Industry Insight with John Yoswick
—John Yoswick is a freelance writer based in Portland, Oregon who 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.
MSOs Discuss Collision Parts Challenges, Increased Work-in-Progress
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A panel of representatives from a in parking lots, waiting to be finalnumber of multi-shop collision re- ized.” pair operations at the MSO Sympo- Amberson, too, said his comwith Ed Attanasio sium in Las Vegas in November dis- pany has seen an increase of becussed how disruptions in the parts tween 10% and 20% in his compasupply chain are impacting their ny’s work-in-progress compared to pre-pandemic. business. “It’s a mixed blessing because All agreed the parts challeng- es are not limited to any particu- in today’s world we almost have to lar parts segments, new have more work-in-progress to keep withincluding Ed Attanasio our people busy,” Amberson said. OEM, used and non-OEM. “I think we have problems in all “Because there are too many jobs categories,” said Marty Evans, an for which we’re waiting for insurMSO operator in Washington who ance authorization or parts. But the also is COO of the Certified Colli- downside is it creates a lot of chaos, and delays for the customer, more sion Group banner network. cycle time for the insurers.” with Ed Attanasio In some cases, other panelists acknowledged, it is impacting their customer satisfaction. “As a general rule, yes, we are seeing CSI going down, with Ed Attanasio The panel discussing parts supply chain issues at the and that’s very painful,” MSO Symposium included, pictured left to right, Mark Evans said. “As much as Miller, Shawn Hezar, Darrell Amberson and Marty we try, as much as we be Evans proactive and communi Shawn Hezar, chief client offi- cate, you sometimes get the head cer for Caliber Collision, agreed all nod or yes, that they understand, but the parts industry segments are facthe survey goes out and that converwith Stacey Phillips ing the same challenges, in terms of sation never took place. We’re all labor and logistics. doing everything we can to commu “I live in Los Angeles where we nicate, but you’re not going to win can actually see the ships lined up, every time.” Hezar said Caliber was “knockwaiting to be docked,” he said. “And of course once they get docked, you ing it with Stacey Phillips out of the park” in terms of still need trucks and people to un- CSI in 2020 when work loads were load them. It’s evolving, and it’s down, but said 2021 “has been pretty painful.” tough.” That in turn, he said, can Darrell Amberson, president have an impact on employee morale. of operations for LaMettry’s Colli- “Our teammates aren’t feeling sion, which has 10 collision repair as good about what is taking place with Stacey Phillips shops and three mechanical shops in either. We have to remember that,” Minnesota, concurred. Hezar said. “We’re seeing it among Asian Parts supply chain challenges, manufacturers, Europeans, domes- the panelists said, are impacting tics,” Amberson said. “It often feels their costs in various ways—inlike we can build three-fourths of creases they will likely need to pass the job or even with more, Stacey but too often on. Parts delays, for example, can Phillips there’s that one critical part—even lead some jobs to expand beyond a a common part, like a bumper cov- customer’s rental car allowance, a er—that we’re waiting months for.” cost repairers can’t always bear in Hezar said that type of situation the name of customer service. now means Caliber has “somewhere “I want to be clear: We’ve about $50 million to $60 million of picked up a lot of rental car expenswork-in-progress…with cars sitting es. Our rental car expenses have
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gone up by millions of dollars,” Hezar said. “At some point you have to say, ‘It’s just no longer feasible. We can’t do that.’ You’re hoping the end [to the parts delays] is in sight, but based on everything we hear, these challenges are going to continue well into 2022. At some point, you have to stop.” Are the MSOs seeing changes in parts discounts? Amberson said he sees parts prices increasing overall but not changes in his agreements with suppliers. That wasn’t the case among other panelists. Hezar said parts margins get squeezed when a part has to be sourced from a supplier with which his company has not had a long-time relationship. “It’s very common that it’s not going to be the same discount. So in a lot of cases we do see it cost-
ing us more,” he said. But suppliers have also come to Caliber this year to say their costs are escalating and they “have no choice but to lower” Caliber’s discount. “We’ve seen that from time to time,” Hezar said. Evans joked he thinks Hezar jinxed him on the topic of changes to supplier discounts after they spoke about it the week prior to the symposium. “I hadn’t heard a lot about it before then, but now it’s becoming more and more common,” Evans said. “Even with those you have a relationship with, we are hearing they are reducing [the] discount, which is very painful.”
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