Collision Repair magazine 14#4, August 2015 by Media Matters

SPECIAL FEATURE: DISRUPTIONS IN THE AUTO ECONOMY

FENIX RISES

A new major player forms in recycling.

VOLKSWAGEN CERTIFICATION An inside look at VW’s new program.

ON THE ROAD

Canada’s suppliers bring the training to you.

Northern LIGHT

Shane Campbell and CSNCity Centre Collision shine in North Bay, Ontario.

PLUS Full report on

IBIS 2015, Des D’Silva of Assured Automotive on profitability, Chief’s Aluminum Dust Extractor and much, much more! Volume 14, Number 4

August 2015

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150 years

CONTENTS

ON THE COVER 39 TRUE CALLING It’s a labour of love for Shane Campbell, owner of CSN-City Centre Collision in North Bay, Ontario.

Volume 14 Issue 4, August 2015

IBIS brings the collision repair world to Athens, Greece.

FEATURES 30 SURVEYS AND POLLS Readers weigh in on internet access, smartphones and working with family and friends. 42 EXECUTIVE VISION Des D’Silva of Assured Automotive on profitability and sustainability. 49 DISRUPTION IN THE AUTOMOTIVE ECOSYSTEM What you need to know to survive and thrive. 55 FENIX RISING More recyclers go public with the launch of Fenix Parts. 59 OEM CERTIFIED Volkswagen’s Certified Collision Repair Facility Program makes its Canadian debut.

NEWS 10 COLLISION REPAIR

Training on the road.

SPECIAL FEATURE: DISRUPTIONS IN THE AUTO ECONOMY

FENIX RISES

A new major player forms in recycling.

VOLKSWAGEN CERTIFICATION

An inside look at VW’s new program.

The Mitchell Road Show makes a pit stop in Toronto.

ON THE COVER: Shane Campbell of CSN-City Centre Collision. PHOTOGRAPHY BY PATRICK GILBERT.

ON THE ROAD

Canada’s suppliers bring the training to you.

Northern LIGHT

Shane Campbell and CSNCity Centre Collision shine in North Bay, Ontario.

PLUS Full report on IBIS 2015, Des D’Silva of Assured Automotive on profitability, Chief’s Aluminum Dust Extractor and much, much more! Volume 14, Number 4

August 2015

$4.95

Canada Post Canadian Publications Mail Sales Product Agreement No. 40841632

YOUR ONLINE SOURCE

Canada’s collision repair information resource. New articles and top news stories daily. Visit www.collisionrepairmag.com.

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HAVE YOUR SAY. We welcome your comments on anything you see in Collision Repair magazine. Send your feedback to editor@collisionrepairmag.com.

66 TOWING & RECOVERY 68 RECYCLING

DEPARTMENTS 06 PUBLISHER’S PAGE by Darryl Simmons Smart shopping. 32 PRAIRIE VIEW by Tom Bissonnette Gift of guidance. 34 WHO’S DRIVING? by Jay Perry Better business. 76 RECYCLING by David Gold Perfect pick. 78 FINANCIAL VIEW by Jeff Sanford Big business.

AUGUST 2015 COLLISION REPAIR 05

PUBLISHER’S PAGE

SMARTSHOPPING Productivity and efficiency are worth investing in. By Darryl Simmons

y thoughts always turn to training during the summer. I’m not exactly sure why that is, but it might be that the longer days just naturally turn my thoughts to ways to be more productive. Really, that’s what training and development are all about. They’re ways to make ourselves and our staff more productive. There may be training out there that doesn’t accomplish those aims, but increased productivity and efficiency should be our goal. Training and development is expensive, no question about it. Aside from the cost in dollars, you lose production

and how to communicate with them can work wonders on an under-performing team. Be cautious in selecting your trainer, though. There are essentially no regulations regarding who can offer training like this. Talk to other business owners in your area and see if they can give you any recommendations. We’re not talking about technical stuff, so there’s no reason to limit your inquiries to other repairers. Reach out to businesses that depend on internal communications to run well. Research training the way you would any other investment. Look at what’s available at various price points and try to determine what your return is likely

PUBLISHER DARRYL SIMMONS (905) 370-0101 publisher@collisionrepairmag.com EDITORIAL DIRECTOR MIKE DAVEY editor@collisionrepairmag.com ART DIRECTOR CANDACE TAYLOR candace@mediamatters.ca ASSISTANT EDITOR MELISSA HAYES melissa@mediamatters.ca STAFF WRITER JEFF SANFORD jeff@collisionrepairmag.com VP INDUSTRY RELATIONS & ADVERTISING GLORIA MANN (647) 998-5677 advertising@collisionrepairmag.com DIRECTOR OF SALES & MARKETING ELLEN SMITH (416) 312-7446 ellen@mediamatters.ca MARKETING COORDINATOR ALEECIA CAMERON aleecia@mediamatters.ca MARKETING ASSISTANT WILL JACQUES will@mediamatters.ca REPORTER ADRIEN MONTOYA

RESEARCH TRAINING THE WAY YOU WOULD ANY OTHER INVESTMENT. time, so it’s absolutely essential that the time and money spent show a return on investment. The tricky part is figuring out which option offers the most return. Assess strengths and weaknesses, both for each team member and for the team as a whole. Remember to look outside the traditional skill sets. For example, your team may have great technical skills across the board, but still not be producing at the highest possible efficiency. Look at the team as a whole and as individuals. You may find that some produce very well on their own, but slow things down when they have to work with other people. This likely comes down to a personality conflict or poor communication. We have a lot of good training options in this industry. However, there are plenty of trainers who specialize in exactly this sort of education. Even a one-day workshop on how to recognize different personality types

to be. Looking at it strictly in dollars and cents makes it a lot easier to gauge your return. If the training costs $1,000, and it will net you a return of $1,200, then go for it! If it’s less, you’ve got more thinking to do. The results may not be strictly tangible or easily quantified. Beware of this. I am not saying you shouldn’t do it, but you really have to do some serious thinking to see if it’s worth the investment. As I said, chances are your staff members want to work hard, produce high numbers and help to drive the business forward. They’ve got the tools and the talent. It’s up to us to provide them with the environment where they can put them to use. CRM

06 COLLISION REPAIR COLLISIONREPAIRMAG.COM

COLUMNISTS & CONTRIBUTORS DANA ALEXANDER, TOM BISSONNETTE, DAVID GOLD, JAY PERRY, SAM PIERCEY SUBSCRIPTION One-year $29.95 / Two-year $55.95 Collision Repair™ magazine is published bi-monthly, and is dedicated to serving the business interests of the collision repair industry. It is published by Media Matters Inc. Material in Collision Repair™ magazine may not be reproduced in any form with out written consent from the publisher. The publisher reserves the right to refuse any advertising and disclaims all responsibilities for claims or statements made by its advertisers or independent columnists. All facts, opinions, statements appearing in this publication are those of the writers and editors themselves, and are in no way to be construed as statements, positions or endorsements by the publisher. PRINTED IN CANADA ISSN 1707-6072 CANADA POST CANADIAN PUBLICATIONS MAIL SALES PRODUCT AGREEMENT No. 40841632 RETURN POSTAGE GUARANTEED Send change of address notices and undeliverable copies to: 86 John Street Thornhill, ON L3T 1Y2

We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage.

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Collision Repair magazine is published by Media Matters Inc., publishers of:

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PEOPLE ON THE MOVE Media Matters welcomes a new staff writer to the team. Jeff Sanford will take up duties reporting on the collision repair industry and the P&C insurance industry. Sanford brings a wealth of experience as a business journalist to Collision Repair magazine as he has worked at some of the largest business magazines Jeff Sanford. in the country. He has already expanded coverage of the ongoing consolidation of the collision repair industry, while providing a new, “executive” level of sophistication to the magazine’s coverage of other factors impacting the auto claim economy, such as private equity and mergers within the insurance industry. Joe Carvalho has been appointed as the new Chair of the Canadian Collision Industry Forum (CCIF). Carvalho is the Manager, National Vendor Auto Programs for Economical Insurance. Carvalho’s appointment marks the first time that a stakeholder from the insurance industry has served as Chair of CCIF. Well known throughout most of Canada’s collision repair industry, Carvalho has worked with Economical InJoe Carvalho. surance in various capacities for nearly 30 years. Urethane Supply Company has announced two new instructors in Canada who are able to deliver the new I-CAR course on plastic repair. “Introduction to Nitrogen Plastic Welding” is a three-hour course delivered in the customer’s shop for up to three technicians. Each tech gets hands-on training with five common bumper repair scenarios, including on thermoset polyurethane, also known as “the yellow plastic.” Mark McIntyre has been with Treschak Enterprises in Welland, Ontario for 25 years as a technical sales representative. He started as a tech right out of high school and received his Interprovincial Autobody Repair License shortly thereafter. McIntyre has a reputation for staying at the leading edge of technological developments Mark McIntyre. and was intrigued by the nitrogen plastic welding process when it was first introduced to Canadian facilities in 2009. McIntyre will be able to provide the I-CAR Alliance training to shops in the GTA and farther afield in Ontario.

Normand Proulx, a 23-year veteran of the Canadian Armed Forces, recently started his own business performing plastic repairs, Proulx Soudure Plastique based in Quebec City, Quebec. He came to Urethane Supply’s factory in Alabama in 2014 Normand and completed factory Proulx. training in plastic repair and refinishing. He is also serving as Urethane Supply’s independent sales representative in Quebec and the Maritimes and will be able to provide the I-CAR Alliance training in the same territory. The company is actively seeking instructors across Canada. Please contact Kurt Lammon at 800-633-3047 with any questions or inquiries. Carrossier ProColor has announced the appointment of Claude Gravel to the position of Performance Management Manager. The position of Performance Management Manager was established to allow the network to continue developing business volume while improving its service offer to partners. Claude Gravel will take office as Gravel. of June 15. As part of his duties, he will optimize the performance of the network’s collision centres to ensure that they are in line with the expectations of its insurance partners. In his many years of experience in the industry, Gravel has held various key positions, in particular at the manufacturer level and within a collision repair network as a performance management consultant. A statement from Carrossier ProColor says Gravel will bring the team a wealth of experience that will contribute to the development of business relationships with insurance partners in addition to being a great asset to the franchisees. “This new position is of great importance for the entire network and this initiative demonstrates our commitment to meeting our operational excellence goals,” says Michel Charbonneau, Vice President, PBE Sales and Marketing at Uni-Select. Gravel will be part of the Insurer Commercial Relations team and will report directly to Alain Villeneuve, Senior Manager, Insurer Market Development.

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NEWS

CHIEF EXPANDS FUSION LINE WITH ALUMINUM DUST EXTRACTOR Chief Automotive Technologies has introduced a dust extractor designed to collect and contain harmful particles released when aluminum vehicle body panels are sanded. The dust extractor features all-stainless steel construction and high-efficiency immersion separation technology. Aluminum is increasingly being used in vehicle bodies to save weight. When sanded, it produces dust that can corrode any bare steel it contacts. The dust is also explosive if a spark is present to ignite it. Collision repair centres should isolate aluminum jobs from steel repair, and collect aluminum dust at its source as it’s generated. “A dust extractor ensures that no metal particles become airborne and travel through the shop,” says Bob Holland, Director of Collision in North and South America for Chief parent company Vehicle Service Group (VSG). “But not all dust extractors are suited for use with aluminum.” Chief’s dust extractor is compatible with any pneumatic sander that has a vacuum

function. Users connect the sander to the extractor via a vacuum hose and air line, and the extractor turns on automatically when sanding begins. To maximize productivity, the dust extractor comes with a wye connector that enables two sanders to connect to it at the same time. Heavy-duty castors provide mobility. The Chief dust extractor’s water-based immersion separation system wets aluminum particles so they can be filtered into a containment vessel. The Chief extractor’s containment vessel can be emptied independently of its water tank. This allows users to properly dispose of the collected solids in compliance with environmental regulations, instead of pouring them down a drain with the wastewater. Since hydrogen gas is produced when aluminum reacts with water, the Chief dust extractor’s containment vessel comes with a relief valve. This ensures hydrogen pressure will not build up and damage the extractor. The containment vessel’s HEPA filter captures 99.995 percent of con-

Chief’s aluminum dust extractor.

taminants at .3 microns in size, and the vessel can hold 1.3 gallons of dust before it needs to be emptied. The dust extractor is part of Chief’s new Fusion line of products, featuring a family of spot and MIG/MAG welders, a new rivet gun and a fume extractor. To learn more, visit chiefautomotive.com.

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NEWS

Arslan launches Aluminum Dent Repair station, Dust Vacuum Arslan Automotive has introduced the 50-EXP1-IT Aluminum Dust Vacuum and 40-950K Aluminum Dent Repair station, designed to meet the demands of modern repair. The 50-EXP1-IT Aluminum Dust Vacuum carries all necessary government approvals and industry certifications allowing it to be used in the collision repair industry. The system, created to collect potentially hazardous aluminum dust, is available in both pneumatic and electric versions. According to Arslan Automotive, the unit has been designed for the recovery of metallic, conductive and explosive dusts into an immersion liquid bath. The 50-EXP1-IT renders any hazardous dust inert and is equipped with a detachable recovery tank for easy disposal of recovered materials. “Our system uses mineral oil for the ‘wet’ immersion bath, rather than water,” says Arman Gurarslan, President of Arslan Automotive. “This is the appropriate solution to The 50-EXP1-IT Aluminum Dust Vacuum. render hazardous aluminum dust inert. Otherwise, the unit would produce hydrogen gas, which is not desirable.” Arslan Automotive guarantees that the units are both explosion and dust ignition proof. The customer must make sure that the compressor is grounded. The company’s new, mobile 40-950K Aluminum Dent Repair station incorporates a touch screen stud welder with electronic control, along with all the necessary accessories and consumables to perform dent removal on aluminum panels. The same stud welder may a l s o b e u s e d f o r d e n t re moval with steel studs and panels, increasing the overall usefulness of the system. T h e u n i t s a re b u i l t w i t h solid copper transformers and are CSA approved. A statement from Arslan Automotive says the comThe 40-950K Aluminum pany holds training clinics Dent Repair station. frequently and the sales team are well trained to train and demonstrate all of the aluminum related equipment. For more information, please contact Arslan Automotive Canada at 800-465-8575, or visit arslanauto.com.

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AN AXALTA COATING SYSTEMS BRAND The Cromax logo and Cromax® Mosaic™ are trademarks or registered trademarks of Axalta Coating AUGUST COLLISION REPAIR Systems LLC or its affiliates, used under license by Axalta2015 Coating Systems Canada Company. 11 © 2015 Axalta Coating Systems Canada Company. All rights reserved.

NEWS

TRESCHAK ENTERPRISES CHANGES INVENTORY WITH MOBILE DEPOT

College enforcement promotes compliance through education Two of the Ontario College of Trades’ (the College) primary responsibilities are protecting the public interest, and promoting the skilled trades. Sometimes, the College has the opportunity to do both at the same time. College enforcement officers are on the road every day, ensuring that those doing the work of one of Ontario’s 22 compulsory trades are, indeed, certified to do the job. The goal isn’t to hand out as many tickets as possible; it’s to promote education and compliance. Educating those in the industry on the legal requirements of certification is not only an important opportunity to protect the public interest, but also to increase the number of certified professionals in the industry. And that’s exactly what is happening, with assistance from groups like Collision Industry Information Assistance (CIIA) www.ciia.com/. CIIA offers training courses designed to help experienced but uncertified individuals successfully challenge the Certificate of Qualification (CofQ) Auto Body Collision Damage Repairer trades exam. College enforcement practices are spurring many individuals into taking the steps necessary to become certified. “A significant number of the individuals in our classes are there because of College of Trades enforcement activity, and they’re preparing themselves to become certified,” says CIIA’s John Norris “Our program helps techs successfully completing these exams.” “Best of all, under the Canada Ontario Job Grant program, almost all of their employers qualified for a twothirds rebate on fees paid.” For more information on what to expect from inspection, go to: www.collegeoftrades.ca/wpcontent/uploads/WhattoExpectInspectionOnepager1.pdf.

info@collegeoftrades.ca 1.855.299.0028 collegeoftrades.ca

A view of a Treschak Mobile Depot setup. The Mobile Depot concept uses net-connected technology to increase efficiency and save repairers money and time.

Treschak Enterprises has pioneered the industry’s first “pull” inventory management system for collision repair centres. According to Jamie Treschak, son of the company’s founder, Don, the genius bit of innovative kit will save collision centres money and is finding eager acceptance as a result. In an interview with Collision Repair magazine Treschak points out, “this is the new way Treschak Enterprises goes to market.” Industry execs know the trend has been to go lean. The new process takes this key business strategy to a new level. “We need to live the lean life ourselves,” says Treschak about the new Mobile Depot system. Treschak outfits supply rooms with an Internet-connected barcode system. Installed in an unmanned kiosk, the system allows techs to self check-out items. Inventory is monitored over the Internet. When supplies are low, replacements are sent automatically before the shortages become a hindrance to productivity. Customers are billed only on usage, not on filling the room. “We put the warehouse in the customer’s shop. But we hold the inventory,” says Treschak. Inventory levels can be set based on usage history. By managing inventory over the net, the amount of product held in inventory is reduced. Clients save money. “Why should a shop be a warehouse? They are only buying what they use,” he says. “The product is on consignment so there is no inventory other then what is open on the floor.”

According to Treschak the savings can be substantial. But there are other advantages as well. One big one: there are no slowdowns due to product shortage. “With the old system if someone forgets to order something, you have problems. Shops run out of materials from time to time, and production stops. I thought, ‘We could do something about this,’” he says. “It’s been a bit of a cultural change for Treschak, but we’ve always been customer-driven.” Utilizing a touch screen and barcode readers, the room is monitored by video. Reporting can be done on a per-person basis. Collision centres are billed once a week. “Rather than getting 100 invoices, you get one for paint and one for sundries. This is great for the account department at the shop. And there is zero ‘stock out,’” says Treschak. “Anybody can sell on price. That’s easy. We got tired of selling that way. We wanted to say, ‘How can we help our clients grow? How can we make this happen?’ If the shop is not doing well, we aren’t doing well. If we focus on doing everything we can to help a shop, everyone wins in the end. Anyone can sell product for cheap. We’re here for the shop.” No wonder clients are lining up. In the blink of an eye the company has 11 shops running the system. “We’ll have three more by the end of August. And then another four or five after that,” he says. For more information on Treschak Enterprises, please visit treschak.com.

A NETWORK IS GOOD… A PARTNERSHIP IS BETTER! Fix Auto is not a distribution network for paint and products, and we’re not just a network with a trademark that puts up signage and calls it a day. We are a national franchisor with one clear goal: the success of our owner operators. This means actively working with you as our Strategic Partner to protect your territory, increase your market share, reduce your operating costs, and maximize the profitability of your business. We are a Canadian company with over 22 years of experience supporting and growing a strong national network of Strategic Partners, and our commitment to you is stronger than ever – because at the end of the day, your success is our success.

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NEWS

The Inside Story: The OMERS/Caliber Collision Deal Big-time financiers are showing huge interest in the collision industry. The number of deals done over the last couple of years is ballooning. While consolidation has long been a major force in Canada, a battle to be the first to consolidate the comparatively massive US collision repair industry seems to be looming—can the Canadian pension fund at the centre of it all win the day? In July of last year, major buy-out fund Blackstone bought a controlling stake in Service King Collision Repair Centers. The strategy on the part of Blackstone is said is to be a consolidation play around the fragmented business in the US. Consolidation is much more advanced in Canada, with network, franchise and MSO locations accounting for approximately 70 percent of the dollar volume. The situation in the US is very different. While consolidation has occurred, the pace and extent of this consolidation are lower. The Ontario Municipal Employees Retirement Systems (OMERS) pension fund, has an eye on this opportunity. Recently its private equity division bought up a controlling stake in Caliber Collision Centers, an American MSO that controls about 300 collision repair facilities in California, Arizona, Nevada, Colorado, Texas and Oklahoma. An active consolidator, Caliber openly solicits collision repair centre owners to sell their businesses to the growing chain. OMERS, through its subsidiary, OMERS Private Equity (OPE), will be part of the action. Caliber was acquired by Onex in 2008. At the time Onex paid $170 million for the Texas-based chain. Two years ago Onex sold that stake to OPE for a 7.5 times return on investment. Now it’s up to OMERS Private Equity to take the company to the next level. Collision Repair magazine recently interviewed the Managing Director of OMERS Private Equity, Tim Patterson, who explained the interest of the pension fund in Caliber. Patterson says OPE searches for companies that, “offer multiple avenues to growth, through organic growth, new site development or from acquisitions.” That is, there has to be a compelling reason for OPE to buy into a company. Can the company be more efficiently managed? 14 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Are their acquisition possibilities? According to Patterson, “Caliber fits this mandate very well.” Like the Blackstone/Service King deal, the plan now is to “roll-up” the highly fragmented US collision repair industry. “Overall, it’s approximately $30 billion per annum. The top four Multi-Site Operators (MSOs) own less than 10 percent of the sector’s revenue, and less than five percent of the shops. That’s an attractive dynamic for industry consolidation,” he says. “The other dynamic currently being played out within the industry is that the larger players like Caliber are taking market share away from the mom and pop shops, because Caliber can offer a lower overall cost to the insurance carriers, more consistent and higher quality repairs and higher customer satisfaction. It’s a win-win-win scenario for the insurance carriers, the customers and for the larger MSOs like Caliber.” Taking a stake in Caliber is the best way to work the consolidation strategy. “We think they have the best management team in the industry. They have cultivated an amazing culture that has made Caliber the employer of choice,” says Patterson. “The company is also the acquirer of choice. Within the industry, shops that are looking to be acquired are aware of this management team and culture, and want to be acquired by Caliber.” Patterson has become a director on the Caliber board and is helping the company in its acquisition streak. “Our relationship with management at Caliber has been fantastic. We’ve worked closely with them to complete multiple acquisitions and various strategic initiatives. We believe that Caliber will continue to be the consolidator of choice five years from now,” says Patterson. T h e i n v e s t m e n t i s a l re a d y p l a y i n g out ahead of schedule. “We have doubled the size of the business in the last 19 months or so. That’s pretty impressive growth. We see continued growth at the same pace over the next two to three years at least,” he says. “In private equity the goal is sustained growth. We added 77 new sites in 2014, and 58 new sites in the first five and half months of this year alone. And we expect to continue growing at this pace for the next few years at a minimum,” he says. Considering the potential for growth at Caliber the out-size returns in the portfolio can be expected to continue.

NEWS

GLOBAL COLLISION REPAIR MARKET TO HIT US$196.97 BILLION BY 2020 A new report from Grand View Research suggests the global collision repair market is going to enjoy strong growth in the years to 2020. According to the report, the market will generate US $196.97 billion in sales by that time. The strong business is partly a result of advancements in insurance, claims processing and repair techniques, which have considerably widened the scope of commercial and passenger vehicle markets. The “strategic reorganization” of the way in which automobile accidents and damage claims are handled has been good for business, claim the authors of the report. They note that, “shared and standard guidelines along with electronic appraisal reviews” now allow work to be accomplished in a transparent, compliant, and efficient manner. This shift has led to a more profitable and efficient collision repair industry. The report also notes that organizations such as the US National Automotive Service Task Force (NASTF), which established a Collision Repair Committee (CRC), have helped collision repair centres achieve new levels of efficiency and customer satisfaction. Further key findings from the study: • Automotive collision repair centres across the globe are procuring recycled and refurbished spare parts from salvaged cars to lower the production costs. This has led to an increased demand for recycled and reconditioned spare parts across the industry. The reliance on recycled

•

parts is having a “major impact on the global automotive collision repair market.” The aging fleets of automobiles, along with an exponential increase in the number of vehicles on the road, are major factors driving profitability in the global automotive collision repair market. Key market players in the collision repair market include Federal-Mogul Holdings, Continental Corporation, DENSO Corporation, Bosch, DuPont and 3M. Intelligent diagnostics modules and advanced automotive telematics are keeping track of real time data on vehicles. This data is syncing with company “clouds.” These advanced t e c h n i q u e s a re g i v i n g c o m p a n y owned repair centres an edge over other independent collision repair centres. The company stores “know” the life history of the vehicle. Automotive collision repair centres are providing customers updates about the status of their repairs via a smart mobile device. This makes it convenient for the customers to pick up their vehicles when ready. The result has been an overall enhancement of customer experience and increased loyalty. The report also suggests that the unorganized and untapped automotive collision repair market in the Asia Pacific region poses as a major opportunity for automotive collision repair vendors.

Rhode Island creates two-tiered collision repair system The Rhode Island House of Representatives and Senate have passed a bill that creates a two-tiered collision repair industry in the state. The most basic requirement of the new law is that collision repair centres hoping to be licensed as Class A repairers will be certified by an OEM to carry out the repair and refinishing of aluminum and high strength steel. Collision centres hoping to be grade Class A will also have to provide a written limited lifetime warranty against workmanship defects and maintain a system for documenting customer complaints and responses. As well collision repair centers will have to provide proof of certification of all technicians. Requiring OEM certification requirement is the first legislation of this type in the US, according to reports.

16 COLLISION REPAIR COLLISIONREPAIRMAG.COM

REGIONAL NEWS

British Columbia

CARSTAR and QACS complete co-branding Late in 2014, CARSTAR Automotive Canada announced a multi-store franchise agreement with Quality Assured Collision & Glass (QACS). The QACS name and brand is strong in British Columbia, and all 10 stores have now been co-branded as both CARSTAR and Quality Assured locations. CARSTAR Quality Assured Armstrong is located in Armstrong, BC, and provides collision repair service to customers in Armstrong, Enderby, Falkland, Salmon Arm, Vernon and the interior of BC. Owner Brian Gordey has worked in the automotive collision industry for 26 years,

18 COLLISION REPAIR COLLISIONREPAIRMAG.COM

while Chris Gordey, the Store Manager, has 22 years of experience. CARSTAR Quality Assured Ivan’s is located in Vancouver, serving its community since 1975. Manager Tom Curman and his team are committed to customer service and Ivan’s has been recognized for customer satisfaction and overall performance by AutocheX. CARSTAR Quality Assured Little Valley is located in Ladysmith, BC. Owner John Neil opened Little Valley Restorations in 1980 and today the business includes John’s son Travis in refinishing and his daughter Sheena in accounting. The team serves customers in Ladysmith, Nanaimo and Vancouver Island and have been recognized with the AutocheX award in five of the last seven years. CARSTAR Quality Assured Norgate is located in Prince George, British Columbia. Owned and managed by Kent Berg, the team at CARSTAR Quality Assured Norgate has been serving customers in Northern British Columbia since 1960. CARSTAR Quality Assured Raydar is located in the heart of Mission. The facility is owned and operated by Lonnie LaPlante. Since 1977, the team at CARSTAR Quality Assured Raydar have been dedicated to providing quality repairs. CARSTAR Quality Assured Rich’s is located in Campbell River, BC. Formerly operating as Rich’s Autobody, the facility is owned by Richard and Sue McCay, who started the business in 1980. The family owned business also includes Blake and Kelly McCay, Richard’s son and daughter-in-law. This location serves customers in Campbell River, Courtney, Comox, Port Hardy and Vancouver Island. Located in Cranbrook, CARSTAR Quality Assured Signal Cranbrook provides collision and glass services to the communities of Cranbrook and the East Kootenays. The facility has been operating since 2003 and is family owned. Darcy Giberson is the owner/operator of this location. CARSTAR Quality Assured Signal Kimberley has been a family operated business since 1978. The store is owned by Thomas and Maureen Watson, serving clients in the Kimberley, Marysville and the East Kootenays area. CARSTAR Quality Assured Sunshine is located in Langley and has been serving the community since 1975, serving Aldergrove, Surrey and the lower mainland. Owned by Michael Srigley, the facility has recently been awarded Honda Canada’s ProFirst Certification. Located in Parksville, CARSTAR Quality Assured Terminal is owned and operated by Mark, Sari and Allan Descoteau, serving customers from Parksville, Qualicum Beach, Nanaimo, and Vancouver Island since 1979. For more information, please visit carstar.ca.

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REGIONAL NEWS

Alberta

CARSTAR Edmonton North receives Honda ProFirst certification CARSTAR Edmonton North has received official Honda ProFirst certification. CARSTAR Edmonton North is just the fourth CARSTAR location to receive the ProFirst certification, according to a statement from CARSTAR Automotive Canada. The certification program—launched earlier this year—provides endorsement to collision repair centres that meet or exceed Honda’s standards of safety and high level of customer care. “All of us at CARSTAR Edmonton North are extremely proud to be aligned with one of the most respected automotive brands in Canada. The ProFirst certification will allow our facility to work closely with Honda, while giving Honda owners peace of mind in knowing their vehicle is being repaired by a ProFirst certified facility,” says Albert LeBlanc, owner of CARSTAR Edmonton North. CARSTAR Edmonton North was sponsored by Alberta Honda for the certification. This sponsorship creates consumer confidence and builds a strong business relationship focused on the customer. “Special thanks go out to Jarret Beauregard, David Elgie and Aaron Ratsoy from Alberta Honda along with Chris Hogg and Mark Wade from Honda Canada for helping to guide us through the ProFirst qualification process,” added LeBlanc. “CARSTAR, along with our franchise partners have established a strong and trusted relationship with Honda throughout the country,” says

From left: David Elgie, Service Manager, Alberta Honda; Aaron Ratsoy, General Manager, Alberta Honda; Jarret Beauregard, Parts Manager, Alberta Honda and Albert LeBlanc, CARSTAR Edmonton North.

CARSTAR President Michael Macaluso. “Achieving certification shows a commitment to providing quality repairs and service to customers.” Once sponsored by a local dealership, collision centres undergo a rigorous evaluation process that ensures that repairs are completed according to the ProFirst requirement that vehicles be returned to customers in pre-accident condition. For more information, please visit carstar.ca.

TOP STUDENTS COMPETE FOR GOLD AT PROVINCIAL EVENT Alberta’s Provincial Skills Competition has come to a close for 2015, with around 700 high school and post-secondary students from 80 communities participating in this year’s competition at the Edmonton EXPO Centre. Of those 700 students, 19 competed in Auto Body Repair or Car Painting. Auto Body Repair saw eight students go for gold at the high school level, while five students vied for the top spot in the post-secondary category. The Car Painting competition saw six post-secondary students go head to head. Over 1,000 high school students participated in nine Regional and Qualifying Skills Canada Competitions to earn a spot at the provincial level. Post-secondary students are selected by their technical institute to represent their college or polytechnic. The event is made a reality thanks to the donation of $3 million in tools, equipment and material from industry, labour and education supporters. The Gold Medalists from the Provincial Skills Canada Competition will become part of Team Alberta and compete at the national competition. The 2015 Skills Canada National Competition will take place in Saskatoon, Saskatchewan from May 27 to 30, 2015. The Auto Body Repair competition saw competitors performing a mock B-pillar section, a dimensional assessment, a structural composite repair and a metal repair. The Car Painting competition tested competitors’ knowl-

20 COLLISION REPAIR COLLISIONREPAIRMAG.COM

edge of cleaning, sanding, masking, undercoat application, and topcoat application. Last year’s gold medal winner in Auto Body Repair, Justin Dambitis, also took the top spot at the national compeition and will be travelling to Sao Paulo, Brazil in August to represent Alberta and Canada at the 2015 WorldSkills Competition. The results from this year’s competition are below: Autobody Repair, Secondary 1 Zachary Saranchuk, St. Joseph, Edmonton 2 Brett Thompson, Forest Lawn High School, Calgary 3 Michelle Peace, CT Centre, Calgary Autobody Repair, Post-Secondary 1 Garrett Walsh, Calgary, SAIT Polytechnic, Concours Collision 2 Sheldon Janiga, Blairmore, SAIT Polytechnic, FCC Collision 3 Caroline Mckervey, Calgary, SAIT Polytechnic, Artisan International Autobody Inc. Car Painting, Post-Secondary 1 Garrett Weiss, Onoway, NAIT, Jacks Auto Body 2 Samantha Janishewshi, Drayton Valley, NAIT, Gemini Auto Solutions 3 Jamie Terpsma, Neerlandia, NAIT, Grizzly Trail Motors

REGIONAL NEWS

Saskatchewan

City Center Auto Body weathers the ups and downs of two provinces Running a collision repair business in a city in the middle of Canada’s oil patch that’s also split between two provincial jurisdictions delivers a special set of challenges. For over three decades, owner-operator Gerald Gagnon has run City Center Autobody in Lloydminster, Alberta—a city that straddles the Saskatchewan and Alberta provincial boundaries. A governmentrun auto insurance system applies to one side of the main street. A private insurance system applies to the other. “People who have done business a long time, we think of it as one city. But there are different tax laws. There is no PST in the city. Our school board is Saskatchewan and most of the schools are in Alberta,” says Gagnon. One challenge with running a facility in the oil patch might be finding employees, making Gagnon’s business something of a mini-UN, with trained techs from Ukraine, the Philippines, Africa and the UK. Another issue is the shifting price of crude oil. A couple of years ago, with the price of oil high and the city booming, Gagnon opened a second location on the Saskatchewan side of town. Then the price of oil plunged. “We have been a little quieter than I was expecting. But that’s the cyclical nature of the economy out here,” he says. To manage the practice, Gagnon “load levels” the work between the two facilities. He has also kept on top of industry trends.

Gagnon is a leader in the local Lloydminster area as one of the first in the region to invest in the tools and skills necessary for aluminum repair. “Our local dealership did not have their own body shop. When they saw me start building the new shop they came over and asked if we would be the preferred shop for fixing their aluminum vehicles. So we did the training and got the equipment,” he says. “Ford came down, inspected the shop and certified us.” He said the new ability is already attracting unexpected business. His technicians are currently working on an all-aluminum Jaguar, and recently an Audi came to City Center Auto Body all the way from Saskatoon. But the investment has been steep. “One of the requirements of fixing aluminum, you have to have a clean room,” he says. “You can’t have aluminum dust mixing with steel or bonding materials. The room you weld and prepare the car in has to be super clean or it could be explosive. Typically in body shops, it’s fairly dusty. Unless you have a place to capture and control that dust, you can’t do it. You’ll cross-contaminate. But we’ve got that set up,” he says. So while the price of oil may be low, investing for the future has left City Center ready for next boom to cycle through Canada’s oil patch. “Most of the guys here are taking a wait-and-see approach on the aluminum. But we dived right in,” says Gagnon. “I think it’s something that’s just coming down the line.”

Thank you to the thousands of stars that make up our CARSTAR universe — our franchise, insurance and vendor partners, and our employees for helping us achieve Gold status. Over 200 locations in 10 provinces | carstar.ca

AUGUST 2015 COLLISION REPAIR 21

REGIONAL NEWS

Manitoba ROADWATCH TAKES AIM AT IMPAIRED DRIVERS: MPI Since the launch of RoadWatch 2015 in May, nearly 13,000 vehicles have been screened in roadside police checks, according to Manitoba Public Insurance. As a result of those roadside checks, 27 impaired drivers have been removed from Manitoba roadways. This year’s program kicked off over the Victoria Day holiday weekend and runs until November. In its first five weeks of operation, Manitoba’s nine police agencies participating in RoadWatch 2015 have conducted 27 roadside check stop campaigns. In addition to removing impaired drivers from the roads, nearly 400 offence notices for Highway Traffic Act violations have been issued including offences for speeding, cell phone use and non-use of seatbelts. “Manitobans have told us these high-visibility roadside checks contribute to road safety by sending a very clear warning that drivers who make the choice to drive impaired or commit other high-risk driving offences risk being apprehended by police,” said Ward Keith, acting Vice President, Business Development & Communications and Chief Product Officer, Manitoba Public Insurance. Now in its 17th year, RoadWatch is a Manitoba Public Insurance sponsored program aimed specifically at drivers who make

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the choice to drive after consuming alcohol or drugs. This year, Manitoba’s public auto insurer has partnered with nine police agencies (Winnipeg, RCMP, Brandon, Morden, Winkler, Altona, Dakota, Rivers and Ste. Anne) to conduct additional impaired driving roadside checks through the summer months and until the end of November. “Manitoba Public Insurance is committed to working with our law enforcement partners to eliminate alcohol and drug-related deaths and injuries,” said Keith. “While fatalities and serious injuries related to impaired driving have been steadily declining over the past 10 years, we still lose far too many Manitobans in impaired driving crashes every single year.” Who is driving impaired? Young males make up the majority of those involved in impaired collisions. In fact, male drivers are involved in three out of four impaired driving collisions. Police data reports that male drivers make up 77 per cent of total drivers charged with impaired driving compared to 23 per cent for females. Younger drivers (both male and female) are involved more often in impaired collisions. As driver age increases, the instances of impaired driving collisions decrease for both sexes but more rapidly for females. About one in three Manitoba road fatalities involve an impaired driver. Now in its 17th year, MPI’s RoadWatch provided funding to nine police agencies (Winnipeg, RCMP, Brandon, Morden, Winkler, Altona, Dakota, Rivers and Ste. Anne) to conduct additional impaired driving roadside checks until the end of November. “Manitoba Public Insurance is committed to working with our law enforcement partners to eliminate alcohol-related deaths and injuries,” says Ward Keith, acting Vice President, Business Development & Communications and Chief Product Officer, Manitoba Public Insurance. “While fatalities and serious injuries related to impaired driving have been declining steadily over the past 10 years, we still lose far too many Manitobans in impaired driving crashes every single year.” Nearly 1,300 impaired drivers have been removed from Manitoba roads over the past five years as part of the program – including more than 300 last year. With road safety at the forefront, the launch of this year’s RoadWatch aligns with Canada Road Safety Week, a national weeklong effort to raise awareness about safe driving habits that runs from May 12 to 18. “By combining visible enforcement with public education, we are optimistic that Manitobans will think twice before getting behind the wheel of a vehicle after drinking,” says Keith. Keeping impaired drivers off Manitoba roads is also a priority of law enforcement. “With the spring and summer seasons upon us, more cars are on the road,” says Inspector Joanne Keeping, Officer in Charge of Traffic Services with the RCMP and Chair of the Manitoba Association of Chiefs of Police Traffic Committee. “It is essential for law enforcement and our road safety partners to work together to deter, reduce and prevent dangerous driving on Manitoba roadways. We are always working towards zero fatalities on the road, and high visibility RoadWatch Checkstops are one more way we are doing this.”

REGIONAL NEWS

Ontario

Pembroke Auto Parts, Algonquin College host aluminum clinic Owners, managers and techs in the Ottawa area recently had the opportunity to get up to speed on aluminum welding techniques when Algonquin College and Pembroke Auto Parts hosted a clinic to teach the new techniques necessary to repair aluminum-bodied vehicles. Aluminum welding and repair techniques are looming large in the minds of many repairers on the tail of the release of Ford’s 2015 F-150. Normand Carriere, owner of Pembroke Auto Parts, a local NAPA store, told Collision Repair magazine that demand for the clinic was high. According to Carriere interest in aluminum welding is growing. “It’s not just about the F-150,” he says. “A lot of vehicles are using aluminum these days.” The June 16 clinic took place at Algonquin College and was attended by more than 30 industry stakeholders. The training featured a classroom presentation, conducted by Sean Slaven of Arslan Automotive, followed by a hands-on portion where attendees got to try out the equipment and techniques. The focus of the event was aluminum welding and dent repair. Aluminum and steel do not react the same way, so it is essential that repairers know the differences, and have the right equipment, before attempting any repair.

The clinic was held at Algonquin College in Ottawa on June 16, 2015.

“We were getting a lot of interest from shops,” says Carriere, when asked why Pembroke Auto Parts took steps to organize the clinic. “It was a good opportunity to get the shops together and get them some information. “It was very well received.”

TOTALLY AUTO TRAINING CENTRE HOLDS FIRST CLASS The new Totally Auto & Paints Training Centre in Ontario’s Renfrew County has opened its doors to its first class. The new school and store, located outside of Eganville in Renfrew County, delivers skills training to a region of the province previously underserved in terms of collision repair skills development. “Because Renfrew county is somewhat off the beaten path we are continuously challenged to get access to real handson experience and information on all the new technologies and products that are being upgraded and improved in our industry,” says Totally Auto & Paints owner Dave Kruger.

24 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Kruger hosts automotive refinish training courses for high school students through the Renfrew County District School Board-Special High Skills Major (SHSM) Ontario program. The program is designed to help students focus on a career path that matches their skills and interests while meeting their grade 11 and 12 graduation requirements. To mark the centre’s launch, Kruger hosted over 100 collision repair centre owners, techs, painters, teachers, students and other refinish professionals at Totally Auto & Paint’s 2015 Spring Trade Show and Exposition. The event was held at the new Jobber Store and Training Centre location on June 4.

REGIONAL NEWS

Quebec Carrossier ProColor, PurNat team to clean illegal dumping grounds Carrossier ProColor has joined forces with PurNat to clean up illegal dumping grounds. Created in July 2013 by Marcel Poiré, Jean-Raphaël Poiré and André Côté, PurNat is a non-profit organization with a mission to protect the environment by remediating illegal dumping grounds. Through various programs, PurNat aims to educate and raise awareness on issues related to environmental protection, such as illegal dumping grounds, pollution and recycling. Cleaning illegal dumping grounds requires considerable resources. To do so, PurNat organizes cleaning operations by mobilizing volunteers to clean and restore the sites where illegal dumps are located. Although the cleaning efforts are a step in the right direction, the complete elimination of illegal dumping sites requires educating youth about the associated dangers and harmful effects. By making tools such as interactive games, videos, pamphlets, etc., available to schools, PurNat aims to educate the children of primary and secondary levels on the importance of being good citizens so that they can leave a better legacy for future generations. For more information, please visit carrossierprocolor.com.

I-CAR ADDS MORE FRENCH COURSES, WELDING TESTS The Automotive Industries Association (AIA) of Canada has partnered with the Comité sectorial de main-d’oeuvre des services automobiles (CSMO-Auto) and I-CAR US to translate 25 additional I-CAR courses and two welding qualification tests into French so that they can be offered in both of Canada’s official languages. The new translation project is the result of a joint effort between several organizations to ensure continuous skills development of workers in Canada’s collision repair sector. The translation project is being funded by a grant from the Government of Quebec’s Commission des partenaires du marché du travail (CPMT) and by contributions from several industry businesses and organizations. It will be completed over the course of the next two years by the translation firm Textualis and a working committee made up of collision repair experts. AIA Canada would like to take the opportunity to thank the members of its Quebec Division for their assistance in creating and submitting the request for funding to CPMT.

Mitchell launches French version of RepairCenter for Quebec Mitchell has announced the release of its popular RepairCenter application in French for the Quebec market. Native French Canadian speakers can now easily manage workflows through RepairCenter, without anything getting “lost in translation,” according to the company. “RepairCenter was created to streamline the often complex collision repairs process, providing a single platform from which to manage workflows,” says Jim O’Leary, Vice President of Product Management. “While the English version of RepairCenter has been available in Canada for some time, we are thrilled to now offer the Workspace and comprehensive suite of management tools to native French speakers in their preferred language.” In an interview with Collision Repair magazine, O’Leary explained how the French version came to be. “We have been working on this for three years. It’s a long-term effort to make RepairCenter work for the French market,” he says. “We’ve been excited about the opportunity in Quebec in the collision space. We felt it was an underserved market.” The Quebec collision repair market has always been unique, existing a little apart from business in English North America. “Quebec is a part of Canada, but it is also a little bit separate. Taking a one-size approach hasn’t been successful,” says O’Leary. “But it’s been great for us. We’ve seen momentum on both the shop side and the insurance side to these shops. “We are optimistic that this will pay off in new business.” So far Mitchell has about 25 shops using RepairCenter French. Some shops around Montreal still use RepairCenter English, but that will soon change. “We’ll be converting them in the coming months,” says

O’Leary, adding that the process has taken some time. “There was a lot of work of translation, but that’s not all it was,” he says. “The biggest area separate from the translation work was getting the tax system right. It took our Quebec team some nuance to get that nailed down.” Mitchell has been expanding its operations in Europe, initially in Spain, but eventually to France, the UK and Germany. Could the investment in a French offering end up helping to position Mitchell in the global market? “That might be,” says O’Leary. That said, the North American speakers of French appreciate the effort. “I like the way Mitchell developed this software to make our daily work much easier. As a customer, I feel important,” says Gaetan Gadbois, owner of Pro Expert Centre de Collision in Brossard, Quebec. RepairCenter “gives us necessary information related to different makes of cars, in a constantly evolving industry.” For more information, please visit mitchell.com. AUGUST 2015 COLLISION REPAIR 25

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REGIONAL NEWS

Atlantic

CCIF Halifax: Joe Carvalho of Economical appointed new 2016 chair By Jay Perry

History was made at the Halifax meeting of the Canadian Collision Industry Forum (CCIF), with the appointment of Joe Carvalho to the position of Chair. This marks the first time a stakeholder from the insurance industry has served as Chair of CCIF. The meeting took place at Lord Nelson Hotel & Suites in Halifax, Nova Scotia on May 22, 2015. The meeting did not disappoint when it comes to relevant information, celebration of accomplishment and a peek behind the curtain of what the future holds for the industry. Larry Jefferies, who served as Chair during the transition to management by AIA Canada, will relinquish the gavel to Carvalho in January 2016. Carvalho is the Manager, Physical Damage Vendor Programs for Economical Insurance. The transition will begin immediately and Carvalho will be integrated into the activities of the Chair, working closely with Larry and Leanne Jefferies, Director of Collision Programs, AIA Canada. Carvalho has stated his focus will be to be approachable, listening to all and to look for opportunities to make the industry better for everyone. E v e r y m o m e n t o f t h e p ro g r a m w a s packed with information. Leanne Jefferies, who also holds the position of Director of CCIF Skills Program, recounted the challenges and the resultant

good news of a very robust program across the country. This is helping the industry to create awareness among the youth that will be the workforce of tomorrow. Leanne also introduced attendees to Aaron Hebb, Canadian Expert, Team Canada (Car Painting) to reflect on his personal experience as a previous Team Canada member and his current role supporting the 2015 Team Canada competitor. Leanne is one of the busiest people in the industry, as she also serves as the driving force behind CCIF’s charitable effort assisting Haiti Arise, an organization that is rebuilding post-earthquake Haiti by establishing a training centre. Within the centre will be a collision repair school providing much-needed skills training to information-hungry Haitians wanting to work as technicians. Much has been accomplished in raising funds, equipment and supplies as well transportation of such to Haiti. This initiative has now become a North American project as CIC in the United States has pledged support too. Among other highlights of the meeting were Greg Horn, Vice President of Industry Relations for Mitchell International, outlining some of the influences that are coming to bear on the industry and sharing his thoughts on how the technology is being incorporated into the mainstream automobile.

Rick Leos of Toyoto (front) and Nathan Sellers of Mitchell presented on estimating solutions promising to speed up the process and lead to more accurate estimates.

Joe Carvalho of Economical Insurance (left) and CCIF Chairman Larry Jefferies of CARSTAR Automotive Canada (right).

Horn also had much to share about global factors. In particular, he discussed China’s entry into the North American (NA) marketplace. During his entertaining presentation, various examples of “knock-offs” produced in China were shown, and also a glimpse at the strategy some Chinese companies are using to very rapidly advance their technological skills to meet North America standards. Aluminum usage and its potential influence on business investment choices also figured high into the discussion. There were technical presentations that focused on the materials usage, safety features, repairability issues and certification programs. Scott Wideman, Collision Program Manager, Volkswagen Group Canada, shared information on the rollout of the VW authorized shop program, and Chris Hogg of Honda Canada did the same in regards to the Honda program. The highlights were the investment in equipment and the required training. A fascinating presentation by Rick Leos of Toyota Motor Sales, USA, and Nathan Sellers of Mitchell International showcased the new OE estimating approach developed by Leos. This is to be available mid-June in the latest update to the Mitchell program. It is the reverse of the traditional approach to estimating damage in that when AUGUST 2015 COLLISION REPAIR 27

REGIONAL NEWS

Atlantic a part is clicked on, the entire detailed procedures and necessary operations populate the estimate. The writer would then review and if something was not needed it would be removed from the estimate as opposed to searching for all of the appropriate parts and procedures. The program even includes links to the technical pages. This is hoped

to be expanded to other manufacturers and holds great promise to make estimate writing more accurate. Culture and training were also on this jam-packed schedule with presentations by Andrew Shepherd, Executive Director of I-CAR Canada, speaking to creating more success with technician training through

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building of a culture of learning within your facility. Shepherd showed statistics bearing out the financial value to a robust training commitment wherein shops that practiced this approach actually improved key performance indicators such as cycle-time and labour efficiencies. Carrying on the theme of investment in business was Tim Ronak, Sr. Services Consultant for AkzoNobel. He provided a very comprehensive look at what it actually costs a business to offer certain services such as credit card processing and an approach to calculating your ROI. Larry Jefferies closed out the day with a look at the progress made on the First Notice of Loss (FNOL) Harmonization project, which now has both repairer and insurer participation. It is possible that implementation with adoption by some insurance participants could happen within this calendar year. Through AIA, an accurate look at the industry from a statistical perspective has been produced, called the Yearbook, a tool that will help in decision making. The Business Conditions Survey, done in conjunction with DesRosiers Automotive Consultants, brought some shifts in workloads to light. It would appear that the banner-type programs are gaining more market share and growing at an amazing pace. The next full meeting of the CCIF will take place in Calgary on September 17, 2015. CCIF will also host a special event at NACE, taking place at the COBO Center in Detroit on July 23, 2015. For more information, please visit ccif.ca.

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FACTS & FIGURES

By The By Mike Davey

Readers respond on Internet access, mobile phones and employing family.

NUMBERS

eople trust those they know. This is as true in the business world as it is anywhere else. We don’t think we’re letting any secrets out when we say that collision repair has a large number of businesses where families work together. The image of the “Mom & Pop” is still very much with us and there are plenty of them around. Even the larger operators often turn to family, or close friends, when it comes to filling positions in their organizations. But how effective is this practice?

Does employing family and friends make your business weaker or stronger?

It depends on the people.

Neither.

Weaker.

Both.

Stronger.

Don’t know.

30 COLLISION REPAIR COLLISIONREPAIRMAG.COM

We recently ran a poll on our website and asked you to fill us in. The question was simple: does employing family and friends make your business weaker or stronger? A clear majority (56 percent) responded with “It depends on the people.” This suggests that those respondents have had both good and bad experiences with employing family and friends. You have at least one advantage when it comes to a family member that “applies” to your business. Chance are you already know what they’re like. You know your bright, energetic niece will do well. On the flipside, you should probably listen to any misgivings you have about your shiftless brother-in-law. It might be worth noting that the next most common response was “weaker” at 22 percent. This seems to indicate that nearly a quarter of respondents have had a bad experience with employing a family member or friend. Only 13 percent of respondents indicated that it made the business stronger. Some food for thought: it might be difficult to turn down a family member or friend when they come to you for a job, but it’s probably going to be much harder to fire them if they don’t work out. We also asked how you most often access collisionrepairmag. com, our online news portal. The survey results indicate that many of you are still tied to your desks, but we suspect this is for technical reasons. Today’s world is mobile. We recently made some changes to our long-running ezine, turning it from a weekly to a daily and also making it mobile friendly in the bargain. This has been extremely successful, and we are currently transitioning the main website to a mobile friendly version. By the way, if you don’t receive our daily ezine, I would strongly encourage you to sign up. It’s designed for quick reading and to give you the news you need to know on a daily basis. Please email me at editor@ collisionrepairmag.com and I’ll make sure you’re on the subscriber list. Speaking of mobile, we also asked which mobile device you prefer. Apple was the clear majority response, but Android and Blackberry have strong adherents as well. The world is moving faster than ever before, and computer technology is taking us there. A few years ago, we asked how many of you were using electronic estimating in your facilities. The response was strong, around 80 percent. However, we also asked this question again recently, and the response has climbed to 100 percent. While there are no doubt many collision facilities who still aren’t using electronic estimating, it definitely seems to be in the ascendancy. CRM

FACTS & FIGURES

Which cell phone do you use?

How do you access collisionrepairmag.com?

Blackberry/Other.

Apple/iPhone.

Desktop or laptop computer.

I don’t have a mobile phone.

Android.

Mobile phone.

Does your facility use electronic estimating?

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PRAIRIE VIEW

GIFTOFGUIDANCE Don’t underestimate the power of mentorship. By Tom Bissonnette

s many of you are aware, I have been working on a succession plan for my business. If all goes as planned, I will essentially ‘retire’ from active involvement with the day-to-day operations of Parr Auto Body at the end of September 2016. This has not been a spur of the moment decision. It has, in fact, been a 5-year project that has pretty much stayed on track. In sp ending time working with our ne w, young partners, I’ve come to realize that I too was fortunate enough to have mentors in my life that have collectively helped me reach my goal of successful business ownership. Ju s t s hy of t h re e d e c a d e s a g o, I s t a r t e d working at Parr Auto Body as the shop manager. It was a very large shop back then — in excess of 24,000 sq. feet — with huge overhead,

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and we needed help to figure out how to run the place properly. I contacted our paint supplier at the time, Ton and Koos from Reineking Paint, asking for help. They steered me towards some great mentors by the names of Chris, Greg and Mike Mario at Regina Auto Body. Those three men have graciously responded to all my silly questions throughout the years with courtesy and respect. Without them, I am not sure I would have even stayed in this business! Later in my career, I would have the privilege to meet and learn from guys like Ken Friesen, Eric Danberg, Mike Srigley, Derrick Ryan and Lloyd Giles. All of these men have each had a profound effect on my business management style, and I catch myself thinking and talking just like them all the time! At Parr, I have the fortune of working with my longtime friends Don Pogoda and Chelsea

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PRAIRIE VIEW

Stebner, who have both had my back on many occasions. Both continue to be a source of support and a great sounding board. Closer to home, I have a wonderful wife who has always believed in me even when I doubted myself. She’s also not afraid to tell me when I am off base,

cessful people are, the more likely they will be open to mentoring you. Business life can be tough, why go it alone? Make the time to find a good mentor and you will find the journey through life much easier and infinitely more enjoyable. Keep in mind that sometimes

WE ALL NEED PEOPLE WHO LIFT US UP, EDUCATE US, AND SOMETIMES GIVE US A SWIFT KICK IN THE PANTS . . . making her a great accountability partner as well. We all need mentors in our lives. We all need people who lift us up, educate us and sometimes give us a swift kick in the pants when we deserve it. Do you have someone like this in your life? If not, that is truly a shame. You are missing out on a wealth of knowledge and experience from somebody that has gone before you. You might think a potential mentor is too busy to help you, but I find that the more sucIMP-0187 Ad_largest selection_hlf pg_print.pdf

a mentor comes in the form of a network or banner group, so don’t miss out on these opportunities. Having the guidance, wisdom and support of someone who’s been there, done that, can make all the difference. CRM Tom Bissonnette is the owner/operator of Parr Auto Body, a collision repair facility located in Saskatoon, SK. He can be reached at tom@parrautobody.com.

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AUGUST 2015 COLLISION REPAIR 33

WHO’S DRIVING?

BETTERBUSINESS No matter the industry, there’s always room to improve.

By Jay Perry

recently attended an insurance symposium. Something I have noticed and am always pleased to see, is that no matter the industry I have worked in, the participants experience challenges. It is also amazing and refreshing to see how many of the challenges discussed are so similar to each other, reaching far across industry divides. The symposium listed consolidation, points of competitive differentiation, economic scale, service levels, regulatory restrictions, disruptive competition, security of data, shifting lines of specialty between the various stakeholders, and more. This all sounds incredibly familiar, doesn’t it?

direction. This will reduce waste in the procedures and reduce the time currently spent in chasing down correct information. That very same mindset is what is needed on a day-to-day basis inside each centre. If you do not look at what was done yesterday and come up with an improved way to do it today, we are doomed to repeat the results and make no improvement at all. The pressures on businesses are just that, pressure, and if you think there will be no other challenge coming to meet you at the next turn, you are dead wrong. It is the nature of business itself.

IT COMES DOWN TO LOOKING AT HOW WE DO WHAT WE DO AND REDESIGNING THE WAY WE DO IT . . . I think the takeaway message is very clear. We have to acknowledge that the industry with which we cross paths on a daily basis faces the same kind of pressures experienced in the repair industry. We see consolidation like never before. We see that commoditization of collision services in the minds of the buying public and the insurers. We see companies growing and gaining economic scale and leveraging that scale to put costs pressure on their competitors. We hear a cry for higher service levels to the motoring public and quicker turnaround times. New performance levels are being delivered, disrupting our established processes. The argument around who’s data is it and how do we protect the EMS security is constantly up and down in conversations. We see more vendors entering agreements that were previously not inside their wheelhouse. It comes down to looking at how we do what we do and redesigning the way we do it into a finer fashion. T h e C C I F F i r s t No t i c e o f L o s s ( F N O L ) streamlining initiative is a step in the right 34 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Business was created to remedy problems. Someone needed cargo in a different country, and so someone invented the pack-animal train, then came along carts, locomotives, tractortrailers, couriers, overnight mailings, and so on. The bottom line is improvements will come because there is a constant need for improvement. We have to learn to do what we do better, faster and che ap er—yes, che ap er—mov ing forward. The challenges faced will be the same for all of us in business. But the winners will be the ones working on continuous improvement and succeeding in doing those three things while maintaining reasonable profit margins that sustain growth and dividends. Follow suit. That’s how you stay the one who’s driving. CRM Jay Perry is the founder and owner of Automotive Business Consultants (ABC), a performance coaching company specializing in the automotive service industry. He can be reached via e-mail at jayperry@a-b-c-inc.com.

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STAFF ISSUES

THERIGHTCHOICE Positions of power call for sound decision-making ability. By Evert Akkerman

e usually hear how bad decisions have hurt or sunk a business, but indecision can be just as bad. An indecisive company president or a franchise owner puts an entire organization in limbo, losing agility, speed and competitive edge. The best and brightest often leave, and it’s harder to attract new talent. People hold off on making decisions due to procrastination, not wanting to choose sides or fear of the fall-out. Others do what they deem popular. If they’re at a training seminar and the speaker says boot camp is best for team building, they book a survival weekend. If they hear on the radio that free coffee ups productivity, they order a coffee machine. If they are at a family BBQ and their brother-in-law had a colonoscopy . . . Think I’m exaggerating? I know an executive who emailed colour pictures of his colonoscopy to his direct reports.

36 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Despite talk of rewarding performance, nurturing talent and boosting morale, many end up in management positions because they’ve put in the time and ‘it’s their turn’. Being great at sales doesn’t make you a great sales manager. Still, executives harbour these illusions and employees harbour the ambitions. As one CEO in my network said, “Having the ambition but not the talent is a big problem.” Once in a seat of power, newly minted supervisors lose themselves in mindless detail, representing a massive misallocation of resources. Say a service centre manager is paid $75,000 to handle running the centre, customer issues and making sound business decisions based on experience. The assistant manager makes $50,000. If the manager is unwilling or unable to make required decisions, I’d say he/she is overpaid by $25,000. My grandfather once spoke of a failed car repair shop. The owner knew best, couldn’t let go

STAFF ISSUES

and wouldn’t let people do their jobs. He spent most of his time under cars doing repairs, while the three hired mechanics stood around. I knew a GM who complained about her team but refused to go on record at review time. She saw holding people accountable and relaying bad news as HR’s job. Incompetent people stayed

descriptions and signed off on by the incumbent. If someone in a position of responsibility is consistently indecisive and it’s recorded year over year, you build an excellent case for not promoting this person, where indecisiveness would have an even bigger impact. Give the nod to people that have a record of stepping up to

GIVE THE NOD TO PEOPLE THAT HAVE A RECORD OF . . . DOING WHAT’S RIGHT FOR YOUR ORGANIZATION. on, receiving unearned bonuses, while the GM was paid for decisions she didn’t make. You have a hig h degree of control in recruitment and performance management. If decision-making is a key requirement for a new hire, you need to probe at the interview and with references. For tenured or new managers, address and record indecisiveness on performance reviews, creating a record of people not delivering on obligations, listed in up-to-date job

the plate and doing what’s right for your organization. Documenting this skill – or the lack thereof – is an effective way to assess and limit the risk to your business. CRM Evert Akkerman LL.M., CHRP is an HR professional. His firm XNL HR helps companies with job descriptions, structured interviews and performance management. He can be reached at info@xnlhr. com and 289-338-4001.

AUGUST 2015 COLLISION REPAIR 37

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PROFILES OF SUCCESS

Shane Campbell, owner/operator of CSN - City Centre Collision in North Bay, Ontario.

NORTHERN

AMBITION Shane Campbell found his calling at CSN-City Centre Collision. By Jeff Sanford

AUGUST 2015 COLLISION REPAIR 39

PROFILES OF SUCCESS

Extreme attention to detail is part of the culture at CSN-City Centre Collision.

veryone in the industry comes to it through a different path. Every collision centre has its own unique business. But how many stand out like CSN-City Centre Collision in North Bay? The centre’s owner, Shane Campbell, is refreshingly

upfront and candid when asked how he got his start in the collision repair business. “I guess I’ve got to give you the real story. I had to leave high school because of a family situation. I decided to pursue a trade, and this was the one that interested me the most,” says Campbell. Not everyone is suited to the high pressures and demands of the collision repair industry, but the trade Campbell turned to was a natural fit for this talents and passion. At least he can be honest about it. For the time he was in school, he says he was always attracted to drafting and art classes. “Those, and phys ed were the ones I always showed up to. I was always good at art. I just liked drawing lines, putting things where I thought they were best suited,” says Campbell. The abi lit y to hand le a line and v isualize how something should look has served him well in his trade. What better skill could a body tech have? Turns out he had a knack for putting cars back together. Desperate to keep his new family afloat, he took his first job in the industry at a used car lot. “It was a way to moonlight and make some money while going to back to school,” he says. But it turns out he was good at it. “Every time I would work on a car, the owner

would say, ‘That’s good kid.’ Eventually the guy running the auto body shop across the street saw the cars coming out of the used car dealership,” says Campbell. “They looked better than the cars coming out of the lot. So he took me in.” It was the owner of CSN-City Centre who recognized the talent. Campbell was hired on as a painter. “There was a big learning curve from used car dealer to the fancy spray booth, but I got the hang of it,” says Campbell. The original owner of the facility eventually moved on to open up a Kia dealership. At the time, another manager was put in charge, but Shane had set his sights high and began to deepen his interest in the business. He definitely has a head for the money side of things. Even without a high school education, he managed to buy his first house at 23 years of age. The equity he built up in that would help him leverage his way into the collision business as an owner. When his original mortgage came up for renewal, Campbell went into the bank. It was 2004; interest rates were at record low levels. “The lady at the bank explained that she could refinance at a lower rate. I said, ‘how much can you give me?’ She

40 COLLISION REPAIR COLLISIONREPAIRMAG.COM

came back with a number that she gave me without a re-appraisal,” says Campbell. He didn’t spend the money on a vacation or home renovation like most. Instead Campbell bought 40 percent of CSN-City Centre off the owner. The two remained partners until 2010, when Campbell bought up 100 percent of the business. Today, his acumen, skills and attention to detail keep him in the upper echelons of the industry league tables. He is in the top percentile in terms of industry ratings. He maintains a 97 percent average on the CSN ranking. He is on all the DRP lists. He chalks his success up to his efforts to keep clients and employees happy. “You have to have a knack for taking care of people. I believe that’s the secret. If you don’t treat people right, you’ve got no business,” he says. “My uncle says, ‘It doesn’t matter what business you’re in, if you take care of people, you’re in business.’ And that applies to suppliers and employees.” He is fanatical about quality control. “We have quality control checkpoints along each step of the process. A light has to go on in that repair area and a manager has to go over and inspect,” says Campbell. “We really work on caring about the customer’s car.” He says the front office staff started what they call the “perfection inspection,” which

PROFILES OF SUCCESS

Production is a team effort, but the job is not complete until the ‘Perfection Inspection’ is complete.

“YOU HAVE TO HAVE A KNACK FOR TAKING CARE OF PEOPLE. I BELIEVE THAT’S THE SECRET. IF YOU DON’T TREAT PEOPLE RIGHT, YOU’VE GOT NO BUSINESS.” – SHANE CAMPBELL

is a final touch up on the client’s car. “When a customer’s car is just coming out of the shop they’ll say, ‘It’s coming out in a minute, we just have to give it the ‘perfection inspection,’” says Campbell. It is this kind of client-centered service that keeps the operation busy. Campbell ensures that the centre is upto-date on certifications, with CSN-City Centre certified by both Honda and Toyota. He is already up to speed on aluminum, and the centre is capable of performing those types of repairs. The company will put up an expansion this summer allowing it the space to service eight more cars. This dedication is not new to Campbell and the team at CSN – City Centre. They have been recognized for their ongoing commitment to continuous improvement within the CSN network. Being named “Shop of the Year” in 2011 and winning the CSI and Shop Growth award in the same year.

But their drive didn’t end there. In every year since, they have either won an award or been runner up. “What we are measured on, and the level of expectation to win these awards continues to get higher,” says Campbell. “But we believe that by doing the things necessary to win these awards we are only making our business stronger and better able to continue to improve on delivering a world class customer experience.” Customer service awards are not possible without processes that can ensure delivery on the promises made. Taking a walk around the CSN – City Centre facility, in the customer service area, there is a strong sense of communication and control. The team knows what is happening in the production area and they are able to answer any customer questions. In the back, the dedication to the process is obvious. The work area, including the manner in

which tools and equipment are stored, is clean and carefully organized. There are also visual management tools throughout. When asked how they are able to maintain this high level of order, Campbell says, “Dedication and passion for doing it the right way, for our customers, for our partners and for ourselves.” The feeling you get from the facility is the culture, with every employee believing in the direction, and staying fully committed to ensuring that each and every customer leaves CSN – City Centre knowing that if they ever get in another collision, they know where they will be taking their car. Campbell finds he has derived a certain amount of satisfaction in building his business in a way that has generated trust among clients and insurers. “It’s not just about the money. It’s always about building something bigger. I more or less don’t worry about the things I can’t control. My issue is running a successful business and dealing with the things I can have control over,” says Campbell. “Reputation is important. “You want to be known as the best and take care of the clients. We’ve built a culture here where you have to respect someone who has spent $40,000 to $50,000 on their vehicle. You have to remember, they could have saved five years to buy.” Campbell has also generated goodwill in the community. His company was part of the recent Seeing More Clearly campaign, which helped the local hospital buy an MRI machine. Campbell joined a few other local businesses in donating money to the campaign. For a high school dropout, it’s quite a turnaround. Today, Campbell’s son sometimes works on the floor. But he is still in school and attending Georgian College, learning the business side of the industry. Perhaps the younger Campbell will take over one day. “I guess that could happen,” says Campbell. “But I’m only 38, I’ve got some time yet.” Now high school students from his old high school—which is right around the corner from the centre—come over for co-up placements. “We take some co-op kids in. If someone is a more hands-on type of person, we want to help those students get through school. They might as well come over here,” says Campbell, who now deals with the same teachers who were there when he left to manage the co-op program. “It’s funny for them. They thought I would amount to nothing.” CRM AUGUST 2015 COLLISION REPAIR 41

EXECUTIVE VISION

OPPORTUNITIES

for Growth

By Mike Davey

Des D’Silva of Assured Automotive on profitability, sustainability and the links between the two.

xecutive Vision focuses on discussions with key players in the auto claims economy and the auto industry, their views on the present industry and their vision for the future. In this issue, our guest is Desmond D’Silva, CEO of Assured Automotive. Assured Automotive is among the largest multi-store operations in Canada, and the largest corporately owned chain in the country. The company operates collision repair facilities throughout the Greater Toronto Area, Southern Ontario and the Ottawa region. Collision Repair magazine: What do you see as the three most critical issues for the collision repair industry? Desmond D’Silva: The first piece of the puzzle is profitability and sustainability, and I list those together because they are interdependent. An unprofitable business is simply not sustainable in the long term, which is obvious, but an unsustainable business also isn’t profitable in the long term, which may not be as obvious. If the model is unsustainable, you will eventually reach the point where investment has grown past profit. Second, there’s vehicle technology and repairability. Consumers demand more and more from their end, so the OEs supply what they want. This leads to further complications in the repair process. Finally, there’s attracting and retaining staf f, which relates to both r e p a i r a b i l i t y a n d p r o f i t a b i l i t y. CRM: What’s the single most important issue, and what would you suggest to a collision repair facility owner who is trying to deal with that? DD: It’s definitely profitability and sustainability. Owners need to have a sound cost management plan in place to ensure

that they are aligning themselves with the right companies. They also need to focus their efforts on operational efficiencies. Owners cannot control the market. They cannot control the number of claims. These are outside factors that occur entirely beyond our control. An owner who wants to focus on profitability and sustainability must put their attention on what they can control, and that’s the internal organization and process.

Unlike many unconsolidated industries, the collision repair industry is mature. The revenue side of the equation tends to revolve around sound customers who are financially solvent, i.e. insurance companies. This gives firms looking to invest financially a considerable ability to implement strategies and systems to enhance the industry’s value offering to their customers. Therefore, the opportunity for growth within the industry is large.

CRM: It seems like we’ve seen an increase in capital financing in the collision repair industry, both for repair facilities and suppliers. What do you think is driving this, and how can repairers take advantage? DD: Capital financing, to date, has focused on investments in organizations that have scalability, market share and effective management controls and systems. The attraction has a lot to do with the fact that the collision repair industry is still relatively fragmented compared to other industries, despite enormous increases in consolidation in the last 10 to 20 years. There is still opportunity for consolidation and therefore growth.

CRM: In your view, what are the most important steps for a shop to take to secure longevity? DD: A strong focus on operational excellence and customer service are crucial to ensuring your business remains relevant. You will hear a lot of people say that the industry has changed. They’re right, of course. It has changed significantly. However, what they sometimes leave out is that it continues to change. Customer expectations continue to rise. A clean, inviting facility and polished customer service will soon be the new normal, and will therefore stop impressing customers. You must go further. Regarding operational excellence, this is already known to be a continuous

42 COLLISION REPAIR COLLISIONREPAIRMAG.COM

EXECUTIVE VISION

process. It’s not certain that you will continue to find ways to improve simply because you are looking. What is absolutely certain is that you will not find them if you stop looking. In any case, both of these areas need constant improvement or you will inevitably be left behind as your competitors seize the opportunity to be the best. CRM: Thinking solely of how it’s going to change the business of collision repair, what’s the biggest change we can expect in the next few years? DS: Vehicle technology and repairability will prove to be the most significant disruptor in the collision repair industry going forward. In general, cars are not becoming less complex. The OEMs are in competition with each other to produce the most advanced vehicles, while increasingly stringent mileage requirements mean they must

“

The right equipment, training and alliances will be the keys to success in this environment, even more so than they are today. CRM: What does the future hold for Assured Automotive? DS: Assured Automotive is, and will remain, focused on the relentless pursuit of customer satisfaction and operational excellence. We always keep our customers top of mind. Each and every decision we make has a direct impact on our customers and our ability to meet their service expectations. This is not just about the insurance companies, but about the motorists we serve directly. It is the policy holders who we interact with at ground level, and it is the policy holders that we must strive to satisfy. Any negative experience will affect their view of us and likely of their insurer, and this

in turn will impact on us. That’s why it’s our top priority. We employ a third party company to contact our customers to ensure they have had a positive service experience with Assured Automotive, and this lets us know that we are delivering service in a timely, friendly and efficient manner. I listed it separately, but pursuing operational excellence is really part of the customer service piece. The more efficient and accurate we are at repair, the more we please our customers. Just like sustainability and profitability, customer satisfaction and operational excellence go hand in hand. CRM

OWNERS NEED TO HAVE A SOUND COST MANAGEMENT PLAN IN PLACE TO ENSURE THAT THEY ARE ALIGNING THEMSELVES WITH THE RIGHT COMPANIES. THEY ALSO NEED TO FOCUS THEIR EFFORTS ON OPERATIONAL EFFICIENCIES. - DES D’SILVA

also turn more frequently to weight saving materials such as high-strength steel and aluminum. Repairing today’s vehicles already requires a significant investment in both equipment and training. This will likely continue to increase as we move into the future. We’ve already seen numerous collision repair facilities close their doors in the last few years because they either couldn’t keep up with the investment needed, or couldn’t compete with more modern and progressive collision centres.

Des D’Silva, CEO of Assured Automotive.

AUGUST 2015 COLLISION REPAIR 43

SPONSORED CONTENT

Perfect Process Prochilo Collision Group in Toronto uses Mitchell’s software to get results.

usinesses share one common goal: to get results. The tools and processes used to achieve them often make all the difference. Prochilo Collision Group is driven by a vision to be leaders in worldclass automotive repair solutions. Such an aspiration relies on a consultative service approach to insurance partners, operational excellence in produc tion sites, and a commitment to ensuring the best collision repair experience possible. Considering the 80/20 rule, and through researching processing control and improvement, 8 0 percent of the group’s results stem from 20 percent of the process. The identified 20 percent of the process driving results at the Torontobased centre can be found in the damage analysis and blue printing process. “Mitchell International has proven to be not just a simple vendor of estimating software, but a critical strategic partner in working with us to reform our processes,” says Paul Prochilo, Director of Corporate Strategy, Prochilo Collision Group. “As we grow, it is imperative that we are capable of standardizing the behaviours and expectations in order to provide consistency, accuracy and 100 percent KPI achievement through our damage analysis process.” Prochilo says the Mitchell Procedure Pages have played a critical role in ensuring conjunctive and non-conjunctive processes have been identified during the blue printing procedure. He says the software benefits three areas: labour margins, cycle time and supplement reductions and increased throughput performance. “ You cannot profit from operations not charged, and ensuring a comprehen-

The team from Prochilo Collision Group during the Toronto stop on the Mitchell Road Show.

sive damage assessment reduces waste for the insurance partner, client as well as the collision repair centre,” Prochilo says, adding that the faster vehicles are leaving your centre, the more you enhance your sustainability as you become more profitable by reducing waste. While Prochilo says the procedure pages are easily accessible, one notable challenge was making sure that every estimator was taking the opportunity to review the procedure pages for every operation. Fortunately, Mitchell stepped in. “Tyler Jacklyn and the operations team at Mitchell understood our needs and provided a tremendous resolve to ensure the consistency and accuracy we were determined to achieve,” he says. “The Mitchell Compliance Utility application was exactly the tool we needed. It is traditionally utilized by insurers during a vendor partner estimating process to ensure compliance.

Mitchell RepairCenter

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“With assistance from Tyler ’s team, we were capable of utilizing the sof tware to meet our compliance needs.” T hr o u gh Mi tc h e ll ’s s o f t w ar e, Pr o chilo says the centre has been able to institutionalize best prac tices in blue printing and damage analysis, ensure consis tenc y and accurac y in all sites for all clients, and ensure provision of leadership and structure to manage the estimating procedure for the most effective spend of client dollars during a collision repair. “Mitchell International has assisted the Prochilo Collision Group in providing automation and empowerment to our estimators in productions sites and satellite facilities,” Prochilo says. “They are a valued partner who we will depend on to continue to support our organization with innovative solutions during our anticipated growth.”

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GLOBAL VIEW

Fine Tuning the Future IBIS 2015 featured a collection of presentations from industry heavyweights, with sights set on the next decade of collision repair. By Darryl Simmons

ithin 10 years, roughly two-thirds of the revenues from the $30 billion US collision repair industry will be captured by just four consolidators, according to Rex Green of BB&T Capital Markets during his presentation at IBIS on May 28, 2015. The worldwide gathering of key influencers and industry stakeholders took place in Athens, Greece at the Hilton Athens. Collision Repair magazine is the exclusive Canadian Media Partner for IBIS. Green’s presentation focused on consolidation in the US, and the potential impacts for the rest of the world. In addition to predicting that two-thirds of the revenue will be controlled by those four consolidators — ABRA, Gerber, Service King and Caliber — Green also foresees a time when consolidators will eventually do virtually all of the carrier-paid repairs. “Since the consolidators have a little more than 10 percent of the market today, my prediction might seem aggressive,” says Green. “However, the market forces driving consolidation in the US are simply unstoppable. Consolidation of this magnitude may not

take hold around the rest of the world, but if it doesn’t, it will be because of regulatory, legal or cultural constraints that defy economics.” The industry forces behind the move towards consolidation are, in Green’s words, “relentless.” As he sees it, these forces include the ever-increasing investment required to meet insurer’s demands for better, faster and more comprehensively self-managed and perfor-

46 COLLISION REPAIR COLLISIONREPAIRMAG.COM

mance-based facilities, increasingly complex repairs requiring more training and more equipment investment, the scarcity of qualified technicians and OEs and dealers leveraging telematics and certification programs. In the US, there are roughly 34,000 dealer and non-dealer repair locations, with average sales per location of approximately $912,000, not including glass repairs. Green compared this to the situation in 2006, when there were approximately 11,000 more locations, but average sales per location were only $666,000. Put into perspective, that’s an increase per location of almost 50 percent in less than 10 years. Green also discussed whether “American style” consolidation may be coming to markets in Europe and Asia, pointing to factors such as economies of scale and the aggressive influence of capital. The first day of IBIS also included a presentation by Sean Carey of SCG Management Consultants, with a focus on the company’s review of the last year in connected cars. Carey argued these types of vehicles that are able to undergo diagnostics by OEMs through subscription services such as OnStar would become the norm. The industry is already witnessing this concept through General Motors’ plan to expand its diagnostic program through the OnStar system, including 2016 models of Corvettes, Equinoxes, Silverados and Suburbans. “OEMs will be in the driving seat,” says Carey, adding he has “no doubt” manufacturers will begin filing claims themselves. Additional presentations were conducted by AIG’s Joe Funk, who discussed new insurer models in South America and Asia, and Clive Humby, Chief Data Strategist of Starcount, who chatted with

IBIS 2015 had a strong Canadian contingent. From left: Darryl Simmons of Collision Repair magazine, David Smith of AkzoNobel, and Michael Macaluso and Sam Mercanti of CARSTAR.

GLOBAL VIEW

IBIS attracts top thought leaders from around the world, such as Vincent Romans of The Romans Group and Des D’Silva of Assured Automotive.

Above left: Networking in a social setting. Clockwise from bottom left: David Smith of AkzoNobel, Patrick Turcotte of Progi, Darquise Savoie, Flavio Battilana of CSN Collision Centres, Gillian and Des D’Silva of Assured Automotive, and Lorenzo and Kellie D’Alessandro of CSN-427 Auto Collision. Above right: Lorenzo D’Alessandro and Sam Mercanti of CARSTAR discuss one of the sessions.

attendees about how “Data is the new oil.” Humby made a strong case for comparing the two. Data, like oil, is difficult to use and benefit from in its crude state. Both need refining and external catalysts to be made useful. When data or oil is processed, it can be explosive and potentially dangerous. Finally, as with plastics and polymers, some of the best and most profitable uses of data are what it can be used to create. The first day of IBIS was rounded out with an in-depth view of the Greek collision repair market provided by Yannis Ioanniadis of AkzoNobel, Wijnand Mebius’ look at parts platforms in use in the Dutch market, and David Mills of Direct Line’s

Conference moderator David Lingham.

Sean Carey of SCG Consultants and Rick Tuuri of Audatex.

“THE MARKET FORCES DRIVING CONSOLIDATION IN THE US ARE SIMPLY UNSTOPPABLE.” - REX GREEN, BB&T CAPITAL MARKETS

presentation on the view of the customer. Kicking off the second day was Andy MacDonald of Tesla Motors, who delivered a presentation on how the company has built a global network of consumerminded collision repair facilities. He described how the company micromanages staff to provide high-quality repairs, but stated clearly that in order to maintain that measure of dedication he believes the collision repair industry needs as much information as possible about future trends to keep up with the ever-changing realities of the business. Using a luminum col lision rep air training as an example, MacDonald says 80 percent of technicians who train with

the company would fail Tesla’s aluminum welding course on their first day. MacDonald was followed by Georg Tautz of Axalta who delivered a presentation entitled “Russia: Still An Opportunity?” Paul Sykes of Audatex gave the final presentation of the day, looking into Generation Y and digitalization. This year’s IBIS had a very strong Canadian contingent, with senior personnel from Assured Automotive (Des D’Silva), CARSTAR (Sam Mercanti, Michael Macaluso), CSN (Lorenzo D’Alessandro, Flavio Battilana), FIX World (Steve Leal, Carl Brabander), Progi (Patrick Turcotte), Akzo Nobel (Dave Smith) and Collision Repair magazine. CRM AUGUST 2015 COLLISION REPAIR 47

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INDUSTRY OVERVIEW

Disruption Automotive Ecosystem

By Vincent Romans and Stephen Applebaum

IN THE

What to expect, and how to survive and win.

he automotive ecosystem includes auto manufacturing, auto buyers and drivers, collision repairers, aftermarket suppliers including parts providers, auto insurance companies and their policyholders, and the deep and extensive claims and services supply chain that supports them, such as the technology and information provider segments. The entire automotive ecosystem is in the midst of significant disruption, and the dizzying pace of change will only continue to accelerate. This disruption is the result of the convergence of upstream upheaval in these sub-segments of the automotive ecosystem: • “ Ne w c o n s u m e r ” b e h a v i o r a n d expectations • Technology evolution including mobility and the Internet of Things • The digital data gold rush and the adoption of advanced analytics • Globalization integration, collaboration, and supply chain consolidation in the automotive ecosystem • Collision repair industry consolidation Over the last 30 years, the auto repair and automotive aftermarket segments were part of a steady and inevitable evolution. During this long-term progression, the auto physical damage industry adapted to a myriad of business innovations, technology enablers, program and process changes, and product and service introductions. Some resisted these innovations as either real or perceived business disruptions or dis-intermediation while others embraced them as opportunities to be leveraged for business, market and strategic transformation. The 2007/2008 “Black Swan” event, the US recession, impacted our entire economy and loomed large and ominous for a number of

years. This became the foundation for today’s unmatched auto physical damage industry transformation. It triggered the start of unprecedented structural change within the US and Canadian auto repair and aftermarket segments. This changing landscape became part of four distinct, yet connected, marketplace phases: Contraction, Consolidation, Convergence and Constructive Transformation that continue today. Additionally, these four phases are being impacted by a confluence of numerous, dynamic and impinging forces which have both disruptive and transformational influences on today’s stakeholders. Some of the more influential external impact factors include: • Globalization • Private equity investment • Ac c i d e n t s a f e t y a n d a v o i d a n c e technology • Predictive analytics • Telematics-integrated claims process models • Insurer multiple-shop operator strategic performance-based DRP contracts • New and hybrid direct repair program models • OEM-certified networks’ influence in the repair process • Morphing demographics • MSOs, growing market dominance and insurance carrier acceptance • Repair segmentation • National technician shortage • Complex vehicle technology and proliferation of advanced materials • Urbanization • In c re a s e d c o mp l e x i t y i n i n s u rance company DRP participation requirements Consequently, the traditional process of

linear thinking, with its straightforward cause and effect structure, is giving way to a more realistic and more complex multi-dimensional thinking pattern, which heightens the understanding of the frequency, acceleration and degree of change. It is important, in light of this, to build and leverage a strategic alliance ecosystem with customers, suppliers, competitors, investors, and business partners in order to maintain and grow a collaborative brain trust. This shared commitment will help to cocreate and foster constructive change within an organization in an attempt to influence its uncertain environment for the mutual benefit of all strategic partners. Evidence of disruption in the auto insurance industry and its extensive supply chain is plentiful and portends even greater change. Long-standing leaders in the US auto insurance industry have lost significant market share to more innovative consumer-centric carriers. Advanced analytics and telematics technologies have combined to enable new forms of insurance products including usage-based insurance. The Internet of Things, including the connected car, will amplify this trend going forward and literally change the fundamental nature of insurance and risk management products, solutions and servicing. For example, consumers are now shopping for and purchasing auto insurance, and submitting and receiving claim payments, on their smartphones. Fueled by the entry of large and growing pools of private equity capital, rapid industry consolidation is occurring across several supply chain segments including the once highly-fragmented collision repair industry and alternative parts supplier markets. In this dynamic environment, we believe that the ultimate leaders and winners in 2015 and beyond will be those companies that most

AUGUST 2015 COLLISION REPAIR 49

INDUSTRY OVERVIEW

successfully focus and execute on the development of compelling personal mobility solutions; transform product development and distribution around the new consumer; leverage data and analytics across the enterprise; think, plan and execute globally; and aggressively collaborate, partner and affiliate as effectively as possible. Today’s consumer is totally unlike that of the past, and they have created new challenges and opportunities for all participants in the automotive ecosystem, in particular for auto insurers. This new consumer, epitomized by Millennials, has embraced mobile technologies and the social media it supports. This phenomenon has fundamentally changed how insurance is branded, marketed and sold. Moving forward, this same mobility will enable insurers to design completely new types of insurance products and manage risks much more effectively for policyholders and themselves. The most disruptive group of mobility technologies is the rapidly emerging “Internet of Things,” much of which is controlled today by industry outsiders, and its potential impact on numerous aspects and multiple lines of insurance as well as on the rest of the auto ecosystem. Of related concern to the insurance industry should be the potential for these “outsiders” to leverage this valuable information to enter the business and become competitors. Some recent acquisitions include Facebook’s purchase of the fitness and location app Moves, Monsanto’s acquisition of crop insurance and data company Climate Corp. (which was started by former Google executives), and Google’s acquisitions of the connected home devices and security company Nest and the Israeli location-mapping service Waze. Verizon acquired Hughes Telematics in 2012. The data generated by all of these businesses, which was never before so digitally available, can be combined with advanced analytics to accurately establish and manage individual and property risks. The ability to successfully acquire, control and effectively translate and utilize all of this data as actionable information will determine the insurance industry’s digital gold rush winners and losers of the future. IMPACT OF OEM GLOBALIZATION The impact of automotive industry globalization is pervasive within the automotive and aftermarket industries. It is one of the more significant ongoing influential macro factors within the larger constellation and confluence of simultaneous conditions impacting the auto physical damage land-

scape. For example, the change caused by how vehicle manufacturers are aggressively re-engineering and consolidating their light vehicle platforms is evident in the worldwide auto manufacturing transformation underway; General Motors is planning to reduce in 10 years its current 26 global production platforms to just 4 by 2025. This globalization of cars and its many OEM implications will continue to drive significant change throughout the entire property and casualty auto insurance and auto physical damage aftermarket supply chain. One of the key drivers of this manufacturing transformation is the National Highway Traffic Safety Administration’s CAFE standards which require average manufacturer fleet fuel consumption to drastically improve from today’s 30.2 miles per gallon to 54.5 miles per gallon by 2025. By the 2016 model year alone, there will be approximately 250 new and different vehicle debuts and redesigns from both US and foreign manufacturers. Ultimately, achieving strategic goals and objectives such as reducing fuel consumption and gas emissions by improving fuel economy and reducing the environment’s carbon footprint reflect the current megatrends end game. As the OEMs drive to innovate globally, there will be intended and unintended outcomes involving the use of many new materials, engine downsizing, alternative powertrains, advanced integrated electronics, telematics and new repair technologies and processes, and producing lightweight vehicles. These innovations will be seen as a disruption by some, while being embraced by others who seek to leverage these global influences for future growth and competitive advantage. OTHER ECOSYSTEM AND SUPPLY CHAIN INDUSTRY CONSOLIDATION Another globalization perspective is being driven by increasing international trade and investment by private equity and strategic buyers involving an explosion in mergers and acquisitions within the property and casualty insurance and auto physical damage industries in the US and throughout the world. The following is a partial list of some of the more relevant recent M&A activity by US and international companies in this ecosystem: • Forum buys Meadowland, a first-ever acquisition by a Chinese insurer of a US insurer • Alliant Insurance Services of the US buys the US agency business of Aus-

50 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Private Equity Investors in US MSOs MSO

Equity Source

ABRA

Hellman & Friedman

Caliber

Omers

CARSTAR

Champlain Capital

Kadels

KCB Management

Driven Brands/ Maaco

Roark Capital

Service King

Blackstone & Carlyle Group

Joe Hudson

Carousel

CHART A (Source: The Romans Group LLC)

tralia’s QBE • Majesco acquired Cover-All Technologies and Agile Technologies, US • Symphony Technology Group acquires Aon e-Solutions from Aon (UK) • ACE (Bahamas) buys Fireman’s Fund US personal lines business • Vista Equity acquires TIBCO for $4.3 billion, US • Onex (Canadian private equity firm) acquires York Risk Services for US $1.325 billion, US • Element Financial (Canada) acquires US-based PH&H fleet management business for US $1.4 billion • Mapfre Insurance, Spain, acquires Commerce Insurance and Middle Oak personal lines, US • QBE Insurance, Australia, acquires Balboa Insurance, US • Travelers Insurance, US, acquires Dominion Insurance, Canada • Desjardins Insurance, Canada, acquires State Farm Canada, US • Boyd Group, Canada, acquirers Gerber Collision and Glass, US • OMERS, Canada, acquires Caliber Collision Centers, US • UniSelect, Canada, acquires FinishMaster, US • LKQ, US, acquires Euro Parts, UK • UBM Plc, UK, acquires AdvanstarMotor Age and Auto Body Repair News ABRN, US • The Carlyle Group (owners of Axalta

INDUSTRY OVERVIEW

Multiple Locations Platform Acquired Transactions 2012 - 14 2012

2013

2014

17 Companies

32 Companies

10 States

9 States

25 States

128 Locations

113 Locations

291 Locations

$300M Revenue Acquired

$265M Revenue Acquired

$964M Revenue Acquired

$2.35M Location

$3.31M Location

CHART B (Source: The Romans Group LLC)

Private Equity Ownership MSO Consolidator

Year

Private Equity

ABRA

2006 2011 2014

Prudential Palladium Hellman & Friedman

Caliber

2008 2013

ONCAP OMERS

Service King

2012 2014

Carlyle Blackstone

Kadels

2006

KCB Management

Joe Hudson

2014

Carousel

CHART C (Source: The Romans Group LLC)

and investors in Service King) acquire Nationwide Accident Repair Services of the UK These acquisitions reflect the growing trend of an increasingly integrated global insurance and automotive economy resulting in an extension of business and market international strategies, introduction of new, innovative and disruptive technologies and processes, and brand expansion while also managing resource and risk diversification. THE DIGITAL DATA GOLD RUSH/ADVANCED ANALYTICS We have entered a “digital Gold Rush” era – a modern version of the California Gold Rush of 1849 – with the gold being digital data which is beginning to flow in torrents. This has huge implications for the insurance industry, and not least for property and casualty claims. Digitization is already having an impact across the claims technology and services supply chain, forcing supplier consolidation and compressing

customer service cycle and response times to near real time. These forces will impact property and casualty claims technology, as well as information and services provider segments, which have historically been highly fragmented and privately owned and operated. National consolidation, volume aggregation and the infusion of sizable technology investments led by professional management teams offer significant medium-term rewards to the participants. The most potentially disruptive group of digital technologies of all is the rapidly emerging “Internet of Things” or “M2M” (machine-to-machine) technology and its potential impact across multiple lines of insurance. Of related concern to the industry should be the potential for nontraditional competitors to leverage M2M data and enter their business. An example is Google’s acquisition of the connected home devices and security company Nest Labs. The data acquired in all of these businesses, never before so digitally

available, can and will be combined with advanced analytics to accurately establish and manage individual and property risks. These powerful forces are all converging to drive mergers and acquisitions activity to unprecedented levels in the property and casualty insurance claims technology ecosystem, attracting increasing numbers of private equity and strategic investors, and providing attractive exit opportunities and strategic alternatives for participants, all while creating exciting new and innovative technology-enabled capabilities for insurers, agents, brokers, and consumers. PRIVATE EQUITY AND COLLISION REPAIR INDUSTRY CONSOLIDATION The first two phases of the current collision repair industry structural transformation, contraction and consolidation, are part of a four-phase model consisting of contraction, consolidation, convergence, and constructive transformation. These first two phases began to emerge and quickly expand after the start of the recession in December 2007. Simultaneously, private equity groups turned their attention to the collision repair industry; they looked under the hood and they liked what they saw. Private equity firms were on the hunt to find alternative investments that could yield comparative or better returns than were currently available during the trough and slow recession recovery between YE 2007 and today. Additionally, their interest is backed and driven by unprecedented amounts of strategic buyer, private equity, and pension fund dry powder/ cash-seeking investments that can drive higher valuations and returns on their capital invested. The current private equity investor groups competing in the consolidation of the auto repair industry are identified in Chart C. There are a number of factors impacting the continued attractiveness of investing in the collision repair industry. • The collision repair industry’s structural transformation is still early to mid-stage • The stigma from consolidation’s failed first attempt during early 2000s is now fully erased • Excess strategic and private equity capital continues to seek high-return, quick-turn investments which are characterized by recurring revenue, free cash flow and attractive returns on invested capital • Aggressive MSO consolidator and private equity competition • Debt financing is inexpensive and

AUGUST 2015 COLLISION REPAIR 51

INDUSTRY OVERVIEW

available • Collision repair management teams realize the benefit of strategically partnering with investors in order to more quickly grow and develop market share • $32 billion addressable collision repair industry size • High barriers to new entrants associated with the MSO consolidator model • Business complexity • Mature management teams • Performance-based insurance DRP contract requirements • Brand recognition • Demonstrated economies of scale • Rising operational excellence with Lean-based process environment • Replicable acquisition and integration models • Leveraging and expanding technology enablers • Insurance industry strategy aligned with MSO consolidator strategy As consolidation continues to drive collision repair industry contraction, four MSO consolidators, ABRA, Boyd/Gerber, Caliber, and Service King stand out as the primary buyers or disruptors vying for multi-location and multi-region platform acquisitions. More nascent strategies are focused on market density and coverage through “build outs or tuck-ins,” acquisition of individual shops, constructing Greenfields and Brownfields, and utilizing franchise models in smaller tier markets. Chart B reflects these four consolidator’s multiple-location platform transactions between 2012 and 2014. The growth of MSO consolidators associated with these transactions has in all cases had private equity backing. When viewed in the context of an approximate $32 billion auto repair marketplace, there is room for further consolidation in what is still an oversupply of repairers within the approximate 33,000 US auto repair location marketplace. The transfer of just over $1.5 billion in multiple-location operator (MLO) platform transaction repair revenue from 2012-2014 excludes three large recapitalizations that included Caliber in 2013 and ABRA and Service King in 2014. If these recapitalizations were included, the total transfer of MSO consolidator revenue would have been slightly over $3 billion, or approximately 10 percent of the industry’s annual revenue. Additionally, the MSO segment representing ≥$20 million in annual revenue included 80 MSO organizations processing $6.3 billion in annual revenue at year-end 2014. How long private equity

continues its aggressive funding of MSO consolidators is uncertain. Chart A reflects selected private equity and pension fund ownership periods for the top four MSO consolidators. SUPPLY CHAIN CONSOLIDATION IN THE AUTO INSURANCE ECOSYSTEM Beyond the collision repair segment discussed above, an unprecedented and powerful number of forces are converging to drive mergers and acquisitions activity in the North American property and casualty insurance claims and technology “ecosystem” to historically high levels, including: • Claims supply chain rationalization and consolidation • Rising adoption and deployment of big data and analytics solutions • Insurance product commoditization and the resulting business transformation • An influx of private equity capital (already raised and seeking to be deployed in the sector) • Expectations of a continuation of a steadily improving economy with the prospect of lingering low interest rates We expect these forces to amplify competition among well-capitalized strategic players and private equity participants who seek to create scalable and defensible positions in the industry. The implications for smaller, less capitalized, regional or technology-challenged competitors are meaningful. CLAIMS SUPPLY CHAIN CONSOLIDATION The area in which we expect the greatest potential for increased activity in 2015 and beyond is within the claims supply chain. The property and casualty insurance claims ecosystem is comprised of thousands of small local and independent firms as well as larger regional, national, and global vendors and business partners who provide mission-critical products and services to the claims operations of the property and casualty insurance industry including: • Insurance technology and IT services, system integrators, core system and claims management software solutions, and database and information providers including communication, repair estimating, and body shop management systems • Claims technology vendors (document management, compliance, data quality, payment systems, etc.) • Collision and auto glass repairers

52 COLLISION REPAIR COLLISIONREPAIRMAG.COM

• Collision repair parts suppliers • Insurance replacement rental car providers • Third-party administrators and claims business process outsourcing firms • Claim services including independent auto and property adjusters and appraisers and catastrophe services • Insurance defense attorneys • Auto and casualty claims management solution providers • Sa lvage vehicle auc t ione ers and towing services • Insurance staffing firms • Insurance claims investigation firms One of the subsectors most impacted by these factors is the highly fragmented and inefficient collision repair and parts business. Many of these are local, privately owned businesses with limited technology capabilities and management talent. National consolidation, often driven by private equity, can lead to expense rationalization, upgraded information technology systems, improved management, and the ability to better respond to upstream customer pressure and improved pricing. By way of example, since its founding in 1998, LKQ Corporation (NASDAQ: LKQ) has consolidated the automotive repair alternative parts market in North America and elsewhere to become the largest provider of alternative collision replacement parts and a leading provider of recycled engines and transmissions with annual revenues approaching $7 billion. In 2014, LKQ acquired Keystone Automotive, a leading distributor of aftermarket parts and equipment. Additionally, one of the other important trends is the development of an electronic parts procurement and e-commerce solution for the large $15 billion, and still highly fragmented and inefficient, North American auto repair parts supply chain. For smaller providers in the claims supply chain, now may be the time to consider combining with a larger, better-capitalized players, especially given the trend toward vendor management by insurance companies. A “going it alone” strategy will be increasingly risky as larger, national players will garner more market share by offering better pricing, superior technology solutions, and greater geographic coverage than “mom and pop” operations. Over the next twelve months we expect information providers to expand in several directions through internal product development supplemented by strategic acquisitions. This expansion will likely include: • Deeper integration with claims man-

INDUSTRY OVERVIEW

agement core systems • Introduction of new tools and services utilizing advanced analytics for use cases across the entire auto and property claims process • Deeper and wider integration with thirdparty companies in the auto and property claims supply chain, specifically including collision repair parts procurement • Further development of auto casualty and workers’ compensation medical management networks and services and cost containment solutions. PREDICTIONS FOR 2015 AND BEYOND • The macro influencers of contraction, consolidation and convergence, combined with the intensity and high velocity of change among the confluence of simultaneous events, will continue to overlay and impact the structural change and the ongoing constructive transformation currently happening within the entire automotive ecosystem. • Property and casualty insurance carriers will develop new forms of highly-customized and contextual insurance coverage tied to policyholders’ real-time needs • Property and casualty insurance carriers will sell micro-insurance and risk management services to customers based on digital connections to their bodies, automobiles, homes, and other personal property; collectively comprising the Internet of Things • Insurance carrier supply chain partners will increasingly assume claims servicing and resolution responsibilities and may well assume some or all of the associated risks in exchange for guaranteed transaction volume • Direct repair assignments through customer choice among the top ten property and casualty auto insurers continues to grow and many now have an assignment conversion rate over 50 percent to their DRP providers • Analytics will evolve to change every aspect of insurance including marketing, distribution, underwriting, pricing, claims, and billing • The pace and scope of supply chain consolidation within the auto insurance ecosystem will accelerate sharply in 2015 as existing players move to protect and grow their market shares. New, well-capitalized and more consumersavvy players will enter the market with an array of powerful digital assets. In-

vestors will continue to gravitate to the space, betting on attractive short-term upsides and adding fuel to the fire • MSO consolidators will continue to execute on their platform acquisition growth and development strategies. They will supplement their multi-regional and national growth with a combination of single repair center acquisitions, Brownfield and Greenfield build outs, and franchise expansion to improve coverage and density in existing major and smaller markets • The traditional insurer-repairer business model, which is focused on an estimate exchange process, is likely to be transformed within three years and supplanted by a process driven by mobile technologies coupled with predictive analytics. This will reduce and eventually eliminate the need for repairer-carrier estimate exchanges for an increasingly higher percentage of claims CONCLUSIONS • The ultimate leaders and winners in 2015 and beyond will be those companies that most successfully focus and execute upon the new realities identified in this report. They will also leverage a strategic alliance ecosystem in which they team up for success. They will accomplish this with customers, suppliers, competitors, investors and business partners as part of a collaborative brain trust where all are committed to co-create and change their organizations and their uncertain environments to their individual and mutual benefit. • In this dynamic environment, we believe that the ultimate leaders and winners in 2015 and beyond will be those companies that most successfully focus and execute on the development of compelling personal mobility solutions and transform product development and distribution around the new consumer. They will leverage data and analytics across the enterprise, think, plan and execute globally, and aggressively collaborate, partner and affiliate as effectively as possible. • The auto parts supply chain, one of the most fragmented of all segments in the ecosystem, and until now characterized by numerous competing parts search and procurement platforms, will finally begin to consolidate in the hands of just a few well-capitalized, highly-experienced

•

and strategically-positioned information and software providers. The ability to successfully acquire, control and effectively translate and leverage all of these new streams of data into actionable information and insights will determine the insurance industry’s digital gold rush winners and losers of the future. The area in which we expect the greatest potential for increased disruption in 2015 and beyond is within the claims supply chain. For smaller providers in the claims supply chain, now may insurance companies give the time to consider combining with a larger, better-capitalized player, especially. A “going it alone” strategy will be increasingly risky as larger, national players will garner more market share by offering better pricing, superior technology solutions, and greater geographic coverage than “mom and pop” operations. Many of the trends associated with the beginning of a slow, long-term, downward slope of future accident frequency such as the proliferation of accident avoidance technology, urbanization, car sharing, Uber, connected vehicles, and telematics, are already cooked into the expanding equation and future auto insurance and repair model reflecting reduced auto accidents and fewer repairable vehicles with new and hybrid insurance coverage offered by fewer surviving insurers. CRM

ABOUT THE AUTHORS Stephen Applebaum is Managing Partner, Insurance Solutions Group, and Senior Advisor, StoneRidge Advisors LLC. He is a subject-matter expert and thought leader providing consulting, advisory and strategic mergers and acquisitions and marketing services to participants in the North American property and casualty insurance ecosystem. Vincent Romans is the founding principal and managing partner of The Romans Group LLC established in 1996. The Romans Group provides business, market, financial and strategic development and mergers and acquisitions advisory services to the collision repair, property and casualty auto insurance, and the auto physical damage aftermarket supply chain.

AUGUST 2015 COLLISION REPAIR 53

INDUSTRY GAME CHANGERS

David Gold, Standard Auto Wreckers CEO, and driving force behind Fenix Parts Inc.

Making History By Jeff Sanford

The auto recycling industry enters a new era with the emergence of Fenix Parts.

ver the past couple years major Wall Street titans like Carl Icahn and Warren Buffett have been investing in auto sector companies to bring new efficiencies to the industry. Venture funds are flowing into “connected car” plays to advance the next wave of technology. Massive buy-out and pension funds are attempting to further consolidate the collision repair space, which promises a new level of sophistication in that sector. But most recently it was the auto recycling industry that has enjoyed the attention, fruits and labours of high-flying Bay Street investment bankers.

AUGUST 2015 COLLISION REPAIR 55

INDUSTRY GAME CHANGERS

David Gold shows part of the yard at Standard Auto Wreckers’ Toronto facility to a reporter from Canadian Auto Recyclers magazine. The recycler is now part of Fenix Parts.

“THE FENIX PARTS IPO IS A MAJOR MILESTONE, AS IT COMBINED EIGHT INDUSTRY LEADING COMPANIES THAT, TOGETHER, WILL HAVE THE ABILITY TO PROVIDE OUR CUSTOMERS WITH GREATER PRODUCT AVAILABILITY, A LARGER GEOGRAPHIC FOOTPRINT AND ENHANCED DISTRIBUTION AND LOGISTICS CAPABILITIES.” – DAVID GOLD

This past May, a group of recycling companies formed to create a new company, to be listed on the NASDAQ stock exchange as Fenix Parts Inc. The collaboration brings eight founding recyclers together, birthing an organization that will deliver the industry to a new level of organizational sophistication. The eight companies will co-ordinate their businesses, changing t he face of t he nor t he aster n Nor t h American auto recycling industry. Did the auto recycling industry just come of age? Arguably, yes. THE BACKSTORY Perhaps no one deserves more credit for the deal than David Gold, the irrepressible CEO of Standard Auto Wreckers.

He recently reflected on his role in the IPO of Fenix Parts. in an interview with Collision Repair magazine. His company was one of the founding organizations of Fenix, and Gold himself was a prime driver behind the deal. “The Fenix Parts IPO is a major milestone, as it combined eight industr y l e a d i n g c o mp a n i e s t h at , t o g e t h e r, will have the ability to provide our customers with greater product availability, a larger geographic footprint and enhanced distribution and logistics capabilities,” says Gold. “We believe we can better do that as a combined company that also retains the local presence and customer service levels that made us all successful.” For any executive in any industr y,

56 COLLISION REPAIR COLLISIONREPAIRMAG.COM

bringing a company to public markets will be the crowning achievement of a career. Having your company issue shares that traded on a legitimate stock exchange confers a level of respectability and authority to a firm. Gold reminisced about the morning Fenix was listed. “It’s not something that every executive gets to go through. It was a really interesting experience. The morning our stock was listed was a really special event,” he says. The IPO of Fenix was known technically as a Conditional Current initial public offering. The deal sees the shell company, Fenix, raising the money that will be used to acquire the eight founding companies involved in the merger. That is, the company goes public before the founding companies merge. Investors were asked to take a leap of faith and invest in a company that only existed on paper. Did this deter average retail investors? LEAP OF FAITH The offering was initially valued at up to $100 million. But when shares

INDUSTRY GAME CHANGERS

were priced shortly before the IPO, the bankers decided to float the deal at $8 per share, slightly below the expected range of $9 to $11 a share. At that price, the deal brought in almost $93 million. The slightly lower-than-expected price was likely a result of the complexity of the deal. The companies would merge officially after the IPO may have left some investors slightly wary. In essence, investors were being asked to bet on a shell company that had not yet brought together the pieces of the intended merger. Without any sort of operating histor y this deal required something of a leap of faith for average retail investors. But when the company did its IPO, 12 million shares listed, one million shares more than expected. The bankers involved exercised an additional 1.8 million shares (the “over-allotment”), due to strong demand. Better yet, at the end of the first day of trading, the stock popped 13 percent, and ended the day 35 percent higher. “We had a good pop the first day, I guess people sat back and said, ‘This makes sense.’ That was humbling to us,” says Gold. Since then, the stock has been trading above $11 a share. So investors have been keen to get in on the deal. The IPO can be considered a complete success. “The institutional investors are into this. They understand the story,” says Gold. Pension and endowment funds like what they see. No surprise. Auto recycling isn’t a high-margin business. But Standard Auto Wreckers has posted solid revenues of $30 million for years. The company also registered a strong uptick in revenue in 2014. The second largest company in the combination, Beagell, also maintains stable sales of around $30 million. According to the prospectus, demand for auto parts “is highly stable,” the market for recycler service, “consistent long-term growth.” This is appealing to investors.

The founding companies have been in business an average of 25 years and operate from 13 locations. So this is a stable group.

THE AUTO RECYCLING BUSINESS IS A HIGHLY FRAGMENTED ONE. THERE ARE MANY ‘MOM AND POP’ SHOPS AND SINGLE-OWNER BUSINESSES, ALL OF THEM RIPE FOR CONSOLIDATION BY A BIG PLAYER.

“Money is not worth much these days. Investors are looking to put money into companies that have roots, generations of experience involved, real brick and mortar businesses. Which is what this group has,” says Gold. “A lot of the bankers recognized how down to earth everyone in this industry is. They wear boots, jeans and a shirt with a logo on it everyday. They see a steady, stable business here.” A WORLD OF POTENTIAL The auto recycling business is a h i g h l y f r a g m e nt e d o n e . T h e r e a r e many “Mom and Pop” shops and single-owner businesses, all of them ripe for consolidation by a big player. Rec-

ognizing the interest in the industry, Gold, along with his partners in the recycling industry and some forward thinking investment bankers, thought it was time to try and consolidate some of this sprawling, key industry. By bringing together several of the biggest operators in the industry, these players could pool resources, merge operations and provide a bigger selection of rec ycled parts over a wider geographic area. A coordinated regional approach provides access to Fenix’s extensive inventory of recycled original equipment parts for distribution on a same or next day basis. There are not many large-scale competitors who can do this. But this is the plan. “People have always talked about rolling up this industry. But it’s never happened. Until now,” says Gold. To get the deal ready to go, investment bankers from Bank of Montreal and Stifel—the under writers of the deal—came in and went through the books with a fine-tooth comb. “We had to make sure the reputation was there,” says Gold. The new company will represent a network that offers sales, fulfillment and distribution in Canada and the Northeastern US. Together the company will have 523 employees and 10,000 customers. “A lot of time and effort has gone into this process, led by a management team that is committed to our customers and our employees,” he says. “ The Fenix leadership team brings with them operating, distribution, logistics, business development, integration, systems and public company experience. We’re going to increase the availability of parts and improve the service to our customers, which is what this is about.” A couple of weeks after the IPO, the first meeting with his Ontario member counterparts—with almost $93 million in the bank from the IPO—the work of merging the companies goes ahead. “We’ll continue to grow. For what it’s worth, the operational efficiencies haven’t been developed yet. Those are coming together,” says Gold. Merging the eight founding companies will allow economies of scale in terms of buying, say, new information technology. That is, the IPO was just the beginning for this bold new organization. “Now the real work begins,” he says. CRM AUGUST 2015 COLLISION REPAIR 57

OE CERTIFICATION

Volkswagen’s Standards Equipment, training and customer service make up the mix. By Mike Davey

olkswagen has recently rolled out its new Certified Collision Repair Facility Program. While this program has been operating in Europe and the US for some time, it is new to Canada. The Volkswagen program uses a network of dealer and independent facilities, with the goal for a network of facilities and dealers that exist in a one-to-one ratio. In other words, there will end up being a certified repair centre for every dealer in Canada. While some dealers have their own collision repair facilities, many do not, leading to a need to include independent repair facilities in the program. Independent collision repair facilities that wish to join the program must first be nominated by a Volkswagen dealer. An extensive audit of the facility is performed to identify the gaps compared to the standards and to ensure that the work can be carried out to Volkswagen’s specifications. There is a final certification audit to verify that the requirements have been met before the certification is granted by Volkswagen Group Canada. The certification path is the same for both dealership and independent facilities. “We started the auditing process in December 2014 and the first facilities achieved

Mixed materials are more common than ever before. This body structure diagram of the Golf 7 from Volkswagen shows that there are at least five different types of steel in this vehicle, each with its own properties and characteristics.

certification in May 2015,” says Scott Wideman of Volkswagen Group Canada. “Roughly speaking, the Certified Collision Repair Facility Program can be broken down into three parts: technology factors, repair procedures and training focus.” While technology is always of paramount concern in collision repair, Volkswagen has recently made some unique advancements

regarding vehicle design. “Regarding technology, you may know that Volkswagen embarked on an ambitious redesign project in recent years,” says Wideman. “The Volkswagen Group MQB platform is our strategy for shared modular construction of many of our vehicles. MQB stands for Modularer Querbaukasten. Roughly translated, that means Modular AUGUST 2015 COLLISION REPAIR 59

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The MQB design platform allows Volkswagen to build numerous vehicles that share common characteristics.

Transverse Matrix. Breaking that down a little more, it essentially means that we’re building a wide variety of cars that share some common characteristics.” MQB model vehicles range from subcompacts to large sedans and SUVs. All share the same front axle, pedal box and engine positioning, despite varying wheelbase, track and external dimensions. The real question is, “How does this affect the repair?” “What this means for the repair industry is that as we have more models going through the evolution to this platform, we will have more vehicles that share fundamental design characteristics. This leads to the possibility that the number of fixtures needed to repair Volkswagen’s vehicles will be reduced considerably,” says Wideman. Materials are included in technology factors. As you can see in the diagram on page 59, numerous steels of various grades make up the structure of Volkswagen vehicles. This is part of the reason that repair procedures must be followed with exact accuracy. Different materials react to the same forces in very different ways, and it’s essential that the technician be able to identify which material is present, and therefore which procedure to use. This leads us directly into a discussion of repair procedures. The Volkswagen Certified Collision Repair Facility Program has certain equipment requirements that must be met. A globally approved fixture bench must be used. Car-O-Liner and Celette are currently the only manufacturers of fixture benches that have that have Volkswagen Group approval.

A resistance spot welder is an absolute requirement, and it must be equipped with Volkswagen’s software. The approved manufacturers are Car-O-Liner, Tecna, Wielander and Schill, Elektron and GYS. Last but certainly not least, training is extremely critical. The training needed to qualify for the Volkswagen Certified Collision Repair Facility Program includes both I-CAR and factory training. A list of required I-CAR courses is listed in the sidebar. Factory training consists of a two-day course delivered at the Volkswagen training academy in Virginia. The factory training focuses on high-strength steel and how it’s used in Volkswagen’s vehicles. “This is primarily hands-on training that takes technicians through the actual repair process from start to finish,” says Wideman. “Part of this is learning to access and how to use our technical portal to ensure repairs are accurate following VIN specific repair procedures.” The course also allows technicians to work with all of our approved equipment brands. This helps to ensure that they will be familiar with whatever approved welder their shop purchases. Most importantly, there is the customer service aspect which is driving the need to have a certified collision program. While it may not b e ver y technical, it can’t be ignored. A facility joining the program must be able to achieve the highest levels of customer s er vice, s omething on w hich Volkswagen prides itself. CRM

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Technicians receive factory training from Volkswagen as part of the certification process.

I-CAR Courses A total of 13 I-CAR courses are required for body technicians working with the program. Please see below for a complete list. • • • • • • • • •

• • •

Worker Protection (WKR01) Corrosion Protection (CPS01) Measuring (MEA01) Structural Straightening Steel (SSS01) Squeeze-Type Resistance Spot Welding (WCS04) Steel Uni-body Front and Rear Rails, Floors and Front Structure (SPS01 or SPS10) Steel Uni-body A, B, C and D-Pillars, and Rocker Panels (SPS02 or SPS11) Stationary Glass (GLA02) Steel GMA (MIG) Welding Qualification Test Prep (WCS03) or Structural Parts Steel Qualification Test Prep (SPS05) Advanced High Strength Steel Overview Materials (SPS09) Automotive Foams (FOM01) Steel Unitized Structures Technologies and Repair (SPS07)

Following a successful 2014 NACE | CARS returns to the Motor City in 2015!

NACE | CARS 2015 will offer the largest conference program and live demonstration area in its 33 year history, including: » Business and management education for owners and executives » Technical training courses on the latest advancements and trends » Live, interactive demonstrations on collision and mechanical technologies » MSO Symposium is back! Exclusive program featuring high-growth strategies, M&A, international growth, divestiture, operational excellence, and more!

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» Technology & Telematics expands with presentations and live demos featuring connected vehicles » Service Repair Leadership Forum designed for leaders and managers in the mechanical repair field addresses business and technology challenges, strategies and operations » Young Technician’s Symposium - Powered by Bosch This two part program will evaluate your electrical system knowledge, diagnostic approach and help you understand how to improve your skills. A live training simulator will be used to demonstrate real world diagnostic examples and student response buttons will provide instant feedback on your progress.

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Cross Country The industry’s shift towards aluminum demands proper education, from coast to coast. By Jeff Sanford

hen Ford announced the arrival of the aluminum-bodied F-150, the industry braced for a major change. Being able to repair the lightweight metal, arguably, became a basic requirement, and one not without specialized tools and training. “There is an art to it,” says Sean Slaven, the Ontario Sales Manager for Arslan Automotive Canada, a distributor of tools needed to perform aluminum repairs. To update the industry on the process, Slaven joined a team of Arslan employees travelling crosscountry, giving four-hour seminars in every corner of Canada. Arslan provides the MIG welders, fume extraction systems, Wet Mix air filtration systems and specialized rivet guns necessary to work with aluminum. To help familiarize clients with these tools, the company sent staff to Italy for a week to pick up the techniques where aluminum has long been common in vehicle manufacturing. Whe n C olli sion Repair mag a z i ne caught up with Slaven, he had visited the Northern Alberta Institute of Technology training facility in Edmonton and the Manitoba Public Insurance group in Re-

gina. Next, Slaven drove and stopped off in a remote Saskatchewan town and visited a local collision repair facility, where they ended up giving the presentation. “We did a full-fledged clinic that evening. It was great,” says Slaven. “You realize how big this country really is.” Then it was on to Abbotsford and back to the East Coast. “We’ve been right across the country,” says Slaven. “It’s been great.” S l a v e n’s s e m i n a r b e g i n s w i t h a 20-minute Power Point presentation on the industry’s recent history. He starts in the 70s when Trans Ams and oxy-acetylene torches were cutting edge, and works up to the arrival of uni-body cars to the current surge of aluminum. “We show them, ‘This is where we started. This is where we are today.’ The technicians love it,” he says. “It helps you realize that there have always been advances in collision repair techniques all along.” It is, of course, the arrival of the F-150 at heart of the latest round of advances. Gasoline prices have been generally higher in the 2000s than they were in the 80s and 90s. Automakers are looking at any way to cut costs. While aluminum may be a complex material to work with,

The Edmonton Cmax and Arslan Aluminum Clinic at NAIT, Northern Alberta Institute of Technology training facility featured aluminum repair equipment provided by Arslan.

The Arslan Automotive sales team picked up aluminum repair techniques at the Tecna plant in Italy.

many expect it to be widely used in the near future. Just consider the numbers. Consultancy Ducker Worldwide recently released its 2015 North American Light Vehicle Aluminum Content Study. According to the report, total North American light vehicle aluminum consumption will increase by 28 percent in 2015 over 2012. Aluminum hood penetration will increase from 34 percent in 2012 to 48 percent in 2015. Complete bodies will reach 18 perAUGUST 2015 COLLISION REPAIR 63

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From left: Arslan’s Claude Vezina, Jason Gray, Sylvain Landry, Sean Slaven, Tecna Italy’s Stefania Sgarzi and Arman Gurarslan of Arslan sales staff, on site at the Tecna plant in Italy.

Arslan sent a team of employees on a cross-country trip to educate collision repair centre staff on proper aluminum repair.

cent penetration, up from less than one percent today. Total aluminum content will climb to 547 lb per vehicle. Ford, GM and Fiat Chrysler will emerge as the biggest uses of aluminum sheet. American metal companies are making huge billion dollar investments in aluminum production facilities. An executive with aluminum producer Rio Tinto Alcan likened the industry’s growing interest to the switch from steel to aluminum pop cans in the 70s. He deemed it a new era. Slaven agrees. “Insurance companies are soon going to be telling the body shops to repair aluminum instead of replacing it,” he says, adding that working with the material will become the norm. “The shift is coming. It’s going to be huge. It’s not just Ford. It’s Toyota, Nissan and GM.” Arslan President Arman Gurarslan says he expects the sale of aluminum repair equipment to be big business for his company. “Eighty to eighty-five percent of body shops don’t have the tools. So we think this is going to be big for us over the next two years,” says Gurarslan. “There is a need for these clinics.” Understanding how to work with aluminum is a serious matter. The dust created when working with the metal can be highly combustive. “When miners working with explosives

need a little extra oomph, they add aluminum dust,” says Slaven, noting an incident in China where dust ignited in an aluminum

“THE SHIFT IS COMING. IT’S GOING TO BE HUGE. IT’S NOT JUST FORD. IT’S TOYOTA, NISSAN AND GM.” – SEAN SLAVEN

wheel plant killing several workers. There was another explosion recently in California, further highlighting the importance of proper training – and a clean room. “You can’t have aluminum dust mixing with steel or bonding materials. The room you weld and prepare the car in has to be super clean or it could be explosive,” says

64 COLLISION REPAIR COLLISIONREPAIRMAG.COM

Slaven. “Typically in body shops, it’s fairly dusty. Unless you have a place to capture and control that dust, you can’t do it. You’ll cross-contaminate.” Helping to facilitate the demand, Toronto-based Eurovac distributes fume and dust evacuation units. The company has had to increase its warehouse as distribution into the US expands. “It’s been a big deal for us,” says Burt Retter, head of Eurovac. His company is finding success selling systems into the US where insurance companies have required collision centres to be certified to work with aluminum. “In Canada they didn’t make it mandatory. But in the US, you have to be certified,” he says. “So we’ve seen some good business. In this country it was more of a voluntary thing. Here, the independents have taken a ‘wait and see’ attitude.’” Even so, he expects the trend toward aluminum to be long and strong. “Aluminum has been around for a long time. But nobody had made the commitment that Ford did. Slowly but surely the industry is adopting aluminum. We see the trend continuing,” says Retter. “The primary motivation is to get the weight down to accomplish new mileage regulations. That’s really the driving force here. Overall, the aluminum thing is for real. It’s going to continue.” CRM

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Ontario passes road safety bill, Move Over law extends to tow trucks Bill 31, the Making Ontario’s Roads Safer Act, was recently and unanimously approved in the Ontario legislature. The amendment to the Highway Traffic Act and the Highway 407 East Act, 2012, passed third and final reading on June 2 at Toronto’s Queen’s Park. The legislation zeroes in on several road safety issues Canadian Automobile Association (CAA) members have identified as high priority, including distracted driving, cycling initiatives, and slow down move over provisions for tow truck operators, CAA South Central Ontario stated in a release. “For many years, CAA has been active advocating at Queen’s Park on many of the elements contained in Bill 31,” says Teresa Di Felice, CAA South Central Ontario’s Director of Government and Community Relations, and Driver Training. “As a tireless advocate

for all road users, CAA is pleased to see significant changes to address distracted driving, improve cycling in our province and provide enhanced safety measures for tow truck operators providing service to motorists on Ontario’s roads.” The association has long pushed for tow truck drivers to be added to the list of emergency roadside workers already protected under the province’s Move Over law. Under the act, Ontario will join five provinces with the legislation already in place — requiring motorists to slow down and move into an adjacent lane when approaching an emergency vehicle with its lights flashing. “Everyone deserves a safe place to work even in non-traditional environments such as the side of the road,” Di Felice says. “Extending slow down, move over protec-

tion will improve safety for both tow truck workers and motorists who are stopped due to mechanical failure, damage or collisions on Ontario’s highways and roads.” The bill also proposes harsher penalties for motorists found guilty of distracted driving. Set to take effect this fall, offenders will face increased fines — ranging from $300 to $1,000 — and three demerit points. New drivers will receive an immediate 30day suspension on first offence. Bill 31 aims to further improve road safety by permitting cyclists to ride on the paved shoulders of unrestricted highways, and enforcing drivers to allow 1 metre of room when passing a cyclist. For more information on CAA and the association’s efforts, please visit caasco. com/community-action. To read Bill 31 in full, go to ontla.on.ca.

CAA Manitoba, RCMP roadside experiment highlights need for Move Over awareness

Towing company fined $30K in Cornwall court

The majority of motorists may need to brush up on the province’s Move Over law, according to an experiment conducted by CAA Manitoba and RCMP. The May 13 study found that out of the 316 drivers who passed a staged tow-truck scene on the side of the TransCanada Highway just west of Winnipeg, nearly two thirds moved to an alternate lane — but a staggering 99 percent did not slow down. CAA Manitoba president and CEO Mike Mager called findings of the roadside probe shocking. “The ones that pulled over, we had speeds that averaged 110 km/h and it was very concerning to have people go by like that at a

A former Cornwall, Ontario towing company faces $30,000 in fines after failing to pay past employees. CRR Cornwall Roadside Recovery, known as Glen’s Towing, and director Glen Comeau were fined during a Provincial Offences Act court trial on June 4, Cornwall Newswatch reports. The company and Comeau were found owing around $10,000 of the respective $30,413 and $25,345 they were ordered to pay in 2013, resulting in newly issued fines. The claimants, six tow truck drivers, were owed overtime, vacation pay, public holiday pay and had been impacted by unauthorized deductions, according to the Ministry of Labour. The defendants are currently situated in Dorval and Vaudreuil-Dorion, Quebec.

high speed,” he told 680 News. “They’re moving over, but they’re not slowing down.” RCMP officer Const. Shawn Smith echoed Mager’s sentiments in a Global News report. “ Yo u g o t p e o p l e s p e e d i n g a n d speeding past an emergency vehicle,” says Smith. “It’s unbelievable.” According to legislation introduced in September 2014, motorists face a fine of $300 and two demerit points when failing to slow down when passing a parked emergency vehicle with its lights flashing. When approaching a tow truck, police cruiser or ambulance, drivers are to reduce their speed to 60 km/h in 80 km/h zones, and slow to 40 km/h in zones where the posted limit is below 80 km/h.

For advertising inquiries, please contact Mike Davey at 905-370-0101 or advertising@collisionrepairmag.com. 66 COLLISION REPAIR COLLISIONREPAIRMAG.COM

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CONTENTS Recycling News.....................68 - 75 Tire Take Back event marks sixth year, ARC to act as patron at 2016 IARC and much, much more. Recycler’s View............................76 by David Gold

Tire Take Back event continues to grow with farmers in the mix By Mike Davey

Tire Take Back 2015 took place June 1 to 6 at over 60 participating locations across Ontario.

For more than half a decade, the Tire Take Back event has been turning discarded tires into community benefits and helping to fulfill dreams for kids. This year marks six years of the Ontario Automotive Recyclers Association (OARA) working to raise funds for Sunshine Foundation through its Tire Take Back program. From June 1 to 6, participating OARA members across the province took in used tires at over 60 locations and donated the collection fees to help fulfill dreams for Sunshine Kids through the Individual Dreams and DreamLift programs. Since 2010, OARA and its members have raised over $820,000 for Sunshine Children.

Tire Take Back is a collaboration between OARA and Ontario Tire Stewardship (OTS), with many companies such as collectors, haulers and processors donating time and resources to make sure all the funds go straight to charity. This year, a new partner entered the mix: the Ontario Federation of Agriculture (OFA) and it’s already started showing benefits. One farmer may have donated well in excess of 7,000 tires this year, although final numbers have yet to confirmed. “The word is getting out, but we still have more work to do when it comes to building awareness,” says Steve Fletcher, Executive Director of OARA. “However, there are

Continued on page 70.

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ARC TO SERVE AS PATRON FOR NEXT INTERNATIONAL CONGRESS The automotive industry has a global reach and impact, and the recycling side of the business does as well. The International Automobile Recycling Congress (IARC) brings together key industry stakeholders from all around the world to discuss best practices, environmental issues and emerging trends. Recently, the Automotive Recyclers of Canada (ARC) has become a patron of IARC to help promote the global automotive recycling industry. Ed MacDonald of Maritime Auto Parts is well known for his involvement with ARC. He presented on the association at the 2015 IARC in Berlin, Germany. “Over the years, IARC has become the platform for discussion of the latest developments and the challenges of automobile recycling,” says Steve Fletcher, Managing Director of ARC. “The congress brings together the various links in the ELV recycling chain such as car manufacturers, metal and plastic scrap traders, recyclers, shredder operators and policy-makers from all over the world. There are representatives from the industry, authorities and academia.” ARC will begin its patronage with IARC 2016, to be held from March 16 to 18, 2016 in the Hotel Palace in Berlin, Germany. Continued on page 71.

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FOR COLLISION Quality Replacement Parts (QRP) is our computerized inventory system. It allows real time requests with quick responses! The system is easy to use. Request a part and all members receive the request and respond in under 15 minutes with competitive quotes based on quality and availability. But that’s not all! QRP also gives you the power to obtain several different parts from different yards, all with a single mouse click! FOR INSURERS Our total salvage management solution provides insurers with a convenient way to generate competitive returns while ensuring their total loss vehicles are handled promptly and properly. FOR MECHANICAL REPAIRERS QRP offers you the same great functionality enjoyed by collision repairers. Request parts one at a time, and within minutes receive competitive quotes from our entire network. You can still put together an entire repair order with a single click! Don’t forget to get a quote on extended warranties!

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OUR MEMBERS A&L Auto Recyclers (800) 265-2128 Comber, ON AADCO Auto Parts (866) 283-7278 Brampton, ON Andy’s Auto Wreckers (800) 265-1945 London, ON Arnprior/ Ottawa Auto (800) 267-7386 Arnprior, ON Bell City Auto Center (800) 265-8498 Brantford, ON Bickell Auto Parts (800) 461-2225 Sault St. Marie, ON Bodyline Auto Recyclers (800) 263-1329 Hamilton, ON Carcone’s Auto Recycling (800) 263-2022 Aurora, ON Corey Auto Wreckers (800) 265-9250 London, ON Dave’s Truck and Auto Parts (800) 267-9110 Carp, ON Dom’s Auto Parts (800) 481-7272 Courtice, ON Doug’s Auto Parts (800) 267-0235 Joyceville, ON Early’s Auto Parts (705) 435-7708 Alliston, ON Hank’s Auto Wreckers (800) 265-6179 St. Clements, ON Hilltop Auto Wreckers (800) 441-9812 Cedar Valley, ON Hotch’s Auto Parts (800) 267-5598 Prince Edward County, ON King’s Auto Recyclers (800) 563-2423 Peterborough, ON Logel’s Auto Parts (800) 463-2986 Kitchener, ON

Maritime Auto Salvage (800) 565-7278 Lower Debert, NS Mark’s Parts (855) 833-9939 St. Isidore, ON Miller’s Auto Recycling (800) 263-8104 Fort Erie, ON No 9 Auto Wreckers (800) 263-3267 Tottenham, ON P&G Auto Parts (800) 461-9562 North Bay, ON Parkway Auto Recyclers (800) 265-6464 Kitchener, ON Peterboro Auto Recyclers (800) 461-1798 Peterborough, ON Port Perry Auto Wreckers (877) 343-3336 Blackstock, ON Rock City Auto Supplies (800) 461-7144 Sudbury, ON Standard Auto Wreckers (800) 263-3595 Nepean, ON Standard Auto Wreckers (905) 885-9576 Port Hope, ON Standard Auto Wreckers (800) 668-5014 Scarborough, ON T&T Auto Supply (807) 577-8449 Thunder Bay, ON Thorold Auto Wreckers (800) 263-4708 Thorold, ON Valley Automotive (800) 565-7667 Pembroke, ON Woodbeck Auto Parts (800) 267-2542 Stirling, ON

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Tire Take Back ... continued from page 68.

already a number of success stories from the agricultural side, just from the first year.” And no wonder. Discarded tires sitting in a field are no good to anyone, plus they are both an environmental and a health hazard, as tire piles serve as almost an ideal breeding ground for mosquitoes. Once they’re collected and processed, however, they’re a definite benefit. Discarded tires can be recycled into a wide variety of consumer products, saving energy and raw materials. That’s a great benefit and it shouldn’t be discounted. However, for most of the people involved, it’s the benefits for the Sunshine Foundation kids that really count. “I think the most inspiring part of this community program are the participants, the businesses that get involved,” says The Sunshine Foundation’s Heidi Spannbauer. “There’s this amazing group of organizers, OARA, OTS and the Ontario Federation of Agriculture, forming the leadership that’s moving us forward, but it’s the companies that participate, the collectors, the haulers and the processors that really are the backbone to this program.” Spannbauer notes that the tires dropped off during Tire Take Back aren’t simply chunks of rubber at the end of their lives. They’re currency. “They really are like currency. The collectors don’t keep it, the processors and the haulers don’t keep it, the funds go directly to The Sunshine Foundation.”

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David Gold, co-owner of Standard Auto Wreckers.

The 2015 installment received a big boost in the Toronto media, thanks to a segment aired on CityTV’s Breakfast Television. The segment, filmed at Standard Auto Wrecker’s Toronto location, featured interviews with Fletcher, Spannbauer, Manager of Promotions and Education with Ontario Tire Stewardship, Krista Cassidy, and David Gold of Standard Auto Wreckers. More than 46,000 tires were collected last year across Ontario during the Tire Take Back events, raising over $90,000. The funds raised help The Sunshine Foundation fulfil dreams for children within its network, including trips of a lifetime to Disneyworld, meeting an idol, and providing adaptive mobility devices. For more information on Tire Take Back, please visit rethinktires.ca.

IARC Patronage ... continued from page 60.

Over 250 industry leaders are expected to attend unique international recycling congress. In addition to education, seminars and presentations, IARC features an exhibition area integrated into the conference facilities, giving auto recyclers a chance to meet with suppliers and see the latest equipment and tools to help improve their businesses.

Social events, ideal for networking, are also planned. These include cocktail receptions and a networking dinner to provide attendees with a chance to share ideas and information with business partners,

colleagues and competitors. The congress is also organizing plant tours to leading recycling companies in the vicinity of Berlin. For more information or to register, please visit icm.ch/iarc-2016.

Wally Dingman and AADCO’s Don Fraser.

HOLLANDER LAUNCHES CORECONNECT PARTS APP Hollander has announced the release of CoreConnect, a web-based app designed to help auto recyclers identify the price and demand of core parts. Developed in partnership with Rebuilders Automotive Supply (RAS), CoreConnect aims to assist recyclers in determining the value of cores they have in inventory or on salvaged vehicles they are considering purchasing by identifying the demand for those parts. “A common ask from our customers is to help them identify more demand for their parts. CoreConnect provides them with that key knowledge for their business,” says Chad Meyer, Hollander’s Senior Director of Product Management. “In one instance, the solution identified over $76,000 of immediate revenue for a recycler. CoreConnect provides them with inventory valuation, key decision support information within the applications workflow, and streamlines the process of selling and shipping the parts to RAS.” According to the company, RAS identifies the level of demand from manufacturers and rebuilders within a recycler’s inventory in EDEN, Hollander’s parts locating network. Current users of Hollander’s Powerlink yard management system can also integrate with

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AUGUST 2015 COLLISION REPAIR 71

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CoreConnect, automating the associated inventory management and sales process. The app provides a variety of ways to identify the parts’ value — including searching by vehicle by entering or scanning the VIN, running a query against the inventory, and subscribing to alerts for limited time offers for high value parts. When a core is placed into the program, the price is guaranteed for a period of time, while the recycler is able to remove and sell the core elsewhere. Through integration with Powerlink, the parts are removed from inventory and delisted from EDEN, eBay, HollanderParts.com and Hollander Storefront. CoreConnect also manages notification to RAS to pick up a core bin when full and electronically invoices them. “Our vision was to use technology to seamlessly connect the high demand for cores from numerous sources with supply; CoreConnect is the reality of that vision,” says Jack Bowser, CEO of Rebuilders Automotive Supply. “RAS, along with Hollander, is excited to bring this solution to market and help all core market stakeholders.” For more information on Hollander, please visit hollandersolutions.com.

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The Automotive Recyclers Association of Atlantic Canada (ARAAC) met recently in Fredericton, New Brunswick to discuss the various important issues relevant to the member recyclers in the four Atlantic Provinces. Board elections took place and Andrew MacDonald, owner of Maritime Auto Salvage was elected as Chair of ARAAC; Dalbert Livingstone, owner, Island Auto Salvage is the new Vice Chair; Shelly Blenkhorn of Blenkhorns Auto Recyclers has been confirmed as Treasurer and Heather Langille from host Capital City Auto Parts is the association Secretary. “I am really excited to see what Andrew has in store as our leader for the next couple of years. He is very smart, and always at the forefront on anything going on in our industry,” says Livingstone. The Atlantic Association is comprised of four Provinces in Canada and is focused on working with government environmental representatives of each of the four provinces to essentially modernize and homogenize the environmental stan-

dards and regulations to be in the ELV processing sector with the utilization of the Canadian Automotive Recyclers Environmental Code as the baseline for the development of these regulations. Just prior to the association’s weekend meeting, the Executive, Steve Fletcher, Managing Director, ARC, and ARA Past President Ed MacDonald met with representatives of the Nova Scotia Minister of the Environment to discuss revised standards. The Executive was pleased to report to its members that a commitment by the Provincial Government was made to work with the association in the development of new provincial standards within the next year. “Steve Fletcher is truly an asset to our association, if only there was a way to clone him,” says Livingstone. The Canadian national code, known as CAREC, endorsed by Environment Canada, is the standard that all recyclers must attain to be admitted to any association in Canada, and this is the standard that Nova Scotia will use to

begin their review of the regulations. Also represented at the meeting were various Government agencies. As well, thepeople present at the meeting were fortunate to have several vendors, including RAS Cores and Hollander who showed the attendees how they are improving their products. Other presentations included ELV Select, and Car-Part.Com and Power-DB, who not only provided information on their product lines, but demonstrated that they are strong and consistent supporters of the industry in various ways. “Car-Part.com also had some news on the Car-Part Gold feature,” says Livingstone. “They are constantly working with repair shops to make it as easy as possible to sell our quality green recycled parts, and Philippe Clermont gave a great presentation on Power-DB. His dashboard

is very well done, and his software is tailored to recycling yards. His experience in the industry shows in his work. He presented his software, and showed how it can benefit a recycling facility, not only by improving sales, but also helping with in-

ventory and production.” The event ended with a facility tour of host Capital City Auto Parts, and a ro u s i n g d i n n e r a n d e n t e r t a i n m e n t f o cusing on music and humour of Canada’s Atlantic Region.

ARAAC members met in Fredericton, New Brunswick.

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Volleyball team sees tremendous support from auto recyclers By Steve Fletcher

This year, the Forest City 15U Green Team from London, Ontario had a very successful volleyball season. Their incredible success is in part due to good coaching, talented athletes, dedicated parents — and the support of the Canadian auto recycling industry. As Managing Director of the Automotive Recyclers of Canada (ARC), I have had the honour of representing the auto recycling industry in Canada and increasingly on a global basis. Over these past 23 years, I have gotten to know hundreds of members on both a personal and professional level. My daughter, Iris Fletcher, joined an already successful club team with a great bunch of girls last year. They had their sights set pretty high, and that sometimes takes a bit of money to achieve.

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The team organized a raffle draw for a series gift baskets. I thought to myself, “Why not send a quick note out to see if anyone wanted to buy a ticket or even sponsor the team?” The response was overwhelming. My quick note ended up generating over $4,100 in tickets and outright sponsorship. T h e s e m o n i e s h e l p e d t o p ro v i d e o u t s t a n d i n g c o a c h i n g throughout the season by offsetting the travel costs for all three of our great coaches to be with the team at all tournaments, right up to the Nationals in Calgary, Alberta. The team achieved great success, placing fifth out of over 150 teams at the Ontario Championships, and winning Bronze at National Championships in Calgary this past May. Along the way, they compiled a record of 33 wins/5 losses at the U15 level, and 10 wins/5 losses at the U16 level — in addition to collecting 2 Gold, 3 Silver and 2 Bronze medals. Throughout the season, after each tournament, I tried to send a few pictures and results, hoping not to bother already busy people. But I knew they were engaged when a few would email asking, “How did Iris and the team do last weekend?” I even had Collision Repair magazine’s own Gloria Mann come out to a few games and start to learn the sport of volleyball!

On behalf of the Fletcher family, and the Forest City 15U Green Team and their coaches, I would like to thank each and every one of our supporters. They collectively helped to make a great season even better, and reminded me of just how great the members of the auto recycling community in Canada truly are. Thank you to: 400 Auto Wreckers, 404 Auto Recycling, AADCO Auto Parts, Aimes Auto Parts, Auto Parts Network, Bastarache Auto Salvage, Brown’s Auto Salvage, Carcone’s Auto Recycling, Cookstown Auto Centre, Copart Auto Auctions, Coreline Auto Parts, Couper Marketing Services, Dave’s Auto Parts, Direct Auto, Dom’s Auto Parts, Doug’s Auto Parts, DSK Enterprise, Dugas Auto Recyclers, Glencoe Auto Recyclers, Gloria Mann, Green’s Auto Parts, Hank’s Auto Wreckers, Hotch’s Auto Parts, Impact Auto Auction, Island Auto Supply, J & B Auto Recyclers, King’s Auto Recycling, LKQ Sonshine Auto Parts, Maritime Auto Parts, McGregor Auto Parts, Millers Auto Recycling, MK Auto Recyclers, P&G Auto Recycling, Progressive Auto Parts, Public Inc, Rush Auto, Salvage Supply & Technology, Summerhill Group, Summerhill Impact, Sunrise Towing & Salvage, Team Auto, Trillium Tire, and Wholesale Auto Parts Warehouses.

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AUGUST 2015 COLLISION REPAIR 75

RECYCLING I

PERFECTPICK In the business of recycled parts, quality is relative. By David Gold

ears ago I wrote about why parts are returned, and the benefits a more accurate parts ordering process would have for industry stakeholders. While quality was third out of the top five reasons for the overall return rate, it has come to our company’s attention that oftentimes the recycler decides a part is not up to standards and vetoes the sale without ever letting the customer weigh in. This practice holds true for sheet metal and crash parts as much as it does for mechanical parts, and the net result is more than lost sales, but a lack of confidence all around. To illustrate, a customer called for a fender for an older truck, guaranteed to be rusted on

As a recycler from the North East part of North America, and with vehicles lasting longer, one can only expect that we’ll sell older parts with imperfections. While our sub frames, rear ends and suspension pieces reflect what a typical part would look like on the same vehicle on the roads today, the description can cause our salespeople to avoid them like the plague. A few years back, I remember my hesitation when an insurance company called for a door, and the one in stock was C quality. I decided to arrange the delivery personally, and highlighted the light inner rust on the lip of the door. Suprisingly, the collision centre was very reasonable, noting that vehicle type rusts in the same spot, and it wasn’t a problem. I realized the client’s car

OUR INDUSTRY NEEDS TO DO A BETTER JOB OF WORKING WITH ALL OF OUR END USERS.

the inner structure to some extent due to that particular year, make and model. Our salesperson detailed the part’s condition, and to be accurate, had our production manager look at it. The information was relayed to the customer, who was more than happy to receive the part as it solved his problem — furthermore, the replacement would be equal to, or even better than the original. Even though the description on our tag in our inventory management system clearly detailed the imperfections, our QC department held the order up, citing quality issues. Our internal processes didn’t allow for the part to be shipped because of the notion that it did not meet set standards. This occurred despite the fact that the customer did his research, and wanted that exact part! The issue of quality parts is a complicated one. Recycled green parts come from varying types of vehicles and year ranges and the recycler’s responsibility should be to clearly denote the imperfections with any part for the customer’s consideration. Take my own 2006 Acura MDX with plastic, weathered headlights. If I need to replace one of them, would I want a shiny new one, or one of equal quality to the headlight on the other side? I think the answer is clear, no pun intended! 76 COLLISION REPAIR COLLISIONREPAIRMAG.COM

door was smashed in badly, and the one I delivered was appropriate for the repair. I can’t help but think of the difference it would make in terms of customer satisfaction if all of our salespeople, shipping and QC team members interacted face-to-face with our customers. Our industry needs to do a better job of working with all of our end users, clearly detailing the descriptions of our parts and making them available for customers to decide whether or not they meet standards. During the delivery process, we also have to make sure that decisions are made to ensure the parts that we deliver stick. As I have noted previously, recyclers have always had to deal with returns and credits. We all know that we are dealing with a used product. However, since the profitability of both our industries are at stake, it is most important that we work together to increase the successful use of our parts. The benefits of green recycled parts surely outweigh any real or perceived quality problems! CRM David Gold is the co-owner of Standard Auto Wreckers, with locations in Toronto, Ottawa, Port Hope, and Niagara Falls, New York. He can be reached by phone at 416-286-8686 or via e-mail at david@standardautowreckers.com.

FINANCIAL INSIGHT

BIGBUSINESS Financial titans are interested in collision repair. ADVERTISER INDEX COMPANY

By Jeff Sanford

PAGE

3M ......................................... 9 AADCO Auto Parts ............ 73 AIA ....................................... 16 AkzoNobel .......................... 26 ARC ..................................... 71 Arslan .................................. 15 Assured Automotive .......... 32 Axalta ........................ 11, OBC BASF ..................................... 4 Boston Auto Wreckers ...... 73 Canadian Hail ..................... 23 Carcone’s Auto Recycling . 75 Car-Part.com ...................... 77 Cardinal Couriers ............... 24 Car-MS QRP ...................... 69 Car-O-Liner .................. 28, 31 CARSTAR ........................... 21 Collision 360 ....................... 14 Color Compass .................. 10 CSN ..................................... 58 Dom’s Auto Recycling ....... 72 DV Systems .......................... 7 Fix Auto ............................... 13 Garmat ................................ 18 Hilltop Auto Recycling ....... 73 Hollander ............................ 54 Impact Auto Auctions ........ 33 LKQ Sonshine ..................... 74 Mercedes-Benz ................. 19 Mitchell ............................... 45 Ontario College of Trades . 37 Parkway Auto Recyclers ... 73 PPG ................................... IFC Prochilo Brothers ............... 36 Prospot ............................... 62 QRP BC .............................. 70 Rhino ................................... 29 Sherwin Williams ............. IBC Spanesi ............................... 38 Speedy Collision ................ 65 Spraymax ........................... 53 Standard Auto Wreckers ... 12 Stark .................................... 67 Steck ................................... 22 Valspar ................................ 35

78 COLLISION REPAIR COLLISIONREPAIRMAG.COM

t is no news to anyone in the industry: collision repair is in the midst of a major wave of consolidation. Some of the world’s biggest investment funds have decided that the fragmented US collision sector is ripe to be “rolled up.” The number of acquisitions is at an all-time high. Getting a handle on how the players are lining it up will be the pre-occupation of this new column.

industry consolidation,” said Patterson. He is confident OMERS has a winning strategy with Caliber. “We think they have the best management team in the industry. The company is the acquirer of choice in the industry.” He says the company’s strategy is already ahead of schedule. “We have doubled the size of the business in the last 19 months or so. That’s pretty impressive growth. We added 77 new sites in 2014, and 58 new

COLLISION REPAIR IS IN THE MIDST OF A MAJOR WAVE OF CONSOLIDATION. First off, the basics on consolidation. The International Bodyshop Industry Symposium (IBIS) conference was held in Athens, Greece in late May. The gathering featured a presentation from Rex Green, an investment banker with BB&T Capital Markets. He explained that, “the conclusion is clear...within ten years roughly two-thirds of the revenues from the $30 billion industry will be captured by the four consolidators.” Who might win the race? One of the major players in this game is the pension fund for Ontario municipal employees, the Ontario Municipal Employees Retirement Systems (OMERS). Through its private equity division the fund bought up a controlling stake in Caliber Collision Centers, an American MSO that controls about 300 collision repair facilities through the southern US. The deal was done through OMERS private equity division, OMERS Private Equity (OPE). In a recent interview, Tim Patterson, managing director of OMERS Private Equity, explained the strategy. “The top four Multi-Site Operators own less than 10 percent of the sector’s revenue, and less than five percent of the shops. That’s an attractive dynamic for

sites in the first five and half months of this year alone. And we expect to continue growing at this pace for the next few years at a minimum,” he says. There are challengers, however. In his IBIS presentation, Green identified what he callled the four horsemen of the Consolidation: Abra Auto Body & Glass, Boyd, Caliber Collision and Service King (controlled by infamous “activist” investor Carl Icahn). This group has doubled the number of stores owned from 418 in November to 919 in April of 2015. But growth in deal flow has “exploded” since 2013 as “the four horsemen” collectively grew their locations at a rate of growth of 89 percent. That is, the consolidation of the US collision repair industry is going ahead full-speed. Keep checking back to this space for full coverage of the race as it is being run. There has never been as much action in the collision repair space as there is today. CRM Jeff Sanford is the Staff Writer for Collision Repair magazine. He can be reached at 905-370-0101 or at jeff@ collisionrepairmag.com.

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