Wisconsin Automotive News Fall 2020

Page 1

FALL 2020

PARTS in CRISIS:

Inside the

“Opt OE” DEBACLE WACTAL Member

Spotlight: AUTO COLLISION SPECIALISTS

BODY SHOP SUPPLY CO. INC. “The Auto Paint People”

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Wisconsin Automotive News

Fall 2020

2020 WACTAL BOARD of DIRECTORS President Larry Terrien, MJ Collision Center larry@mjcollisioncenter.com Vice President Mark Williams, Williams Auto Body mark@williamsautobody.com Secretary Ronnie Goss, Goss Auto Body, Inc. ronnie@gossautobody.com Treasurer Sue Black, Dean’s Auto Body suzieq@deansautobody.com

Fall 2020

CONTENTS

Vol. 8, Number 1

COVER STORY

CRASH PARTS IN CRISIS:

8

Inside the “Opt OE” Debacle by Joel Gausten

Directors Eileen Haberman, Glen's Auto Body, Inc Steve Humblet, Quality Paint & Body, Inc. Ken Kempfer, Fox Valley Technical College Michael Taylor, Zimbrick ChevroletSun Prairie Tracy Black, Dean’s Auto Body, Inc. Executive Director Deb Brunett info@wactal.com 262-542-7707 Lobbyist Jolene Plautz jplautz@aol.com

CELEBRATING 30 YEARS PUBLISHED BY: Thomas Greco Publishing, Inc. 244 Chestnut St., Suite 202 Nutley, NJ 07110 PHONE: 973-667-6922 • FAX: 973-235-1963 ADVERTISING: 973-667-6922 • alicia@grecopublishing.com PUBLISHER Thomas Greco (thomas@grecopublishing.com) SALES DIRECTOR Alicia Figurelli (alicia@grecopublishing.com) GRAPHIC DESIGNER Lisa M. Cuthbert (lisa@grecopublishing.com) EDITORIAL DIRECTOR Joel Gausten (joel@grecopublishing.com) EDITORIAL / CREATIVE COORDINATOR Alana Bonillo (alana@grecopublishing.com) OFFICE MANAGER Donna Greco (donna@grecopublishing.com) www.grecopublishing.com Wisconsin Automotive News is published quarterly by Thomas Greco Publishing, Inc., 244 Chestnut Street, Suite 202 Nutley, NJ 07110. Distributed free to qualified recipients; $48 to all others. Additional copies of Wisconsin Automotive News are available at $5 per copy. Reproduction of any portions of this publication is specifically prohibited without written permission of the publisher. The opinions and ideas appearing in this magazine are not necessarily representations of Thomas Greco Publishing, Inc. or of WACTAL. Copyright © 2020 by Thomas Greco Publishing, Inc. Images © www.istockphoto.com.

We Must Fight Together by Larry Terrien

PRESIDENT’S MESSAGE..............................................................4

MY TWO CENTS ......................................................................6 It’s Not Rocket Science (and You Won’t Need a CPA) by Steve Humblet (Quality Paint & Body)

WACTAL MEMBERSHIP APPLICATION..............................................7

WACTAL MEMBER PROFILE ........................................................12 Auto Collision Specialists, Brown Deer by Alana Bonillo INDUSTRY ADVICE: ASK MIKE ......................................................14 How Can Shops Generate New Income despite COVID-19? ADVERTISER’S INDEX Body Shop Supply Co. ........................IFC

Reliable Automotive Equipment..........10-11

Dentsmart ..............................................17

Sherwin-Williams ..................................OBC

FinishMaster ..........................................5

Straight and Square..............................13

Morrison’s Auto Parts............................IBC

Zorn Compressor & Equipment..........16

Network 1 Solutions..............................18 Fall 2020

Wisconsin Automotive News

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PRESIDENT’S MESSAGE

We Must Fight Together COVID-19 may still be part of our daily lives, but I think for the most part we have learned to adjust to it and come up with solutions in our businesses on how to deal with it. At WACTAL, we are fighting a plague that has affected our industry for years, even decades. Many non-member shops say that we can never win against insurance companies. They are too big. They have too much power, or there are too many shops that just do as they are told. That’s like saying this COVID-19 pandemic is too big and there’s nothing that we can do. Of course it’s hard, but we come up with solutions to deal with it! Insurance companies have also changed the way they do business, with most adjusters working remotely and stepping up their insistence on photo estimating. Although the underlying reason is the safety for all involved in the process, there’s no denying that insurance carriers have saved millions by keeping their adjusters off the road. A result of this, however, is that shops are left picking up the slack with exponentially more administrative work. Insurers send out a bare-bones estimate written from a couple of photos, and then it’s the shop’s job to physically inspect the vehicle, research OEM procedures, write a proper repair plan, take good photos of everything and document the reasons they are doing all of the additional repairs. In addition to all this, they are left to explain to their customer why their estimate is so much higher than the insurance company’s estimate! I’ve heard from some shops that it is taking them several hours to research procedures, write a detailed repair plan and document everything. Have you ever received an estimate

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Wisconsin Automotive News

Fall 2020

from an insurance company where they researched OEM procedures? I bet not! If it’s too time-consuming for them and they dump it on you, then you need to get compensated for your time. How many of you are charging administrative fees for the time that you spend on this? This is just one of the many issues that we are hearing about from member shops, and it reinforces the reason why it is so important - now more than ever - to be a member of WACTAL. Together, we have the strength to deal with issues like this. But we cannot help you unless you help us. If you are not yet a member, now is the perfect time to join. If you are a member, please let us know what your issues are. Chances are, you are not “the only one” and there are other members who have already successfully dealt with the issue. If we join together, we can fight these battles. We can no longer let insurance companies and backyard repairers set industry standards and dictate how we conduct business. We must understand our costs of doing business and recognize that the manufacturers, not insurance companies, set the bar on how to repair vehicles. Above all, remember who your customer is. (Hint: it’s not the insurance company!) WACTAL has always advocated to fix cars correctly or not fix them at all. Together, we can fight to make this an industry that receives the respect and compensation that it deserves. Like COVID-19, it will not be an easy battle, but it is one that we must fight together! Larry Terrien President WAN

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Fall 2020

Wisconsin Automotive News

5

MY TWO CENTS By Steve Humblet

It’s Not Rocket Science (and You Won’t Need a CPA) Here’s a fun little exercise that is quick and easy. Take a period of sales: A month, a couple months or even a quarter or one year. (Weeks are too short a timeframe for any accuracy.) Divide that sales volume by the number of hours it took you and your team to produce those sales. The result is, in reality, what you’re charging for an hour of your shop’s talents and resources. This may surprise you for better or for worse. In my initial calculation, what I thought I was billing was woefully short of what I thought I was charging – “woefully” being less than my door rate! Yikes! On the plus side, it was an easy fix that didn’t take long at all. Should you be in that position, do the following: 1) Do what you can to improve efficiency. 2) Review your billings and estimates. In detail! Are

you charging for the services you’re providing? I was not doing this very well! 3) Increase your rates accordingly. If you’ve done numbers one and two, this is a no-brainer. You can do it, and now you know why you need to! Now, if your numbers were good, I’ll bet you can do better. Get after it! Reduced costs equals increased sales. See, there is no CPA required. Here’s some advice from the founder of GoDaddy, Bob Parsons: “Measure everything of significance. Anything that is measured and watched, improves.” It did for me. Steve Humblet is a WACTAL member and owner of Quality Paint & Body of Minocqua, WI. WAN

MONTHLY LY EXP E

$2,900.00 $200.00 $200.00 $250.00 $150.00 $325.00 $300.00 $500.00 $150.00 $700.00 $150.00 $100.00 0 $150.00 0 $600.00 0 $2,500.0 00 $175.00 0 $100.00 0 $500.00 0 $250.00 0 $10,200.0 00

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222 $45.95 $22.00 $67.95 $ 0.06

XXXX $72.02

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Wisconsin Automotive News

Fall 2020

The sample numbers provided here are based on a fictional three-man shop with office staff. This includes an owner still active in the “hands-on” part of car repair. These numbers are based on a monthly analysis for simplicity. A quarterly or yearly figure would present the most realistic comparisons. Your last year’s tax return and timecard totals would have all the information readily available to complete this. *This desired profit percentage is over and above the cost of doing business. Example: Instead of owning a body shop, you invested that money. What percentage could you expect to receive? A five to 10 percent return is considered a reasonable expectation. This calculator is intended to be used as a tool to aid in the determination of the Labor Rate necessary to meet the financial requirements of each shop.

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Fall 2020

Wisconsin Automotive News

7

COVER STORY By Joel Gausten

CRISIS:

Crash Parts in

Inside the “Opt OE” Debacle

packaging. However, it comes from a third-party “OE” may not always mean safe. supplier. It’s bought directly from the dealer by a It’s likely you’re seeing terms like “Opt OE, “Alt OE” or “Surplus OE” on estimates and in part third-party seller and has a third-party warranty. listings offered by suppliers more and more these days. Generally, these terms are used to identify Tier One-OEM: A new part manufactured by the original automaker parts that have been sourced vehicle manufacturer’s supplier, with identical outside of traditional OEM dealers/sources. specifications and engineering and no branding Although the inclusion of “OE” in their names differences. implies a level of quality and legitimacy, the rise of these parts in In some cases, third-party parts sellers the industry has led to ambiguity (typically found online) may be marketing so-called over the actual sources of these “Opt OE” parts that were actually manufactured products, how they are for use outside of the US. classified/defined and their appropriate use in the repair process. In some cases, third-party parts sellers (typically Tier One-OEM with Branding Differences: A new found online) may be marketing so-called “Opt part built by the vehicle manufacturer’s supplier, OE” parts that were actually manufactured for use with identical specifications and engineering. outside of the US. Although these parts can be However, the part will have different branding. purchased by repairers here, they may not adhere The third-party supplier delivers the part and to the same engineering and performance provides a warranty. standards as those products directly sold by OEMendorsed sources in America. In other cases, Aftermarket Certified: A new aftermarket more legitimate parts suppliers are using “Opt manufacturer’s part with third-party certification OE” to classify factory parts they’ve discounted to (i.e., the Certified Automotive Parts Association). incentivize insurers to direct shops to use them. The part has aftermarket packaging, is provided For most of 2019 (and as detailed in our by a third-party supplier and has a third-party Summer 2019 issue), the Collision Industry warranty. Conference (CIC) Parts and Materials Committee – comprised of more than 200 inter-industry Aftermarket Non-Certified: A new aftermarket members – focused its attention on reaching a manufacturer’s part with no third-party consensus on acceptable parts terminology and certification. It has aftermarket packaging, is definitions in the US marketplace. Unfortunately, provided by a third-party supplier and has a thirdthe year concluded with these efforts reaching a party warranty. standstill amidst what Committee Co-Chair Ken Weiss called “disagreement and discord.” After Led by Committee Co-Chair/Society of months of heated discussion, the Committee was Collision Repair Specialists (SCRS) Executive essentially split between two distinct camps Director Aaron Schulenburg and comprised of offering their own interpretations of alternative OEM representatives and Committee members “OE” wording. not invited to participate in the first working The first mindset was represented by a special group, the second working group offered just two CIC working group comprised of shops, insurers, definitions: parts suppliers and Information Providers. At the year-end CIC meeting in Las Vegas last November, OEM Part: A new part in the vehicle this group proposed a whopping six parts manufacturers’ (also referred to as OEM) categories for industry reference: authorized and official packaging, manufactured directly by the OEM or their approved, contracted OEM Dealer: A new vehicle manufacturer part supplier [and] distributed exclusively through the that comes in vehicle manufacturer packaging, is original equipment manufacturer’s official, provided by a vehicle manufacturer supplier and authorized distribution network in the market has a vehicle manufacturer warranty. specified by the OEM. Warrantied, updated and supported exclusively by the OEM. OEM Non-Dealer: A new vehicle manufacturer Continued on page 17 part that comes in vehicle manufacturer Fall 2020

Wisconsin Automotive News

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WACTAL MEMBER PROFILE By Alana Bonillo Auto Collision Specialists has called Brown Deer its home for the past 23 years.

AUTO COLLISION SPECIALISTS For Bob Rasmussen, owner of Auto Collision Specialists of Brown Deer, there is no other profession that would have allowed him to experience a daily sense of accomplishment more than collision repair – plus, he loves cars! Rasmussen’s interest in the auto body world started in his sophomore year of high school. He nurtured the interest by working on cars in his father’s garage at the family residence. It expanded to the point where he pretty much kicked his dad out of his own garage and took over. “There are a lot of different things I could’ve gotten involved with, but I enjoy working with my hands…I like taking something smashed and putting it back together.” During the winter months, he would take on jobs at body shops to further hone his

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Wisconsin Automotive News

Fall 2020

A look inside Auto Collision Specialists' bay area.

skills. In 1982, the time came for him to open up Auto Collision Specialists. For the first 15 years of the business, the shop operated from a rented building in Milwaukee. He then had the opportunity to purchase a vacant lot in Brown Deer, which has been home to Auto Collision Specialists for the past 23 years. Rasmussen is grateful for his tight-knit team of five employees, which he considers family. His general manager, Troy Dykstra, has been working with him for 19 years. Troy’s wife, Nicole, has been working as office manager for almost as long. Customers know they are in good hands with Auto Collision Specialists, as Rasmussen and his team appreciate the hardship of having their lives interrupted by an accident. They take pride in building relationships with their customers, and the shop is fully equipped with everything it needs to do high-quality repairs and return vehicles to preaccident condition. A former I-CAR instructor for roughly a decade, Rasmussen truly knows the importance of keeping up with training at his I-CAR Gold Class shop and regularly attends Page 1 various seminars and manufacturer presentations. As a longtime industry veteran, Rasmussen has seen

changes come and go over the years. One of the biggest ones he has witnessed is the takeover of mom and pop shops by MSOs as more and more move into the area. He’s seen many independent shops sell to MSOs. Another important way to keep up with industry trends and knowledge is to be an active member of WACTAL. Rasmussen has been a part of the association since 1985 and even served on the Board of Directors for about 20 years.

“There are more benefits to being involved with WACTAL than just being a member. The membership itself will provide you with benefits, but getting involved with the industry is certainly a bonus.”

“There are more benefits to being involved with WACTAL than just being a member. The membership itself will provide you with benefits, but getting involved with the industry is certainly a bonus. You get to know the industry better and get to know your colleagues and those in other shops. Many [other shops] are willing to help, but if you don’t reach out to others, you won’t know that. I’ve developed a lot of friendships over the years.” WAN

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Fall 2020

"Serving NW Wisconsin" Wisconsin Automotive News

13

INDUSTRY ADVICE

ASK MIKE: How Can Shops Generate New Income despite COVID-19? This month, we “ASK MIKE” for his thoughts on ways shops can generate new income even during the COVID19 pandemic. We at Wisconsin Automotive News hope you find this following exchange useful, and we encourage you to reach out to us if you have a question for Mike on this or any industry-related matter that he can answer in a subsequent issue. Wisconsin Automotive News: This has been a financially challenging year for many, but how can shops generate more income right now despite the ongoing pandemic? Mike Anderson: Many years ago, the CEO of Dunkin’ Donuts spoke at an event I attended. He talked about how Dunkin’ Donuts was successful and had all this business in the morning that paid their bills. However, he said their buildings were sitting empty the rest of the day. Therefore, they were not generating any revenue except in the morning. He explained that the company looked at ways to get more business. They actually purchased Baskin-Robbins. They became busy in the evenings because people were getting ice cream, but the middle of the day was still dead. So, they bought Togo’s, which made them busy in the middle of the day by offering sandwiches. Now, they had different business models for different times of the day. To shift gears, those who work for or with dealership body shops know that dealerships use what is called the ‘absorption rate.’ That means that the more the other

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Wisconsin Automotive News

Fall 2020

departments can absorb the overhead costs, the more money will flow to the bottom line whenever they sell a car. So, if they can make profit from the service department, the body shop or the parts department, then every car sale goes to the bottom line. The profit margins from car sales are not what they used to be; it’s pretty minimal and not enough to pay the bills. What Dunkin’ Donuts did was say, ‘The more we can have other businesses and income in there, the more they will absorb our costs and increase our profits.’ The reason I tell this story is because I think shops need to start thinking about diversification. Just like Dunkin’ Donuts diversified and decided to sell ice cream and sandwiches, shops need to think about what else they can do with their buildings and people. If they have other income streams, then it helps to not put so much pressure on the body shop to cover all the bills. In terms of diversification in our industry, calibration is the first thing that comes to mind. Most shops are subletting out their calibrations on cameras, blind spot monitoring, etc. to dealerships because they don’t have the equipment, training or square footage. But I think we’re starting to see some OEMs – specifically Nissan/Infiniti – getting ready to offer hands-on calibration classes for certified shops. If shops get the training, now they have the ability to get the equipment. Then, it is just a space constraint. One way to possibly solve this problem would be to do all the calibrations in the evening outside of normal business hours. If that

creates revenue, then you’ve already paid the bills. Calibration is a revenue source that’s going to grow. Another thing to consider is that the number of vehicles with ADAS is growing every year. When I talk to car dealerships across the country, they say they’re having record months selling cars because people don’t want to take an Uber or public transportation. Car sales are at an all-time high right now at most dealerships you talk to. That is going to accelerate the number of cars on the road with ADAS. That means there’s more of a potential market to do calibrations in-house. Another way to diversify is to bring your glass work in-house. The majority of shops are subletting that out, but there are a lot of great resources out there for training. Also, the equipment is affordable. A lot of shops also sublet their mechanical work – alignments, wheels, etc. If you’re a business doing $1.5 million or more a year in sales, then you can absolutely support having a full-time mechanic. When most shops sublet out, they’re only making 20 to 25 percent profit on that. If they can bring it in-house, the gross profit is probably going to be 60 to 70 percent – not to mention the cycle time improvement. Also, from a liability standpoint, bringing something in-house gives

you more assurance that you’re actually doing something correctly. I will caution – and I know I’m going to get some haters on this – that there is absolutely a difference between aftermarket scan tools and calibration targets versus factory ones. Make sure you’re getting the right equipment and targets from the OEMs and utilizing the training when it’s available. I’ve also seen shops doing more grassroots marketing and getting back to the things they did when they were just starting out in business. They’re really giving that personalized service to customers, but they’re also making sales calls. A statistic that I learned from Ryan Taylor from Bodyshop Booster is that 41 percent of all cars that go through a service lane at a dealership need some type of auto body work. On average, it’s a $900$1,000 repair. The average dealership runs about 60 to 100 cars a day through their service lane. Sixty cars a day through a service lane times 20 working days a month is 1,200 cars. If 41 percent need some type of body work, that’s roughly 400 cars a month. If we just capture 10 percent of those, that’s 40 percent more jobs. That’s income. If you’re a dealership body shop, focus on Continued on page 16

Fall 2020

Wisconsin Automotive News

15

ASK MIKE

Continued from page 15

building that relationship with your service lane. If you’re not a dealership body shop, I’m sure there are dealerships in your area that don’t have a body shop. Now, you have the opportunity to tap into that. Paint and materials profitability is another thing to look at. Most paint companies offer 20 Groups where you can benchmark and see where there are some areas of opportunity from a financial perspective. Obviously, another goal should be to capture the customer when you write an estimate. If you write an estimate for someone and they don’t schedule an appointment, follow up with them. When someone calls to schedule an appointment to have you write an estimate, get them in as soon as possible. Also, you need to have the ability for customers to book appointments online. The other thing you should do is look at your average estimate quality, which is critical to profit. You can get all the cars in the world, but if you’re not writing a good, accurate estimate with all the not-included operations on there for a safe and proper repair, then you’re losing out. One of the things I like about the

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Wisconsin Automotive News

Fall 2020

Enterprise ARMS report, which is free, is that it shows you what your average labor hours are per estimate compared to the rest of the market. If you don’t know your Enterprise ARMS username and password, reach out to them or reach out to me, and I’ll help you get it. WAN

Mike Anderson is an Accredited Automotive Manager (AAM) and the former owner of Wagonwork Collision Centers, two highly acclaimed shops located in Alexandria, VA. He has served as a member of many industry organizations throughout his career, including the WMABA Board of Directors, the Mitchell Advisory Board, the MOTOR Advisory Board, the ASE Test Review Committee, the National Auto Body Council, the Collision Industry Conference and the Society of Collision Repair Specialists. Additionally, he is a past Virginia SkillsUSA chairman, serves as a facilitator for Axalta Coating Systems’ highly recognized Business Council 20 Groups in both the US and Canada and facilitates numerous courses for Axalta Coating Systems’ Educational Series. He currently offers expert industry consulting via his latest venture, Collision Advice (collisionadvice.com).

COVER STORY

Continued from page 9

Non-OEM Part: A new part that does not meet the definition of an “OEM part.” “That’s super-clear for a consumer to understand,” Schulenburg explained. “It doesn’t make [non-OEM parts] bad, wrong or an unacceptable option. There are thousands and thousands of non-OEM parts that are legitimately picked, chosen and sold every single year. But we defined ‘OEM’ and anything that doesn’t meet that definition from our vantage point as a ‘non-OEM’ part.” Unfortunately, the COVID-19 pandemic stalled any substantial progress in further addressing the “Opt OE” controversy. After a six-month absence, the CIC Parts and Materials Committee finally resumed its public-facing work this past July via a Zoom presentation that featured input from various part and estimating platform representatives. Once again, the discussion showcased the vast differences in the wording used to identify and market replacement parts. For example, parts platform APU Solutions classifies “Surplus OEM” as a brand-new OEM part sold by the dealer with a warranty. Additionally, the company uses “Recovered OEM” to identify a new “take-off” part that has already been

on a vehicle (even one with zero mileage). APU Solutions Director of Sales Eric Marrello explained that when APU quotes “Recovered OEM” parts, it asks each supplier and network to segment out that part type to either “Surplus” or “Recovered.” When APU Solutions inserts a “Surplus OEM” part into an estimate, “it goes back in as a ‘Surplus’ [part] depending on if it’s Audatex, Mitchell or CCC.” However, if a “Recovered OEM” part is inserted, it goes in as a “Recycled” part. “If [the part] has been painted or there’s been some type of bolt taken off and [it’s] not brand new in the box with a sticker, that’s not a ‘Surplus’ part. We tried to make sure we were accurate with that definition, and that’s why you see those two categories broken out.” CIC Panelist Jerry Gastineau, senior director of content management for Mitchell International, noted that his company currently doesn’t reference a “take-off” part designation, thus illustrating the current lack of uniformity in overall parts classifications in the industry. “It isn’t clear exactly where that fits. That really accurately represents the need for this good discussion. I

Continued on page 18

LET US TURN THEM AROUND!

Contact Wisconsin Automotive News Sales Director Alicia Figurelli

(973) 667-6922

ALICIA@GRECOPUBLISHING.COM

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Wisconsin Automotive News

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COVER STORY

Continued from page 17

think everybody in the industry wants us to come together and align on what to call these parts. I think there is some appetite in the industry – I don’t want to speak on anybody else’s behalf, but certainly on our behalf – to accept some accountability for adherence to those definitions once we all agree what a part is and what category it should fall into. The next step is then for all of us to align and stick to those agreements on part categorizations.� If you’re having trouble following all of this, you’re certainly not alone. Perhaps the most troubling aspect of today’s alphabet soup world of parts is the potential for inconsistent and contradictory communications in the supplier-estimating platform-shop/insurer estimate-consumer chain – and the litigation that could result from a repairer not utilizing the proper part in a repair. While the CIC discussion made it clear that the part definition debate will carry on for quite some time, the exact cause of the issue remains unanswered as well. For example, a clear benefit exists for any supplier including “OE� or “OEM� in a part name, as such nomenclature gives an impression of that product’s quality regardless of how it might ultimately function during a repair or in a subsequent collision. But is this a transparent attempt by some parties to add a marketable sheen to controversial items or the result of

a legitimate lack of clear and universally applied terminology? Gastineau stressed that his experience in the field dictates the latter. “Realistically, you can count on one hand in a decade the number of times we’ve had to stop working with a parts supplier because of integrity issues. Academically, it’s possible, but it just isn’t that common.� As the inter-industry continues its work to provide suitable direction to stakeholders on what the part terms showing up on insurance estimates or part sellers’ product lists actually mean, shops must remain diligent in confirming that the items they are ordering are truly what they appear to be. When faced with a question over the classification and source of a part, shops should always request a clear definition from the provider (including an OEM dealership’s wholesale department) and directly verify with the automaker that the part source is authorized by them to sell in the US, the part is indeed intended for use on vehicles in this country and that its warranty is provided by the correct party. The next virtual Collision Industry Conference is scheduled for November 10 and 11 via Zoom. Please visit ciclink.com/sponsors for a free meeting participation code. WAN

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