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Mississippi Collision Repair Association and Parts Suppliers File Suit Against PartsTrader The Mississippi Collision Repair Association and Parts Suppliers are seeking industry support in suit against State Farm and PartsTrader. Over 30 plaintiffs, mostly Mississippi body shop owners, have filed an injunction against State Farm and PartsTrader in an attempt to prohibit the insurer from forcing any Select Service shop in Mississippi to use PartsTrader. The suit was filed Aug. 28 by Jackson, MS-based attorney for the nearly three dozen plaintiffs, John Arthur Eaves, Jr., in the Hinds County, MS, Chancery Court against State Farm Mutual Automobile Insurance Company
and PartsTrader LLC. Plaintiff include the Mississippi Collision Repair Association (MSCRA) OEM parts dealers and other parts suppliers and dozens of collision repair principals, including prominent local repairers John Mosley (Clinton Body Shop) and Doug White (Capitol Body Shop). The suit seeks the court’s declatory judgment and injuction to block State Farm from requiring the PartsTrader ordering process in Mississippi. The requested injunction is to 1) Prohibit the Defendants from
by Barrett Smith
the insurer has provided full payments, as of late, 21st Century claims representatives have elected to once again deny payments for the repairer’s posted labor rates, processes and procedures as deemed to be reasonable and necessary to properly restore their customer’s vehicle. As Such, Eddie Quintela Quintela, on behalf of and with the full support of his customer, has found it necessary to once again file a lawsuit against the
See Suit Against PartsTrader, Page 18
Quintela Sues 21st Century A Second Time for Short-Pays, Makes ‘Cents out of Sense’
See Quintela, Page 49
Change Service Requested
P.O. BOX 1516, CARLSBAD, CA 92018
Eddie Quintela, Owner and President of Collision Concepts of Delray Beach, FL has once again found it necessary to file a lawsuit against 21st Century Insurance on behalf of his customer who made a claim under their policy with the carrier. In 2012, on behalf of his company’s customers, Quintela filed three separate lawsuits against 21st Century of which the insurer agreed to settle before the trial dates. In addition to the disputed amounts, the insurer paid all of Eddie’s legal fees and costs. In spite of recent claims whereas
VOL. 31 ISSUE 10 OCTOBER 2013
Tesla Motors Surges Despite Only Two ‘Galleries’ in Texas, Legacy of Franchises Holds Tesla Motors has two Texas showrooms for its luxury electric cars, one in Austin, the other in Houston, but you can’t call them stores. Texas law prohibits carmakers from selling directly to customers, as Tesla does elsewhere. Instead, the companies must sell through franchise dealerships, something Tesla so far refuses to do. Tesla tried to get the state’s law changed, to no avail. So instead of stores, Tesla’s Texas facilities are “galleries,” where customers can examine the company’s $62,400-plus Model S sedan and talk with Tesla reps about the car’s features. And that’s about it. “They can’t tell you the price of the car, how to buy the car or give you a test drive,” said Diarmuid O’Connell, Tesla’s vice president of business
development. “All they can really do is tell you about electric cars.” As Tesla expands across the country, the company has run into a dogged foe: the traditional auto dealership and its franchise model. Dealer associations in several states have tried to shut out Tesla with lawsuits and legislation, viewing the company’s direct-sales model as a challenge to their way of doing business. They aren’t necessarily worried about Tesla itself. The Palo Alto company delivered 5,150 cars in the second quarter against a forecast of 4,500 and turned a profit of 5 cents per share while analysts expected a loss of 17 cents. It remains tiny by the auto industry’s standards, planning to sell just 21,000 cars worldwide this year. See Tesla Motors Surges, Page 23
Special SNAPSHOT of the Collision Industry, survey by Collision Repair Educational Foundation and I-CAR p. 30
State Farm and PartsTrader Offer More Info on Roll-Out, Use of the System by John Yoswick
Whether or not they participate in State Farm’s Select Service program, shops and parts vendors still have lots of questions and concerns about PartsTrader as State Farm continues its roll-out of the program. Here is some additional information addressing some of those questions that representatives of State Farm or PartsTrader have provided. Roll-out schedule. PartsTrader rolled out in September in major markets in California, Nevada and Utah, and in October in Michigan and Ohio. It will reach major markets in Wisconsin, Illinois, Indiana, Kentucky and Tennessee later this year. Vendor choice. Shops are not required to get price quotes from anyone beyond their designated preferred dealer. In fact, Partstrader’s
Dale Sailer said, the system defaults to sending a job’s parts list only to the shop’s preferred dealer, though the shop can expand the search from this default. State Farm does not get data about whether a Select Service shop’s parts list for a job went only to the shop’s preferred dealer for quotes. A shop can “direct order” a part through the system without waiting for any parts quotes; State Farm does know, however, if a Select Service shop does this. And if a dealer always gives a shop the same discount, the dealer can set the system up to automatically respond with that discount to all requests for quotes from that shop. “Dealers don’t have to hire a whole bunch of people to fill out quotes,” Sailer said. See More on PartsTrader, Page 38
Presorted Standard US Postage PAID San Bernardino, CA Permit #2244
2 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
REGIONAL
Amarillo College Collision Program Back . . 4
Amarillo Hail Toll at $500M; Losses like
Hurricanes. . . . . . . . . . . . . . . . . . . . . . . 4
BASF to Build New Facility in Geismar, LA . . 6 Corpus Christi Plant to Pay $750,000 in
at SEMA Show. . . . . . . . . . . . . . . . . . . 32
BLS Says Collision Industry Production
Rose in June . . . . . . . . . . . . . . . . . . . . 33
CA Air Resources Board Passes Windshield Requirement to
Reduce A/C Usage. . . . . . . . . . . . . . . . 52
Emission Controls . . . . . . . . . . . . . . . . . 8
Caliber Collision Opens Two New
Every Collision Course at Chief University. . 9
California Teen Dies in Lock-Jammed Car. 53
Locations in CO and CA . . . . . . . . . . . . 32
How Tesla Was Shut Out by Texas’
Car Bench America Says Shops Not
Insurance Auto Auctions Relocates its
Daimler to Sell Self-Driving Production
New OK Statute Blocks Old Employees
Everyday Paint Operations Result in
Franchise Laws . . . . . . . . . . . . . . . . . . 24
Oklahoma Auction . . . . . . . . . . . . . . . . . 4 in Recruiting . . . . . . . . . . . . . . . . . . . . . 4
Service King Forms New Relationship
with Axalta. . . . . . . . . . . . . . . . . . . . . . . 8
Sterling Auto Body’s Open Houses
in Webster and Houston. . . . . . . . . . . . . 4
Tesla Motors Surges Despite Only Two ‘Galleries’ in Texas, Legacy of
Franchises Holds . . . . . . . . . . . . . . . . . . 1
Ready to Repair Newest Cars. . . . . . . . 26 Car by 2020 . . . . . . . . . . . . . . . . . . . . 33 Explosion and Fatality that Rocks
the Collision Industry . . . . . . . . . . . . . . 54
and the Jim Clark Lotus-Ford 38/1
Indianapolis Winner as Part of Clark
Tribute at 2013 Goodwood Revival. . . . 48
GA and CA Most Expensive States
to Own a Car . . . . . . . . . . . . . . . . . . . . 33
MD Shop Owners Prevail Against Short
What’s Going on with the Louisiana
Mississippi Collision Repair Association
COLUMNISTS
Mitchell Announces its New Reputation
Economy?. . . . . . . . . . . . . . . . . . . . . . . 9
Attanasio - Is Radio Advertising a Sound
Decision For Body Shops? . . . . . . . . . . 46
Franklin - Development-Appropriate
Marketing . . . . . . . . . . . . . . . . . . . . . . 12
Pays—No DRP, No Problem. . . . . . . . . 36
and Parts Suppliers File Suit Against
PartsTrader . . . . . . . . . . . . . . . . . . . . . . 1
Manager Package . . . . . . . . . . . . . . . . 34
Mitchell International Sold to Asset
Management firm KKR For Estimated
$1.1B . . . . . . . . . . . . . . . . . . . . . . . . . 51
Insider - Eliminating the “Have Not”
NABC Partners with ATT on Anti-Texting
Yoswick - October Retrospective
New SRS Checklist Available . . . . . . . . . . 47
Shops Will Help the “Haves” . . . . . . . . 44
on the Collision Industry . . . . . . . . . . . 10
NATIONAL
AASP/NJ Announces Support of MCRA
Suit Against PartsTrader. . . . . . . . . . . . 52
ABRA Helps Raise $30,000 for Veterans’
Service Dogs . . . . . . . . . . . . . . . . . . . . 34
Campaign . . . . . . . . . . . . . . . . . . . . . . 33
NY Assembly and Senate Hear Bills to
Make Insurance Co. Parts Mandates
Illegal. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Quintela Sues 21st Century A Second Time for Short-Pays, Makes
‘Cents out of Sense’ . . . . . . . . . . . . . . . 1
Record Fundraiser for CREF . . . . . . . . . . . 13
Allstate Pays Labor Rate to Settle
SCRS Issues Position Statement on
AMI and ASA Give the 2013 Emil Stanley
Sherwin-Williams and Online Blueprint
ASA Launches New Website, Improves
Snapshot of the Collision Repair Industry . 30
12 Pending Claims. . . . . . . . . . . . . . . . . 6
Merit Award . . . . . . . . . . . . . . . . . . . . . 50
Insurer Mandates. . . . . . . . . . . . . . . . . 14
Provider Team Up . . . . . . . . . . . . . . . . 34
Repairer Tools . . . . . . . . . . . . . . . . . . . 32
State Farm and PartsTrader Offer More
Ed Rusk Jr. . . . . . . . . . . . . . . . . . . . . . 53
State Farm Donates $70K to CREF,
Different Experience’ . . . . . . . . . . . . . . 34
The 1963 Federal Consent Decree . . . . . . 20
ASA President Risley Writes to State Farm’s ASRW’s New Format Will Be ‘Vastly
Attorney Spearheads Suit Against Carfax . 50
Automotive Instructors Get Special
AAPEX 2013 Invite . . . . . . . . . . . . . . . 32
Best Way to Research New Product
Target Ta arget Success S with Autobody y News. News
Franchitti Reunites with The Henry Ford
Texas to Allow Electronic Proof of
Insurance . . . . . . . . . . . . . . . . . . . . . . . 8
• Autobody News has a 32-year track record of providing more in-depth regional news than any other collision repair publication • Targeted 100% to collision repair • Featuring the collision industry’s top regional columnists, experts and reporters • Read by 35,000 collision professionals every month in five regional editions • Advertising packages that get results by reaching your target market
Info on Roll-Out, Use of the System . . . . 1
Lifetime Over $1M . . . . . . . . . . . . . . . . 23
Three CARSTAR Stores Get Praise
for Outstanding CSI . . . . . . . . . . . . . . . 50
What Does Tesla’s Record-setting Safety
Come t sa visit u oth o NACE B 50 5 1 #N
Rating Say to the Collision Industry? . . 16
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Contact: Barbara B Davies, General Manager * (800) 699-8251 Autobody News | P.O. Box 1516 | Carlsbad, CA 92018 | bdavies@autobodynews.com
Publisher & Editor: Jeremy Hayhurst General Manager: Barbara Davies Contributing Writers: Tom Franklin, John Yoswick, Janet Chaney, Toby Chess, David Brown, Rich Evans, Ed Attanasio, Chasidy Sisk Advertising Sales: Joe Momber, Sean Hartman, Bill Doyle (800) 699-8251 Sales Assistant: Louise Tedesco Art Director: Rodolfo Garcia
Indexof Advertisers
Houston’s Randy McGinty First to Complete
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Southwest
Contents
Serving Texas, Oklahoma, Louisiana, New Mexico 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. ©2013 Adamantine Media LLC.
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Box 1516, Carlsbad, CA 92018; (800) 699-8251 (760) 721-0253 Fax www.autobodynews.com Email: news@autobodynews.com
A Frame Paint Booths . . . . . . . . . . . 36 Absolute Mitsubishi-Hyundai . . . . . 40 American Innovative Manufacturing . 8 AutoMax Hyundai Del City . . . . . . . 50 BASF . . . . . . . . . . . . . . . . . . . . . . . . . 5 BMW Wholesale Parts Dealers . . . . 49 Car-Part Pro. . . . . . . . . . . . . . . . . . . 24 Certified Automotive Parts Association (CAPA). . . . . . . . . . . 25 Chevyland . . . . . . . . . . . . . . . . . . . . . 6 Chief Automotive. . . . . . . . . . . . . . . 13 CJ, Inc. - Signature - Star-A-Liner . . 16 Classic BMW . . . . . . . . . . . . . . . . . . 32 Classifieds. . . . . . . . . . . . . . . . . . . . 54 Dallas Dodge . . . . . . . . . . . . . . . . . 56 David McDavid Auto Group . . . . . . 11 Dent Tools Direct USA . . . . . . . . . . 10 Don Carlton Auto Group . . . . . . . . . 45 Equalizer Industries . . . . . . . . . . . . 38 Extractor . . . . . . . . . . . . . . . . . . . . . . 6 Finnegan Chrysler-Jeep-Dodge . . . . 2 Ford Wholesale Parts Dealers TX, OK, LA, NM. . . . . . . . . . . . . . 39 Forklift Wrecker . . . . . . . . . . . . . . . . 22 Fowler Honda . . . . . . . . . . . . . . . . . 50 GM Wholesale Parts Dealers . . . . . 48 Herkules Equipment Corporation. . 26 Honda-Acura Wholesale Parts Dealers. . . . . . . . . . . . . . . . . . 28-29 Houston Auto Body Association. . . 46 Huffines Chrysler-Jeep-Dodge Lewisville . . . . . . . . . . . . . . . . . . . 12 Huffines Hyundai Plano . . . . . . . . . 18
Hyundai Wholesale Parts Dealers . 47 KBS Coatings . . . . . . . . . . . . . . . . . 18 Kia Motors Wholesale Parts Dealers. 43 LKQ . . . . . . . . . . . . . . . . . . . . . . . . . 55 Malco. . . . . . . . . . . . . . . . . . . . . . . . 15 Mazda Wholesale Parts Dealers . . . 52 Mercedes-Benz . . . . . . . . . . . . . . . . 19 Mike Calvert Toyota. . . . . . . . . . . . . 38 Mitchell International. . . . . . . . . . . . 17 Mitsubishi Wholesale Parts Dealers. 51 MOPAR Wholesale Parts Dealers . . 35 Motor Guard Corporation . . . . . . . . . 4 North Freeway Hyundai . . . . . . . . . . 9 PreFab Ads . . . . . . . . . . . . . . . . . . . . 9 Ray Huffines Chevrolet . . . . . . . . . . 37 Reliable Chevrolet. . . . . . . . . . . . . . 46 Replica Plastics. . . . . . . . . . . . . . . . 20 SATA Spray Equipment . . . . . . . . . 27 Scoggin-Dickey Buick . . . . . . . . . . 44 South Pointe Chrysler-Jeep-Dodge. 21 Sherwin-Williams Automotive Finishes . . . . . . . . . . . . . . . . . 22, 23 Starlite Coatings . . . . . . . . . . . . . . . 34 Subaru Wholesale Parts Dealers . . 53 Toyota of Fort Worth . . . . . . . . . . . . 34 Toyota of Laredo . . . . . . . . . . . . . . . 14 Toyota Wholesale Parts Dealers . . . 48 Valspar Automotive . . . . . . . . . . . . . . 7 Volkswagen Wholesale Parts Dealers . . . . . . . . . . . . . . . . . . . . 53 Volvo Wholesale Parts Dealers . . . . 52 Walcom USA . . . . . . . . . . . . . . . . . . 33 Young Chevrolet . . . . . . . . . . . . . . . 20
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 3
Amarillo College Collision Program Back
Autobody News has reported previously on the revival of the Auto Collision certificate program at Amarillo College. The head of the program Eddie Casias says it may be early in the semester, but he’s extremely pleased with the turnout. He says, “we were hoping to get some students. We didn’t know how many. We were hoping to have maybe 5 or 7 tops, but actually we had a better turn out than we thought. We ended up having 12 students this year, so it was a lot better turn out than we expected.” Casias says the body shop industry, in our area included, has a high demand for qualified workers. He says that’s because high schools have gotten away from teaching the trades. Casias says, “not very many people are getting into the business anymore. I’m not sure if it’s just because it’s not being pushed as much anymore or what the actual reason might be, but body shops are suffering these days for help.” “Nationwide, the auto body repair industry lacks trained entry-level workers and is struggling to replace retiring craftsmen. Every shop has trouble finding people,” Casias said. “Now I’ll be able to give students the right start in the business.” Over the years Casias has taught many helpers
who have gone on to become great painters. Casias says 4 years of college isn’t for everyone, and he wants to take what he’s learned and pass it on to new students in a short amount of time. “This class is actually a nine month course, and at the end of the course they earn a certificate of completion. With that certificate they can go out into the real world and actually get jobs in body shops,” says Casias. AC’s auto collision program had been teaching students about the industry for about 25 years. Casias says it was put on hold for the past couple of years for unknown reasons. A handful of auto repair shops in Amarillo say they fully support the program at AC. Many say they would much rather hire a student out of the auto collision program than someone with no schooling.Casias tells us there is no set limit for the number of students the class can hold. The Amarillo College program teaches today’s technology with sponsor-donated equipment. With his industry contacts, Casias will be able to help students land job interviews after they’ve completed the program. “My goal is to get students ready to start working in a shop,” he said, “and to make this the finest program possible.”
Insurance Auto Auctions Relocates its Oklahoma Auction An increased demand for services has Insurance Auto Auctions expanding and relocating one of its facilities in the Midwest. IAA has announced the relocation of its Oklahoma City site to a larger facility in the region. This relocation significantly expands IAA’s capacity and fits with the company’s strategic vision of growth among key customer markets across North America. “Over the past several years, we have experienced a significant increase in demand from multiple customers in Oklahoma City as well as the need for catastrophe services in the region,” said Tom O’Brien, chief executive officer of IAA.
“The relocation of our facility to a new state-of-the-art building will allow us to better serve this important market and provide enhanced services to our existing customers,” he said. The new 30-acre facility gives IAA the additional capacity necessary to serve the greater Oklahoma City market, the company said, and provides for the company’s growing global buyer base consisting of rebuilders, used-car dealers, automotive body shops, automotive wholesalers, exporters, dismantlers, recyclers and brokers. IAA’s Oklahoma City new auction facility will be located at 7300 N. I-35 Service Road in Oklahoma City, with auctions to take place every Wednesday at 9:30 a.m. CT.
Sterling Auto Body’s Open Houses in Webster and Houston
Sterling Autobody Centers’ OPEN HOUSES, Thursday, September 19th, 4pm - 8pm, at 701 Kobayashi Drive, Webster, TX 281-332-0758 and Saturday, September 21st, 10am-2pm at 9960 FM 1960 West, Houston, TX. 281-955-2450 Now Hiring • Auto Body/Structural
Techs (Individual Flat Rate Pay) • Auto Paint Techs/Preppers • Estimators • Customer Service Representatives • Detailers & Porters. For more information, visit: www.sterlingautobody.jobs Or call Toll Free (SE HABLA ESPAÑOL) 855-208-5636
4 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
Amarillo Hail Toll at $500M; Losses like Hurricanes
Texas insurers have written checks for $500 million to pay claims on hail damage from the May 28 storm in Amarillo. “The Amarillo hailstorm just became the 10th costliest storm on record in the state,” says Mark Hanna, a spokesman for the Insurance Council of Texas. “The losses from this hailstorm are comparable to Hurricane Dolly that struck South Padre Island back in 2008.” That storm is the costliest in Amarillo’s history. Last May a storm moved over the city and caused damage to about 75 percent of residential property in the city, pelting it with baseball-size hail and high winds. Amarillo is the fourteenth most populated in Texas with about 194,000 people. The storm system, which included tornadoes, caused $1.3 billion in insured losses to seven states. After Texas, it moved onto Oklahoma, where it caused an additional $450 million in damage, ICT says. Texas leads all other states in significant hail events by a wide margin this year. There were 7,031 major hail storms in 2012, according to statistics culled from NOAA’s Severe Storms database. Most storms happened in March, April and May.
New OK Statute Blocks Old Employees in Recruiting
Oklahoma law generally disapproves of contracts that restrict an individual’s right to earn a living, such as non-compete agreements. However, effective November 1, 2013, a new Oklahoma statute will give employers a tool to prevent former employees from hurting their businesses. The new section, codified at 15 Okla. Stat. § 219B, clarifies that employers may prohibit employees (or independent contractors) from wooing away their former coworkers once they leave employment. A contract or contractual provision which prohibits an employee or independent contractor of a person or business from soliciting, directly or indirectly, actively or inactively, the employees or independent contractors of that person or business to become employees or independent contractors of another person or business shall not be construed as a restraint from exercising a lawful profession, trade or business of any kind. Restrictions on soliciting an employer’s workers still have to be part of an otherwise enforceable contract. Employers need to be careful that they are not altering the otherwise at-will employment relationship with such agreements.
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 5
BASF to Build New Facility in Geismar, LA
BASF will break ground on a new $42.6 million polyurethane blending facility in Geismar, LA, next June. The project was originally slated for a Houston site — so much so that it was initially called “yellow rose” after a Texas folk legend - but local officials said they were able to lure it away to Louisiana.
“I’m glad we plucked that yellow rose from Texas and brought it to
Louisiana,” said Gov. Bobby Jindal at the company’s announcement Sept. 12. Louisiana has offered up financial incentives to help BASF with the project. Jindal said that the company will receive a $1.2 million modernization credit paid out over five years to help with the first phase of the project. BASF may also opt to take advantage of certain other programs, including Louisiana’s industrial and “quality jobs” tax exemptions. Opening in 2015, this new facility create 22 new jobs directly, with an average salary of $72,300 plus benefits. Jindal also said he expects the project to produce 145 indirect jobs in the area. This is BASF’s fourth facility expansion in Louisiana since 2009.
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Allstate Pays Labor Rate to Settle 12 Pending Claims by Barrett Smith
In June 2013, Allstate claim’s management contacted Ray Gunder and requested a meeting to discuss Allstate’s interest in bringing closure to the lawsuits of which Ray had filed against the nation’s second largest insurer on behalf of a dozen of his customers. During the meeting with Allstate’s Tom Travis and Greg Ashley it was agreed, based upon service and quality, that Gunder’s Auto Center was indeed entitled to their labor rate, however, not all repairers deserve the same labor rate, and concern was expressed, that should the word get out, how Allstate would pay Gunder’s labor rate without having to do so for other shops. Ray advised he would continue to share his journey with the industry, and regardless, if a settlement with Allstate was reached or litigation continued, others would find out as his intent was that all repairers and their technical staff would be compensated fairly for their efforts, not just Gunder’s. In July Gunder’s was advised that Allstate would settle all twelve pending lawsuits by paying the full labor rate and all related attorney fees and costs. Full payments for each were received last week. Allstate makes the 44th insurer to date which has agreed to pay Gunder’s
full labor rates and materials. “I am very appreciative of the way this was handled by Allstate,” says Gunder. “No one wants litigation; however, sometimes it is needed to get disputes resolved. My hope is that this is truly a new way Allstate does business nationwide and they speak to the entire industry with one voice.” The largest payment from Allstate was for $1,575, while the smallest payment was for $198. “Enclosed please find payment in the amount of $1,575.24 for your loss on 10/28/2012,” an Allstate representative wrote in documents included with the payments to Gunder Auto Center. Gunder has an ongoing track record of suing insurers on behalf of his customers over short pays. “We’ll be in depositions all week with Geico representatives and have continued lawsuits with State Farm,” Gunder says. “Perhaps [Allstate] agreeing to our rates will encourage GEICO and State Farm to pay rates and allowances that are fair and reasonable. One can be sure that we’ll continue to pound the rock until they do.” Gunder Auto Center settled a similar case with State Farm in 2012. The collision center offers auto glass replacement and repair services for its customers. This service is outsourced.
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 7
Texas to Allow Electronic Proof of Insurance
A new law in Texas is making it okay to use a cell phone in the car. But, only if it’s to prove you have auto insurance. Texas is now one of 23 states where it is legal to show proof of insurance by pulling up the policy card on your smart phone. “There’s already a lot of people doing that in vehicles that I’ve stopped in the past where they’ve presented that,” said Senior State Trooper Chris Ray. “Of course that hasn’t been acceptable until now,” he added. Most major car insurance companies offer apps where you can easily access your policy. As with any application, some people like it and want to use it,” said Merritt Vaughn, a State Farm Agent in Amarillo. “Some people don’t want anything to change. They want their printed cards but we clearly know this is the future.” He thinks have the app as an option will be beneficial for everyone. “Everyone that has had a paper ID card in their car, they haven’t always been actually valid ID cards. This gets around all of that. Its accurate, it’s timely, if they present it, everyone can be confident that it’s an active valid insurance card,” Vaughn said. State Troopers still suggest carrying the paper card in your car just in case.
Corpus Christi Plant to Pay $750,000 in Emission Controls
Service King Forms New Relationship with Axalta
Service King Collision Repair Centers announced a new relationship with Axalta Coating Systems. Axalta, formerly known as DuPont Performance Coatings, will provide Service King customers with top-ofthe-line, professional paint services through its Spies Hecker line of products. Service King will have access to Spies Hecker paint across its entire nationwide footprint, building on its successful prior experience with the brand in selected locations. In addition, the relationship will further allow Service King to maintain its core values of innovation, quality repairs and customer satisfaction. “As we grow as a brand in collision repair, Service King continues its commitment to provide the best products and services in the industry,” said Chris Abraham, Chief Executive Officer of Service King. “Axalta offers the best of the best when it comes to automotive refinishing products.” Said Nigel Budden, Vice President of Axalta’s North America Region. “Our goal is to continue to provide superior products and services, working together with our distribution partners and focusing on meeting Service King’s needs.”
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any community questions about flaring events at the facility. The agreement continues EPA’s efforts to reduce emissions of toxic air pollutants, with a particular focus on industrial flares. These requirements focus on reducing the amount of waste gas sent to flares and on improving flare operations, both of which work to reduce toxic emissions. Improper operation of an industrial flare can send hundreds of tons of hazardous air pollutants into the air. More pollution results when waste gas is sent to a flare, or if the flare is inefficient. EPA wants companies to flare less, and when they do flare, to burn the harmful chemicals found in the waste gas. The facility is required to pay the penalty within 30 days of filing the consent agreement. To date, EPA has issued all final greenhouse gas permits by the deadline. From pre-application consultations to post-application technical sessions, EPA’s permitting program helps Texas companies obtain their greenhouse gas permits within the one-year statutory deadline.
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The MarkWest Javelina plant will invest over $650,000 for facility operations improvements that will reduce flaring events and improve communications with the local community. The gas processing plant will also pay a civil penalty of $97,500 to settle violations of the Clean Air Act uncovered by the U.S. Environmental Protection Agency (EPA). The consent agreement addresses a number of violations occurring from Sept. 1, 2012 to Jan. 30, 2013. “EPA is committed to reducing toxic air pollution from sources that have an impact on the health of our citizens,” said Ron Curry, EPA’s Regional Administrator. “This agreement has a positive and direct impact on improving air quality and communication for the surrounding community.” In addition to improving flare efficiency, the settlement requires that MarkWest Javelina improve operational reliability without increasing facility emissions and improve emission controls. The company will also establish a 24 hour hotline to answer
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Houston’s Randy McGinty First to Complete Every Collision Course at Chief University Randy McGinty has worked in the collision repair industry for more than 25 years. He got his start working in independent body shops before moving to dealerships and eventually
UTI Houston collision repair instructor Randy McGinty is the first person to complete every collision repair training course offered by Chief University
owning his own body shop. After more than a decade of owning and operating his own body shop, McGinty lost the lease on his building, which left him wondering what to do next. His wife suggested he try his hand at being an instructor and apply for an open teaching position at the Universal Technical Institute in Houston. “I didn’t really know what I wanted to do next,” McGinty said. “I had been teaching people that worked
for me and that I worked beside… I took all my credentials and everything else and presented it to UTI and, after a series of tests, they decided to hire me. They taught me how to teach, and I’ve been here ever since.” McGinty teaches both structural and non-structural automotive repair classes at UTI Houston. Earlier this year, McGinty made history by being the first person to complete every collision repair training course offered by Chief University, the technical training arm of Chief Automotive Technologies. For his efforts, he was granted the advanced master structural technician and advanced master structural damage analysis professional certifications. It took McGinty more than 120 course hours and nearly 10 years to complete all of the collision repair training. It’s a feat that McGinty said just wouldn’t have been possible without the support he received from UTI Houston. “The only reason I was able to take all of these classes was due to my education managers and education di-
rectors here at the Universal Technical Institute,” he said. “Without their help and blessings, this would have never ever happened.” When he’s not busy taking classes or teaching students, McGinty and his wife enjoy riding Harley Davidson motorcycles, camping, grilling and watching movies. For more information on Randy McGinty or UTI Houston, call 281443-6262 or visit www.uti.edu. You can also connect with UTI on Facebook and Twitter. To learn more about Chief University classes, call 800-445-9262 or visit www.chiefautomotive.com. You can also connect with Chief Automotive Technologies on Facebook, Twitter and YouTube.
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What’s Going on with the Louisiana Economy?
Gov. Bobby Jindal has been known to make contradictory statements about the economy. “The bottom line is that for too long, Louisiana’s workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity,” Jindal said in January, when pitching his now failed tax reduction plan. But now, it’s morning in Louisiana. “Louisiana is one of the best places for businesses to invest and create jobs,” Jindal enthused recently, without mention of taxes. In May, ChiefExecutive.net declared Louisiana the 11th best state for business. In July, Pollina Corporate Real Estate ranked LA 14th among pro-business states. According to the Bureau of Labor Statistics, when Jindal took office in January 2008, there were 1,962,000 people employed in Louisiana. The unemployment rate was 3.8 percent. In July of 2013, there were 1,947,000 million employed Louisianans, roughly the same as when Jindal became governor. The unemployment rate was 7 percent, more than three points higher than when Jindal took office.
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Historical Snapshot
—John Yoswick is a freelance writer based in Portland, Oregon, who has a body shop in the family and has been writing about the automotive industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact him by email at jyoswick@SpiritOne.com.
October Retrospective on the Collision Industry with John Yoswick
“This is just my personal opinion, 20 years ago in the collision repair not the ADP company line, but it just industry (October 1993) A proposal was introduced at the Colseems to me that you can spend an lision Industry Conference (CIC) in awful lot of money studying someDenver to develop a third-party evaluthing to find an answer that nobody reation of how shops are reimbursed for ally wants to hear,” Tuuri said. refinish and other materials. - The project, at least how Nadler Steve Nadler, the owner of outlined it, does not appear to have ever moved forward. Painters Supply Company in Denver, distributed a 2-page memo suggesting that a national certified public ac15 years ago in the collision repair counting firm be hired to study the maindustry (October 1998) terials reimbursement issue. Nadler Jack Gillis of CAPA perhaps best said this study could address the accusummed up a demonstration of nonracy of such practices as basing mateOEM parts at the Collision Industry rials reimbursement on paint labor Conference (CIC) in October when he hours, and establishing “ceilings” or said, “Not one of our better days.” “caps” on material charges. The demonstration, arranged by No data has been identified that the CIC Parts and Airbags Committee, can be used “to support the present reinvolved installing several non-OEM imbursement methods,” Nadler’s parts, including a hood and fender that memo states. bore the CAPA-certified sticker, on an He suggested that a CIC subcomundamaged 1994 Toyota Camry. Fit mittee be formed to develop a request and other problems with the parts were for proposals for the study from the naobvious, and after the demonstration tion’s top CPA firms. Nadler said that Gillis said neither of the parts would this step would provide the industry be listed as certified in the next Certiwith estimates of the cost of the 1- to fied Automotive Parts Association 2-year project. (CAPA) directory. “I could say it’s not going to be The fender, he said, had been de$5,000. I don’t think it would be certified earlier in the week because of $500,000,” Nadler said when asked for more than 20 complaints, including some projection of costs. “On a fullone the week of the CIC demonstrafee basis, it might be anywhere from $100,000 to $150,000. But that’s purely speculative on my part, and depends on the scope of the project.” Joe Landolfi of Kemper Insurance said the study may put to rest an issue that has been hotly debated in recent years. “We have listened for Participants at the Collision Industry Conference (CIC) in quite a while about paint ma- the fall of 1998 had a chance to evaluate OEM and nonOEM parts that were installed on a vehicle during the terials reimbursement prac- Denver, CO, meeting tices,” Landolfi said. “This may be a chance to finally (establish) tion that was the second complaint some definitive explanations and patafter the manufacturer had supposedly terns.” But Rick Tuuri of ADP said fixed earlier problems with the part. his company is all too aware of the ex—Test fits of parts continued at pense and risk of undertaking such a CIC meetings over the next two years; research project. ADP completed a OEM parts generally were found to massive revamping of its paint labor score higher in attendees’ evaluations system several years ago, only to meet of fit and finish, but occasionally nonwith unprecedented industry resistOEM parts were rated as equal to—and ance. in one case, better than—the OEM.
10 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
10 years ago in the collision repair industry (October 2003) In a special 2-year study of the autobody repair industry, the California Department of Consumers Affairs’ Bureau of Automotive Repair (BAR) documented that, in nearly half the transactions it studied, consumers were charged for parts and labor they didn’t receive. The BAR inspected 1,315 vehicles that qualified as part of a pilot program mandated by legislation. Of those, 551, or 42 percent, had parts or labor listed on the invoice that were not actually supplied or performed. The average dollar amount of overbilling was $811.93. “We’re disturbed by the pattern of problems we found in some shops,” said BAR Chief Patrick Dorais. – As reported in Autobody News. While the “42 percent” statistic received a lot of attention, the National Auto Body Council (NABC) noted (in
the article) that the vehicles inspected were not randomly selected among all those repaired in California but rather were vehicles brought to the BAR by owners concerned about possible fraud. “Considering the way the sample was skewed by the BAR’s methodology, it is more surprising that 57 percent of the repaired vehicles showed no problems at all,” Chuck Sulkala of the NABC said at the time.
5 years ago in the collision repair industry (October 2008) At least six shops in the Temple, Texas, area (about 70 miles north of Austin, population about 60,000) each notified State Farm they no longer would participate in the insurer’s Select Service program. Mark Holladay, manager of the Don Ringler Chevrolet body shop, said the final factor contributing to his decision was what he viewed as State See Historical Snapshot, Page 23
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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 11
On Creative Marketing
Tom Franklin has been a sales and marketing consultant for fifty years. He has written numerous books and provides marketing solutions and services for many businesses. He can be reached at (323) 871-6862 or at tbfranklin@aol.com. See Tom’s columns at www.autobodynews.com under Columnists > Franklin
Development-Appropriate Marketing with Thomas Franklin
A while back several new shops opened in my area. When I asked what they were doing about marketing, almost everyone said Yellow Pages and 800 number first. Some had bought into advertising mailer packages and others local magazine ads. Naturally some were focused on putting together a presentation package to send to DRP coordinators in the hope of getting insurance work. Some were also going around taking business cards to agents. Almost no one was doing any direct solicitation to get immediate jobs in the door. It occurred to me that many shop owners believe there is a general marketing setup that everyone should include right away. It seems no one takes into consideration how marketing should differ depending on the stage of growth and development of the shop. I’ve always viewed the development of a business much like the developing stages of a trade profes-
sional: Beginner, Apprentice, Journeyman, Professional, and Leader. At each stage, both professional procedures and marketing procedures must change too. I know of one leading body shop that runs no ads, does no phone solicitation, has no program for contacting prior customers, and has no DRPs. It is allied with multiple dealerships and has an estimating office at many of them. It employs a full-time marketing professional to maintain optimum relationships with all of the dealership principals. A shop at a lesser level of development couldn’t survive this way. A beginning—and even what I would call an “apprentice” shop—is also unlikely to do phone solicitation. If it is just starting out and has no customer base, it won’t have a program for contacting prior customers. And it is unlikely to have DRPs at this point. The beginning shop owner needs to
12 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
focus on one target public at a time. Dealerships and DRPs may be great sources of volume business, but competition is keen for these sources of business and pursuing them can be a waste of time unless the owner has friends in high places who can help get a deal. A better use of time would be direct selling: Going to mechanical shops, commercial firms, government agencies, charitable agencies, and other organizations that use vehicles that will require body damage repair from time to time is much better idea. The key principle at this point is to concentrate financial and personnel resources on specific contacts that can bring in immediate, actual work. I would consider a “journeyman” shop one that has survived the initial critical phase — that eliminates many beginners — and is now getting organized for the long haul. Building a base of repeat customers should be primary. Gathering in-depth informa-
tion from each new customer opens the door to follow-up calls, mailings, special offers, and probing for referrals. Some limited ads may be appropriate but should not take financial resources away from commission or bonus plans that encourage estimator/salespeople to tap the customer database and referral sources for immediate new business. A shop at this point is not yet completely secure. Marketing resources can’t be wasted. Broad, long-term projects like a website and social media sites are necessary but should not take away from directly focused job-mining efforts. The well-established professional shop is in a position to employ a wider range of marketing efforts. A steady flow of repeat customers and probable referral sources like DRPs and dealerships ensure sufficient cash flow to afford name-recognition marketing. A lesser shop would be foolish to waste money on ads that do little more than
keep the shop’s name in the public eye, but at the professional level, it’s possible the owner is considering opening other locations. At that point name-recognition is essential. This might include radio and TV ads, sponsoring sports and other activities, and participating in professional groups like the Chamber of Commerce. The leadership shop markets itself like any outstanding professional shop, but takes it a step further. The owner is likely to hold an officer position in an autobody trade association and be involved in making industry advances through CIC meetings and other venues. This is not to say that shop owners at earlier development stages shouldn’t participate in industry forums and activities. But the collision repair industry is highly competititve these days and marketing is a very costly activity. Ad salespeople with expensive promotional schemes are beating at the door all the time. Until a shop is very well established, every marketing move must produce a real job coming in the door. When enough of those jobs are sure to come, there will be plenty of time to play with those expensive ads and promotional schemes. But until that
happens, it would be wise to recognize what stage of development a shop has really reached and employ marketing resources appropriately.
Record Fundraiser for CREF
The Collision Repair Education Foundation announced that its 12th annual industry fundraiser golf outing raised $70,000, a record high for the event. The fundraiser was a day of golf at South Shore Country Club in Hingham, MA. A new aspect of the event, a helicopter golf ball drop, raised $12,000 alone. Golf balls, sponsored by individuals, were dropped from a helicopter above a green. Closest to the pin won a $1,000 American Express gift card. The winning ball was sponsored by Gerber Collision & Glass president and COO Tim O’Day, who graciously donated the prize back to the foundation. All funds will go toward supporting scholarships and grants for collision schools and students. Said Clark Plucinski, executive director. “We would like to thank all of the attendees, sponsors, and specifically PPG Automotive Refinish for their co-hosting sponsorship as this event has progressed from raising $19,000 in 2009 to $70,000 this year.”
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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 13
SCRS Issues Position Statement on Insurer Mandates
The Society of Collision Repair Specialists (SCRS) has issued a position statement regarding insurer mandates. It reads as follows: In representation of collision repair businesses across the United States, The Society of Collision Repair Specialists (SCRS) takes exception to business mandates that property and casualty insurers impose upon collision repair businesses; particularly those that specify required vendors, business platforms or internal processes that must be followed in order to be included in, or avoid being excluded from, certain lines of work. As an example, insurer mandates surrounding parts procurement platforms may inhibit independent collision repair businesses from utilizing parts vendors with whom they have an existing relationship, providing insurers with greater influence and control over the parts supply chain. SCRS believes this control falls outside of the scope of the insurance business. Some insurers are stipulating agreement to these terms, as a condition of being recognized in Direct Repair Programs (DRP). SCRS supports efforts that
rightfully seek to eliminate such intrusion into the collision repair business, and enforcement of existing laws, regulations and codes that currently prohibit such actions. It is the opinion of SCRS that voluntary agreements cannot include stipulations which violate existing laws, rules and regulations. SCRS believes that collision businesses are capable of establishing successful vendor relationships and internal processes that will best accommodate the needs of the consumer, and that service providers will continue to respond to the market with increasingly creative solutions that drive performance for their customers and the respective market entities. We believe that solutions with tangible value propositions will be utilized and supported by the marketplace without the undue influence of insurer mandate. The encouragement to embrace open platforms to enhance performance, rather than rely on exclusionary program agreements influenced by one or more of the participants, follows an acknowledgement from State
Farm Insurance that the nation’s largest carrier is transitioning from “piloting” the requirement to use the PartsTrader online part sourcing and ordering program, in select marketplaces, to a tiered national rollout. State Farm had previously included a provision in its Select Service Agreement requiring participating repairers to agree to utilize automated replacement parts locating services or applications, as specified by the insurer, for ordering and/or sourcing replacement parts. According to SCRS, as the program rollout developed, so did the rules of engagement surrounding it. The organization provided a brief rundown of the history of the program: ● In May of 2012, State Farm issued a video on its B2B website where Auto Estimatics Consultant George Avery expressed: “... repairers are in control of who provides your parts, regardless of the part type. We have worked with PartsTrader on a process that [enables] you to maintain your relationships and negotiated deals with your vendors. We understand that relationships with
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your suppliers are important in managing your business, much in the same way we value our relationship with you.” ● In an email distributed within the same month, PartsTrader communicated to suppliers who had declined the offer to participate in the quoting process that: “State Farm Select Service repairers will be placing all parts orders related to State Farm claims via the PartsTrader application from [date]. During our discussion you indicated that this was not in your interest to register online with PartsTrader to participate in the intended parts procurement process. We respect your choice and want to make sure you are still able to receive those State Farm orders. With that stated, it is not our intent to come between the relationships you have built with the shops. This email is to confirm that we have now modified your company’s configuration to be a ‘Fax Only Supplier.’ This means that a repairer can place an order to your company in PartsTrader, and we will send that order to See SCRS Statement, Page 49
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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 15
What Does Tesla’s Record-setting Safety Rating Say to the Collision Industry? by Ed Attanasio
Tesla’s recent perfect 5-star safety rating is unprecedented and the highest in the history of automotive safety testing. It took all the former numbers and crushed them, when independent testing by the National
Arduous testing of the Tesla resulted in a 5-star rating, the highest in the history of automotive safety testing
Highway Traffic Safety Administration (NHTSA) awarded the Tesla Model S a five-star safety rating in every subcategory without exception. Only one percent of all cars tested by the federal government have achieved five stars across the board. Furthermore, NHTSA does not just hand out top ratings, so these scores are significant and have caught the
attention of other carmakers, the press and the public, as well as collision and mechanical repair shops that want to work on these elite vehicles. Tesla Motors, Inc. is a Palo Alto, California-based company that designs, manufactures and sells electric cars and electric vehicle powertrain components. The Tesla Model S is the first premium sedan built from the ground up as an electric vehicle. The company sold 10,500 Model S sedans during the first six months of 2013, and forecasts that they will be selling 40,000 models annually by fourth quarter 2014. Of all vehicles tested, including every major make and model approved for sale in the United States, the Tesla Model S set a new record for the lowest likelihood of injury to occupants. While the Model S is a sedan, it also exceeded the safety score of all SUVs and minivans. This score takes into account the probability of injury from front, side, rear and rollover accidents, according to a press release recently released by Tesla. Now the $64,000 question out there is—how can body shops get cer-
tified to work on these increasingly popular and very safe cars? Tesla’s Communications Manager Shanna Hendriks recently addressed these in-
Amato’s Auto Body is proud of the fact that they will soon be the only Tesla-certified collision facility in the San Diego area, according to Body Shop Manager Perry Anderson. “It’s an exciting time for Tesla, so we’re very happy to be involved,” he explained. “These vehicles are becoming more and more popular and we’re seeing more of them here in our shop. Right now, we have six Amato’s Auto Body is proud of the fact that they will Teslas that we’re working soon be the only Tesla-certified collision facility in the on. It’s definitely a privilege San Diego, CA area to be able to work on these quiries about the manufacturer’s newly exceptional cars.” developed certification program. If other body shops are inquiring “Tesla has a dedicated repair and about how to become Tesla-certified, training program that interested body they may have to wait for a while, Anshops can go through to become recderson said. “It’s invitation-only, from ognized as a Tesla Approved Collision what they’ve told us. Tesla is pretty Repair Center. One of the things that much in a position where they can makes the Model S unique is that the pick and choose who they want workcar is made of aluminum, so body ing on these cars. Tesla contacted us shops need to have aluminum-based because we were already certified to repair abilities. Body shops can inwork on a lot of other high-end luxury quire about the training program by vehicles, so they knew the learning sending an email to Collisio-techcurve would not be daunting for us. info@teslamotors.com.” We are factory-trained and certified to
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work on six luxury brands, including Aston Martin. I think the people at Tesla were attracted to us because of our Aston Martin certification, because both car makers use similar materials and obviously some of the repair techniques are alike in some ways. Both of them are made of aluminum, so the bonding technology used is very similar. With both, you need special rivet guns and glue guns and with aluminum, you have to have a clean room as well. “The people from Tesla came here and inspected our facility to make sure we were capable of repairing these cars,” Anderson said. “Once we were onboard, we had to invest in some new equipment, including a Fronius welder, but the biggest thing has been the training. Tesla wants us to know these cars inside; be able to completely disassemble them and then put them back together perfectly.” By putting several of their shop’s 41 technicians through the Tesla training, Amato’s now has a core group that can work on the cars, but the process is ongoing. “We have two technicians that have gone through the Tesla Fit and Finish class and now have 80 hours under their belts,” Anderson
said. “Tesla just recently rolled out cupants at g-loads that do not cause innew training this summer, so once we juries. Just like jumping into a pool of complete the rest of the training within water from a tall height, it is better to the next few months, we’ll be offi- have the pool be deep and not contain cially certified and have the plaque on the wall.” What does Anderson think about Tesla’s recent safety numbers? “I’m not surprised,” he said. “One came into the shop one day and it had obviously been hit pretty seriously. The front end was caved in and it was a total loss, but the woman walked away without a scratch and even the car doors opened and closed per- A Tesla pictured with Founder Elon Musk fectly. All we said was ‘wow.’ ” rocks. The Model S motor is only Other interesting facts about the about a foot in diameter and is astounding safety ratings earned re- mounted close to the rear axle, and the cently by Tesla include: front section that would normally conThe Model S has the advantage tain a gasoline engine is used for a in the front of not having a large gaso- second trunk. line engine block, thus creating a The rear crash testing was parmuch longer crumple zone to absorb ticularly important, given the opa high speed impact. This is funda- tional third row children’s seat. For mentally a force over distance prob- this, Tesla factory installs a double lem—the longer the crumple zone, the bumper if the third row seat is ormore time there is to slow down oc- dered. This was needed in order to
protect against a highway speed impact in the rear with no permanently disabling injury to the third row occupants. The third row is already the safest location in the car for frontal or side injuries. The Model S was also substantially better in rollover risk, with the other top vehicles being approximately 50 percent worse. During testing at an independent facility, the Model S refused to turn over via the normal methods and special means were needed to induce the car to roll. The reason for such a good outcome is that the battery pack is mounted below the floor pan, providing a very low center of gravity, which simultaneously ensures exceptional handling and safety. In addition, the lithium-ion battery in the Model S did not catch fire at any time before, during or after the NHTSA testing. It is worth mentioning that no production Tesla lithiumion battery has ever caught fire in the Model S or Roadster, despite several high speed impacts. While this is statistically unlikely to remain the case long term, Tesla is unaware of any Model S or Roadster occupant fatalities in any car ever.
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 17
Continued from Cover
Suit Against PartsTrader
forcing implementation of PartsTrader in the State Farm Select Service shops, 2) Finding the Defendants in breach of the 1963 Federal Consent Decree (and thereby voiding the Select Service agreements), and 3) Stopping the Defendants from interfering in the relationship between customer and shop by delaying service payments or otherwise limiting the use of rentals. The suit alleges that State Farm’s implementation of the PartsTrader system tortiously interferes with prior business relationships that collision repair facilities have with their long standing parts suppliers. (Tortious interference occurs when a person intentionally damages the plaintiff’s contractual or other existing business relationships.) In addition, the suit contends that State Farm is attempting to force the Plaintiffs to breach their legal fiduciary (trustworthiness) duty to their customers, ie. compromising a safe and reliable repair. “The relationship between consumer and repairman has
been all but destroyed. The repairman must do as instructed by the insurance company, not the consumer.” Said attorney Eaves Jr., “PartsTrader and State Farm will effectuate a ‘race to the bottom’ in quality and safety.” And though he says the case very likely will go to court, he is hoping for an out-of-court resolution. “We would love for them not to bring it (the Parts Trader system) to Mississippi. But it would be up to them,” he said. Cheaper parts have indeed been responsible for multiple injuries, said Eaves Jr., who is a former candidate for governor of Mississippi. “Nobody likes to be forced into filing a lawsuit but this is the largest automobile insurer in the country and we have a lot of mutual customers that will be impacted by this,” said John Mosely, president of MSCRA from Clinton Body Shop and a plaintiff in the suit. “We have invested tons of money in our business and State Farm telling us we have to buy through PartsTrader system, is not the best thing for the repair or the customer.” Mosely currently participates in the Select Service program with State Farm.
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18 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
In addition to seeking an injunction against implementation of the PartsTrader system, the suit seeks a declaratory judgment that State Farm is operating against the 1963 Consent Decree, entered into by several insurance company associations and the Federal Government, limiting insurer’s activities in collision repair to influence customers. Because of this conflict, the suit seeks to void the Select Service agreements between repair facilities and State Farm. Finally, the suit seeks to keep State Farm from interfering in the contract between the customer and body shops by “causing or implying delay in service payments, appraisal or limitation on the usage of rental automobiles.” State Farm is requiring use of PartsTrader for specified shops in its Select Service DRP but insists using the service is strictly voluntary because membership in Select Service is voluntary. State Farm’s public affairs representative Roszell Gadson said, “Repairers participate in Select Service® on a voluntary basis. Parts Trader is a company that provides an electronic
parts ordering platform to repairers nationwide. State Farm guidelines for the use of parts and part types have not changed due to electronic parts ordering. Estimates are written and part types are chosen by repairers based on consistent guidelines,” said State Farm’s public affairs representative Roszell Gadson. Barry Lewis of Ridgeland, MS, and owner of European Coachworks, says participating in the lawsuit was simple common sense for his business. “I’m just trying to cover us for the future,” says Lewis, “because eventually it’s going to affect us whether you’re in the program or not.” The “program” to which Lewis is referring is also a company doing business as Parts Trader LLC, which was named in the lawsuit as well. While Parts Trader’s website states that the repairer has the final say in which part they should use, the MCRA maintains that State Farm insists their insured drivers receive the cheapest parts available in order to cut repair and replacement costs. State Farm neither confirmed nor denied whether parts purchased See Suit Against PartsTrader, Page 20
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 19
Continued from Page 18
Suit Against PartsTrader through the Parts Trader service were inferior to those the repair shops claim to use. “There are thousands of examples where inferior parts led to injury,” Eaves Jr. said, citing his considerable experience as a trial lawyer. “This
PartsTrader program is the first time this has been implemented. Most of the cheaper parts will be made in countries where quality is not as important,” he continued. But State Farm says the suit is without merit and that the Parts Trader system is not yet a reality for Mississippi. Preventing it from being implemented in Mississippi is, of course, the point of the suit.
“State Farm recently received notice of a lawsuit in Hinds County, Mississippi, related to our electronic parts ordering initiative and our Select Service® program. We believe the suit is without merit. We intend to vigorously defend the suit,” said Roszell. “The Parts Trader program has not yet even been implemented in Mississippi.” MCRA President Mosley argues that parts ordered from off-shore sites
are not upheld to the same standards of safety as are American-made parts. But the PartsTrader website states unequivocally that it does not recommend specific parts or manufacturers. “Collision parts suppliers providing pricing within PartsTrader must be nominated by repairers like you before we invite them to participate in this market,” says the PartsTrader website.
The 1963 Federal Consent Decree (www.ican2000.com/documents/1963/)
Collision repairers and their representatives have come up with numerous different legal theories about why insurers shouldn’t be allowed to create networks. One of them is based on the now littleknown Consent Decree. In November 1963, the U.S. Justice Department settled a class action suit that it brought against the associations representing some 265 insurance companies, which resulted in their officers signing a “Federal Antitrust Consent Order,” known as the Consent Decree. A consent decree in general is a written agreement in which a company or organization under investigation by a governmental agency agree to
do or not do something in the future – without admitting any past wrong-doing. In this case it settled the class action suit without trial. The signers, three insurance trade associations and their members agreed to forever refrain from several practices, including setting prices and steering. They admitted no wrongdoing but agreed to abide by its terms in perpetuity, meaning it’s still binding on its signatories today. The DOJ filed an action against the associations alleging that they had formulated an “Independent Appraisal Plan” in 1947 “to depress and control automobile material damage repair cost.” The heart of the plan was a scheme to control the work
of independent appraisers who prepared estimates of repair costs and got body shops to agree to them. The Government’s case focused on an insurance industry invention called the Combined Claims Committee (CCC) which was established to control collision repair prices. Basically, each CCC member-insurer selected one favored appraiser or appraisal firm in each market area, to the exclusion of others, to receive all of the participating insurer’s adjusting work, as long as this adjuster worked within the guidelines that the CCC established and controlled. Under the plan, committees appointed by the trade groups would spon-
sor individuals or partnerships to act as appraisers in assigned territories for all association members. In return for the insurers’ agreement to use them exclusively, the appraisers would agree to depress and control repair costs by arranging (when possible) for shops to agree to estimates before they had examined the damaged vehicles, by “establish[ing] strict labor time allowances,” and by “obtain[ing] the lowest possible hourly labor rate.” The DOJ alleged that the plan violated the Sherman Act. In November 1963 (less than a week after John F. Kennedy’s assassination) the Government’s case was See Consent Decree, Page 22
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The 1963 Federal Consent Decree (continued from p. 20)
dismissed, pursuant to an agreed order under which the defendant associations were enjoined from pursuing any program that had the purpose or effect of “exercising any control over the activities of any appraiser.” The Independent Appraisal Plan has never been revived, nor has any program or practice which favors chosen damage appraisers or excludes others. In the words of Silvie Licitra, wellrespected collision industry writer and a collision repairer at the time, resultant payoffs and corruption were rampant because the selected appraiser fixed the labor rates, required arbitrary discounts on parts, and held firm to the labor times published in a guide. These appraisers also had shops with which they had unwritten agreements that their estimates would be accepted, sight unseen. “Those appraisers all had their hands out and if you didn’t pay them off, they’d write lousy estimates (creating) a take-it-or-leave-it situation, the shop being faced with losing the job if they didn’t play ball (with insurers).”
Frank Stepanek, chairman of the National Body Shop Committee of the Independent Garage Owners (IGO) of America (precursor to the Automotive Service Association), was quoted in a November 1963 industry publication: “It’s no longer legal for many insurance companies to demand discounts, set the hourly rates, boycott repair shops [and] use specific appraisers.” A number of trade associations were targeted in the years following the signing of the Consent Decree. In March of 1964, Allstate Insurance Company filed suit against 109 members of the Central Jersey Auto Body Association (CJABA), charging them with antitrust violations, conspiracy and price fixing. In July of that year, a judge ordered the association members to sign a consent decree of their own. The embittered members reluctantly settled with Allstate, citing lack of funds to finance a protracted legal battle with the company. In support of the CJABA, an association of central New York body shop owners set up a legal defense fund for the CJABA.
Their spokesman was quoted as saying: “It’s with deep regret that this spirit was not nationwide. I strongly urge every body shop or garageman who looks forward to freedom in his business to alert himself and seek remedies that will maintain our rights and freedoms in the industry.” The legal wrangling went back and forth until the summer of 1967, when a congressional committee called for an investigation into the auto insurance business. U.S. Sen. Philip Hart of Michigan proposed federal oversight of the industry and an amendment to the 1945 McCarran-Ferguson Act as a way to curb insurance domination of the collision repair industry. McCarran-Ferguson effectively shielded the insurance industry from federal antitrust laws by granting states the primary responsibility for regulating insurance. Sen. Warren Magnuson, chairman of the Senate Commerce Committee, made additional calls for investigative probes and even threatened to launch an independent investigation by a special counsel.
Between congressional pressures and Transportation Secretary Don Boyd’s insistence the matter be studied by his department, the White House was prompted to step in. In a message to Congress in early 1968, President Lyndon Johnson called for a thorough investigation into the auto insurance business. “The Consent Decree was like a BandAid,” said Dick Hogg, a suburban Philadelphia body shop owner who remembered the ‘63 action, as well as the business conditions that led to its signing. Hogg also remembers that its signing didn’t usher in a golden age for body shops. “It only gave us temporary relief because like some other laws, there was no enforcement. The terms of the Consent Decree were diluted by the state regulations that are, for the most part, unenforced. The insurance departments give the benefit of the doubt to the insurers.” Since insurance companies hedged their bets with their chosen appraisal firm, they had control. No auto damage claims were settled unless they passed through See Consent Decree, Page 40
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Continued from Cover
Tesla Motors Surges
The car dealers don’t want other automakers to follow Tesla’s lead, opening company-run stores that would compete with franchisees. “They feel threatened by this, as they have when other companies have tried to do this in the past,” said Jack Nerad, editorial director and executive analyst at Kelley Blue Book. “Dealers are part of a well-developed supply chain, and they want to keep it that way.” To Tesla, the fight represents a classic Silicon Valley story—an innovative startup disrupts an established industry and faces resistance. The
dealer associations, Tesla executives say, are trying to stifle change in a stodgy marketplace that could use a little shaking up. “They go to the legislature and say, ‘We need protection from innovation,’ “ O’Connell said. “There’s really a fundamental question here: Should the government be prescribing a business model for automotives? Apply that argument, and we’d still be riding horses and delivering messages by hand.” To the dealer associations, direct sales could destroy a franchise system that they say works for manufacturers and consumers alike, even if many buyers don’t realize it. Texas, for example, has auto dealerships in 284 cities and towns,
according to the Texas Automobile Dealers Association. Of those, 163 towns have fewer than 15,000 residents. If the auto industry switched to direct sales, the car companies wouldn’t maintain stores and service centers in the smaller communities, said the association’s president, Bill Wolters. “The manufacturers would do exactly like the big-box stores have done with all the other products—they would only be in the metropolitan areas and big cities,” Wolters said. “The franchise system provides a much broader network of dealers than you’d have if manufacturers controlled the outlets.” The ability to sell cars in the hinterlands was, in fact, one of the main reasons the auto industry adopted the franchise model. See more on p. 24.
Continued from Page 10
Historical Snapshot
Farm’s unwillingness to postpone a training class (on how to process total losses for State Farm) that the insurer was requiring the shops to attend at a time when Holladay and his five technicians were working 60- and 70-hour weeks repairing vehicles damaged in a recent hailstorm. “All we asked from the very beginning was that we be allowed to postpone this (class) for a month or two until things kind of got worked down after that hailstorm,” Holladay said. “We were all just at our max. We were told straight up, it was just, “No.” He said he has not seen any significant change in the amount of State Farm work the shop is doing. “I think it was a good decision,” Holladay said. Gene Sneed, who along with his wife Barbara, owns and operates B&G Collision and B&G Paint & Body in Temple, also removed his two shops from the Select Service program. This summer, he and about eight other shops in the area began jointly sponsoring newspaper ads urging consumers to use the shop of their choice. “They will promise you the world in order to persuade you to go to one of their direct repair or network shops,” one of the ads states about insurers. “Don’t be steered wrong.” —from CRASH Network (www.CRASHnetwork.com), October 6, 2008.
State Farm Donates $70K to CREF, Lifetime Over $1M
State Farm Insurance Company recently donated $70,000 to the Collision Repair Education Foundation, pushing the company’s lifetime contributions to the foundation above $1 million. The donation will help support high school and technical college school programs, students and teachers nationwide. “State Farm’s support of collision repair education is consistent with our long-term commitment to education overall,” said Russ Hoffbauer, State Farm claims director. “Collision repair education is very important to State Farm and to our customers. As technology in the automotive industry changes rapidly, it is critical to have students entering the field and learning the latest repair methods to be able to provide remarkable service to our customers.” www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 23
How Tesla Was Shut Out by Texas’ Franchise Laws Tesla has chosen to skip the middleman and open its own dealerships to sell its pricey Model S electric car. In states like Texas where manufacturerowned dealerships are not allowed, prospective Tesla customers must resort to buying the car online. StateImpact Texas explains the reason that law has not changed boils down to money and a powerful automotive dealership lobby which outspent Tesla in Texas. According to the Tesla Motors website, the nearest Tesla dealership is in suburban Denver. Although you can't purchase a Tesla in Texas, you can have your Tesla serviced in Austin, Dallas, or Houston. Tesla Motors fought legislative franchise battles with dealers on a number of fronts this year, but Texas became the only state in which the electric vehicle maker mounted a vigorous challenge to existing franchise laws. Tesla lost its fight outright. Gene Fondren, the late legislator, lobbyist and longtime head of the Texas Automobile Dealers Association, is credited with making Texas’ dealer franchise statute among the toughest in the nation. The statute’s ban on factory-
owned dealerships, to which Tesla was seeking an exemption, is the strictest of all the states, says Tesla CEO Elon Musk, referring to Fondren as a “really tough dude.” “He worded it six ways to Sunday. Like Green Eggs and Ham, you know,” Musk told Automotive News this year. “If you’re a manufacturer, you cannot sell it any which way, no matter what. You can’t sell it in a house, can’t sell it in a mouse, can’t sell it in a grouse. It’s like, OK, wow. You can’t sell it.” Fondren stepped down from the Texas dealers association at the end of 2003 at age 76. He died in 2010. But the staff he built has stayed. “We get a lot of calls from other [dealer association] people saying, ‘Send me the language for this part of your statute,’” said Bill Wolters, who succeeded Fondren as association president in 2004. Wolters credits Tom Blanton, COO of legislative affairs and a 33-year association veteran, and Karen Phillips, executive vice president and general counsel with 29 years at the association, with writing the framework of Texas’ franchise statute.
24 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
“They did a tremendous amount of work in the background, and then Gene would go get the bill passed,” said Wolters, who has been with the association for 31 years. The part of the Texas statute that blocked Tesla was created 15 years ago when Ford Motor Co. launched a factory-store initiative, the Ford Retail Network. Ford lost a subsequent challenge to the Texas law. The Virginia Automobile Dealers Association modeled its language on factory selling after the Texas statute, though it was modified to accommodate some differences in Virginia, said Don Hall, the association’s president. “We’d look at what Texas was doing and then we’d tweak it this way or that way,” Hall said. “But it was Fondren who got us the basic language and concept and understanding.” Hall recalls Fondren renting a Washington apartment when the Texas Legislature was in recess to help the National Automobile Dealers Association with federal initiatives. The Texas dealers association doesn’t have the influence in Texas it once did, said Paul Burka, who has
covered Texas politics for Texas Monthly for more than 30 years. “I just think the world has changed, and that’s true of all the lobby,” Burka said. “More power has passed to the politicians, and they control the lawmaking. And the business lobby doesn’t have the power it used to. That’s beyond the TADA.” Wolters acknowledges the oldtime lobbying days are over in Texas. But money still speaks in other ways. Burka said he wasn’t surprised when Tesla lost its face-off with Texas dealers. “Because power follows money, and I think there just wasn’t enough money behind the Tesla people,” Burka said. “They just didn’t have the heft to fight them.” Tesla is expected to take another crack at the Texas statute in 2015, when the next general session of the Legislature opens. To have a chance at winning then, Tesla will have to spend time and money in the Texas capital and make contributions, Burka said: “If they’re going to survive, they’re going to have to play the game.”
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 25
Car Bench America Says Shops Not Ready to Repair Newest Cars by Ed Attanasio
Government mandates for more fuel efficient and safer vehicles have forced changes in the design and construction of all vehicles. The collision industry is changing faster than most body shops can keep up and staying on the cutting-edge can be expensive and time-consuming. And just as importantly, you may no longer be performing proper repairs on today’s newer models altogether, by either rejecting new training, systems and equipment, according to Ray Zitzloff, the president of Car Bench America (CBA). “The OEMs are reducing the weight of these new vehicles by integrating a variety of lighter multistrength materials into their designs,” Zitzloff said. “High strength steel and aluminum will be common in all vehicles and they require different repair procedures and equipment. Aluminum and MIG brazing, riveting and bonding, aluminum clean rooms with vacuum systems are all required. If you’re a body shop owner, you already know this all too well, and acutely aware of
meet the changing needs of the 21st century vehicle, including welders, aluminum steel kits, plasma cutters, SPR guns, induction heaters, laser measuring etc., and more shops will settle for making improper repairs on the newer vehicles, because to do them right will require more training and more sophisticated equipment, according to Zitzloff. Zitzloff can see the future of structural collision repair and the role his company will be playing in this whole new Car Bench America’s universal system is now available approach to fixing cars, he for use on Ford light trucks and cars. From left, Car Bench International Director of Marketing Lorenzo Manfredi; Sr. said. “Car Bench is the most Engineer for Ford’s Paint and Technology Center Jerry versatile, accurate, and costBonanni; President of Car Bench International Silvano effective structural repair Pietrelli and Car Bench America’s President Ray Zitzoloff system in the world, with unveiled the system more OEM approvals than CBA has introduced a full line of any other system,” Zitzloff explained. equipment called Revolution from 3M “We’ve all heard this statement: ‘Once bench to 5.2M all sharing and using the a vehicle has been damaged it will same universal hardware with state-of- never drive the same again,’ but Car the art laser measuring for virtually all Bench can make that statement obsolight trucks and cars sold in North lete. Vehicles are built on fixtures at the factory to ensure structural dimenAmerica To complement the Revolution CBA has added a complete line of sional accuracy and ease of assembly. products from Europe necessary to Repairing them on fixtures has always the fact that most of these new materials can no longer be heated or pulled to fit. The removal and replacement of sections of various types of materials is required.”
26 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
done the same thing, but that’s not the end of the story.” When asked why Car Bench America’s Universal fixture system is the best way to repair today’s cars, Zitzloff is quick to respond. “First off, the Car Bench prototype equipment is used by more OEMs for designing and building vehicles than any other systems. The same prototype equipment used by body shops is also used by the OEMs for performing repairs. This means that the same cars that were built using Car Bench are being repaired by using the same equipment. When doing sectioning and replacement repairs, the tech is essentially rebuilding the vehicle.” Zitzloff also praised other features of the Car Bench system. “Our systems provide fast accurate Laser Measuring (self leveling, no recalibration, 1MM tolerance) for blueprinting, estimates from virtually any lift,” he said. “And they save time, because they’re faster and provide more accurate repairs without re-measuring. For the finest structural repair system in the world, Car Bench America is leading the way.”
NY Assembly and Senate Hear Bills to Make Insurance Co. Parts Mandates Illegal Two bills before the New York legislature seek to make insurance company requirements to use specific vendors or process for parts or materials procurement illegal. Assembly Bill 7234 (A7234), Introduced by Sen. John DeFrancisco and titled ‘An act to amend the insurance law, in relation to collision and comprehensive coverage on motor vehicles’ and Senate Bill 5786 (S5786), also sponsored by Sen. DeFrancisco, propose to amend Section 1, Subsection (a) of Section 2610 of the New York insurance law generally known as the anti-steering section that currently makes it illegal for an insurer to require a specific repair shop. The bills seek to ban insurance company requirements for collision repair parts and materials procurement programs, clearly aimed to block PartsTrader (see all cover stories this issue.)
AB 7234 AB 7234 amends the insurance law directing that no insurer providing collision or comprehensive loss shall require a repair facility to use a specific vendor or process for the pro-
curement of parts or other materials necessary for the repair of a motor vehicle. The proposed language below for the subsection adds a prohibition against specifying vendors or processes. The text in all capitals includes the proposed amendment. (a) Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern, NOR REQUIRE A REPAIR FACILITY TO USE A SPECIFIC VENDOR OR PROCESS FOR THE PROCUREMENT OF PARTS OR OTHER MATERIALS NECESSARY FOR THE REPAIR OF A MOTOR VEHICLE. SB 5786, introduced on June 14, prohibits insurers, providing collision or comprehensive coverage of motor vehicles, from requiring repair shops to use specific vendors or processes for acquisition of vehicle repair parts and materials. “These bills seek to clearly address within the insurance laws of
New York State that insurance company requirements to use specificvendors should be illegal,” said Ed Kizenberger, executive director of the New York State Automotive Collision Technicians (NYSACT). “Requiring repair facilities to use an online marketplace to purchase parts or materials based upon the lowest price could force millions of dollars of business to move outside New York State. Repairers should continue to source parts and materials from vendors they know and trust to best serve the interest of the consumers.” Kizenberger said that his association supports efforts around the country to eliminate insurer mandates. However, while insurers should understand the potential impact mandating specific vendors or processes would have on a collision repairer’s efficiency when faced with multiple mandates, crafting legislation that would seek to make the mandates illegal is the only way to assure an efficient market. “Historically, when it comes to mandated products and processes, insurance companies don’t see the im-
pact these requirements have on the industry as a whole,” stated Kizenberger. “When multiple insurers implement multiple requirements, everyone loses, and ultimately the consumer is left footing the added cost created by the insurance companies that engage in this practice.” The bills add a prohibition against specifying materials purchases, going beyond making the specification of parts procurement processes illegal. “We wanted to make sure that the bill would address future concerns for the industry,” Kizenberger added. “There are already examples of insurance companies requiring repair facilities to use specific brands of paint in other parts of the world.” The bills have been referred to the Assembly and Senate’s respective insurance committees.
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30 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
See Snapshot of Industry, Page 41
www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 31
ASA Launches New Website, Improves Repairer Tools
The Automotive Service Association (ASA) has provided independent repairers access to a web-based advocacy program at the federal and state levels for a number of years. After researching various online advocacy programs, ASA has been working to remodel its legislative and regulatory website, www.TakingTheHill .com. The new website is more userfriendly and designed to move information quickly to members and to policymakers. ASA members are encouraged to visit the newly designed site and sign up for free legislative alerts. “With our Washington, D.C., office on Capitol Hill looking out for repairers, the industry looks to ASA for grassroots advocacy and information. Redesigning this site is one more step in the association’s commitment to provide members with the tools they need to stay informed and be heard on Capitol Hill,” said Angie Wilson, ASA’s vice president of marketing and communications. The TakingTheHill.com website redesign was donated by Autoshop Solutions, the website design and Internet marketing agency that recently redesigned ASA’s main website, www.ASAshop.org.
Automotive Instructors Get Special AAPEX 2013 Invite
Automotive instructors are invited to attend Inside AAPEX for Automotive Instructors on Wednesday, Nov. 6 and Thursday, Nov. 7 at the Automotive Aftermarket Products Expo (AAPEX) in Las Vegas, Nev. Attendees will learn about new technology, meet with manufacturer product managers and trainers, and earn National Automotive Technicians Education Foundation (NATEF) credit hours. The program features education sessions offered as part of the AAPEX Learning Forum that address new technology and timely repair issues including “Direct Injection Update,” “Wallet Flushing?” “New Exhaust Technologies Including the New Clean Diesel,” “Wiring Diagram Color Coding: A Tool for Understanding Electrical Circuits” and “TPMS Smart Maintenance and Repair.” All of the sessions have been approved by NATEF for continuing education credit hours. Each session is accredited for one hour. Attendance certificates will be available at the conclusion of each session. Instructors will have access to the AAPEX show floor to view products and talk with manufacturers.
Best Way to Research New Product at SEMA Show
The SEMA Show annually features a New Products Showcase to provide exhibitors with a designated display to highlight new product debuts, yearly updates and the latest versions of their best sellers. All of the products entered into the New Product Showcase are photographed and include product details and key information on how to locate and contact exhibiting manufacturers. Buyers can obtain a wealth of product information that will be relevant well into 2014 by taking advantage of the free scanners available. Provided via “Free Scanner Pickup” booths located around the New Products Showcase, buyers can scan all of the products they are interested in, while examining and researching additional products exhibitors have to offer. There is no limit to the number of scans buyers can conduct, and the information is gathered electronically, allowing for it to be retrieved or printed immediately. With new exhibitor and product information in hand, buyers can concentrate on making deals and spend more time on the Show floor connecting with existing partners and new suppliers. More information is available at www.SEMAShow.com.
Caliber Collision Opens Two New Locations in CO and CA
Caliber Collision Centers continues its aggressive expansion with the announcement today that it has acquired Mattocks Brothers Autobody in Denver, CO and opened a new location in Tustin, CA. “Today’s opening of two new Caliber locations in Colorado and California reinforces our commitment to add centers that provide the operational consistency, customer focus and cost management our clients require in today’s competitive insurance marketplace,” said Steve Grimshaw, CEO of Caliber Collision Centers. Caliber Collision’s new 13,000 square foot West Denver location opened today at 4171 Morrison Drive, Denver, CO. Caliber’s new 16,000 square foot Tustin location also opened today at 5 Auto Center Drive, Tustin, CA. “Our new Denver and Tustin centers increases Caliber Collision’s locations to 132 as we continue to restore our customers to the rhythm of their lives in Colorado and California,” added Mark Sanders, Caliber Collision Centers’ Chief Operating Officer.
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BLS Says Collision Industry Production Rose in June
According to the latest data from the U.S. Department of Labor Bureau of Labor Statistics (BLS), the total production for the auto body repair industry rose in June after declines in both April and May. The total average weekly production in June increased to 6.59 million man hours. The industry’s total production, which we define as the total average weekly hours by month multiplied by the total number of production and non-supervisory workers employed each month, closed June, 2013 at 6.59 million man hours. This represents an increase. from the 6.5 million man hours reported in May. Production hours in June 2013 stood at 1.4 percent above 2012. The decline came chiefly from an increase in average hours worked each week by production employees, up to 38.7 hours in June from 37.4 hours in May. The number of production and non-supervisory employees actually declined in June to 170,300 from 173,800 in May. Added together, the average weekly production over the past twelve months now totals 78.96 million man hours. That is 3.5 percent higher than the 12 month total a year ago.
Daimler to Sell Self-Driving Production Car by 2020
Daimler plans to start selling a selfdriving car by 2020 to help its Mercedes-Benz brand regain the top spot among premium carmakers, development chief Thomas Weber said. “We want to be the first to launch autonomous functions in production vehicles. You can be sure we will accomplish that in this decade,” Weber said. Carmakers and suppliers are working on ways to make driving safer and more comfortable through automation and the race is on to bring the technology to the mass market. Daimler is focusing on so-called highly automated driving, in which cars master situations such as cruising the highway or maneuvering through traffic jams while the driver relaxes. The car would recognize difficult situations such as dealing with traffic lights or urban driving among pedestrians and cyclists, and hand control back to the human behind the wheel. Daimler is not alone in its ambitions. Nissan, for example, has also announced plans to launch a car completely guided by computers this decade. The technology was shown at the Frankfurt auto show, with production estimate to take 10 to 15 years.
GA and CA Most Expensive States to Own a Car
The cost of buying and operating a car varies from state to state and you might be surprised to learn which state is the most expensive. Driving in Georgia will take a bite out of your pocketbook. A new survey by BankRate.com has found that Georgia is the most expensive state in the U.S. to operate a motor vehicle, followed by California. Oregon is said to be the most affordable for those hitting the roads everyday. The cost of gas, insurance, repairs, taxes and fees are all factored into what it costs Georgia residents an average of more than $4,000 per vehicle per year. Residents of Oregon benefit from the lack of a state sales tax, low auto insurance and the fact that they drive 16-percent fewer miles than the national average. Those factors land the state on the bottom of the list at $2,204 annually. The national average for operating a car is $3,201 according to the survey.
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NABC Partners with ATT on Anti-Texting Campaign
As an advocate of the ‘It Can Wait’ movement, the National Auto Body Council issued a call for its members and others in the collision industry to join the nationwide effort to curb texting and driving on Drive 4 Pledges Day, September 19. Drive 4 Pledges Day is a national day of action that aims to have every driver make a personal commitment to never text and drive and to also recruit others to do the same. The NABC is urging drivers to make the pledge online at go-att.us/NABC, a dedicated link created by AT&T specifically for the National Auto Body Council’s efforts. The campaign is a collaborative effort between major wireless carriers AT&T, Verizon, Sprint and T-Mobile. As part of the nationwide Drive 4 Pledges Day, NABC member companies will be implementing a variety of promotional events to educate employees and the public—particularly teens—about the dangers of texting while driving. While texting is by far the biggest distraction on the road, NABC notes that any distraction is dangerous, including phone calls, reading e-mails, eating, changing CDs, fixing makeup, etc.
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Mitchell Announces its New Reputation Manager Package
ASRW’s New Format Will Be ‘Vastly Different Experience’
The Opening General Session, sponsored by Axalta Coating Systems, will now offer two concurrent sessions, one for Collision, one for Mechanical, that will combine the best components of a keynote presentation with the industry-specific focus of a forum. The forum’s headlining guest speaker will be Mike Anderson. Admission to the new Opening General Session/Industry Forums are included in all registrations, and all attendees are invited to attend. “Vastly different from past years, we’ve completely redesigned the Opening General Session and attendees can expect a much different experience. Mike Anderson is extremely well-respected, and attendees are going to want to hear his message,” says Dan Risley, ASA president. “The format of this key event also aligns with our mission to create exceptional value for our audience and provide invaluable networking opportunities for the industry and by the industry.” “Axalta Coating Systems is honoured to sponsor this year’s Opening General Session,” said Mike Bennett, North America marketing director, Axalta Coating Systems.
Mitchell has announced the general availability of RepairCenter™ Reputation Manager. The new package offering combines real-time text and email updates with advanced customer insights from satisfaction surveys and social media data to improve the repair shop and vehicle owner processes. The tool should help increase repeat business and referrals by providing actionable insight into the customer experience. By adding online customer satisfaction surveys and incorporating comprehensive reporting and analytics technology, repair shops can better identify steps during the repair process that can be improved. “Customer retention and business growth go hand-in-hand, but until recently, repair shops haven’t had the breadth of automated tools needed to improve upon the customer experience,” said Anlin Sethi, Senior Manager of Product Management, Auto Physical Damage solutions. “By incorporating real-time interaction and engagement, alongside robust survey analytics, Reputation Manager allows repair shops to improve their reputation and build stronger customer bases.”
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Sherwin-Williams and Online Blueprint Provider Team Up Sherwin-Williams Automotive Finishes A-Plus™ Network and VehicleOwnersGuide.com, an online provider of blueprint documents that help collision repair shops identify any missed revenues, are providing access to the provider’s Open Claims Gateway™, a full feature claims portal that includes claims workflow, dispatching, estimate review, vendor e-Coupons, consumer translations and analytics. The new dispatching system is already populated with the A-Plus Network’s leading collision repair facilities and will provide a turnkey repair network for insurance companies throughout the U.S. and Canada. The Open Claims Gateway portal will dispatch cars to A-Plus shops, and then these facilities and insurance companies can use the system to manage the claims. “Open Claims Gateway will be provided free of charge to A-Plus Network facilities, and there is no contract to sign. Says Troy Neuerburg, Director of Sales Excellence at Sherwin-Williams Automotive Finishes, “This system offers numerous benefits.” For information call call 1-800-SWULTRA (1-800-798-5872).
ABRA Helps Raise $30,000 for Veterans’ Service Dogs
ABRA Auto Body & Glass helped to raise more than $30,000 during the first annual Bent Creek Charity Golf Tournament to benefit Helping Paws Inc. More than 100 golfers and guests gathered at The Bent Creek Golf Course in Eden Prairie, MN, on August 12 to support Helping Paws of Hopkins, MN, according to officials. This inaugural golf event is part of Helping Paws’ initiative to connect the healing power of service dogs with disabled veterans suffering from Post Traumatic Stress Disorder. The cost of raising and training a service dog is estimated at $30,000. These canine companions can help to transition returning veterans back to civilian life. “We are absolutely thrilled and proud to partner with important charitable organizations like Helping Paws,” said Duane Rouse, president and CEO of ABRA. “We recognize the amazing accomplishments of our military veterans who served with courage and their unending drive to make a difference for our country. Supporting these training dogs to help heal our heroes is a privilege.”
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MD Shop Owners Prevail Against Short Pays—No DRP, No Problem by Chasidy Rae Sisk
Anyone who has been involved with the collision repair industry for any amount of time knows how frustrating it can be when insurers refuse to pay the full amount billed for a repair. Many repairers count their losses and move on to the next vehicle, but Mark Schaech Jr., co-owner of Mark’s Body Shop in Baltimore, MD, refuses to take this insult lying down. While he and his partner, his father, would prefer to avoid the necessity of taking legal action, he’s definitely “not taking it anymore!” Schaech knows this is a common problem that shop owners face, so he’s glad to share his experience and advice with collision repairers across the nation. In May 2013, Schaech won his first short-pay lawsuit against GEICO for $392.95. Since then, Schaech won a case against State Farm when the insurer filed a replevin lawsuit (replevin is a legal remedy for a person to recover goods unlawfully withheld from his or her possession) against him, claiming his charges for storage were unreasonable and not competitive
within the market area. Mark’s Body Shop was holding a car while awaiting payment, but when State Farm settled with the car’s owner and took title, they refused to pay Schaech. The repair contract was the deciding fac-
Mark Schaech Sr. with his son Mark, Jr.
tor in Schaech’s victory, playing a huge role “like it does in any other case,” according to Schaech, who added that “it is so important that your documents are in line.” In addition to being paid the full amount owed, Schaech was also reimbursed for his attorney’s fees. He feels the victory was very important since a loss would have given State Farm, and possibly other insurers, precedent for refusal to pay on total losses.
Schaech credits the CCRE (Coalition for Collision Repair Excellence) for his knowledge of such legal actions, noting that “the first time I heard of a shop taking control of their business was at a CCRE meeting.” He followed that up by hiring an industry consultant, Barrett Smith, of Auto Damage Experts and a good Maryland attorney, Anthony DiPaula to support his efforts to take control of his own business. He is also grateful to all of the “attorneys fighting a successful fight.” His next case involved an assignment of proceeds, ammunition he obtained from industry lawyer Erica Eversman, but it doesn’t stop there! Schaech is currently pursuing numerous lawsuits, including one involving an older claim of two short-pays from GEICO and a similar suit against State Farm. The lawsuits that Schaech is currently pursuing are older claims since he has not had any recent problems with GEICO, which he attributes to his successful case in May. Most insurers are paying his operation costs, though labor rates with insurers refusing to pay his full labor rate continue to be a problem. The one exception he
notes is State Farm who always leaves a short-pay, but for now, the customers are paying the difference. Schaech is not taking any additional assignments of proceeds at this time as he has several in progress. Schaech notes, “I would say that 90% of the time, insurers in our market refuse to reimburse our customer for their entire repair bill. These short pays are for reasonable and necessary rates and procedures required to repair our customers’ vehicles to pre-loss condition to the best of human ability. It seems that the larger the carrier, the worse the behavior. It seems like as opposed to fairly paying claims, these carriers would prefer to spend those dollars on advertising campaigns.” Regarding what may cause him to hesitate before filing a lawsuit, Schaech admits that it can be expensive and time-consuming to sue an insurance carrier, especially when the short-pays are small amounts, but one way to combat that is to pile several claims into one case, making it more efficient. His ultimate goal is to handle these cases on his own; as he attends the trials, he is educating himself via his attorney in
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hopes of being able to handle future suits in small claims court on his own. “All I will have to spend is time which I’m more than willing to do in order to ensure my customers are being taken care of,” Schaech notes. The short-pay lawsuit in May was the first that Schaech actually pursued to trial. Because these types of cases are new to the Maryland court system, “it takes a bit of educating the courts that we are contracted by our customers to provide a proper and safe repair and do not have any contract with any insurance companies. But the misconception is that, because the insurance company is paying the bill, they have a right to inject themselves into the repair process when this is simply not the case. Because we are the experts, we carry all of the liability associated with the repair. We are the ones who have to provide a warranty to our customers and stand behind the repairs. We are the ones who know our cost of doing business. Therefore, only a shop can know what to charge for a given repair. The duty of the insurance company, by contract, is to make the customer whole, not to control the price or dictate the repair methodology, all while not sharing in
the liability for those repairs.” Though most insurance companies insist that they don’t pay for certain operations or that a shop is overcharging, Schaech insists, “the collision repair community knows that these are word tracks that insurance adjusters have been trained to use for years, and in most cases, these carriers do pay for that, and the shops that are asking to be compensated are not the only ones asking for these operations and rates.” Schaech was happy when the judge ruled in his favor: “It felt good that the Judge got it. I also feel confident that the courts will continue to find in our favor as courts are in many other states all over the country. It takes a close look at the law and the insurance policies to realize that determining the cost of repairs and the repair methodology is not the business of insurance. In many policies, the insurance company has the option to take the customer’s vehicle and repair it themselves, but if they chose that option, they would have to accept all of the liability that goes along with the repair which is why they do not select that option.” As a proud member of CCRE and SCRS, Schaech strongly encourages
other collision repair experts to stand up for their rights. “I would encourage other shop owners to know their state laws and get a good attorney to work with. There are many shop owners across the country who have been forced to go legal, and these repairers have been an inspiration and have always made time to answer my questions and lend advice. There is unbelievable support available to those who want to learn.” Schaech’s desire to become more involved has also led him to become involved with the Washington Metropolitan Auto Body Association (WMABA) where he sits on the Board of Directors. Schaech also assures other shop owners that the trial itself was not very difficult. “It was easy for us to explain who the expert repair professional is and who decides what the Final Bill should be, and the judge agreed that because GEICO doesn’t know our costs, they cannot possibly determine what we are able to charge.” It is also important to note that Schaech’s lawsuit has not really affected his relationship with GEICO or any other insurers. His problem isn’t with the individuals that he deals with but the company’s policies on handling claims.
RAY HUFFINES
Schaech also takes issue with his state’s laws regarding insurance companies breaching contracts and how this affects consumers’ rights. “If a Maryland Insurance Company breaches their contract with the policy holder, and the consumer wants to hold them accountable in a court of law, the consumer is not able to recover attorney’s fees in our state. This really inhibits consumers from taking action, even when it is obvious that they are in the right… I wish the carrier would spend some of those billions of dollars they spend on marketing to properly compensate consumers for quality and safe repairs. I see a lot of poor repairs that have been completed in shops who were not properly compensated for repairs, and this is a consumer problem, especially as it relates to consumers’ safety and the value of their vehicles.” When asked what measures should be enforced to prevent the necessity of short-pay lawsuits, Schaech notes, “If insurers would get back to the business of insurance, selling policies and paying claims, and stay out of the collision business, we would not have to go this route. The reality is that, by law, consumers have the right See MD Short Pays, Page 45
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Continued from Cover
More on PartsTrader
More details on rating system. Vendors and shops using PartsTrader rate one another using a feedback system. Shops answer five questions to rate a supplier based on parts and service quality; vendors answer four questions to rate shops in terms of payment practices, return rates, etc. Sailer said users of the system can expect to spend about one minute per day responding to feedback rating questions about companies with which they have conducted parts transactions. Participating in the anonymous feedback rating system is mandatory, he said, because a rating given to a vendor by a shop, for example, is weighted based on how much business that shop does with that vendor. “If you represent 50 percent of somebody’s business, your feedback has to be worth 50 percent of their ratings,” Sailer said. “So as a supplier, if a shop has only ordered from you once, and he didn’t like you and trashes you in the feedback, that’s only one piece of feedback. He can’t
be 50 percent of your feedback because he’s not that relevant to your business.” Feedback is not required on every purchase, however, and the number of surveys a shop or vendor must complete may vary day-to-day but should take an average of about five minutes a week, Sailer said. Users can request to provide feedback on a transaction even if not asked, he said. Only a company’s star-based rating is visible to users of the system, Sailer said, but any additional comments that are made about a shop or vendor are batched and sent to that shop or vendor. Bad ratings cannot be challenged, he said, but someone giving you a bad review isn’t likely to continue to do business with you, so the review won’t be weighted as heavily in your overall rating as feedback from those doing more business with you. Customers don’t have to wait. Select Service shops don’t have to wait the half-hour to receive quotes if a customer wants an estimate right away, State Farm’s George Avery said. “There’s no problem with writing your estimate like you do today and
giving it to them,” he said. “In the event you’re awarded the job, you can take that estimate and do your direct buy, or you may choose to put it out for some quotes. But we certainly understand there are times when a customer just wants an estimate.” Buying from non-participating vendors. Occasionally, Avery acknowledged, a shop may need to use a parts vendor who is not on PartsTrader, such as when an uncommon custom wheel or flare is needed. “If it’s a guy down the street who you buy from once or twice a year, just an odd part, you’re more than welcome to buy that part from him,” Avery said. Because that part will be shown as not having gone through the system, it will be flagged as an order not in compliance with Select Service guidelines, Avery said, but local management will have leeway to decide how far from 100 percent compliance is acceptable for shops on the program. Getting vendors on the system. The only way a vendor can participate in PartsTrader is if they are “nominated” by a shop using the system. Avery said during the initial test-
ing of the system in five markets, a shop complained that a vendor from Florida – where PartsTrader hasn’t been rolled-out – showed up on the system. Avery reiterated that only shops – not State Farm nor PartsTrader – control which vendors are on the system. “It turns out a repairer (on the system in another state) had a relationship with that vendor in Florida,” Avery said. If a shop nominates a vendor, then is unhappy with that vendor, can the nomination be rescinded? Sailer said no. “Two reasons: First, the odds are pretty darn good that someone else nominated them as well,” Sailer said. “And let’s say no one else did, but somebody else started using them. The last thing I’m going to do is say to my users, ‘Well, because Joe doesn’t want to do business with that vendor, you can’t do business with them either.’ We’re not going to take away your choice if they’re already on there. But no one will make you do business with them.” Not part of a Select Service reduction. Some shops in several See More on PartsTrader, Page 40
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The 1963 Federal Consent Decree (from p. 22)
The Plan’s sieve, and as you might expect, the dollars that passed through were only those deemed allowable by the insurance industry at large. The typical labor rate for collision repair was between $5 and $6 per hour. Essentially, the selected appraiser fixed the labor rates, required arbitrary discounts on parts and held firm to the labor times published in a guide. In addition, the appraiser had shops with which one had unwritten agreements to accept their estimates sight unseen. According to Silvie Licitra, a well-known collision industry writer whose experience dates from that era, payoffs and corruption were rampant at that time. “It was a real crazy business back then,” wroteLicitra. “Those appraisers all had their hands out, and they were taking money like crazy. If you didn’t pay them off, they’d write lousy estimates. It was a take it or leave it situation because a body shop was faced with losing the job if they didn’t play ball.” In question, however, is the specificity of the Consent Decree to individual insur-
ance companies today. The Decree was signed by representatives of the three major insurance associations at the time: Association of Casualty and Surety Companies (ACSC); American Mutual Insurance Alliance (AMIA); and National Association of Mutual Casualty Companies (NAMCC), all of which are now defunct. Also, despite their seniority in business the majority of the dominant companies today are not on the list of signatories so represented. State Farm (1922), Farmers (1928) and GEICO (1936) do not, for example, appear on the list of companies represented. In addition, communication from the DOJ’s Antitrust Division claims that the consent decree cannot be enforced against individual insurance companies, since the companies themselves were not signatories to the decree. Read the 1963 Consent Decree http://www.ican2000.com/documents/1963/ Content herein draws upon articles published by Charlie Barone and John Yoswick.
Continued from Page 38
More on PartsTrader
markets have dropped out of the Select Service program rather than use PartsTrader. But Avery said the program is not part of any plan to reduce the number of shops on the program or shift work toward large MSOs. “That could happen, but this is not an effort to drive the number of Select Service repairers we have,” Avery said. He also noted that more than 50 percent of Select Service shops are independent single-location businesses, a higher percentage than any other large insurer’s program. “That’s not a signal to me that I’m trying to dump the independents,” Avery said. “They are great business partners.” Lawsuit filed. PartsTrader hasn’t rolled into Mississippi yet, but repairers and parts vendors there have already filed suit in an effort to prevent shops from having to use it. The Mississippi Collision Repair Association and more than two dozen body shops, dealers and other parts suppliers al-
lege in the suit, filed in Hinds County Chancery Court, that State Farm’s implementation of PartsTrader tortiously interferes with existing business relationships that shops have with their parts vendors. In addition to an injunction halting State Farm’s implementation of PartsTrader, the suit seeks a ruling that State Farm is violating the terms of the 1963 Consent Decree, which placed limits on more than 260 insurer’s activities related to auto insurance and claims. The suit also seeks to prevent State Farm from interfering in the relationship between a shop and its customers by delaying payments or appraisals, or by placing limitations on the use of rental vehicles. State Farm said the case is without merit and that it will vigorously defend against it. See related story this issue. John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@ SpiritOne.com.
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Snapshot of Industry
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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 41
42 OCTOBER 2013 AUTOBODY NEWS | www.autobodynews.com
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The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com
Inside Insurance
Eliminating the “Have Not” Shops Will Help the “Haves” with The Insurance Insider
It wasn’t so long ago that all shops were created equal. If you had tools, four walls and a sign, you could be a body shop. Actually, I should remove “four walls” from the list; there were many “shops” repairing cars that didn’t have one wall, let alone four. At any rate, the qualifications to repair a car didn’t include special equipment or training. Starting a body shop business required not much more than proclaiming that you were a body man. At that time, thankfully, direct repair programs were virtually non-existent. I can’t imagine what we would have done during that time period if direct repair programs were prevalent. How would an insurance company identify which shops to refer their customers to? Even though shops have evolved significantly since that time, the same dilemma exists for insurance companies today: Which shops do we refer
our customers to? Without having the intimate knowledge of your shop or your competitors, finding the most qualified shops in a market is as about as easy as developing a national health care plan.
Why does an insurance company care where their insureds have the vehicles fixed? There are a lot of reasons. The cost of the repair is a motivating factor in finding the right shop, although it no longer is the most important. Back in the early 1980s
when there were more than 70,000 shops in the United States, price was the biggest concern. Customer service wasn’t even on our radar. The quality of the repair was assumed to be no better or worse at one shop than at another down the street. In fact, the biggest concern I had with a shop was determining whether or not the dog in back lot was chained up so I could write my estimate. Everyone was assumed to be able to perform a proper repair. For the younger generation reading this, it’s probably difficult for you to understand what I’m talking about. To put it in proper perspective, some shops would need to wet down the dirt floor before painting a car. It wasn’t uncommon to see shops pulling full-frame vehicles with anything that was stationary. And one of my personal favorites was
watching the old-time body men use a torch. A torch in the late 1970s and early 1980s was about as useful as duct tape. The industry has changed dramatically over the past few decades and the unprofessional, uneducated shop owner has been replaced. Professional, educated and astute operators have taken the industry to the next level. Now customer service is religiously the topic of conversation. Insurance executives are facing increased scrutiny and pressure to improve customer service scores. Policyholder retention is the lowest the industry has seen. Insurance has become a commodity where price is the single most motivating factor to consumers. There are intense battles happening between the Top 10 carriers for policyholders, as evidenced by the marketing dollars being spent. Ironically, our biggest challenge isn’t finding new customers; it’s keep-
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ing the ones we have. Retention is directly correlated to customer service. Unfortunately, the collision repair facility and insurance company typically share a common fate relative to customer service. If the customer likes the shop, more often than not, the customer will like the insurance company. Conversely, if they don’t like you, they don’t like us. Thus, the importance to us of finding the right shop to repair our insureds’ vehicles. Repairing vehicles today poses a significant challenge to the collision repair industry as well as the insurance industry. Collision repair shops need to make significant investments in training to remain current with the latest technology and repair methodologies. We recognize that this is critically important to a safe and proper repair. There are still over 40,000 shops in the U.S. How do we find the shops that are the best trained and have invested in their people? The new and specialty equipment required to properly repair many of today’s vehicle should help foster a reduction in the number of shops in the industry. The days of opening up a shop with a tool box and a sign in front of the building are a distant
“bad” memory. The challenge is eliminating those shops from the marketplace. We don’t want our insureds’ vehicles in shops that are ill-equipped. Collision repair shops need to work closely with insurance companies and state and national regulators to eliminate the “haves” from the “have-nots.” Those that have the equipment and training must survive while those that “have-not” should not. The insurance industry can’t do this alone. We need help identifying the “haves.” The industry continues to evolve and the upper class of the industry is growing exponentially. The middle and lower tier shops are shrinking. It would be our desire to increase the pace of this, with the thought that the surviving shops would be better trained and equipped. The sooner we eliminate the “have-nots,” the better it will be for everyone in the industry.
The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com.
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Continued from Page 37
MD Short Pays
to choose the body shop that they feel will do the best job, and by contract, the insurance company is supposed to indemnify the policy holder when there is a loss. So, I say ‘just pay the bill Mr. Insurance Company.’” In 1975, Schaech’s father opened Mark’s Body Shop in a two-bay garage. After six years of refinishing cars through high school and college, Schaech managed the family business from 1999–2002 when they moved into their current 17,000 square foot facility. At that point, Schaech Jr. became his father’s partner. Though Mark’s Body Shop repairs approximately 1000 cars annually, grossing around $3 million in sales, they do not participate in any DRPs, but that wasn’t always the case. “There was a time when we participated in as many as five DRP programs, but over the years, these programs developed into bargain basement repair programs. We were asked to use more aftermarket and junk yard parts which we find to be a lower quality alternative to new OEM
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parts. We were instructed to utilize remanufactured wheel and junkyard suspension components which we believe to put our customers in harm’s way. Finally, we were asked to work so cheaply that it became difficult to invest in new equipment and training which is imperative to repair today’s modern vehicles.” To shops that are currently facing difficulties obtaining full payment on repairs, Schaech offers the following advice: “There are numerous organizations and individuals in our industry who really care about consumers and repair facilities. These leaders are only a phone call or email way and willing to provide sound advice when a shop owner or consumer needs some sound advice.” “The reality is not all shops are the same; we all have different costs, different levels of quality, different equipment and training, different certifications, and different fixed costs. It just doesn’t make sense that we can all work for the same price.” Mark’s Body Shop 4025 Mortimer Ave. Baltimore, MD 21215 410-358-5155 www.marksbodyshop.com
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www.doncarltonhonda.com www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 45
Social Media for Shops
Ed Attanasio is an automotive journalist based in San Francisco, California. He can be reached at era39@aol.com.
Is Radio Advertising a Sound Decision For Body Shops? with Ed Attanasio
Even thought the Internet is continuing to explode and cable TV advertising is flourishing, radio is still alive and well and more body shops are using it, according to people who know—such as: advertising agencies, media buying companies radio stations and body shops themselves. According to Kantar Media, there are nearly 5,000 AM stations and roughly 9,000 FM stations in this country and last year radio advertising dollars increased by 8 percent at the national level and 3 percent locally. While the collision industry is always looking for new forms of advertising and marketing, the word out on the street is that good old broadcast radio is still a viable form for body shops, both MSOs and independents. Phil D’Angelo is a sales manager for three radio stations in northern California (KUIC, KKIQ and KKDV) and has seen how radio advertising has worked well for body shops in his
regions. “We currently have five body shops advertising on KUIC in Vacaville, CA, and they’re happy with the results,” D’Angelo said. “Radio is more popular now, because it offers so many options for companies of all sizes. For regional companies, you’re going to get more bang for your buck with radio, as opposed to other forms of advertising or marketing. People wake up in the morning with the radio; drive to work with the radio and listen to the radio all day at work, so radio travels everywhere and some people listen to it 8–10 hours and more every day. Also, we’ve discovered that the Internet and broadcast radio work hand-in-hand, because radio creates demand and the Internet fulfills that demand. If they hear you on the radio and then see you online, there’s a good chance you’ll get them as a customer.” D’Angelo had to learn the collision game in order to better serve his body
miere iation e r P ’ s Texa ody Assoc Auto B
shop clients, he explained. “When we started working with body shops, we discovered that their business model is unique, because from what they’ve told us, 80% of all the work comes through the insurance companies. So, the advertising we’ve designed for them conveys a specific message, but branding is also a big part of it. We want the body shop’s name to be in the listener’s head. In the radio business, we call it the consumer’s ‘top-of-mind awareness,’ and it’s very important in the collision repair industry, because getting your car fixed is not an impulse buy. So, when people do get in an accident, they’ve already heard the shop’s name over and over on one of our stations and that’s who they will mention it to their insurance agent.” Chuck Jessen is the owner of PreFab Ads in San Francisco, a company that licenses professionally-produced TV spots to body shops on an
exclusive-by-market basis. These commercials have appeared on 260 local television markets throughout the country and several have won international advertising awards and have been featured on such national TV programs as “Reel TV” and “World’s Funniest.” Jessen is currently producing a series of radio ads to add to his menu of offerings, because his clients are asking more and more for 30 and 60second spots they want to air on local stations. “Some body shops are switching from TV to radio, so that they can target their customers more specifically,” Jessen said. “In the bigger markets, the cost of TV advertising is prohibitive for many independent body shops with modest advertising budgets. If you’re paying to advertise to a certain market and a large majority of it is out of your area, it doesn’t make sense for any regional business to advertise outside
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that area. With radio, body shops can get more saturation and coverage in smaller to mid-size markets, so it’s ideal for body shops that draw customers from no more than 10 miles away.” Radio has a captive audience and Jessen knows from his 30 years of experience what types of radio ads will work in any market, he said. “People are in their cars a lot and commuters aren’t going away any time soon. We’re producing several different types of radio ad, including humorous and instructional. With our TV ads, we already know humor works and community service type themes are always well-suited for the collision industry. We produced a radio ad that conveys an anti-texting message and it gets good reviews, because it’s a warm and fuzzy type of ad that listeners will find useful.” Sharon Wicks is the president of Silicon Valley Media Consulting in San Jose, CA and has seen a recent spike in her clients’ interest in buying more radio advertising time, she said. “Radio is thriving, because it just makes sense for regional businesses that can’t afford a heavy television advertising schedule. Radio has gone
full circle and now it’s back in a big way, especially for companies that value a highly targeted approach.” Wicks has seen more and more of her clients asking about Pandora Internet Radio, an automated music recommendation service that plays musical selections of a certain genre based on the user’s artist selections. The user then provides positive or negative feedback for songs chosen by the service, which are taken into account when Pandora selects future songs. “Advertisers like Pandora, because it is more targeted than conventional radio,” Wicks said. “Pandora has specific demographic information about every one of its users, so you’re getting exactly who you want to reach. When your ad runs, it appears in a pop-up banner-type ad with audio that can be either 15 or 30 seconds in length. Either way, it’s less invasive than a 60-second radio ad and of course, it’s paired with a visual, which gives it more impact.” Rich Villanueva is the marketing manager at Michael J’s Body Shop, Inc., with three very busy locations in San Jose, CA. After much planning and research, Villanueva decided that
radio was the best plan for this burgeoning regional MSO, for several reasons. “We found a local FM station (KEZR) that offered a package we were very comfortable with, so we hired an advertising agency (Kilburg & Associates) that does ads for the San Jose Sharks NHL hockey team,” Villanueva said. “We decided to go with humorous ads and almost immediately we received a lot of positive feedback. We’re basically doing branding with these radio spots, rather than doing promotions. Since this is our first radio schedule, we want to get the name out there and connect the dots with our audience.” Michael J’s had their agency produce seven different ads to run in rotation on KEZR and is now going to create more ads to leverage the fact that one of their owners is a woman. “We’re targeting women with these new commercials, because they represent a large portion of our customer base,” Villanueva said. “Jamie Ryan is one of our co-owners and she’s a great spokesperson for what we’re trying to do. In these ads, we position her as an expert and an advocate, especially for our female market. The message is we
will treat our customers well from beginning to end, by providing them with a stress-free, non-threatening environment when they bring their car to Michael J’s.”
New SRS Checklist Available
Airbag Solutions recently released a new Supplemental Restraints Systems (SRS) estimating checklist designed to allow damage appraisers to more easily identify each of the components required to remain in compliance with OEM service requirements surrounding restraint systems. The free SRS service checklist is available online as a fillin PDF or as a printed download. Douglas Gan, COO of Airbag Solutions, said this brings the company one step closer to its goal of offering a standardized, one-step source for critical OEM requirements to the collision industry. “With the use of this checklist [and our database], appraisers are now able to address each of the critical questions needed to ensure a proper and timely repair. Knowing the answers to SRS related questions before the repair has begun will help to eliminate supplements, reduce cycle times and follow OEM procedures.” See Airbag Solutions at: www.airbagsolutions.com.
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www.autobodynews.com | OCTOBER 2013 AUTOBODY NEWS 47
Franchitti Reunites with The Henry Ford and the Jim Clark Lotus-Ford 38/1 Indianapolis Winner as Part of Clark Tribute at 2013 Goodwood Revival
Three years after an emotional run at Indianapolis Motor Speedway, IndyCar Series star Dario Franchitti has been selected by The Henry Ford to once again drive one of Jim Clark’s most famous race vehicles in the 2013 edition of the Goodwood Revival in England, September 13-15. The popular Scottish driver and three-time Indianapolis 500 winner, was previously chosen to drive this historic car in 2010 when it returned to the Indy track for the first time since Clark drove the car to victory there in 1965.That victory, the first for a rear-engine car, and the first Indy win for Ford Motor Company, helped changed the sport of IndyCar forever. “We are thrilled that Dario accepted the offer to drive the Lotus at Goodwood,” said Christian Overland, executive vice president of The Henry Ford. “We know how much the car means to him, and also how much the chance to help honor his hero Jim Clark means to him and his family.” “The drive at Indy was a highlight of my life,” said Franchitti, who currently drives for Target Chip
Ganassi Racing. “I’ve won the Indy 500 three times, but to drive that car there that day was something very, very special. Back in 1965, that car was cutting edge technology. It still feels very sharp and is bloody quick, especially in a straight line. You open
up the four-cam Ford and hear that glorious noise, it’s just incredible. I was driving the car that day in Indy very much below its capability because it is a one-off, special piece of history. The drive that day was a very personal thing for me.” In 1965, the Lotus-Ford, driven by Scottish-born Formula One star
Jim Clark, won the Indianapolis 500. The Henry Ford acquired the car in 1977 and in 2009, the Ford engine was removed from the vehicle and shipped to Indianapolis, where conservation work began at Race Car Restorations, Inc. The chassis was restored by Classic Team Lotus run by Clive Chapman, son of Colin Chapman, founder of Lotus. The creation of the Lotus-Ford stands as an excellent example of innovation and collaboration. Lotus and Ford Motor Company were ultimately brought together in the early 1960s by legendary American road-racer Dan Gurney. At that time, Gurney thought that the sleek, front-engine American Indianapolis race cars could be defeated by proper application of rear-engine, European Formula One technology. He introduced Ford engineers to Colin Chapman, founder of Lotus and one of the world’s most innovative
race car builders. The result was a lightweight, aircraft-inspired Lotus chassis, with four-wheel independent suspension and powerful rearmounted Ford V8 engine. The LotusFord effectively killed the traditional Indy car and established a new paradigm for American race cars. “The drive this weekend at Goodwood will be about demonstrating the car for all those fans of Jimmy, and I am excited about doing it,” said Franchitti, currently seventh in the IndyCar Series standings with two races left. “Goodwood is a fast, fast track that hasn’t changed much since back in the day, so I’ll be taking it very easy. It’s a demonstration run with a bunch of cars that were very important to Jimmy’s life and his career. I can’t tell you how privileged I feel to be able to do this.” Franchitti will take the Lotus 38/1 on the course during the Jim Clark Tribute Parade throughout the weekend. The Lotus-Ford 38/1 Indy car will be on display all weekend at Goodwood in the paddock area of the event.
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Continued from Page 14
SCRS Statement
you at the fax number... Note: This process means you will not participate in the quoting process, and repairers may order from suppliers that have quoted first, then direct order any remaining parts to you via the ‘direct only’ option.” ● Just over a year later, the option to not be a fully active participating supplier was revoked. In an email communication issued in July of 2013, PartsTrader advised Select Service repair facilities in certain markets that: “As you were notified in a previous email, PartsTrader is discontinuing the fax only option for suppliers who choose not to utilize the PartsTrader platform as a fully active participating supplier... When you use PartsTrader after July 31, suppliers which you have nominated to use PartsTrader but have not yet begun to use the PartsTrader application to provide quotes or accept orders, will no longer appear on your system as an available vendor, and therefore will no longer be able to receive orders placed in PartsTrader via fax.... We
would of course like you to encourage these suppliers to participate, but you should also identify suppliers for those makes who are participating to avoid any purchasing issues on August 1 or later. We can assure you that we do have participating dealers covering every major vehicle make in the [market] area.” According to SCRS, “The rules of the game are changing and it is apparent that maintaining the relationships and negotiated deals of participating repair facilities is only a priority, so long as all involved submit to do business in the manner prescribed by State Farm Insurance, and other carriers with similar programs. Today these mandates address parts sourcing and ordering, but there is valid concern that they open the door to future market manipulation and influence over other similarly critical collision businesses purchasing habits as well.”
Continued from Cover
Quintela
insurer on his customer’s behalf for such denials. “As in the past with this company”, states Eddie, “they pay us only after we file suit but before they go before a judge and/or jury. Thereafter they pay in full for every needed material, process and rates for a while… then abruptly change back to their old ways. I’m puzzled; as I am confident their company share-holders would be as well, since the insurer has often paid 20 times the amounts in dispute, often paying upwards of $2,500.00 in
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legal fees and costs for a dispute that may be under $100.00!” “I don’t care” said Eddie Quintela; “it would be much easier for their policyholder if they just paid what they owe without the need for litigation, but when they don’t, I’ll be helping my customer to have their ‘day in court.’ As I see it, they [insurers] can either pay fairly now… or pay much more later! “It doesn’t make a lot of sense and even makes less ‘cents’ says Quintela. “It’s no wonder insurance rates continue to climb and it has absolutely nothing to do with the cost of proper repair as the insurers would have people believe!”
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Attorney Spearheads Suit Against Carfax Bellavia Blatt announced today that as of Aug. 23, 2013, more than 420 plaintiffs, up from 120, have joined the mass action lawsuit filed against Carfax. The additional plaintiffs resulted in Carfax’s increased potential liability of more than $150 Million, up from $50 million previously. The lawsuit contends that Carfax’s exclusive contracts with industry insiders—among them, Cars.com and AutoTrader.com forced auto dealers to sign costly agreements for vehicle history reports. The alleged illegal, anticompetitive practices enabled Carfax to overcharge dealers. Establishing a monopolistic climate enabled Carfax to publish inaccurate and outdated reports. Customers’ demands for free Carfax reports, as advertised on television, compelled dealers to subscribe to Carfax’s service. Carfax’s anticompetitive practices increased costs to dealers, and ultimately consumers, by hundreds of millions of dollars. The lawsuit demands a jury trial and seeks treble (three times) damages, interest and attorney’s fees. Consequently, a small dealer would
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potentially recover $105,000; a medium size dealer, $216,000; and a large dealer, $324,000; plus interest and attorney’s fees. Because of the potential gain, dealers are joining the lawsuit on a daily basis. The lawsuit’s key objectives are permitting competition and improving the accuracy of the reports. Leonard A. Bellavia of Mineola-based Bellavia Blatt is leading the lawsuit. Bellavia serves as general counsel to several national, state and regional dealer associations and represents many of the largest dealer groups in the country. The firm has extensive experience in auto-industry litigation and serves as co-lead counsel in a lawsuit against the federal government on behalf of 150 terminated Chrysler dealers. “Dealers may still join the lawsuit against Carfax,” Mr. Bellavia said. “However, they must act quickly.” To learn more about the lawsuit and to join it, call Bellavia Blatt at 516.873.3000, and ask for Brad Stern. For more information, visit DealerLaw.com. Carfax did not respond to a request for comment.
AMI and ASA Give the 2013 Emil Stanley Merit Award
The Automotive Management Institute (AMI) and the Automotive Service Association (ASA) have announced that Mark Steinke, production manager for Rydell Collision Center, Grand Forks, N.D., is the recipient of this year’s Emil Stanley Merit Award. Steinke has worked in the collision repair industry for more than nine years. He is currently completing the necessary requirements to earn his Accredited Automotive Manager (AAM) designation. When not working in the shop, he contributes his time to various community and industry organizations. As the scholarship recipient, Steinke will receive $1,000 to be applied toward expenses to attend educational sessions and view the latest repair technologies and equipment during the 2013 International Autobody Congress & Exposition (NACE), Oct. 16-18 in Las Vegas. “I am honored to be selected as the recipient of this scholarship.," said Steinke. "I’m looking forward to the training and networking opportunities that this scholarship makes possible. This opportunity will provide me with new knowledge acquired from many of the best instructors in the industry.” The Emil Stanley Award is made possible by a grant from ASA to AMI.
Three CARSTAR Stores Get Praise for Outstanding CSI
CARSTAR Auto Body Repair Experts shop owners gathered recently in Las Vegas to celebrate the company’s 24th anniversary and honor its top performers from across the U.S. Customer service is a foundation of the culture, and CARSTAR says it maintains an average customer satisfaction index (CSI) rating of 98 percent or better. Each year, CARSTAR honors the top stores in customer satisfaction in three tiered sales levels. The CSI ranking reflects the ongoing survey feedback received from customers based on their CARSTAR experiences. For level 1, the winner was City CARSTAR in Janesville, WI, owned by Michael Buggs. For level 2, the winner was Champion CARSTAR Collision in Hightstown, NJ, owned by Paul Edgecomb. For level 3, the winner was Utzig CARSTAR Collision Service in Janesville, WI, owned by Al Utzig. Said David James, vice president of marketing for CARSTAR, “Customer surveys and our own observations tell us the three store owners and their employees receiving these honors have generated an exceptional level of positive awareness in their communities and created repeat customers for CARSTAR.”
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Mitchell International Sold to Asset Management firm KKR For Estimated $1.1B
San Diego-based Mitchell International, which makes software for the auto collision industry, that it’s being sold to private equity firm KKR & Co. of New York for an undisclosed price. However, Bloomberg News reported the deal valued Mitchell at about $1.1 billion. Bloomberg cited sources who requested anonymity. Mitchell’s current owner, Aurora Capital of Los Angeles, agreed to sell the company after several months of looking for a buyer. Aurora, also a private equity firm, acquired Mitchell in 2007 for more than $500 million. Aurora acquired Mitchell in from Hellman & Friedman LLC. A little over a year later, in April 2008, Mitchell and CCC Information Services announced an agreement to merge the two companies. The Federal Trade Commission filed suit to block the merger and in March 2009, a judge ruled in favor of the government and the companies terminated their agreement to merge. Mitchell employs about 900 workers in San Diego writing software that helps insurance companies and body shops manage vehicle repairs. It
also makes software for handling medical insurance claims from auto accidents. Finally, it has a product that helps workers’ compensation insurers spot claims abuses. Alex Sun, president and chief executive of Mitchell, said the ownership change will help the company expand globally and boost its product line. “The current management team will stay in place,” Sun said. “There really will be no change in the operations or strategy of the company.” Mitchell expects revenue of $350 million to $400 million this year, Sun said. Mitchell has annual earnings before interest, tax, depreciation and amortization (EBITDA) of about $90 million, other sources said. Three companies dominate the auto claims software business— Mitchell, Solera Holdings’ AudaExplore division in San Diego, and CCC Information Services of Chicago. In January, Leonard Green & Partners LP, another buyout firm, acquired CCC from Investcorp, one of the Middle East's largest private equity houses, for more than $550 million.
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The buyers face a consolidating auto collision repair market that’s seeing fewer accidents—thanks to backup cameras and other accidentavoidance technology. “That claims shrinkage isn’t over yet,” said Stephen Applebaum, senior analyst at industry consulting firm Aite Group. “So you have a lot of people in this business trying to figure out what they’re going to do next.” For Mitchell, the strategy involves expanding into additional areas of property and casualty insurance. That approach mirrors what Mitchell did over the past decade to break into the injury claims software business. The company also has growth potential overseas. Today, the bulk of its business is centered in North America. “There are some health care opportunities because that industry is changing rapidly, and Mitchell has some good expertise,” Applebaum said. “Then there is the international piece. Mitchell’s name is Mitchell International, but they are not really international.”
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Mitchell has recently beefed up its international footprint through an investment in GT Motive, an auto claims software firm serving Spain and other parts of Europe. Mitchell International traces its roots in San Diego to 1946, when Glenn Mitchell managed a Chrysler motor parts distributorship and saw that body shops needed better parts information and pricing data. He founded Mitchell Manuals, an auto parts information publishing firm. Mitchell died in 1971. The company has been sold several times over the years, as it morphed from paper manuals to digital software and databases. Today, Mitchell employs about 1,700 people worldwide. KKR has $83.5 billion in assets under management and invests a significant chunk of its money in technology firms. The sale is expected to be completed this winter. KKR & Co LP and Warburg Pincus LLC were among the private equity firms competing for Mitchell. Advent International Corp and Blackstone Group LP also participated in the auction for Mitchell.
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AASP/NJ Announces Support of MCRA Suit Against PartsTrader The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) has announced its support of the Mississippi Collision Repair Association’s (MSCRA) recently filed suit against State Farm and PartsTrader in an attempt to prevent the insurer from bringing the PartsTrader program to Mississippi. “What part of ‘no’ doesn’t State Farm understand?” asks AASP/NJ Executive Director Charles Bryant. “The collision industry has clearly rejected the concept of PartsTrader, yet State Farm is taking the position that they are going to force PartsTrader on the collision industry—like it or not! This lawsuit should be a wake-up call for State Farm. State Farm’s attempt to create the appearance that they are trying to help the collision industry solve a problem has clearly failed. “The collision industry has clearly rejected the concept of PartsTrader, yet State Farm is taking the position that they are going to force PartsTrader on the collision industry,” said Bryant. “State Farm’s at-
tempt to create the appearance that they are trying to help the collision industry solve a problem has clearly failed.” On Aug. 28, MSCRA and two dozen collision repair facility operators filed a lawsuit in the Hinds County, Miss., Chancery Court against State Farm and PartsTrader, stating the required PartsTrader program can damage their cycle time and therefore, harm customer satisfaction. “If PartsTrader was good for the collision industry, State Farm would have been able to convince the industry to accept the concept by now,” said Bryant. Said State Farm spokesperson Roszell Gadson, “State Farm recently received notice of a lawsuit in Hinds County, Mississippi.... We believe the suit is without merit. We intend to vigorously defend the suit,” said Roszell. “The Parts Trader program has not yet even been implemented in Mississippi,” he added, seemingly unaware that that is the point of the lawsuit.
CA Air Resources Board Passes Windshield Requirement to Reduce A/C Usage
The California Air Resources Board recently passed another mandate for auto manufacturers selling vehicles in California. As of 2014, all vehicles sold in California will be required to have windshields which reflect the sun. The windows would have a metallic coating, a window technology said to be in use for some 20 years now. The board passed the mandate in hopes of not only reducing greenhouse gas emissions but also improving fuel efficiency. By using the sun-reflecting windows, vehicles will maintain a cooler temperature and therefore drivers will use less air conditioning. Apparently the windows are able to keep sedan interiors 14 degrees Fahrenheit cooler, while keeping a truck or SUV about 12 degrees cooler. Starting in 2012, one-quarter of vehicles sold in the state of California will require the sun-reflecting windshields. These windshields must block fifty percent of the sun’s heat when a car is parked. By 2014, all vehicles will be required to have such windshields. Starting in 2016, all vehicles will be required to block sixty percent of
the sun’s heat. However, car manufacturers will be allowed to compensate for the temperature control in some other way, as long as it meets the increased standard. According to statistics involved in the decision, the windshield change will prevent 700,000 metric tons of carbon dioxide from being emitted in the year 2020. This is equal to removing 140,000 vehicles from the road all year. However, this is just a drop in the bucket when you consider the 22 million vehicles in California. Some are concerned that the metallic coating on the windshields will interfere with the working of cell phones, GPS and toll road electronic passes. However, the windshields are going to have a small area in which the metallic coating is not placed. This is expected to alleviate the problem, although many are still skeptical.
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California Teen Dies in Lock-Jammed Car
The death of a California teen is under investigation after she was found lifeless inside a locked car, and police suspect a jammed lock may have led to the teen’s death. The 14-year-girl was found dead inside a hot car where temperatures reached 130 degrees after faulty locks apparently left her trapped inside. Graciela Martinez was found dead in the backseat of her brother’s BMW outside Madera South High School in Madera, CA, hours after he had gone inside to class. He drove his sister to school that morning and left her alone in the vehicle because he had a 6.40 am class while her first lesson began at 7.40 am. She had no cellphone, food or water with her. When he and another sister finished classes at the end of the day, they found Graciela white and unresponsive in the back seat. For the family of Graciela Martinez, there are questions that may never be answered, and at the top of the list is how someone young and healthy could be taken from them so suddenly. “They took her to the hospital but they couldn’t save her,” said the victim’s sister, Patricia Martinez.
Police said it now appears the Madera South freshman was accidentally locked inside her car and was unable to escape. “People don’t think of that, I don’t think of that even after this investigation started, that was the furthest thing from my mind,” said Madera detective Dan Foss. But things quickly changed when Foss made a disturbing discovery about the car’s locking system. He said investigators found the doors will sometimes lock on both the inside and outside when the key is used, disabling the horn and making it almost impossible to escape. “Would she feasibly be able to get out of the car? It would be very difficult, she would have to try very hard,” Foss said. Officers demonstrated how the car can unknowingly turn into a death trap. Investigators said Graciela’s brother was unaware of the risk when he locked her in only to find her dead hours later. “It’s just sad, you never really know when it is going to happen.” said classmate Brandon Hernandez. “She was my only sister. I don’t know if I can ever get through it,” Patricia Martinez said.
ASA President Risley Writes to State Farm’s Ed Rusk Jr.
ASA’s Dan Risley has made ASA’s position clear that it is against all forms of direct repair program requirements to use specific suppliers or products. In a letter dated September 11 to Ed Rust Jr., chairman of the board and chief executive officer of State Farm Mutual, Risley commends the U.S.’s leading private passenger automobile insurer for its past decision to eliminate its requirement to use a specific estimating platform by its direct repair shops. The association also acknowledges State Farm’s scoring system that promotes competition among Select Service repair facilities. However, the association comes out firmly against State Farm’s recent requirement to use the PartsTrader online parts marketplace, stating it will increase a State Farm shops cycle time, negatively impacting customer satisfaction and increasing the insurance company’s costs in the long run. The letter states, “ASA would like to acknowledge State Farm as one of the first companies in the country to not mandate that a collision repair facility utilize a specific estimating platform. For many years, several top 10 insurance carriers required a specific estimating platform to participate in their direct repair program. In addition, State Farm was one of the first to implement a scoring sys-
tem that allows Select Service repair facilities to compete against each other in a transparent and real-time environment. These decisions clearly elevated State Farm’s position in the industry as a thought leader and facilitated positive change. The letter continues, “In light of the recent announcement of the national rollout of Parts Trader, ASA is taking a firm stance against insurance company mandates that limit a repairer’s right to choose their vendors, distributors and suppliers.” ASA includes three suggestions for State Farm to consider as a starting point to address the industry’s concerns. ● Immediately eliminate mandates requiring collision repair facilities to purchase or source parts using a specific third-party vendor. ● Encourage the use of these types of programs on a voluntary basis with a financial incentive. ● Heavily weight your scoring system to reward repair facilities that are leading their respective markets in parts cost, alternative parts usage, length of rental and cycle time. All of which are key operational metrics that drive overall repair costs. The complete text of the letter can be read and downloaded at www.autobodynews.com.
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Everyday Paint Operations Result in Explosion and Fatality that Rocks the Collision Industry
A recent vapor explosion in Missoula, from the explosion, Hughes said. He MT, has led to the death of one body was hospitalized then released. shop employee and the injury of anHughes said several items in the other. Both OSHA and the local Mis- shop also caught on fire, but the auto soula fire department are investigating body shop itself sustained minimal the tragic incident. damage. “We’ll be looking at things like Two employees of Rick’s Auto Body were injured the morning of Aug what kind of protective system they 19, one fatally, after lacquer thinner fumes exploded in an enclosed area in the back of the shop. Bruce Hall, 44, died early the following morning at Harborview Medical Center in Seattle from third-degree burns suffered over 95% of his body. Missoula City Fire Marshal Gordy Hughes said the Employees of Rick’s Auto Body on Missoula’s west side two workers were caught in gather outside the shop after the fatal explosion. the fire when static electricity Credit: Kurt Wilson, Missoulian caused paint fumes to ignite, and explode. have in place,” Hughes said. Hughes said two other employees Rick Booth, who owns Rick’s rushed to the area after they heard Auto Body, said the entire shop is devsomeone yell fire, and doused the astated by the death of a co-worker. flames with a fire extinguisher. Hall, who lived in Missoula, had The other man had minor burns worked at the shop for five years in and injuries related to inhaling fumes the detail department and provided
customers with rides when their vehicles were in the shop, Booth said. Customers were very fond of Hall, whom Booth described as a quiet guy who liked his job. “It’s a tragedy,” Booth said. “It’s not what we expect to have happen when we come to work.” He said he isn’t sure what OSHA or the fire department will be investigating, but said he assumes they are looking at what caused the elements to ignite. They may also be looking at a faulty piece of equipment, he said. Booth said there may be a mechanical issue with part of the fan that shuts off when it senses fire. “I want to find out what it was, so we can fix the right thing,” Booth said. Hughes said his inspectors would be looking into the ventilation system and other safety measures in the building. The fire department’s investigation won’t be completed until next week. Hughes said Rick’s Auto Body is “not negligent as far as the fire department [is concerned.]” He said that OSHA’s investigation to determine if the building’s
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safety code was up to standards will be released in a couple of weeks, and potentially an exhaust fan may be part of the issue. While the shop had safety measures, including training, in place, management acknowledges that the ventilation and equipment is still being investigated. There are a few things to retain from this incident: ● When transferring flammable liquids in a metal container, the container must always be grounded and bonded. ● When transferring flammable liquids, ensure it is being done away from potential ignition sources. ● Ensure all containers are capped when not being used. ● Just because many paints are now waterborne does not mean that paint operations are without hazards; most clearcoats are still very flammable. ● Employees must be trained on the workplace hazards of their work environment. This horrific event is a reminder of the seriousness and significance that attention to safety has, particularly with paint and spray operations.
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