will be the main production plant for its upcoming all-electric Cybertruck, and Model 3/Model Y vehicles for customers in the eastern half of the U.S. “It will be stunning. It’s right by the Colorado River. It will have a boardwalk… It will be an ecological paradise. It will be open to the public as well,” CEO Elon Musk noted. Musk confirmed that development on the new Giga Texas facility began on the weekend of July 17. Speculation has been ongoing for months regarding where Tesla would ultimately decide to put its second U.S. electric vehicle production facility. In midMay, reports indicated that Tesla was conflicted between Austin and Tulsa, OK, for its new facility, and both locations were being considered seriously. Austin had initially come out as the frontrunner in the race, but Tulsa

had also emerged as a massive contender. In January, Musk tested the waters for a Texas Gigafactory that would be responsible for building the all-electric pickup. It was later revealed that the new factory would also produce the Model Y and Model 3. To decrease delivery wait times for customers in the eastern half of North America, Musk indicated the new factory would be located in the central U.S. The company also wanted the new facility to be the largest yet, which would require ample land mass and a significant workforce. In mid-June, Tesla was offered a 2,100acre plot of land just 12 miles outside of Austin. Musk confirmed Tesla had been offered the Texas plot of land, but had not made any moves on purchasing the property because other areas were still being considered. Texas has offered Tesla $14 million in tax breaks over 10 years as long as the electric automaker invests $1.1 billion. During the Q1 2020 Earnings Call, Tesla CFO Zach Kirkhorn said the new factory would be the company’s largest yet. We thank Teslarati for reprint permission.

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Continued from Cover

PPP Forgiveness ic,” Peterson said July 23 during the AICPA’s weekly Town Hall covering PPP and other issues related to the COVID-19 recession and recovery efforts. Erik Asgeirsson, CEO of CPA.com, the technology and business subsidiary of the AICPA, said during the Town Hall the SBA and Treasury are not expected to release the expected 25 to 30 FAQs before President Donald Trump signs new relief legislation. Congress is trying to hammer out a package before going on recess Aug. 8. Even if the FAQs do come out, the SBA issued a procedural notice July 23 that indicated it would not begin accepting PPP forgiveness submissions from lenders until a new software-as-a-service platform currently under development goes live Aug. 10. The SBA said the launch could be delayed if new legislation changes the forgiveness process in ways that require changes to the new platform. The SBA’s notice adds another reason for waiting to work on PPP loan forgiveness applications to those covered in an AICPA blog post that published July 14, said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president of public practice.

“We have to be as patient as possible,” he said. The real PPP forgiveness deadline Kari Hipsak, CPA, CGMA, an association senior manager, said in an interview the important deadline in the PPP forgiveness process doesn’t come until 10 months after the end of the loan’s covered period. At that point, if forgiveness forms have not been submitted, the funds officially become a loan that needs to be repaid. Hipsak said it’s best for borrowers to take their time and make sure they have as much information as possible so they can maximize loan forgiveness. “There’s no need to rush through the forgiveness,” she said. “A lot of businesses, I think, want to put the forgiveness behind them, but there are still a lot of unanswered questions. And so as long as there’s not a deadline to have this application submitted, other than 10 months after the end of the covered period, it’s really a business decision.” Some additional considerations related to PPP forgiveness include: Questions about utilities: Utilities are among the items besides payroll that borrowers can pay with PPP funds. But there are questions about what qualifies as a utility under the PPP guidance. “It includes the basics, such as trash collection, water, electricity, etc., but we get a lot of questions about business-specific utilities,”

SBA Suggests Getting Help With Loan Forgiveness Applications by John Yoswick

Although there’s been a push for Congress to greatly simplify the process of seeking forgiveness for Paycheck Protection Program loans of less than $150,000, it seems likely those receiving loans above that amount will still need to provide adequate documentation for how the funds were spent. If your business is preparing to apply for loan forgiveness, the Small Business Administration (SBA) says help is available. “We really encourage you to reach out to our SBA resource partners to as-

sist with the forgiveness application,” Sonia Smith, a public information officer for the SBA, said during the Collision Industry Conference (CIC), held virtually in late July. “Whether you’re using the EZ Loan Forgiveness Application or the long form, we can help in making sure it is all correct, making sure you have the right documentation. So when you submit it to your lender, you’ve got the package correct from the beginning.” Smith said loan recipients can use the “Find local assistance” page on the SBA website (www.sba.gov/ local-assistance/find) to locate SBA

Hipsak said. “And there is even some guidance that indicates that transportation costs such as fuel for a business vehicle is includible. But we don’t have all the answers for that yet.” Internet services, which have become even more vital in this time of social distancing, appear to qualify as utilities under the PPP, Hipsak said. Many exceptions to full-time-equivalent (FTE) rules: The PPP was designed to help organizations keep paying their employees as pandemic-related closures and slowdowns reduced revenue. As a result, employers who reduce their workforce generally see a reduction in their PPP forgiveness eligibility amount. But there are numerous exceptions for situations such as: An employee who was offered a chance to return to a position but refused. An employee who was fired for cause or voluntarily resigned. An employee who voluntarily requested and received a reduction in hours. There are additional exceptions as well to the FTE and wage rules,

and borrowers should be aware of them when they apply for forgiveness. Clarification needed for self-employed borrowers: PPP guidance states that self-employed individuals must compare their 2020 income with their 2019 income to determine their maximum eligible compensation. “If you’re a self-employed individual, how do you prove what you got paid in 2020?” Hipsak said. “That’s one big question that remains for self-employed individuals.” Documentation is critical. The forgiveness applications are extremely detailed, and the final rules are uncertain in some areas. Some documentation isn’t required for submission with the forgiveness application but is required to be retained by the borrower. So it’s important to keep documentation of any facts that could become an issue related to forgiveness. “It’s always easier to be prepared going into something than having to look in hindsight and collect all the necessary data,” Hipsak said. We thank the Journal of Accountancy for reprint permission.

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Continued from Page 14

Tulsaâ&#x20AC;&#x2122;s Non-Gigafactory Future Isnâ&#x20AC;&#x2122;t All Gloom and Doom by Joey Klender, Teslarati

Tesla chose to build its next Gigafactory production facility in Austin, TX, and not in Tulsa, OK. Even though the Oklahoma city that has housed several automotive manufacturing plants in the past didnâ&#x20AC;&#x2122;t land the electric automakerâ&#x20AC;&#x2122;s next facility, it is still looking to develop its car industry by bringing in suppliers. Oklahoma Secretary of Commerce Sean Kouplen said his department had launched a new plan geared toward enticing existing automakers to expand their businesses to Tulsa. The â&#x20AC;&#x153;accelerator program,â&#x20AC;? as The Oklahoman called it, would also aim to lure the automotive industry to Tulsa. In the past, the state has been home to several large car companies as a base for vehicle manufacturing. Ford had an assembly plant in Oklahoma from 1915 through the 1960s, and General Motors had a manufacturing facility in the state from 1979 to 2005. The automotive industry accounted for 28,000 jobs in Okla-

Continued from Cover

Survey Finds to keeping all of his staďŹ&#x20AC; working,â&#x20AC;? an estimator who is one of nine employees at a shop in eastern Pennsylvania said. Shop optimism had also rebounded a bit from what it was in the spring. In the second half of April, 15% of shops said they were â&#x20AC;&#x153;veryâ&#x20AC;? or â&#x20AC;&#x153;extremelyâ&#x20AC;? concerned about their business surviving even just the next month, and 25% felt that way when they looked out three months. By June, those rates were cut by about half, with just 8% worried about the next month and 14% worried about making it into the fall. In April, only half of shops said they were not very, or at all, concerned about being in business next spring; in June that had nudged up to three in ďŹ ve shops, with just 16% saying they are â&#x20AC;&#x153;veryâ&#x20AC;? or â&#x20AC;&#x153;extremelyâ&#x20AC;? concerned about still having their doors open a year from now. â&#x20AC;&#x153;People are using their cars as safety bubbles to go out and explore,â&#x20AC;? a survey respondent in Texas

homa in the past, according to the stateâ&#x20AC;&#x2122;s historical society. With demand for cars at an all-time high based on population increases, the possibility for manufacturing jobs in the automotive sector is exponentially higher than what it was several years ago. And although Texas will house Teslaâ&#x20AC;&#x2122;s new facility, Kouplen maintains other car companies are more than welcome to come to Oklahoma. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll take anybody. We believe there is a revolution occurring within the automotive world,â&#x20AC;? Kouplen said Aug. 6. â&#x20AC;&#x153;Frankly, we think the tier one and tier two suppliers would be very smart to move to Oklahoma.â&#x20AC;? If car companies decide to take a chance on Tulsa, it could help the city with an injection of jobs that have been lost due to the COVID-19 pandemic. TuslaWorld indicates almost 275,000 jobs have been aďŹ&#x20AC;ected by the presence of the virus. Tulsa was in the running for Teslaâ&#x20AC;&#x2122;s new Gigafactory with Austin since news broke in May the company was planning to open a new production plant. Although it was

said. â&#x20AC;&#x153;Collisions will continue.â&#x20AC;? Across a total of 151 shops that reported February to May monthly revenue ďŹ gures in June, the combined total monthly revenue fell from $39 million in Februaryâ&#x20AC;&#x201D;an average of $261,000 per shopâ&#x20AC;&#x201D;to $38 million in March, $27 million in April and $23.5 million in Juneâ&#x20AC;&#x201D;an average of $156,000 per shop, and a cumulative loss of more than $29 million. Interviews with some shops this summer oďŹ&#x20AC;ered anecdotal evidence that revenue patterns vary widely by market. â&#x20AC;&#x153;For whatever reason, in our area weâ&#x20AC;&#x2122;re usually about 30 to 45 days behind other businesses,â&#x20AC;? said Tim Cockrell, owner of two Cockrellâ&#x20AC;&#x2122;s Body Shop locations in Alabama. â&#x20AC;&#x153;March and April and May were down 15% or 20%, but all of a sudden in June, it went down to 50%.â&#x20AC;? Richard Fish, owner of six Fix Auto USA franchises in Southern California, saw things turn in the opposite direction, but also vary by location. â&#x20AC;&#x153;In June, we were at 78% of our baseline sales. So weâ&#x20AC;&#x2122;ve seen some rebounding,â&#x20AC;? Fish said. â&#x20AC;&#x153;At our worst [this spring], we were close to 50%.â&#x20AC;?

relatively obvious that CEO Elon Musk wanted Texas based on a poll he posted on Twitter in early 2020, Tulsa had plenty of advantages. It had a solid economic foundation, plenty of engineers willing to work for the company and a lot of enthusiasm from politicians and citizens. The city also went as far as painting a well-known statue of an oil driller with Muskâ&#x20AC;&#x2122;s face and the Tesla logo on its chest. However, Tesla ultimately chose Austin based on the fact that many of the companyâ&#x20AC;&#x2122;s key executives were more interested in the Texas city. â&#x20AC;&#x153;When talking to key members of the team that would need to move to Austin from California in order to get the factory going, Austin was their top pick to be totally frank,â&#x20AC;? Musk said in an interview with Automotive News in August. â&#x20AC;&#x153;That was a big factor in choosing Texas and Austin. SpeciďŹ cally Austin. I guess a lot of people from California, if you ask them whatâ&#x20AC;&#x2122;s the one place youâ&#x20AC;&#x2122;d move outside of California, itâ&#x20AC;&#x2122;s Austin.â&#x20AC;? We thank Teslarati for reprint permission.

SBA Suggests resource partners in their area. An analysis conducted by the Society of Collison Repair Specialists suggests nearly 20,000 body shops nationwide received a PPP loan. The data, released in July by the SBA and the Treasury Department, indicates 2,500 independent repairers received loans of $150,000 or more. An industry survey in June found among 200 shops that had received a PPP loan, almost a third (31%) had already applied for loan forgiveness. Not one of those shops reported their application had been rejected, and in fact, nearly 84% said they had already received notiďŹ cation that repayment of the funds was not necessary. More than three in ďŹ ve of shops receiving a PPP loan as of June had not yet applied for having repayment waived, though more than 90% of those said they intended to do so.

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98th Soldier Wins Dream Automotive Job at Kindig-it Design by Maj. Michelle Lunato, DVIDS Hub

People who are passionate about cars undoubtedly know the MotorTrend Television show, “Bitchin’ Rides.” Capt. Frank Fanelli of the 98th Training Division (Initial Entry Training) certainly did, as a “selftaught hot rod builder and pinstriper” on YouTube. In fact, the U.S. Army Reserve soldier watched the show often as a form of education; he just never dreamed he’d work there. But after competing in a televised special, “Bitchin’ Boot Camp,” Fanelli won just that—a job at Kindig-it Design in Salt Lake City, UT. “I used to watch the show when I was younger, envious of what they were doing and wanting to be a part of that, and now I actually work there and I am a part of that crew. It’s kind of surreal,” said Fanelli, a Kendall, NY, resident who was recently the company commander of Echo Company, 2nd Battalion, 389th Regiment, 3rd Brigade, in Mattydale, NY. Fanelli’s surprise job was indeed just that. Out of the blue, he received a phone call from someone who had seen his YouTube page, “Fanelli Restorations,” and suggested that he apply to be on the upcoming special, “Bitchin’ Boot Camp,” a televised building competition where 12 highly skilled fabricators compete for a chance to join the Kindig-it Design crew. Fanelli, being very familiar with the main show, “Bitchin’ Rides,” said he didn’t even want to try out. “I didn’t think I was going to make it to begin with, so I didn’t even want to waste my time.” With more than 2,000 fabricators from across the U.S. applying and no formal automotive education, the U.S. Army Reserve soldier just figured the opportunity was too good to be true. “I don’t have a shot at this. There’s got to be so many more talented people out there than me,” said Fanelli. However, his mother and brother insisted he seize the chance at a dream. So he put together his car resume, gathered up pictures of his work and submitted an audition video from his YouTube page.

“This is my passion right here. I want to bring my skills to the table with you guys. It’s time for me to take it to the next level,” stated Fanelli in his November 2019 audition video. And with that, he made the cut to be one of the 12 fabricators who would compete for the coveted job at Kindig-it Design. So after being selected, Fanelli packed up his car and headed to Salt Lake City for the adventure, but still didn’t think much of it. “I thought, I will probably last an episode. Whatever. So I kind of went in there throwing it to the wind and tried my best, but not really thinking I had a shot in it.” True to the name, “Bitchin’ Boot Camp,” the 17-day competition kept the 12 competitors moving, on edge and in the dark about what to expect next. There was a mix of individual and team challenges over the fastpaced, ever-changing list of tasks. From making a traditional hot rod speed bulge to fabricating a full stainless steel dual exhaust system, the competitors were tested mentally and physically on both their skill and teamwork. At times, the competition’s grueling demands took its toll on the competitors, who were let go one by one as the competition progressed. This is where Fanelli’s military experience gave him an edge though. “The whole military mindset of understanding change, and how you can get unexpected things coming your way, and adapt to it, totally played into how I was able to keep my cool during the whole show,” said Fanelli. This ability to remain calm, and even positive, under pressure was noticed by many on the show—so much so it was nicknamed the “Fanelli Finesse.” “Frank doesn’t ever let anything affect his positive attitude. As probably the best team player in the Bitchin’ Boot Camp, his inexperience doesn’t seem to be holding him back as much as in the beginning of the competition,” said Hot Rod Magazine’s Week 4 Recap on the special series. So his inexperience in some technical areas was overlooked due to his resiliency and ability to make

decisions in chaos, which came directly from his eight years of service in both the Active Duty and Reserve components.

U.S. Army Reserve Capt. Frank Fanelli, a Kendall, NY, resident who is the commander for Echo Company, 2nd Battalion, 389th Regiment, 3rd Brigade, 98th Training Division (Initial Entry Training), works on a door handle for the Week 6 Challenge of the MotorTrend Television special, “Bitchin’ Boot Camp” in Salt Lake City, UT. The 17-day televised competition concluded with Fanelli winning a job offer at Kindig-it Design. Credit: MotorTrend Magazine Courtesy photo

Fanelli explained that he didn’t always know how to do some of the challenges, or there were a large number of tasks in a short period of time. Instead of letting the stress get to him, he pulled from his military experience, remained calm and moved forward with what he thought was

the best decision at the time, which is exactly what he teaches his Reserve Officers’ Training Corps cadets at SUNY Brockport, where he worked as a government contract instructor. “This is the same stuff we train the cadets to do. Sometimes you have time to plan, and have the leisure of planning an operation the way you want to. And other times, you have to make a decision on the spot because the mission depends on it. That’s kind of how it felt during the challenges [on the show.]” However, seeing the value in these particular skill sets only came from the vantage of hindsight. Prior to winning, Fanelli said he was more concerned with the technical aspects of the competition. He knew he had skill and passion, but he just wasn’t sure if it was enough for the level of expertise at Kindig-it Design. “Not that I really doubt myself so much, I guess I was trying to really measure up what I thought my skill set was versus the potential of other people, but I really didn’t consider See 98th Soldier Wins, Page 24

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Midyear Updates terms has been a positive development. Most loans are expected to be largely forgiven. An interesting side note: anecdotally, most of the MSOs and shops that received PPP loans during the first application period obtained those loans from small and local banks and credit unions. Evidently the big banks focused on their largest customers. During the second application period, more loans were obtained from some of the big banks, but many MSOs not only didn’t get big bank loans, but some never even heard back after their inquiries. M&A Activity The current level of mergers and acquisition activity keeps surprising us. Not surprisingly, the top two national consolidators continue to make offers and acquire independent shops and MSOs. But private equity firms have really stepped up their interest and investments. Five super regional MSOs are also in acquisition mode. Add to these numbers several dozen sub-regional MSOs that are continuing to make acquisitions largely using internal capital sources. Finally, Driven Brands now owns a nine-shop MSO and is pursuing more acquisitions. Private Equity Interest is Driving Activity Industry buyers have changed dramatically in five years. Five years ago, the most active buyers included the four big consolidators—ABRA, Caliber, Service King and Gerber— plus seven regional MSOs—Pacific Elite, Kadels, Cooks, Craftsman, Joe Hudson, Classic Collision and Car Care—and one PE firm, Carousel Capital, which owned Driven Brands. In the years since, almost all of those firms have disappeared into larger firms. ABRA bought Cooks Collision, then sold to Caliber ABRA bought Kadels Pacific Elite got bought by PEbacked Crash Champions Car Care got bought by Service King

Joe Hudson got bought by TSG Consumer private equity Carousel owned Driven Brands, which it subsequently sold to Roark Capital Classic Collision was acquired by New Mountain Capital We attribute the activity and the values to the number of new entrants into the collision space, mostly private equity firms—the highest we’ve seen in 20 years. New PE entrants have come flocking back to the market looking for opportunities that will benefit from increasing consolidation. Most see the stability and non-cyclical nature of collision repair as effective cash generators with modest risk. Some are looking to buy and then sell out to someone larger. And some are probably looking to coat-tail Caliber and Driven, if and when they have IPOs. PE firms come in lots of sizes and varieties. The new participants range from $350 million in assets to more than $16 billion. Some are inexperienced in the industry but anxious to learn. Some have hired CEOs who are highly skilled executives. Others have already found their platforms and are aggressively expanding. Ten are still looking for their first platform! All of them are looking for high quality large MSOs in major metro areas. Deal Terms and Structures Today Five years ago, structures involved a variety of cash, stock, debt and earnouts with most deals being done for cash. Some deals were done as stock purchases, though most were asset purchases. Multiples ranged from five to nine times reconstructed EBITDA, with some outliers for very large MSOs. Increasingly, deals are being measured on purchase price to revenues, with smaller shops in the 35% to 45% and medium size MSOs in the 65% to 90% of revenues, depending upon the strategic fit, EBITDA levels and ongoing management teams. Today, we see the same variety of consideration with most all deals still being done as asset purchases. During this time of COVID, many are structured with both cash and earnouts with performance hurdles— some EBITDA based and some rev-

enue based. Some are structured to share the risk between the sellers and the buyers. Multiples are trending lower for plain vanilla acquisitions but remain robust for quality platforms. OE certifications are driving increases in values—especially highend brands. National Consolidators Just Keep on Buying Assisted by an additional capital raise in the second quarter, Gerber has acquired more than two dozen shops so far in 2020, including nine in Southern California, as it enters the largest U.S. market for the first time. Caliber Collision added more debt capital and continues its growth even as its revenues have slowed. In late July, it acquired one of the premier MSOs in the Southeast, when it closed on Professional Collision of Mobile, AL. Multi-Regional MSOs Are Growing Most Rapidly Illinois-based Crash Champions, led by Matt Ebert, reached from Chicago across to Southern California to acquire 14-shop MSO Pacific Elite

early this year using both equity and debt capital. In February, Crash added three shops in Ohio, and is on the hunt for more. Former ABRA senior executives with the backing of a highly credible sponsor, New Mountain Capital, are deploying millions of new equity capital following their takeover of Classic Collision in Atlanta last year. Led by CEO Toan Nguyen, Classic expects to challenge Joe Hudson’s position as the fourth-largest operator in the U.S. Classic now has eight of its 37 locations in south Florida, including the acquisition of the former Carolina Auto Body. (Full disclosure: Focus Advisors represented Carolina Auto Body.) Joe Hudson’s continues to beef up its management ranks and consider additional acquisitions across its Sunbelt markets. Texas-based ProCare acquired six-shop Houston operator Hodges Collision to bring its total to 41 shops. Regional MSOs are Preparing for Growth Chilton Auto Body, a 12-shop MSO in the San Francisco Bay Area, re-

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cently hired Chris Abraham, former CEO of Service King, and a team of acquisition professionals with expectations of growing substantially. Oklahoma-based Collision Works added eight shops with a large acquisition last year, and now operates 33 locations in Oklahoma and Kansas. The Collision Works team is sized to add more capital and acquisitions. Franchise and Affiliation Opportunities Accelerate Franchisors and banner networks are finding increasing success as operators seek multiple ways to increase partnerships and revenues. Driven Brands’ portfolio of franchisors—CARSTAR, ABRA, MAACO and FIX USA—is continuing to add franchisees, as well as expand its portfolio of other automotive industry participants. Driven’s April acquisition of FIX USA and its largest franchisee, Auto Center Auto Body, reinforced its hold on most of the “waterfront” franchise opportunities. (Full disclosure: Focus Advisors represented FIX USA.) Two banner groups, CCG and 1 Collision are growing as well. 1 Collision, which has now merged with Canada-based CSN, is expecting to rapidly add new affiliates to its current U.S. network of 50 shops. Together, the combined companies have more than 280 shops. California-based Certified Collision Group now claims more than 450 shops with $2 billion in gross revenues across the U.S. With some of the country’s largest independent MSOs in the fold, CCG is focused on helping them gain additional DRP and vendor relationships. Our Expectations Our best estimate is that 2020 will end with revenues annualizing at 80% of 2019 revenues. A realistic expectation for 2021 is that shop revenues will return to 2019 revenues. Miles driven will continue to be negatively impacted by a slowly returning economy, but positively impacted by people’s willingness and need to travel more securely without exposure to potential infections. With many more vacation and business trips being

taken, miles driven should be positively impacted. The Federal Reserve has been cautioning that damage to the entire economy is profound, deep and expected to impact us all for years ahead. So, while we are inclined to be optimistic, we believe caution is more realistic. When there is a widely available and distributed COVID-19 vaccine, revenues will accelerate rapidly as confidence in normal economic activity returns and overall economic growth begins to accelerate. What is the net result for the collision repair industry? Continued uncertainty, but not widespread disaster. Questions we answer every day: Should I sell now or should I wait two years until the economy and my revenues improve? For some folks, their age and their lack of a successor dictates they sell now. Others with a succession plan—or, even better, a growth plan—have the best of both worlds. Acquirers are still looking

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favorably on targets today. In two years they may be less aggressive because they will have already bought their key platforms and may only looking for smaller fold-in acquisitions. For sub-regionals determined to grow into super regionals, accessing capital today is likely to be easier than in two years because of strong PE interest. Values are always suppressed when there are many sellers and a limited number of buyers. If everybody is heading for the exits at the same time, there is a danger some deals just won’t get done and that acquirers will use that opportunity to reduce valuations. Everything else being equal, savvy sellers prefer to go into the market when there are more buyers and fewer sellers. For many owners, it’s a balancing act between the growth they expect in the years ahead versus the opportunity to sell when there are multiple buyers willing to make them fair offers. With trillions and trillions of dollars being spent by the government to prevent the collapse of the economy, there will come a time,

sooner rather than later, where taxes will rise to begin reducing the debt. Our expectation is that capital gains taxes are likely to rise first. Closing a transaction in 2020 may avoid a significantly greater tax hit in 2021. What kind deal structure is possible today? Acquisition deals are likely to be structured differently than in the past. We expect less cash up front and more earned out by achieving performance hurdles over time. Sellers may also be asked to finance part of the acquisition price. On the plus side, many of the private equity investors are creating vehicles in which sellers can roll over a portion of their sale proceeds into equity ownership positions. Will these new investors actually close on the offers they have extended? Most professional buyers that issue Letters of Intent have an established track record of honoring their purchase commitments. Even in the time

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of COVID, deals negotiated before the pandemic hit were largely fulfilled, although some had structural and hurdle requirements added. Inexperienced or first-time buyers may have a harder time holding the pricing of their offers as their private equity sponsors have fewer transactions under their belts. And if there is a long-term recession of incredible depth, that would be a material change that would impact valuations and closings. We thank Focus Advisors for reprint permission.

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Gerber, Enterprise Expand in Arizona as Local Development Remains Bullish Construction begins in Queen Creek on a $5.8 million dual tenant building for Gerber Collision & Glass, one of the largest collision shop consolidators in North America, and privately-held Enterprise Holdings, known publicly as Enterprise RentA-Car. Both companies remain bullish on the valley as they break ground on 3.8 acres after two years of planning. The project will include a 17,000-square foot building for Gerber Collision & Glass, and a new Enterprise rental facility, with car wash, on the adjacent 1.5-acre property. Vehicle repair and maintenance is considered an essential service by the federal government. “You still have to get your vehicles fixed,” said John Rang, the Arizona developer leading the project with construction management firm GCON Inc., an Arizona-based company. “Even through this pandemic, we continue to see a steady increase in demand for transportation services, particularly in our local markets like Queen Creek, Gilbert and San Tan Valley,” said Kevin Coo-

per, vice president of Arizona for Enterprise Holdings. “This newly developed property will provide us with greater capacity and a professional facility for our customers and employees.”

Source: Gerber

The GCON pre-construction design team uses building information modeling known as BIM360, a technology that allows for highly accurate prototyping and construction coordination, to streamline construction. Inside, the building will feature air-conditioned repair work bays--a rare feature for the vehicle repair

industry. This is expected to draw high quality, experienced technicians who appreciate cooler working conditions. The building is equipped with state-of-the-art paint and prep booths valued at $500,000 and repair equipment valued at $250,000. “The commitment of these companies to this exciting development is a testament to the explosive growth and opportunity of the Queen Creek/San Tan Valley trade district,” said Rick Breuer, a commercial broker focused on automotive-commercial real estate. Gerber Collision & Glass was founded in Chicago, IL, in 1937 as a single auto glass and trim shop, and has grown to be part of the largest auto collision and glass repair companies in the U.S. and Canada. The company’s optimism for expanded growth in the Valley hasn’t waned, even in light of the COVID-19 pandemic, and continues with plans for further investment across Arizona. Source: Gerber

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98th Soldier Wins what they may be looking for in an employee. It wasn’t just somebody who is the best car builder in the world with skills, but somebody who was a team player, was passionate about it and could fit in there. “The fact that I had more to offer than technical skill was what pushed me to the top,” said Fanelli. “In the finale, KevDogg [shop foreman Kevin Schiele] told me, ‘The reason why we are picking you is that you are very skilled and talented, but your passion for cars and your desire to learn—I can teach anybody to weld, but I cannot teach people work ethic and the drive to want to learn and get better, and that is something I see in you.’” And in that moment, everything changed for Fanelli. He was offered the opportunity to work at Kindig-it Design in Salt Lake City. That meant a lot of change for this New York ROTC instructor/Reserve company commander. Fanelli said he was not only

ready for the change, but in fact, he had been seeking it. Though he truly enjoyed working with the cadets, he knew it was something he would not do forever. And, his time as the commander for Echo Company was drawing to an end. So several months prior, the U.S. Army Reserve soldier had applied to the Federal Bureau of Investigation. As the FBI process was taking months, and nothing seemed to be happening, Fanelli admits to feeling lost prior to the dream job offer. “I felt like I had become directionless,” explained Fanelli. “[Getting the Kindig-it Design job] changes things in the sense that I am doing something full time that I am passionate about, instead of just floating through life the way that I felt I was, sort of directionless and not sure who I was and what I was supposed to be doing. So it gives me a lot of confidence.” Fanelli joked that maybe the delay in the FBI application process worked out just perfect for him in hindsight. “Ironically, the same day that I got the job with Kindig-it, I got a call

from the FBI saying that they were ready for me to move onto the next phase exam. I had been waiting for six months at that point, after passing a few other tests, and almost forgot about it.” Working for the FBI would have been fun and cool, but it didn’t quite hold his passion as much as cars. So the dream opportunity at Kindig-it Design is really a significant moment in his life, said Fanelli. “This is life changing. It really is. It means so much to me…I wasn’t sure I’d ever, one, be good enough to do something like this in the car industry; and two, I wasn’t sure if working in the car industry would spoil my passion,” he said. “You know, sometimes you do something every day, and as much as you love it, it kind of becomes a job. So I didn’t want to take something I love so much and turn it into a daily grind and become just whatever with it,” he said. “I hope it’s not just the honeymoon phase for me, but every single day that I go to work here, I am really enjoying it.” Relocating for his dream job has even come with some addition-

al perks. As a part of the Kindig-it Design crew, Fanelli will be part of the upcoming fall show, Season 7 of “Bitchin’ Rides.” And, while getting settled into a new city and state, the soldier was able to find two roommates who work in the car industry as well. “So I am living my car life almost 24/7,” laughed Fanelli. Stumbling upon this too-goodto-be-true job, and everything aligning just right with it, has put Fanelli in a place he never thought he find, but he couldn’t be happier to be there. “Since I got to the show, I didn’t want to leave and go back to my house in New York. It was just so amazing for me to be here, be involved in this and doing this,” he said. “I never thought I would find a career that I would really care that much about. It’s like the old saying goes, people say, do what you love and you will never work a day in your life. “I always felt like, that’s just an old saying and maybe I will never find that. But I actually feel that way at work for the first time ever.” We thank DVIDS Hub for reprint permission

Texas Man Accused of Buying Lamborghini Urus With COVID Relief Funds by Adrian Padeanu, Motor1.com

“The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.” This is the description you will find on the U.S. Small Business Administration’s website in the section dedicated to coronavirus relief options. However, some business owners decided to take advantage of the COVID-19 stimulus by fraudulently using the funds to purchase high-end vehicles and making other unnecessary expenditures. After a Florida man accessed the program to buy himself a shiny new Lamborghini Huracan worth $318,000, a similar story has emerged about someone from Texas. He too acquired a Lamborghini, but instead of opting for the naturally aspirated V10 supercar, he decided to go with a Lambo Urus. The high-performance SUV packing a twin-turbo V8 engine kicks off at over $222,000 in the U.S. for the 2021MY.

He reportedly secured $1.6 million in PPP loans and used some of the funds to also acquire a Rolex and a 2020 Ford F-350 truck. It goes without saying the man is now facing multiple charges, including for making false statements to a financial institution, wire fraud, bank fraud and engaging in unlawful monetary transactions. According to the U.S. Justice Department, the $1.6M loan also funded several real estate transactions rather than being used for what it was supposed to—payroll costs, rent, interest on mortgages, etc. It’s worth mentioning the PPP loans are forgivable provided the business owner retains the company’s employees and uses the money for eligible expenses. That obviously wasn’t the case here. As if that wasn’t bad enough, the 29-year-old also spent thousands of dollars at strip clubs and night clubs in Houston and used some of the COVID relief funds for additional lavish personal purchases. We thank Motor1.com for reprint permission.

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with Stacey Phillips

From the Desk of Mike Anderson with Mike Anderson

Mike Anderson is the president and owner of Collision Advice, a consulting company for the auto body/collision repair industry. For nearly 25 years, he was the owner of Wagonwork Collision Center, an OEM-certified, full-service auto body repair facility in Alexandria, VA.

More Best Practices to Make the Most of the ‘Parts’ Portion of Your Business In a previous column https://www. autobodynews.com/index.php/ from-the-desk-of-mike-anderson/ item/20425-from-the-desk-of-mikeanderson-making-the-most-of-theparts-portion-of-your-business.html I shared some best practices shops can use to improve their parts-related processes and profits. Here a few more. Best Practice: Check the OEM information. You might presume that checking OEM collision repair information for each repair is something related to just procedures. But it also plays a role in streamlining your parts processes as well. One way in particular: Identifying any non-reusable or one-time-use parts that need to be on your estimate and parts order. We’re not just talking about clips and fasteners. On some vehicles, there are interior or exterior trim pieces that are one-time-use, as well as some suspension or supplemental restraint system parts. It’s important to know that while the estimating systems are doing a better job of identifying all one-timeuse parts, those systems—nor even the OEM electronic parts catalogs— identify all of them. The only way to make sure you are aware of all of them is to read the OEM repair information. Not all of the automakers identify one-time-use parts in the same way. Toyota/Lexus, for example, uses a black dot to indicate something is a non-reusable part. Nissan/Infiniti uses a black dot with a white X; sometimes these parts are color-coded in the automaker’s documentation. Mazda uses a white “R,” Subaru uses a star and Ford uses a symbol of a trash can to signal something is a one-time-use part. There are other automakers, such as BMW, General Motors and Porsche, that currently don’t have a symbol, but instead use wording within the procedures to identify one-timeuse parts. It might say, “Remove and replace,” for example, or “Remove and discard,” or “This is a non-reus-

able part.” So you can’t just glance at the OEM repair procedures. Take the time to read them thoroughly. And when you list one-time-use parts on your estimate, include a line note indicating that the OEM has designated it as such. The OEM repair procedures can also alert you about which parts can be repaired and which cannot. Many automakers, for example, say that components of certain strengths of steel should not be repaired, only replaced. The procedures also can designate “if this, then that” statements related to parts. One example might be “If an airbag deploys,” then certain other parts on the vehicle must be replaced, even if they don’t appear damaged. The time to have all this information is up front, so you don’t get into a job and only then discover you didn’t order all the parts the OEM procedures require. Best Practice: Improve the parts information in the estimating systems—for yourself and the rest of the industry. If you determine a part needed as part of a repair wasn’t shown in the estimating system, or if you find some other information gap, like a one-time-use part not being identified in the estimating system, don’t just order the part and move on. Contribute to the solution! It’s easy: Visit the Database Enhancement Gateway (www.DEGweb. org) and submit an inquiry. It’s a quick process, particularly after you’ve done it a few times. The DEG will reach out to the estimating system provider, which in turn will research whether information was indeed missing or inaccurate, and if so, correct it. That may well help you in the future, as well as help all the other shops working on that make and model of vehicle. If we all work together on this, we can help make the estimating databases more complete. Some may argue you shouldn’t have to do that,

given what shops spend on the estimating system. But at the end of the day, complaining does not solve the problem. By taking the time to submit inquires to the DEG, you help control your own destiny. As Mike Jones of Discover Leadership says, “You can be the wind or the flag. The wind dictates which way the flag blows. The flag is subject to the wind. Always be the wind.” Best Practice: Maximize efficiency through better parts receiving. Receiving parts might seem the most passive process in your shop: The delivery driver brings in the parts and drops them off. But the best-run shops use some very specific steps related to parts receiving. They are mirror-matching all parts, for example. Take the new part out of the box or packaging, and compare it to the old one to make sure at

that point in the process the parts for the job are accurate. Given the average body technician generates $100 in gross profit per hour, you don’t want that technician stopping work and spending time to come find you to tell you a part is incorrect or missing. In my previous column, I talked about the value in using an electronic parts ordering system. Some of those systems can help with parts receiving processes as well. Some allow the parts vendor, when fulfilling the order, to electronically push the parts invoice back to your management system to automatically post the invoice for you. We did a survey of more than 400 body shop parts managers, and they said they spend at least 40% or 50% of their time just manually rekeying parts invoices. So if your electronic parts system can streamSee More Best Practices, Page 34

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with Victoria Antonelli

In Reverse with Gary Ledoux

Gary Ledoux is an industry veteran with 48 years’ experience in the automotive and OEM collision parts industry. His column appears exclusively in Autobody News. He can be reached at YesterWreck@yahoo.com

The Advent of the Computer Age In January 1980, BYTE Magazine The mini-computer was then announced in an editorial “the era of hooked up to a telephone line, a call off-the-shelf personal computers has made to one of 19 IBM computers arrived.” spread around the country. Two and a with Gary Ledouxhalf minutes later, the estimate printTandy (RadioShack) and Apple had already been selling computers ed out on a dedicated printer at the for more than a year and the soon- body shop. to-be ubiquitous IBM PC, which The cost of doing all that was would set the standard for some time about $10 per estimate plus the cost to come, would be introduced in Au- of the call—if it had to be long disgust 1981. Individuals’ lives and the tance. Most calls were said to be lobusiness world at large would soon cal. be changed forever. with Stacey Phillips ADP also entered the field in Beginning around 1982, a lot mid-1984 with the introduction of of ink was spent within the collision “Tele-Estimating,” a computerized industry trade magazines addressing estimating system handled over the computerization and how and why phone allowing a shop to use comthe industry should embrace this new puterized estimating without having medium. to buy the computer. One collision industry maga“Simply call a special toll-free with Attanasio zine noted, “As we moveEd through the number and read off the damage ‘80s, shop owners around the coun- codes from a completed AUDATEX try are discovering a new tool for get- worksheet, and within minutes your ting and keeping a competitive edge: estimate is processed, printed and computers. If you’ve never taken a distributed.” look at these at these smart machines, A spot survey conducted by a you’re in for a pleasant surprise.” The trade magazine and published in Dearticle went on to explain the differ- cember 1982 indicated that of 600 with Bruce Roistacher ence between hardware and the new body shops surveyed across the counemerging world of software. try, 101—17%—had a computer sysAnother trade magazine arti- tem. Of those that did not have one, cle looked at three different comput- 20% said they were considering buyer systems designed specifically for ing one, while 80% said they would body shops. One was called Auto Re- not consider buying one. Then as now, pair Management Systems. One was change comes hard to the collision remade by Kennedy Communications pair industry. with Gary Ledoux One respondent noted that he had and sold for $29,900; that’s $79,600 in 2019 dollars. And one was produced purchased a computer system to help by Triad Systems of Sunnyvale, CA. run his shop but the monthly cost of The magazine devoted an entire maintaining the system far exceeded article to the ADP/Audatex estimat- its usefulness. ing system and how easy and effiIn January 1985, a trade magacient it was. Another article asked “Is zine ad for Digitree Systems of BoulYour Shop Ready For A Computer der, CO, offered a complete body System” and provided a 15-question shop management software system check list to help the reader decide. including estimates, job costing, reBut the latest in technology came pair orders and full accounting with from a company with called Mitchelmatix. payroll for $1,995. Together with a Stacey Phillips A trade magazine article noted shop computer of the purchaser’s choice, estimators loved their estimating man- a shop could computerize for less ual but now Mitchellmatix was going than $5,000 ($11,946 in 2019 dolto make them easier to use by inserting lars.) a bar code into the book. The bar code By mid-1986, a trade magazine was then read when a computerized article noted, “Like it or not, we are wand was passed over the strip by now living in the computer age. For the estimator. many years, computers have been

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used for various business applications and we find them more and more in each aspect of our daily lives. You probably can’t remember when your monthly department store bill was not prepared by a computer. In fact, if all the computers now in use were suddenly shut down the whole world would be thrown into chaos.” Despite this obvious statement, many shops had still not computerized. The article was followed by an ad for Team Management Network computers featuring a “portable computer,” forerunner to the laptop, which could be brought out to the car to complete an estimate, then reconnected to the main computer system. According to an article published in the fall of 1986, 32% of all body shops would seriously consider installing a computer system within the next year. That means 20,000

shop owners were asking, “What can a computer do for my business?” The article suggests the No. 1 priority for shop owners should be computerized job costing. A January 1987 article about computerized estimating systems noted, “Although the traditional role of computers in business tends to be in bookkeeping and finance, a properly written estimating program can provide the starting point for a whole new level of efficiency and profitability.” A three-page spread in a January 1987 trade magazine offered short descriptions of computerized estimating systems and body shop management computer systems from 16 companies, including S & S Development Systems, Tru-Time Systems, Inc., and Keep It Simple Software and Cad Design Systems. It seemed everyone and their See Computer Age, Page 43

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Hey Toby! with Toby Chess

Toby Chess is an I-CAR program instructor, Training specialist, and former salvage yard operator. Toby is universally known in the collision industry for his work with first responders and advocacy for body shops and consumers. He can be reached at tcspeedster@gmail.com

An Overview of Corrosion Protection Products: Part 2 of 2 applied. Seam sealer tape can be removed and repositioned until it is firmly pressed into place with a roller (See Fig. 15) which sets the adhesive.

This is the continuation of Corrosion Protection: Part 1, printed in the August issue of Autobody News.

will lead to an adhesive failure.

California Autobody Association with David McClune

Fig. 14

DTM sealers (Fig. 14) have the same characteristics as the generally Single part seam sealers (Fig. used seam sealers, but has corrosion 12) are an NVH control material. Its inhibtors added so it can be applied to John Yoswick bare metal. primary purposewith is to keep out moisNo OEMs recognize the use of ture, wind and sound, and it is used on all joined metals. It dries by at- these seam sealers. They all state tracting moisture and will take longer there needs to be a barrier coat beto dry than two-part adhesives, gen- tween the bare metal and the seam sealer, perferably 2K epoxy primer. erally speaking. A friend of mine used a compa Every OEM for which I have corrosion data requires a primer to nyâ&#x20AC;&#x2122;s DTM seam sealer with no primbe applied prior to the application of er on a new roof panel. The vehicle returned with all of the seam sealer seam sealer. lifting off the panel. He contacted with Richard Steffen the manufacturer of the product and they would not warranty the repair. They said he did not follow OEM procedures, which stated a coat of epoxy primer was needed to be applied prior to the application of the seam sealer. I just want you to be warned before you apply this seam sealer to bare metal.

Fig. 17

Fig. 12

Year in Quotes

Fig. 16

Make sure you clean the primed surface with a good wax and grease remover such as Acrysol (Fig. 16). Using your thumb to put the tape in place and not cleaning the surface

Collision Repair Association of CA.

Sound deadener (Fig. 17) is a two-part material used for noise, vibration and harshness. It can be used to fill large gaps, but I teach using it as an adhesive between the outer door skin and intrusion beam. Work time is about an hour and it is a non-expanding material that works well on horizontal as well as

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Fig. 13

Two-part seam sealers (Fig. 13) are used just like the single component. They have a faster drying time than single-part sealers, but cost more. Control flow sealers are used in areas where a flowable self-leveling type seam sealer is required, as Fig. 15 The next type of seam sealer is it flows up to 2 in., then cures, pre- in the form of tape (Fig. 15). Comventing further with flow. Self-leveling Karyn Hendricks sealers are recommended for roof mon locations of use are the hood seam sealing and on drip rails and hem, door hem, deck lid hem and trunk opening seams. A fast drying, quarter panel arches. There is no dry non-sag, high build sealer is used for time so you can paint immediately. all other areas that need seam sealer. Do not stretch the tape as it is

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with David M. Brown Southwest_Issue_0920.indd 32

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vertical applications. You will need a foam base to apply this material. I recommend use on sail panels on quarter panels and around the gas door pocket.

comes in direct contact with bare aluminum in the presence of moisture and oxygen. A chemical reaction occurs and aluminum will start to corrode, and it will not stop. If a coating, such as primer, is applied over the aluminum after the corrosion process has started, the corrosion process is known as filiform corrosion. (See Fig. 20).

flexible foams and rigid foams.

Fig. 20 Fig. 19

Fig. 18

Sound deadening pads (Fig. 18) are used on door skins, floor pans and quarter panels. They stiffen up a panel to help with noise reduction and vibration. Vibration can lead to an opening of a panel and moisture can get in, which could result in the formation of rust. Automotive foams are used for NVH control and, in the case of structural foam and rigidity, in place of using a steel reinforment. There are

These two-part materials are designed to eliminate panel flutter, water leaks, wind and noise, and duplicate OEM sound deadening on sheet metal. They eliminate oil-canning of door skins, hood/deck lids, roof panels, rear quarter assemblies and sail panels. Do not substitute it with commercial single-part foam found at home building supply stores, which is highly flammable and attracts moisture to expand. You will need to remove the foam from areas that will be welded. If the material catches on fire, cyanide gas and carbon monoxide will be released.

Panel adhesives (Fig. 20) are now considered a corrosion protection item. When the adhesive is applied, it forms a barrier so moisture cannot get in between the joints. Toyota has limited the use of adhesives to only weld bonding, a combination of resistance spot welds and glue, which are listed in its specific model repair manuals. Toyota (CRIB 158) does not approve of panel bonding as a substitution for welding. A final note on corrosion and aluminum: as you are aware by now, aluminum does corrode. The first kind is galvanic corrosion, which occurs when bare steel

Fig. 20a

The other type of corrosion occurs naturally. When bare aluminum is exposed to oxygen and moisture, a barrier coat known as aluminum oxide (Al3O2) forms on the surface. This material will not burn offâ&#x20AC;&#x201D;it melts at 3725 degrees F, whereas aluminum melts at 1220 degrees F. It causes porosity in the weld site. Adhesive, body repair pins and paint do

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surface of the aluminum fender. Besides the iron particle beginning to rust, galvanic corrosion started under the rust particles. What would happen if I primed the fender? A big comeback.

not stick to it, and that is why it is necessary to remove before welding, painting and adhesive application.

Fig. 21, Sand with 180 grit DA Fig. 23

Fig. 22, Clean with a good wax and grease cleaner. Note the aluminum (black soot) on the towel

The next set of pictures show how to perform a recommended cleaning process in a clean environment. As I stated earlier, I was sanding the body of a vehicle that I took down to bare metal. I used the same DA and the sandpaper from the steel body to sand away the paint and primer on the aluminum fender. When I was finished with the fender, I put it outside, and look what happened after one week. (See Fig. 24). Metal particles were transferred from the dirty DA sandpaper to the

LKQ Corp. Appoints Jacob H. Welch to its Board of Directors LKQ Corporation announced Aug. 12 it has appointed Jacob H. Welch of ValueAct Capital to its Board of Directors, effective the same day. “We are delighted to welcome Jake to LKQ’s board,” said Joseph M. Holsten, chairman of LKQ Corporation. “Jake’s investment management track record and public market experience will further complement the diverse skills and experience of our board. We look forward to his contributions as we work with management to drive long-term value for all of our stakeholders, including our shareholders.” Welch is a partner of ValueAct Capital, one of LKQ’s largest stockholders. He has previously served as a director of Armstrong Flooring, Inc., where he was a member of the Compensation and Finance committees. Prior to joining ValueAct Capital in August 2009, Welch worked as an analyst with The Blackstone Group in its private equity division in New York. He has a bachelor of arts, cum laude, from Harvard College and is a CFA charterholder. “ValueAct Capital invests in great com-

panies navigating changes with the potential for substantial longterm value creation,” Welch said. “We have long admired LKQ’s three market-leading businesses and have more recently been encouraged by management and the board’s renewed focus on operational excellence. “This is a great foundation for continued revenue, profit and cash flow growth in the years ahead,” Welch continued. “I have had the chance to meet many members of management and the board and am impressed with their long-term vision for LKQ as the leading parts provider and true partner to its customers. I am excited to join the board and look forward to working collaboratively with management and my fellow board members.” ValueAct Capital owns approximately 7% of LKQ’s outstanding common stock. In connection with Welch’s appointment, the LKQ and ValueAct entered into a nomination and cooperation agreement, which will be filed as part of a current report on form 8-K. Source: LKQ

Fig. 24, Clean with a good wax and grease cleaner. Note the aluminum (black soot) on the towel

At https://scrs.com/wp-content/ uploads/2018/01/2016-scrs-guideto-complete-repair-planning-revised-11-16.pdf , you will find a complete list of non-included items needed for repairing aluminum. Check out I-CAR and its offerings on corrosion protection classes. Kent Automotive, 3M, Fusor and SEM have online classes on their products, and Kent has in-house training as well.

Continued from Page 28

More Best Practices line that, you’ve greatly reduced time spent on a process for which your shop can’t bill. I can’t write about parts without mentioning one of the mistakes I see some dealership management make. At some dealerships, the body shop isn’t given financial credit for parts sales. I think this a bad idea for several reasons. I think it reduces the likelihood that someone within that shop is responsible for following up on parts credits, for example. It also could lead to less than ideal repair-vs.-replace decisions; if those making parts decisions are paid on commission, and the shop gets no credit for a part sale, they may choose to repair a part when replacing would be the better decision for the repair. Do you have questions related to parts? Want more ideas and best practices? Reach out to me, and check out our parts-related videos when you subscribe to our free YouTube channel (https://tinyurl.com/AdviceYouTube).

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with Stacey Phillips

Techs of the Future with Stacey Phillips

Stacey Phillips is an award-winning freelance writer and editor for the automotive industry. She has 20 years of experience writing for a variety of publications, and is co-author of “The Secrets of America’s Greatest Body Shops.” She can be reached at sphillips.autobodynews@gmail.com.

The Importance of Creating Lifelong Learners and Implementing Hands-on Efficiency Training Over a year ago, Jeff Smith, a collision repair instructor at the Northeast Arkansas Career and Technical Center, reached out to me about the overwhelming shortage of technicians. As a result of our conversation, I initiated a new column for Autobody News magazine called Solving the Tech Shortage, which has since received an award. At the time, shop owners and managers faced a shared challenge: how and where to find new technicians. My intent was to come up ways for the industry to discuss ideas on how to solve this problem. Since then, our industry has encountered new unexpected challenges due to the pandemic. In light of the recent changes in shops across the country, I felt it was appropriate to rename the column to “Add name of column” and focus on ways body shops can help recruit, develop and retain technicians for the future. I encourage you to reach out to me with any ideas you would like to share with others in this forum. Workforce development and technician recruitment remain a top priority for repair shops across the country. Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), said there are some unique initiatives currently taking place in the industry. “The reality is the gap we have is far too wide for any one program to simply wipe away,” said Schulenburg. “The more opportunities there are to pull people into this industry, bring them up to speed with what they need and get them ready to be producing on the shop floor, the more the industry will benefit.” During the SCRS open board meeting in July, the association invited two educators from Ranken Technical College and Matrix Trade Institute to share information about the programs they have established and how they are making a difference. Creating Lifelong Learners at Ranken Technical College

A few years ago, John Helterbrand recognized many of the students graduating from the automotive collision repair program at Ranken Technical College in Missouri couldn’t ﬁnd a

“The idea behind the automoprograms and wanted to learn more about how they keep students moti- tive program is to make somebody productive on Day One,” said Helvated. “The OEMs do a very good job terbrand. This may include teaching of what I call ‘culture experience,’” students about tear down methods, he said. detailing or R&I. Industry training A pilot project was then is provided from organizations such initiated at Ranken College I-CAR, SP/2 and ALLDATA. A set of tools is also given to using the best practices from the OEM programs. It each of the students. “If we are going to put our consists of five semesters of learning, which includes a students to work, we need to make semester of aluminum train- sure they have tools,” said Helterbrand. “We don’t want them diging. As part of Ranken’s pro- ging in other people’s toolboxes. gram, students are paired with They need to have something they a mentor. Together, they feel is theirs.” In addition, students learn about follow an operator game John Helterbrand, right, department chair of the automoplan, outlined in a booklet shop culture and develop interviewtive collision repair program at Ranken Technical College, with students Spencer Woodall and Robert Burkett that walks them through the ing skills. The goal is to find a place learning process. The intent for them to work in the industry afjob. Although they had successful- is to keep track of what is accom- ter the first eight weeks of hands-on ly earned their associate’s degree, plished, so neither the mentor nor training. were eager to work and had a good the student becomes overwhelmed. Helterbrand said Ranken Techniwork ethic, the department chair of the program said they weren’t being hired by the collision repair industry. “As an educator, that’s a big problem,” said Helterbrand. As a result, he set out to make some changes. Helterbrand reached out to the school’s advisory board, and then talked to students to learn about their concerns. He soon found retention was one of the main issues. “Students felt they didn’t fit into a shop’s culture or were making a difference; they were essentially lost in the business model,” said HelterYOU ONLY GET ONE CHANCE AT THE brand. “We’re all so busy doing proFIRST REPAIR. cesses, we forget we’re people.” Original BMW Parts & Accessories. Worst of all, according to Helterbrand, he found employers were often shortsighted and convincing Classic BMW Texas students they didn’t need an educaPlano BMW of Dallas 214-778-2673 Direct Wholesale tion. Dallas 214-778-2674 Direct Wholesale 800-245-7269 “For a student, who has low self 214-778-2814 Fax 972-241-3953 Fax esteem, that’s detrimental for their success because they always feel like Oklahoma BMW of Houston North they aren’t completing something,” BMW of Tulsa Houston said Helterbrand. Tulsa 888-215-7431 800-331-3996 Helterbrand also reached out to 281-875-4021 Fax 918-665-1360 Fax several OEMS in the industry with internships programs, including Toy©2020 BMW of North America, LLC. The BMW name, model names and logo ota, Honda, GM and Ford. He found are registered trademarks. retention was very high within these

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cal College and other accredited technical colleges and high schools must ensure students are receiving high quality education so they are marketable when they graduate. “The industry plays a very big role in this,” said Helterbrand. “We have to be able to help students prepare themselves for the industry.”

Two students at Matrix Trade Institute mapping a vehicle with one of the institute’s blueprint/ technical writing stations

Working together, his hope is they create lifelong learners who aspire to be part of the industry for the long term. More information about the pilot program is expected to be announced in late summer 2020. Implementing Hands-on Efficiency Training at Matrix Trade Institute Dustin Peugeot, CEO and co-founder of the Matrix Trade Institute, said it’s critical to look at workforce development and technician training through the lens of a student. “If we forget that, whatever kind of education or training we provide won’t resonate with the student,” he said. The Matrix Trade Institute was established two years ago in Beachwood, OH, and is currently expanding to Detroit. “We’re the new kid on the block but fortunately, we have done more things right than wrong and built some nice momentum,” he said. Peugeot said that too often, employers find that entry-level technicians don’t have the proper training or skills needed to be effective and productive on the shop floor. As a result, Matrix assists employers retain and grow the next generation of technicians. Peugeot said the goal is to create an environment where shops ultimately hire fewer employees, by boosting productivity and creating a cohesive culture. “We believe the best recruiting

model is a great retention model,” said Peugeot. Their focus is to “revitalize, retain and recruit.” “We all fight that battle of trying to get the best and brightest to feel good about entering the trades,” said Peugeot. “We have to put forth the effort to make that as appealing as possible, not only for trainees, but also for the people in their lives who need to support and be proud of their decision.” He stressed the importance of investing time and energy into the development of current employees. The first step is talking to employers about the various ways they can encourage their teams to become more involved in their own development and plot a career path, based on training, education and growth. By taking this approach, Peugeot said employees will never have a reason to leave the business, because they are being provided with all of the skills required to do their jobs effectively. The next step is revitalizing employees by investing in their skills and growth, offering specific skills training and increasing production. Ultimately, Peugeot said this allows shops to recruit differently and find employees to focus on specific

they are considered the best landing spot for a recruit, regardless of their education. “We have to look within before we can start complaining about Millennials or work ethic or people wanting to get into the trade,” he said. Currently, Matrix offers 20-week

They have found this enables individuals to perform, feel valued and grow within their internships. The majority of the time, Peugeot said the internships turn into full-time employment. Peugeot said it’s critical to help the industry become a better place to

“We’re the new kid on the block but fortunately, we have done more things right than wrong and built some nice momentum,” — Dustin Peugeot programs in collision repair and refinish, automotive maintenance and service advisor training, all of which focus on a hands-on efficiency-based curriculum. Students typically intern after the first two or three weeks. Peugeot said students are seen as productive members of the business the first day of an internship. Similar to the program at Ranken College, participants receive a tool set and are shown how to organize it. Rather than relying on outdated textbooks, the programs focus on modern technology, such as interactive, game-style learning simulation.

onboard employees and develop employees who work hard, show up on time and want to work. “We can’t blame the students of this generation,” he said. “We have to look within and find out how we can become better employers, recruiters and growers of talent.”

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National News

Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.

with Ed Attanasio

CCC Photo Estimates and AI-Supported Claims Spike in Response to COVID-19 more than doubled from January to April, as carriers are accelerating use and adoption of digital tools in response to COVID-19. Sisk“Industry use of photos for method of inspection has been growing and insurers are seeing benefit to both cycle time and customer satisfaction,” said Susanna Gotsch, director, industry analyst for CCC. “The recent spike is likely indicative of a with Chasidy Rae new Sisknormal as we’re seeing greater use of digital by carriers that have been in market and new insurers coming online with digital solutions.” CCC also reports a similar trend in estimates written using CCC® Smart Estimate, the world’s first AIguided estimating solution. Smart Estimate applies AI and estimating claims have expanded at a record with Victoria Antonelli pace exceeding double-digit growth logic to photos captured with Quick Estimate. through May of this year. CCC’s Senior Vice President of Many shops that used to think of photo estimates as an option are now Product Management Jason Verlen making them the norm for a wide has extensive experience in the software industry, with specific expertirange of reasons. CCC’s statistics show the rapid se in product management, big data adoption of digital technology is in and analytics. Before joining CCC with Gary Ledoux direct response to social distancing in May 2015, Verlen spent five years and work-from-home protocols initi- at IBM, where he was VP of big data ated to combat COVID-19. The com- analytics. “The use of AI-supported claims has accelerated from steady adoption by industry leaders to a massive increase in use and adoption by the with Gary Ledouxindustry at large,” Verlen said. “Our data, and the conversations we are having with customers, strongly suggests that this point in time will mark a digital revolution in claims.” “We’re seeing every industry embracing new technologies, rethinCCC’s Senior Vice President of Product Manageking how they work, and focusing ment Jason Verlen reported the usage of CCC® with Stacey Quick Estimate, the company’s mobile photoPhillips on personalizing experiences for estimating solution, has more than doubled their customers. The insurance infrom January to April of this year in response dustry is no different.” to COVID-19 By creating an easy-to-use syspany’s industry data indicates the in- tem for customers, insurance adsurance industry recently surpassed 3 justers and shops alike, Verlen has million estimates initiated leveraging seen all three parties using more and photo technology, sinceEd tracking be- more photo estimates than before. with Attanasio “The adoption rate was already gan in 2018. The company also reports the going up, but then the pandemic turpercentage of claims processed ned it into a complete transformation,” through CCC® Quick Estimate, its he said. “Shops are more concerned mobile photo estimating solution, now about safety for its customers At any point, a piece of technology can go from being discretionary to essential, and in many cases, this is what’s happening now with photo with Chasidy Rae estimating within the collision repair industry. Recently, CCC Information Services, Inc. (CCC) reported photo estimates and AI-supported insurance

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and employees for obvious reasons. More and more insurers are asking for our mobile photo estimating solution and shops realize that they’re

“It’s providing a vastly better and safer consumer experience and we’re getting more and more users every month,” he said. “We know from history that people will use technology to adapt for whatever reason, and then don’t change back. The pandemic has made photo estimating systems more relevant than ever before and shops that were reluctant to use them are now embracing this technology.” Another reason CCC’s photo estimating is quickly CCC’s statistics show the rapid adoption of digital technology gaining in popularity is the is in direct response to social distancing and work-fromfact the technology is better home protocols initiated to combat COVID-19 and the public is more comgoing to get more work by making it fortable using it on a daily basis. “There was a little friction two to part of their processes.” Those who are adopting the sys- three years ago because the first getem now will likely use it for the long neration of any technology is always term. Verlen said. going to be inferior to the technology

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it replaces,” Verlen said. “One of the main issues back then was the quality of digital cameras in cellphones, but you look at them now and they are amazing. The enhanced camera capabilities lead to greater clarity, and we’ve applied technology to guide users in taking the right pictures, so picture accuracy has improved, adding a whole new level of credibility, which is so important, especially for shops that are using it for the first time.” CCC offers the industry’s only end-to-end digital auto insurance experience, from telematics data used by insurers for policy quotes and premium discounts, to incident management, where telematics can be used to alert an insurance carrier after a crash event, to photo- and AI-powered applications for repair, total loss and casualty claims management. Using mobile, AI and IoT together with its industry platform, CCC connects the broader auto insurance ecosystem supporting more than $100 billion in transactions each year. In June, CCC announced the availability of CCC® Quick View, a photo-guided vehicle inspection so-

lution. Quick View enables auto underwriters to efficiently and affordably complete vehicle inspections virtually by offering policyholders a mobile app to easily capture vehicle photos.

When CCC’s patented Damage Detection Heatmaps® are applied, shops and insurer can easily assess a vehicle’s condition, including pre-existing damage

Once photos are received, CCC’s proven AI-enabled photo analytics and Damage Detection Heatmaps® are applied, allowing insurers to assess vehicle condition, including the identification of pre-existing damage. Quick View also makes it easy for insurers to assess the presence of custom equipment. Policyholders can capture and share photos at their con-

MSO Symposium Going Virtual

Subaru Reports July Sales

The Automotive Service Association (ASA) is pleased to announce the ninth annual MSO Symposium will still take place the week of Nov. 9. “We’re just going to do it virtually and at no cost for attendees,” said Ray Fisher, president and executive director for ASA. Fisher said ASA has been preparing for a virtual event since late May in case changes had to be made due to the COVID-19 pandemic. The virtual program will be open to the entire industry and allow attendees who may not normally attend to learn about the MSO market. MSO Symposium Week will begin Monday, Nov. 9, and conclude Friday, Nov. 13. The event will contain the same style sessions as in previous years but will be delivered in single-session installments five days in a row. Each daily session will be 60 to 90 minutes. There will be updates over the next few weeks and months. Source: ASA

Subaru of America, Inc. reported 51,458 vehicle sales for July, a 20% decrease compared with record July 2019. These results reflect the impact of the COVID-19 global pandemic and the uncertainty surrounding economic recovery. Following 11 consecutive years of sales records, Subaru reported year-to-date sales of 318,572, a 21% decrease compared to the same period in 2019. July marked the third consecutive month of 50,000plus vehicle sales for the automaker. As the top performing car line by volume, Forester sales increased 4% in July compared with the same month a year ago. WRX/STI posted a 6% increase, while BRZ posted a nearly 60% increase compared to July 2019.

venience typically in five minutes. Early use of Quick View by a large, national insurer shows marked improvements in cost, speed and the identification of pre-existing damage. Specifically, Quick View reduced costs by 75% over manual inspections, led to 60% of inspections being completed in less than 24 hours and identified pre-existing damage on more than 15% of assessed vehicles. “Insurers are looking to balance the need to understand risk with the ability to efficiently and consistently conduct vehicle inspections,” said Naved Siddique, CCC’s group vice president, insurance services group. “Quick View offers policyholders a guided experience to make photo capture easy, while AI and heatmaps help insurers with their virtual vehicle assessments. “Quick View has additional inherent value as vehicle photos can be integrated with CCC’s claims solutions, making them readily available for review by insurers should a physical damage claim arise in the future,” Siddique said. “We’re excited to apply our mobile, AI and

heatmap capabilities to the inspection process, supporting the broader needs of our insurance customers.” CCC Quick View empowers drivers to carry out photo collection digitally and at their convenience. Insurance carriers can use digital photos to be more productive and effective in determining the condition of a new policyholder’s vehicle. CCC Quick View offers features such as guided photo capture, which enables consumers to receive a Quick View invite, prompting and guiding them through photo collection and submission and geo-coding that verifies where photos were taken, helping identify garage location. It also enables users to take photos that can be integrated with CCC’s claims solutions, making them easily available for comparison if a physical damage claim is initiated under the applicable policy in the future, allowing carriers to potentially mitigate prior damage claims. www.autobodynews.com

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pecader s.” drin dinsuotos ctive new

ures hich uick ding and verhel-

phoCC’s asily sical the allgate

Continued from Page 30

Computer Age brother was jumping on the computer bandwagon. Many systems were designed to run on an IBM XT or AT computer system or Tandy system. Some did not require the hardware system to have its own hard drive. Making the right choice was very confusing, especially for those people with no background or knowledge of the computer world. And those who did have some knowledge were quick to point out the system purchased today could be obsolete in a year, further scaring shop owners. By January 1988, many shops had accepted the inevitable and computerized their shops, but many were still on the fence. Those that made the leap found, much to their delight, learning the management programs was not that difficult. And once mastered, shops didn’t know how they lived without computerization. Computer systems of the period could have included not only a shop management system but also estimating software. At that time, more

than 20 different brands of collision shop-related software were available, including shop management and estimating systems. One computer advocate noted, however, that most shop owners bought a computer for the wrong reason—to write estimates. He noted the real value in a computer was job costing—knowing how much money was made on each individual job. The concept of job costing would take some time to sink in. An early 1988 ad for Digitree computers noted the popular computer was now being shipped with the “Mitchell Connection,” an automatic estimating program containing the entire text of the Mitchell crash estimating guides The ad noted the Digitree program required an IBM or compatible computer with MS DOS 3.1, 640K RAM and a 40MB hard drive, pretty standard stuff for the times. A 40MB hard drive! Imagine! More space than one will ever use! The 40 MB hard drive was obsolete in a fairly short time, causing people to buy compression programs for their software, making the entire system unstable.

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Despite the burgeoning computer industry, a trade magazine article in the summer of 1988 discussed various uses for a new tool in the body shop—the fax machine, ideal for, among other things, placing parts orders. The article noted, “The fax machine is here to stay, and most successful collision shops will have fax machines in use in the near future.” The fax concept had been around for years but only commercially acceptable and viable since the early 1980s. By the end of the decade, computers equipped with the proper software could create an estimate, job costing, create work orders, order parts, create estimate supplements, analyze data, log technicians on and off a job, create technician progress reports, maintain parts and materials inventory, create work flow, perform accounting procedures and do word processing.

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Dean Fisher Now I-CAR Board Member Driven Brands™, North America’s leading group of automotive aftermarket brands, proudly announces Dean Fisher, collision group president, has been elected as a board member for the Inter-Industry Conference on Auto Collision Repair (I-CAR.) “Dean has a wealth of industry knowledge as he has been a part of the collision repair industry his whole life,” said Michael Macaluso, paint, collision & glass group president and EVP, Driven Brands. “His perspective is always deeply valued within our organization and we know his dedication to helping the industry thrive will be a welcomed addition to this respected group of board members.” “The complexities added to the automobile will only continue, as consumer expectations evolve more rapidly than ever before,” Fisher said. Source: Driven Brands

FCA, Waymo Expand Autonomous Driving Tech

McPherson College Matching Gift Challenge

FCA and Waymo announced July 22 they have taken the next significant steps in the expansion of their successful autonomous driving technology partnership. Waymo will now work exclusively with FCA as its preferred partner for the development and testing of class 1-3 light commercial vehicles for goods movement for commercial delivery customers, including Waymo Via. The two companies will initially target integration of the Waymo Driver into the Ram ProMaster van, a highly configurable platform that will enable access to a broad range of global commercial customers. This partnership will allow FCA and Waymo to leverage their respective strengths and competencies to determine how to effectively use autonomy to address the specific needs of commercial customers given the rapid growth of goods delivery services. FCA became Waymo’s first OEM partner in 2016. Source: FCA

McPherson College in Kansas has announced a $1 million matching gift challenge from Florida philanthropist and automotive enthusiast Dano Davis. The gift will support business curriculum development, student experiences and scholarships for students enrolled in the only bachelor’s degree in historic automotive restoration in the country. Davis hopes his gift will motivate others to support McPherson College’s automotive restoration program. Any gift designated to the restoration program—for lab and classroom support, scholarships, the tool fund, endowment— will qualify for the match. In January of this year, Davis opened The Brumos Collection, in Jacksonville, FL, that focuses on the development of the automobile and the Brumos Porsche racing legacy. The museum is housed in a building created to resemble the Ford assembly plant that once operated in Jacksonville. Source: MacPherson College

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National Associations with Stacey Phillips

SCRS Open Board Meeting Highlights Include Presentations About Pressing Industry Topics The collision repair industry recent- focus,” he said. “We all feel fortuly had the opportunity to attend the nate that SCRS has a role of support Society of Collision Repair Special- for its members and we have taken a ists (SCRS) open board meeting, held lot of great pride in doing that.” virtually in July. During his executive director’s “The open meeting was for report, Schulenburg shared some of anyone wishing to learn more about the COVID-19 resources the organithe current state of the association’s zation provides on the SCRS website activities and pressing industry top- (https://scrs.com/covid19-resources), ics,” said Aaron Schulenburg, ex- which includes information about workplace preparation and health, ecutive director. Open to association members and financial aid and relief. and non-members, the meeting in- He also mentioned the organicluded updates and presenzation’s involvement with tations from SCRS staff and other entities and industries committees outlining curto help drive the industry rent initiatives. The agenda forward. These include noalso featured guest presentable groups such as the tations and comments from American Society of Assoindustry colleagues. ciation Executives, the U.S. John Eck, GM Chamber of Commerce and The following is a sumcollision manager mary of some of the highthe National Federation of lights from the meeting, which includ- Independent Business, as well as newed a presentation about GM’s ADAS ly-formed coalitions like the Ameridocument, information about data ca’s Recovery Fund Coalition. privacy and the SCRS award-winning “We are working to identify ways to help the small businesses we repBlueprint Optimization Tool (BOT). At the start of the meeting, resent and the information we could Schulenburg announced SCRS would bring to the marketplace,” he said. During the open board meeting, be holding a live electronic vote of board members for the first time. John Eck, collision manager at GM, Following the meeting, the winners and Chris Blackmore, GM program were announced. They included the manager, shared information about incumbent, Amber Alley of Barsot- GM’s Advanced Driver Assistance ti’s Body and Fender; Tony Adams Systems (ADAS) support document of Weaver’s Auto Center; and post-collision inspecand John Mosley of Clinton tion. The four-part ADAS docBody Shop. All three will sit ument outlines the answers on SCRS’s board of directors for the next three years. to questions that arose as a “We had five outstandresult of GM’s attendance ing candidates,” said Brett at the VeriFacts Automotive Bailey, SCRS chairman Brett Bailey, SCRS summit in February. The of the board. “The wealth sections include system dechairman of knowledge that each of scription, component locathem has is off the charts. Whoever tion, calibration and slow calibration. wins the election in those three spots “Several in the industry pressed will do a great job.” us to help identify ADAS terminolo Since the start of the pandemic, gy, abbreviations and component loSchulenburg said the situation has cations as well as how to calibrate,” impacted every one of its member said Eck. businesses. As a result, the organiza- This technical document, Doction has strived to offer guidance and ument ID #5577683, is available assistance to members. with GM Service Information (SI) “It certainly has been something and also as a free PDF document on that has taken a significant amount of GM’s website: https://www.genuine

gmparts.com/pdf/techinfo/gm-driver “You want to make sure that the -assistance-systems-aid.pdf. right security wording and legal doc Blackmore then talked about GM’s umentation is in place in all those collision inspection process. agreements to not only protect your collision center, but “We recognized that the requirements process we laid all the vendors you work with, the customer and the data proout for a collision are exvider,” he said. tremely labor-intensive and He advised shops to look vehicle invasive,” he said. “We’ve been working on at what he referred to as sereviewing that process and Chris Blackmore, GM curity detection and response program manager document since January.” capabilities. “You want to work with partners This involves talking to other OEMs and working closely with who are proactively looking to ensure that there is nothing egregious taking GM’s internal engineering team. He outlined GM’s draft concept place, data is always being protected, in regard to post-collision inspection, and providers have a security officer which includes the steps for visual in- in place or are audited by a third-parspections and affirming diagnostics. ty organization to make sure data seIf approved, a final document will curity is the No. 1 priority,” he said. be available to the industry He then offered recommendations on what to look with details and photos. Schulenburg said SCRS for in a security partner: fields numerous concerns from members in regard to ▪ Third-party certification data privacy. ▪ Annual investment in en “Data protection is a hanced security very important issue right Brandon Lauer, vice ▪ Storage solutions that abide now,” he said. “We believe president of business by GDP laws that electronic commerce development and ▪ Team members dedicated client experience for needs to take place, but we to security ClaimsCorp. should be able to count on the ▪ Full transparency of data companies that we are working with usage that it takes place responsibly.” ▪ Deletion practices He then introduced Brandon ▪ Auto Claims Economy industry Lauer, vice president of business de- knowledge velopment and client experience at ▪ Strong data transfer and protection ClaimsCorp., who talked about the processes proactive steps businesses can take ▪ Data usage agreements in regard to data privacy. Lauer offered tips on how shops At the close of the meeting, Schulencan protect their businesses. First, burg shared information about the award-winning SCRS Bluehe stressed the importance of print Optimization Tool always asking for consent and (BOT), powered by NuGen authorization from customIT, an OEC company. ers. Next, he said companies should evaluate their solution “We worked with Nupartners. This includes askGen IT due to their treing where the data is stored, mendous development rewho has access to it and Pete Tagliapietra, sources and shared vision business development in what we could accomhow it is transferred. leader at NuGen IT, Lauer recommend- an OEC Company plish with the BOT,” said ed leveraging data storage Schulenburg. providers for multiple solutions and The BOT was the recipient of a carefully reviewing all agreements 2020 SEMA New Product award and that require data sharing. See Meeting Highlights, Page 50

44 SEPTEMBER 2020 AUTOBODY NEWS / autobodynews.com

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Continued from Cover

‘Industry Relations’ Allstate, agreed the revamp offered an opportunity to be “evocateurs” to the industry. Allen said the point was to address “real challenges,” but stop talking “up and over.” The idea was to find something on which the industry could find more agreement, he said. “The CIC Industry Relations Committee will foster discussions that identify topics that the Industry would benefit from gaining alignment on,” the committee’s purpose states. Keller said “alignment” was the key word here. “How are we gonna do that?” he said. “Very carefully.” The committee planned a “very interactive” setup with open mics for a lively and engaging dialogue, he said. It also planned to leverage but not interfere with work done in other CIC committees, he said. Engaging other segments of the industry also was a goal, Allen said. For example, he said, if a paint company wanted to talk about an issue,

it should bring it to the committee. Committee member Amber Alley, of Barsotti’s Body and Fender, said she’s seen issues left in a stalemate during her 2.5 years on the Insurer-Repairer Relations Committee. “Neither side is wiling to give,” she said. She hoped the introduction of perspectives from segments outside of the auto body repair and insurance industries would lead to greater appreciation of others’ views and find actual resolutions, rather than applying “Band-Aids on problems that we all know exist.” Algie felt the new committee format could accomplish more than the old Insurer-Repairer Relations iteration. The presence of a third party might “calm the waters a little bit,” he said. The Industry Relations Committee’s plans for its first two official CIC discussions suggest its new direction. During the SEMA Week CIC meeting, the body would discuss operating in a pandemic, Keller said. (The live SEMA has since been cancelled, but CIC plans to convene in November, albeit virtually.) The January 2021 CIC

would examine artificial intelligence, Keller said. “This is a great starting point,” Alley said of the planned conversation on COVID-19 lessons. Nobody had experienced such a thing, and it would be naive to assume anyone in the room emerged without some negative impact, she said. Sharing successes and failures from the experience could lead to a vision for the future, she said. The committee provided a teaser of sorts for the COVID-19 discussion with comments from two of the panel’s insurers. Committee member Scott Kohl, of Liberty Mutual, noted his company has about 3,500 shops on its direct repair program. “It hit each one very, very different,” he said of COVID-19. Fellow committee member Jonathan Chase, of National General, pointed to the matter of cleaning fees. All stakeholders wanted to collaborate and do the right thing, but different parties obtained information in “different spots,” he said. Since the issue is fresh in everyone’s mind, it can be used as an example of how to to work better

Nikola Scores Landmark Order For 2,500 Battery-Electric Garbage Trucks by Mark Kane, Inside EVs

Up to 1,200 cans/charge

Nikola Corporation announced a “landmark” order for 2,500 battery-electric refuse trucks for Republic Services, one of the largest waste collection companies in the U.S. The deal is for a minimum of 2,500 vehicles with an option for up to 5,000 total, which is really two orders of magnitude beyond anything we saw in the U.S. so far. According to the press release, it’s the largest single order in the waste industry. The Nikola Refuse (that’s the name apparently) trucks will be based on the battery-electric Nikola Tre truck for Europe (entire package including batteries, controls, inverters and e-axle). The brief specs show that it will be able to take up to 1,200 cans per charge.

Nikola boss Trevor Milton said sharing the Tre platform will allow Niokola to “drive the cost down for both programs by using the same parts.” With 1,000 HP, the Nikola Refuse is expected to outperform the conventional diesel and natural gas counterparts, as it will be able to go up hills with full loads “without issue.” The plan is to “likely” start onroad tests in early 2022 and full production shortly after with deliveries in 2023. Nikola is to produce both the chassis and body—previously Republic Services was usually forced to buy those things separately. For comparison, the production of Nikola Tre trucks will start in 2021.

Nikola Refuse specs: Up to 150 miles (240 km) of range Up to 720 kWh battery Up to 1,000 HP of power

We thank Repairer Driven News for reprint permission.

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together in the future, Case said. The committee wasn’t trying to say anyone acted incorrectly; rather, it wanted to discuss the different approaches, he said. Treating the cleaning issue as a case study would make everyone more effective, he said. Chase recalled “being confronted daily” with a changing environment and talking to “MSO partners” and other vendors and peers. Everyone wanted to take care of the customer and deliver safety, but the experience still proved difficult “because we weren’t all talking together,” Chase said. If the topic of cleaning a car left stakeholders struggling, it could be even harder to handle a customer complaint about their Level 5 self-driving car, but “it’s coming,” he said.

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46 SEPTEMBER 2020 AUTOBODY NEWS / autobodynews.com

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Hurricane Isaias Insured Losses Estimated to Top $4.2B in U.S. and Caribbean by Danielle Ling, PropertyCasualty360

Early insured loss estimates for Hurricane Isaias are in days after the storm rocked the East Coast, knocking out power for millions and creating significant property damage from the Carolinas to New York. Isaias became the second hurricane of the season to make landfall in the U.S., touching down Aug. 3 in Ocean Isle Beach, NC, after hitting the Caribbean. Isais previously made landfall in the Dominican Republic as a tropical storm before hitting the Bahamas as a hurricane. On Aug. 10, Karen Clark & Company (KCC) issued an early insured loss estimate for Hurricane Isaias, evaluating losses in both the U.S. and the Caribbean. Based on its hurricane reference models, KCC estimates the insured loss from Hurricane Isaias will be around $4 billion in the U.S. and $200 million in the Caribbean. This estimate includes the privately insured wind and storm surge damage to residential, com-

mercial and industrial properties and automobiles, KCC says and does not include NFIP losses. Isaias created havoc all along the Atlantic coast last week. Strong winds knocked out power for over 3 million residents, leaving millions in New York and New Jersey in the dark for almost a week.

The Category 1 storm made landfall in North Carolina on Aug. 3 with maximum sustained winds of 85 mph, bringing torrential rains, storm surge, damaging winds and tornadoes. The Mid-Atlantic and Northeast recorded wind gusts of 60 to 70 mph as the core of Isaias passed through the region. Downed trees and pow-

er lines caused structural damage to properties, crushed automobiles and disrupted transportation services throughout the affected area for several days. The Caribbean, Puerto Rico, the Dominican Republic and the Bahamas were subjected to powerful winds from Isaias, tearing down trees and power lines. In Puerto Rico, around 350,000 customers lost power and many communication towers were rendered inoperable. Areas of the Bahamas impacted by Isaias were among the regions devastated by Hurricane Dorian last year. Worsening Isaias’s impact in these areas, not all repairs needed after Dorian had been completed by the start of this hurricane season. In the wake of Isaias, roof damage and structural damage from downed trees were observed in commercial and residential buildings, according to KCC’s loss report. We thank PropertyCasualty360 for reprint permission.

ARA Takes Summer Road Trip Virtual, Annual Convention to Follow Suit by Chasidy Rae Sisk

The Automotive Recyclers Association (ARA) planned its inaugural ARA Summer Road Trip for July 2325, with the intention of connecting up-and-coming industry leaders with experienced auto recycling veterans through tours of several ARA member facilities. The Road Trip was to be an evolution of the association’s Future Leaders of Automotive Recyclers Educational Summit (FLARES), established in 2018. The tour was scheduled to begin in Chicago, but unfortunately, in the days leading up to it, Chicago Mayor Lori Lightfoot issued an emergency order requiring two weeks of self-quarantine for travelers from 15 different states due to COVID-19 concerns. Although ARA was forced to postpone the Road Trip out of precaution for members’ health and safety, ARA Director of Member Relations Vince Edivan, who had planned to act as host of the trip, was able to safely travel to Chicago, since his home state of Virginia was not on

the restricted list. Edivan took the tour virtual, posting pictures and videos to the organization’s social media accounts to allow would-be attendees to join him for the road trip experience. Edivan began his road trip on July 23 by visiting CAR Auto Recyclers in North Manchester, IN, and Legal Chop Shop in Fort Wayne, IN. Over the following days, he visited Auto Parts City in Gurnee, IL, and Rockford’s Auto Parts in Rockford, IL, as well as Bionic Auto Parts & Sales in Chicago and Northlake Auto Recyclers in Hammond, IN. Edican also dined with the owners of ABC Auto Parts in Riverdale, IL, owned by Jim Watson, ARA past president, and his brother, Joe Watson, current president of the Auto & Truck Recyclers of Illinois (ATRI.) “All locations are either CARand/or Gold Seal-certified automotive recycling facilities, having achieved the top tier of certification for general business practices, environmental and safety issues, and customer service offered by ARA and recognized by the industry,” Edivan shared. “It was a rewarding experience for all,

as the ARA members who graciously agreed to open their doors to their peers were able to still reach the ARA membership at large through videos and postings on ARA’s social media platforms.” Sandy Blalock, executive director of ARA, added, “While the challenges presented by the COVID-19 pandemic made the widely-attended Road Trip unrealistic, ARA was able to adapt and leverage the reach of social media and technology to bring ARA members together and share knowledge. “Overall, it was a great opportunity for ARA to get back out and visit face-to-face with some of our great Illinois and Indiana members, and ARA looks forward to rescheduling the Road Trip as soon as safely possible,” Blalock said. ARA has also made the difficult decision to shift its 77th Annual Convention & Exposition, scheduled for Nov. 11-14, to a completely virtual event. “Ultimately, the health and safety of the membership and staff is our top priority,” Blalock said. “After many discussions, serious consideration,

Asbury Announces Record Q2 Results Asbury Automotive Group, Inc., one of the largest automotive retail and service companies in the U.S., reported net income for the second quarter 2020 of $49.6 million and adjusted net income (a non-GAAP measure) of $48.7 million. This compares to net income of $54.9 million and adjusted net income of $45.9 million in the prior year quarter. “We delivered a very strong quarter and proved out the resilience and the flexibility of our business model,” said David Hult, Asbury’s president and CEO. “Our focus on gross profit combined with our cost restructuring efforts allowed us to remain pro-active and committed to long term growth by moving forward with acquiring 12 Park Place luxury franchises in the Dallas-Fort Worth market under more favorable terms than the prior agreement,” Hult continued. “With the addition of Park Place, Asbury will be a stronger, more diversified company.” Source: Asbury Automotive Group

and with the safety of all attendees at the forefront, we have decided to re-direct all our efforts into transitioning the 77th Annual ARA Convention and Exposition into a virtual conference. We were hopeful that this year’s convention could remain a live event, but the current state of affairs simply presents too much uncertainty and risk at this time.” “For 76 years, the ARA Annual Convention and Exposition has been the gathering place for the professional automotive recycling industry and an incredible place to network, learn and conduct business,” said ARA President Scott Robertson. “ARA is the voice of the professional automotive recycling industry and it is our duty to provide information, education and opportunity to automotive recyclers from around the world—even in the midst of a global pandemic. “Yes, it will look different, but it will still be the extraordinary experience that our attendees have come to expect year after year.” For more information on ARA and the upcoming 77th Annual Convention & Exposition, visit a-r-a.org.

48 SEPTEMBER 2020 AUTOBODY NEWS / autobodynews.com

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Meeting Highlights 2020 SEMA Global Media award. Schulenburg said the windows-based application is an automated version of the Guide to Complete Repair Planning, providing collision repair facilities with an intelligent, easy-to-use estimate analysis tool. “It immediately identifies labor operations, line items and customizable charges that could be overlooked on an estimate,” he explained. “Based on the feedback and insight we’ve received, we’ve identified a very successful utilization of the tool in identifying the opportunities being missed and the financial impact for the end user,” said Pete Tagliapietra, business development leader of NuGen IT. Live demos of the BOT are being held every Wednesday at 2:30 EST. An access code is available on the SCRS website: https://scrs.com/bot/. Visit https://scrs.com/events/ to learn more about the next SCRS open meeting and visit the website for membership information.

CES 2021 Is All-Digital

SEMA Show Canceled

The Consumer Technology Association (CTA)® is excited to share that CES® 2021 will be an all-digital experience. With the growing global health concerns about the spread of COVID-19, it is not possible to safely convene tens of thousands of people in Las Vegas in early January 2021 to meet and do business in person. An all-digital CES 2021 will allow the entire tech community to safely share ideas and introduce the products that will shape our future. You’ll be able to participate in all the awe-inspiring moments of CES wherever you are in the world. We are designing a unique experience for the tech industry. Mark your calendars for the first week in January and be on the lookout for more exciting news about CES 2021. We plan to return to Las Vegas for CES 2022, combining the best elements of a physical and digital show.

SEMA, the Specialty Equipment Market Association, announced Aug. 5 that due to COVID-19 and concerns event facilities and services will be unavailable, the SEMA Show will not be taking place in 2020.

Source: CTA

While both event organizers and industry members have been working tirelessly to deliver an outstanding SEMA Show in November, mounting uncertainty has rendered continuing with the event inadvisable. SEMA expects the decision will bring much needed clarity to an uncertain picture and will help exhibitors, attendees and partners plan accordingly. Recent SEMA Show survey results indicated interest in a possible virtual tradecshow with related

live elements. SEMA will be working with industry members to determine interest levels on specific alternatives. “The SEMA Show is committed to furthering businesses in the automotive specialty equipment market, and to providing manufacturers and buyers with the best opportunity to connect, promote new products and discover new trends,” said Chris Kersting, SEMA president and CEO. “We appreciate the spirit, hard work and innovation our industry puts into the SEMA Show each year. While we are disappointed circumstances prevent us from hosting the Show in November, we look forward to getting everyone together in 2021 for another outstanding event.” Full refunds for SEMA Show exhibitor booth deposits and attendee registration fees will be issued. Updates will be posted to www. SEMAShow.com. Source: SEMA

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Webinar Highlights the Importance of OEM Certification by Emmariah Holcomb, glassBYTEs.com

“You’re making the investment today for the return down the line,” said Connor Smith, CARSTAR original equipment manufacturer (OEM) manager, as he began describing the value in auto glass businesses gaining OEM certifications in an industry webinar. The webinar, The Importance of OEM Certification, was hosted Aug. 11 by the Collision Industry Electronic Commerce Association (CIECA) and took a closer look at the long-term benefits available to the industry. Smith shared his insight on why now is the time for businesses to start looking into becoming OEM certified, which certifications are the most beneficial to shops, what the return on investment (ROI) looks like once gaining certifications and what the future of certifications look like. Automotive technology plays a large role in why Smith thinks “now is the time to look into OEM certifications.” During the webinar, Smith

mentioned some of the related challenges associated with newer-model vehicles. “Everyone knows your standard Corolla is more high tech now than it was 10 years ago,” said Smith. “All of the advancements and safety-marketed features makes repairs more challenging, especially when you factor in the

future. He stressed the importance of always having a good relationship with your local dealers. “The first thing you should do is research various certification requirements and other needs,” said Smith. “Be aware that some certifications will require dealer sponsorships—this is why building a relationship with them is key.”

“There’s one consistent thing, the OEs are here and they aren’t going away,” — Connor Smith training. The best way to get OEM certifications of any type is through training.” When it comes to which certification shop owners should consider, Smith had a simple but direct answer: “Business owners should choose the one that they have the most equipment for and that doesn’t need a huge investment to start.” He advised industry business owners to look at their local dealerships and inquire if they need or have a body shop. This, according to Smith, can lead to a possible partnership or sponsorship in the

There were a number of attendees concerned about the ROI associated with gaining specific OEM certifications. Smith responded to their concerns by stating, “This is a long-term game and you should think of this like a 401(k) for your business; it’s wrong to want shortterm gains from these certifications.” Although the cost associated with certifications is high up front, according to Smith, there are several areas for future growth. By choosing this type of investment for your business you could gain

Honda is Asking Office Staff to Work on Assembly Line by Kurt Verlin, The News Wheel

Are you currently waiting on the delivery of a Honda you ordered? When it arrives, it may have been assembled by one of Honda’s accountants. According to a report from local radio station WOSU, white-collar employees at Honda’s plant in Marysville, OH, have been asked to fill in for a rapidly dwindling blue-collar workforce.

Honda is still scrambling to regain normal inventory levels after its factories were shut down between March and May, and it can’t backfill assembly line positions fast enough to recover. “Regardless of whether or not you wanted to, you could be subject to it,” said a Honda employee

who wished to remain anonymous. “They took volunteers first, but my understanding was they didn’t receive many volunteers for this activity, so then they made it mandatory.” WOSU was able to procure an email in which a Marysville general manager outlines why Honda employees working in the research and development, purchasing and accounting departments were requested to work on the factory floor. Chief among the reasons were COVID-19 and the $600 benefit that unemployed workers are receiving until the end of July. Though Honda is taking precautions—daily temperature scans for employees, mandatory masks and the ability to test for COVID-19 on-site—it confirmed it has recently seen an increase in cases across North America. Honda’s anonymous worker believes that whenever an assembly line worker gets sick, they’ve been in contact with 40 other workers. People in the regular assembly line workforce are also absent for other COVID-19-related reasons,

such as finally taking the time to receive elective surgeries they had initially postponed because of the

pandemic, and dealing with the medical, familial and other impacts brought on by the coronavirus. According to Jamie Karl of the Ohio Manufacturers Association, Honda’s Marysville plant already needed workers before the pandemic, which has only made the situation worse. Honda says it is targeting “sometime in August to return to proper staffing levels,” but with the COVID-19 situation only getting worse in the U.S., it is difficult to imagine how the automaker will pull that off. We thank The News Wheel for reprint permission.

additional technicians, marketing support from the OEs, which include an influx of brochures as well as digital content, and more. “The potential for additional techs could also get your business additional cars within the year as well, you just have to keep reminding yourself that it’s a big investment upfront, but a minimal maintenance investment,” Smith said. Going Forward According to Smith, the future of OEM certifications are uncertain, but they are a big factor in the “right now.” “There’s one consistent thing, the OEs are here and they aren’t going away,” said Smith. He also stated these types of certifications are becoming a standard which may lead to issues with future repairs if your shop or technicians aren’t certified. “I honestly think it’s worth the investment to keep your business,” Smith concluded. We thank glassBYTEs.com for reprint permission.

NICB: Thousands Left to Rebuild After Isaias As Hurricane Isaias leaves a path of destruction in its wake, the National Insurance Crime Bureau (NICB) warns everyone as floodwaters recede, many flood-damaged vehicles are left. This provides an opportunity for fraudsters to dupe innocent car buyers. Dishonest dealers can buy flooded vehicles, clean them up and sell them to unsuspecting buyers. Many of these vehicles come on the market after natural disasters. NICB recommends buying from a reputable car dealer; to check the car thoroughly looking for water stains, mildew, sand and silt under the carpets, headliner and behind the dashboard; and to look under the hood for signs of oxidation. Pull back the rubber “boots” around electrical and mechanical connections for these indicators. Ferrous (containing iron) materials will show signs of rust; copper will show a green patina; aluminum and alloys will have a white powder and pitting. Source: NICB

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