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June 2018 $595
THE OFFICIAL PUBLICATION OF THE ALLIANCE OF AUTOMOTIVE SERVICE PROVIDERS/NEW JERSEY (www.AASPNJ.org) AND THE AUTOMOTIVE RECYCLERS ASSOCIATION OF NEW JERSEY (www.ARANJ.org)
The Consolidators Aren’t Coming –
They’re HERE! New Jersey Automotive Explores Predatory Pricing
2018 AASP/NJ Training Seminars A Life Inside Collision Repair: Tracy Flannery www.grecopublishing.com
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We Appreciate Your Business! Flemington Audi, the largest Audi wholesale parts dealer in NJ, thanks our customers for continued loyalty and business. We appreciate the opportunity to serve you over the years, and look forward to helping you save time and increase profits in the future with Audi Genuine Parts.
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Flemington Audi 213 Routes 202/31 South, Flemington, NJ 08822 Business Hours: M-F 7:30am – 5pm Sat 8am – 4pm
Parts Direct: 877.857.2787 Parts Fax: 908.782.1795 Email: rmuir@flemington.com www.njparts.com mikekaufmann d e a l e r g r o u p “It’s all in the name”
AUTO BODY DISTRIBUTING CO
Join our growing list of satisfied customers! Orders accepted by phone, fax and email. New Jersey Automotive | June 2018 | 5
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P.O. Box 734 Neptune, NJ 07753 EXECUTIVE DIRECTOR Charles Bryant 732-922-8909 / setlit4u@msn.com 2017 - 2019 OFFICERS PRESIDENT Jerry McNee, Ultimate Collision Repair, Inc. 732-494-1900 / ultimatecollision@att.net COLLISION CHAIRMAN Dennis Cataldo, Jr., D&M Auto Body 732-251-4313 / jr@dandmautobody.com MECHANICAL CHAIRMAN Keith Krehel, Krehel Automotive Repair, Inc. 973-546-2828 / krehelauto@aol.com TREASURER Tom Elder, Compact Kars, Inc. 609-259-6373 / compactkars@aol.com SECRETARY Thomas Greco, Thomas Greco Publishing, Inc. 973-667-6922 / thomas@grecopublishing.com BOARD John Craggan, Ultimate Collision Repair, Inc. 732-494-1900 / jcraggan@ultcollision.com Gary Gardella, Jr., County Line Auto Body 732-363-5904 / countylineautobody@gmail.com Dave Laganella, Peters Body and Fender 201-337-1200 / petersbandf@gmail.com Sam Mikhail, Prestige Auto Body 908-789-2020 / mikhail@goldcar.com Ted Rainer, Ocean Bay Auto Body 732-899-7900 / ted@oceanbayautobody.com Anthony Trama, Bloomfield Auto Body 973-748-2608 / anthony@bloomfieldautobody.com BOARD ALLIED Joe Amato, The Amato Agency 732-530-6740 / joesr@amatoagency.com Dave Gruskos, Reliable Automotive Equipment 732-495-7900 / dave@rae1.com Mike Kaufmann, Advantage Dealer Services 973-332-7014 / mkaufmann@advantageds.com PAST PRESIDENT ATTENDING Jeff McDowell, Leslie’s Auto Body 732-738-1948 / chacki@aol.com
PUBLISHER Thomas Greco / thomas@grecopublishing.com SALES DIRECTOR Alicia Figurelli / alicia@grecopublishing.com EDITORIAL DIRECTOR Joel Gausten / joel@grecopublishing.com CREATIVE DIRECTOR Lea Velocci / lea@grecopublishing.com EDITORIAL/CREATIVE COORDINATOR Kristen Dalli / kristen@grecopublishing.com
CONTENTS
VOLUME 48 NUMBER 6 | June 2018
10 AASP/NJ TRAINING & EDUCATION SEMINAR FLYERS 14 PRESIDENT’S MESSAGE 18 EXECUTIVE DIRECTOR’S MESSAGE
LOCAL NEWS
20 I-CAR CALENDAR 22 MECHANICAL CHAIRMAN’S MESSAGE 55 NJA ADVERTISERS’ INDEX
by Kristen Dalli
25 AASP/NJ Releases Schedule of 2018 Training Seminars
32 A Life Inside Collision Repair: An Inside Look at Industry Member Tracy Flannery 37 Park Avenue BMW: GRAND OPENING NATIONAL NEWS
by Joel Gausten
40 Data Ownership, Right to Repair Roadblocks Detailed at AASP National Meeting ASK MIKE
by Mike Anderson
44 How does being an association member most impact a person’s career
and experiences in the industry?
47 COVER STORYby Joel Gausten The Consolidators Aren’t Coming – They’re HERE! AUTOMOTIVE RECYCLERS ASSOCIATION OF NEW JERSEY 55 Wharton Insurance Briefs by Mario DiFilippis
OFFICE MANAGER Donna Greco / donna@grecopublishing.com CONTRIBUTING EDITORS Charles Bryant • Mario DeFilippis • Jeff McDowell • Mitch Portnoi • Ron Ananian Keith Krehel • Jerry McNee • Bob Dirkes
Published by: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963
www.grecopublishing.com NEW JERSEY AUTOMOTIVE is published monthly and is sent to AASP/NJ and ARANJ members free of charge. Subscriptions are $24 per year. NEW JERSEY AUTOMOTIVE is published by Thomas Greco Publishing Inc., 244 Chestnut St., Nutley, NJ 07110. The editorial contents of NEW JERSEY AUTOMOTIVE are copyright © 2018 by Thomas Greco Publishing Inc. and may not be reproduced in any manner, either in whole or in part, without written permission from the publisher and/or editor. Articles in this publication do not necessarily reflect the opinions of Thomas Greco Publishing Inc. Stock Images courtesy of www.istockphoto.com.
Joe Amato, Sr. Ron Ananian Jim Bowers Charles Bryant Don Chard Guy Citro Pete Cook Ed Day Dave Demarest Phil Dolcemascolo Tom Elder Bob Everett
Thomas Greco Dan Hawtin Rich Johnson Wes Kearney Nick Kostakis Jim Kowalak Joe Lubrano Michael Lovullo Jeff McDowell Sam Mikhail Ron Mucklow
George Petrask Russ Robson Jerry Russomano George Threlfall Cynthia Tursi Lee Vetland Paul Vigilant Rich Weber Brian Vesley Glenn Villacari Stan Wilson
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LAND ROVER GLEN COVE 70 Cedar Swamp Road Glen Cove, NY 11542 855.582.4719 landroverglencove.com
JAGUAR HUNTINGTON 1249 E. Jericho Turnpike Huntington, NY 11743 855.582.4714 jaguarhuntington.com
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Open Your Eyes… And You WILL Become A Game Changer!
Presented by AASP/NJ President Jerry McNee (Ultimate Collision Repair, Inc.) and John Niechwiadowicz (QLC, Inc.)
June 25
6pm - 10pm
Location: Ultimate Collision Repair Inc.
1115 US-1, Edison, NJ 08837 Open Your Eyes! is focused on strategic improvements. Not just for ‘the company’, but for everyone on the team. Our goal is to explore and discuss critical components that will result in a better, more efficient, more profitable, more productive, more enjoyable collision repair business environment! We’ll touch on the following topics for discussion:
• An update on the TOP KPIs every highly successful team needs to know and why! • Labor Rate Trends & What YOU Can Do About It! • Components Of Effective Communication • Forecasting for 2018 • The Importance Of Job Costing • Motivational Incentive Plans • And much, much more!
PRE-REGISTRATION REQUIRED AASP/NJ MEMBERS: NO CHARGE NON-MEMBERS: $75.00
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Aluminum Repair and Welding Presented by General Motors
July 17 6pm-10pm Holiday Inn Totowa, NJ
July 19 6pm-10pm Clarion Hotel Toms River, NJ
Food and drinks will be served Sponsored by Flemington Car and Truck Country
This clinic will familiarize attendees with the different types of aluminum repair and welding procedures. Specific topics will include alloys and treatment methods, as well as sectioning procedures, including chemical bonding and welding methods. A certificate of training completion will be issued for all of those in attendance. Attendees who complete the course will receive a certificate that counts towards the renewal for the New Jersey Labor Licensing.
To register for these events: Call AASP/NJ Executive Director Charles Bryant at 732-922-8909
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WE’RE GOING IN THE WRONG DIRECTION PRESIDENT’S MESSAGE
The collision repair industry is not what it used to be. Do you know what you’re truly working for per hour?! Five years ago, many of us could not have imagined the level of technology we’re now dealing with in 2018. The realities we’re facing in our shops have pushed us to explore new repair methods and focus our energies on pursuing advanced education and training. Surviving this changing climate and doing everything we can to provide safe and proper repairs requires us to step up our game and make major investments that would have been unheard of just a few years ago. On top of that, we still must deal with yearly increases in shop insurance (22 percent), workers’ comp (eight percent), health insurance (58 percent), dental (88 percent), employee raises, utilities, property taxes, new equipment, training, paint and material – and an endless list of other things. Nothing in our line of work is getting any cheaper, and I doubt we’re going to get a break on these things in the future. Unfortunately, we
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have to contend with these bills while operating under what some insurers deem their “prevailing market area rate.” Ask yourself what your partners are doing for you. Have you ever asked them the last time their employees received a raise or a new company car? How about the number of weeks of vacation, personal or sick days they get, or the retirement plans, company matches and health insurance they have? Have you asked them when the last time was that they increased their customer premiums to maintain their bottom line? Have you asked them how much profit they made last year? IF NOT, WHY NOT? As they ignore us and say it’s a cost of doing business, are they really considered partners? Their bean counting methods will force most people into shortcuts, improper repairs or ultimately out of business. Now, ask yourself: Do they rule with intimidation? Can you offer the same benefits to your employees that they can offer to theirs? Yes or no?
by JERRY MCNEE
I’m sure I speak for many when I say that the way several Direct Repair Programs are structured these days is squeezing us to the point where we’re forced to question how long we can keep our relationships/businesses going. The demands and pricing offered by some carriers puts us in a bind and threatens to pull us under as the waves of change keep hitting our industry. More than a few insurers are responding to the increased technical and procedural requirements on the shop level by chipping away at what they pay for certain needed operations and trying to control severity at any cost. Too many of us are feeling the pressure. Do we bow down to what we’re being told and let cars leave our facilities without first utilizing the proper repair methods and procedures? We can’t. Todd Tracy has proven this, and he will prove it again with his next case. We should never put profits over people, but many shops are struggling to accomplish what should be a no-brainer? In many cases, our partners are hurting us – and we are allowing it. It’s time for this to stop. I’ve yet to run into anybody in a shop who says, “Yeah, the insurers are right. These are the real rates.” What system do insurers use to determine prevailing market rates? The answer is they’re not using anything other than what they say! Technicians are demanding a true cost of doing business, but flat-rate shops are slamming cars together in order to beat labor times. Insurance appraisers will only say that it’s a cost of doing business or that dealing with it is above their pay rate. We can’t continue at this pace. We have a hard-enough time bringing new technicians into this industry; we’ll have an even harder time keeping them and paying them correctly if this trend continues. Insurers don’t care. It
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is up to us to educate ourselves and stand up for what’s right. I’ll ask you again: Do you really know what you’re working for per hour? What are you going to do about it? When will you have that conversation with them? This needs to happen every day. Have you ever heard these things? “You’re the only one.” “That’s great that you have the newest tools and equipment. You can’t charge us, but please use them.” “Nobody does what you do.” “We don’t pay for that.” “It’s your area.” “I’m just a small fish; no one in management listens to me. I can only do what I’m told.” When they say these things to you, I want you to keep your true costs in mind. Of course, you need to know what they are first! This message is not anti-DRP; this message is pro-fairness for all. The only advice I’d offer our members on this topic is to look at every agreement you have very carefully. If the numbers no longer make sense, it might be time to move on. Have you considered how things could change if we all said no? It’s a hard decision to walk away from an entity that is giving you 20 to 40 percent of your business, but would you continue if you knew it’s for $6 to $12 per hour profit – or even less? Everyone needs to know their numbers! If you don’t, then who’s to blame for what we are handing them? Your partners should be there to help you provide safe and professional repairs. If they’re not doing that, then they might not be the right partners for you – or you really don’t know. Who will be the next John Eagle? I’m sorry for the plaintiffs’ misfortune in Todd Tracy’s case, but honestly it was just a matter of time. I’m sure it has happened before; we just don’t know about it. “Thank you, sir. May I have another?” What are you going to do about it? NJA
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THERE HAS NEVER BEEN A BETTER WAY TO BUY THE WORLD’S BEST ENGINEERED PARTS. THEY’RE CALLED “ORIGINAL BMW PARTS” FOR GOOD REASON. FOR UNCOMPROMISING PRECISION AND INCOMPARABLE QUALITY, YOUR BMW CENTER IS YOUR ONE-STOP SHOP FOR EVERYTHING BMW.
For Original BMW Parts, contact one of these authorized BMW centers: BMW of Springfield 391-399 Route 22 E. Springfield, NJ 07081 Toll Free: 800-648-0053 Fax: 973-467-2185 bmwofspringfieldnj.com
Flemington BMW 216 Route 202/31 Flemington, NJ 08822 PH: 877-657-2787 Fax: 908-782-1795 njparts.com/bmw
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Princeton BMW 3630 Quaker Bridge Road Hamilton, NJ 08619 PH: 609-570-1611 Fax: 609-570-1602 princetonbmw.com
Wide World BMW 125 East Route 59 Spring Valley, NY 10977 PH: 877-817-3895 Fax: 845-425-5080 wideworldofcarsbmw.com
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Circle BMW 500 Route 36 Eatontown, NJ 07724 Parts Direct: 732-440-1235 Fax: 732-440-1239 wholesale@circlebmw.com circlebmw.com
Paul Miller BMW 1515 Route 23 South Wayne, NJ 07470 PH: 973-696-6060 Fax: 973-696-8274 paulmillerbmw.com
Park Ave BMW 530 Huyler Street South Hackensack, NJ 07606 PH: 201-843-8112 FAX:201-291-2376 parkavebmw.com
BMW of Bridgewater 655 Route 202/206 Bridgewater, NJ 08807 PH: 908-287-1800 FAX:908-722-1729 bridgewaterbmw.com
BMW of Bloomfield 425 Bloomfield Avenue Bloomfield, NJ 07003 Parts Direct: 973-748-8373 psantos@dchusa.com
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EXECUTIVE DIRECTOR’S MESSAGE
Are You Prepared for the Changes Coming to the Automotive Repair Industry? by CHARLES BRYANT
The collision industry is already starting to experience the first stages of what’s to come. For starters, insurers are laying off or terminating hundreds of appraisers as they attempt to make the permanent switch to photo estimating. However, they plan to do so by relying on collision shops – or consumers – to take pictures of a vehicle’s damage and send them in to prepare an estimate. This new concept of writing an estimate based on a picture is already causing major problems in the collision industry, and even bigger problems for unsuspecting consumers that are driving unsafe vehicles. Consumers are receiving checks for a few hundred dollars based on pictures of damage sent to the insurer, when many of the vehicles have actually suffered thousands of dollars in damages and are unsafe for roadways. Inside Edition highlighted this problem in a recent episode, and explained how vehicles with estimates generated from pictures were consistently thousands of dollars away from the actual cost of the repairs – and were unsafe to drive. One vehicle was even considered a total loss even though the owner was still driving it! My point is: Photo estimating is not just causing a problem for the collision industry; it’s also putting people’s lives in jeopardy. Had these vehicles been inspected by a qualified insurance appraiser – or a qualified auto body repair professional – there is no doubt that the vehicle owners would’ve been advised to take their cars off the roads. To watch the full Inside Edition episode, go to: youtube.com/ watch?v=P-L5WdDWMlY&feature=youtu.be. Another major change that could be on the horizon is the way auto property damage claims get reported to insurance companies. This issue is also already a concern to the collision industry because of the steering that takes place; none of us are strangers to insurance companies directing customers to certain repair facilities, even when they have already decided where they want to have their vehicle repaired. Following an accident, it is common for a vehicle owner to bring the car to a local auto body shop and then let the insurance company know where the vehicle is;
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then, the insurance company can go out to the shop, inspect the damage and negotiate an agreement to get the car repaired. However, currently, even when a vehicle owner informs the insurance company where the vehicle has been taken for repairs or informs the insurance company where he/she wants the vehicle taken for repairs, some insurers still attempt to convince consumers that they would be better off taking the vehicle to a different shop – one that is chosen by the insurance company instead of the vehicle owner. Presently, certain insurers are very aggressive in trying to change people’s minds about where to have their vehicles repaired. This forceful action on the part of an insurance company is what is commonly referred to as steering. As a result of the open steering that presently takes place, collision shops often tell their good customers to contact them right away if they’re involved in a collision, as they can help them get the claim reported and have the vehicle towed directly to the shop for the customer. However, as a result of the ever-growing capabilities of wireless technology and the data gathering capabilities that vehicle manufacturers are building into most modern cars, it is highly likely that in the near future it could be the car reporting the accident instead of the vehicle owner. It could also be the car that sends a message to a towing
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CALENDAR
JUNE 5, 2018 Corrosion Protection Allstate Insurance, Bridgewater Squeeze-Type Resistance Spot Welding Innovative Solutions & Technology, Lincoln Park JUNE 6, 2018 Structural Straightening Steel Allstate Insurance – New Jersey CSA – Auto Center MCO, Wall Township JUNE 7, 2018 Adhesive Bonding Metropolitan Car-o-liner, Mahwah Replacement of Steel Unitized Structures Ramada Inn, Newark Vehicle Technology Trends & Diagnostics Overview Reliable Automotive Equipment, Belford JUNE 9, 2018 2015 Ford F-150 Structural Repair Training Course Allstate Insurance – New Jersey CSA – Auto Center MCO, Wall Township JUNE 11, 2018 Aluminum Exterior Panel Repair & Replacement Pennco Tech, Blackwood JUNE 13, 2018 Advanced Steering & Suspension Systems Damage Analysis Allstate Insurance – New Jersey CSA – Auto Center MCO, Wall Township
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Measuring LKQ Keystone, West Deptford JUNE 14, 2018 Sectioning of Steel Unitized Structures Ramada Inn, Newark JUNE 20, 2018 Steering & Suspension Damage Analysis Allstate Insurance – New Jersey CSA – Auto Center MCO, Wall Township JUNE 21, 2018 Plastic & Composite Repair Metropolitan Car-o-liner, Mahwah Structural Straightening Steel Ramada Inn, Newark JUNE 27, 2018 Corrosion Protection Allstate Insurance – New Jersey CSA – Auto Center MCO, Wall Township Steel Unitized Structures Technologies & Repair LKQ Keystone, West Deptford JUNE 28, 2018 Full-Frame Partial Replacement Ramada Inn, Newark
For more information, visit i-car.com NJA
EXECUTIVE DIRECTOR’S MESSAGE company that is partnered with the insurance company to pick up the car and take it to an insurer-chosen shop to participate in their direct repair program. All of this could potentially take place before the owner of the vehicle even leaves the scene of the accident. Naturally, the owner of the vehicle would likely have to give an insurer permission to gather such data and act on it. At the present time, collision shops are often able to prevent the steering that takes place by having good communication with the owner of the vehicle promptly after the accident happens. In the scenario described above, such a damaged vehicle could be picked up by a tow truck and on its way to a preferred shop before the owner of the vehicle even has the opportunity to inform the insurance company where they want their vehicle taken for repairs. A lot of the information provided above is a good guess at how things are likely to change in the very near future. For this reason, I urge everyone in the collision industry to pay close attention to how the new technology being installed in modern vehicles is likely to affect their businesses, and to be prepared for these changes. If there ever was a time that the collision industry should stick together and fight to make sure that their voices are heard as these new changes take place, that time is now. Every collision shop in the country should belong to an automotive trade association that keeps a close eye on the industry and constantly looks out for the best interests of its members. The Alliance of Automotive Service Providers of New Jersey is keeping a close eye on how these changes are likely to affect the collision industry, and we stand ready to make the voice of our members heard as these changes take place. If anyone would like to join AASP/NJ or discuss any of the information referenced in this article, I can be reached at (732) 922-8909. NJA
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Unintended Consequences
MECHANICAL CHAIRMAN’S MESSAGE
Years ago, I read an old saying: “The streets of hell are paved with good intentions.” During my career, I’ve worked as an employee for JCPenney Auto Center, as a New Jersey high school teacher and finally, as an employer for the last 36 years. In that time, I have witnessed plenty of unintended consequences – some self-defeating, some comical and some downright dangerous. For example: A neighboring town close to where I grew up had a narrow road that wiggled its way through the center of town, but it had no shoulder or side street for a long stretch. Due to the limited space along the road, there was no area to position anyone (police) to monitor that speed limits were followed, and the local youth knew it. Realizing they could not be watched, local drivers would often exceed the speed limit on the road. I myself drove down this road often, but of course always stayed within the speed limit. (Yeah, right!) In an effort to slow the drivers down, an electric sign was installed that displayed the speed of the vehicles that were approaching the
sign. BAD MOVE. Instead of the drivers slowing down, the local youth (usually males) took it as a challenge. They tried to see who could go down the road the fastest, ultimately endangering the young drivers, which was certainly not the goal of the signage. But wait – it gets worse! Some kids lacked credibility – they lied about how fast they were able to speed down the road – so a passenger was required to “certify” the speed claimed, now endangering two youths. So what started out with good intentions turned comical, then dangerous. Sick Days - While working for a large retail auto center (22 bays) years ago, the company had a policy of not paying for sick days. Imagine that – you actually had to show up to work to get paid. After staying with the company for five years, a milestone that many employees did not reach, you were given a few sick days. As an employee, I watched as the policy led to abuse, so much so we nicknamed it the five-year-flu. In retail, Saturdays were the absolute worst days to call out sick, as Saturday accounted for two weekdays or more of business. By calling out, the employer (and later
by KEITH KREHEL
when I was a service manager, I) had to perform heroics to compensate for the employee(s) who unexpectedly (at least to management) called out on our busiest day. The only thing worse than the tech not showing up for work was knowing he would be paid. On Monday, that same employee would often come to work with a suntan from his weekend at the shore, subsidized by the employer.
Minimum Wage - Before my retail auto center job, I worked at a local Gino’s fast food restaurant – anyone remember the Gino Giant? I got the job through a friend and was glad to get it, even though it paid $1.65 per hour – 10 cents less than minimum wage. As I remember, they paid us less as they allowed us to eat (a lot) for free. Believe me, we ate far more than that 10 cents per hour. Realistically, I had no skills at age 16, and did not even know how to properly mop or sweep a floor while maintaining a line and cleaning glass, but I soon learned. After a year and a few raises, it was time to move on, but I was glad to have had that exposure to a restaurant business, and the income needed to keep my car (a ’68 Firebird 4 speed Muncie trans, Hurst linkage) on the road. As a business person, and a Gino’s veteran, I realize the consequences of a substantially higher minimum wage will result in fewer employment opportunities – especially for youths – is not good on a couple levels. My entry-level job that paid minimum wage in no way held me back. In fact, it was quite the opposite. I was never upset getting paid what I was worth to my employer at that time. A more significant “livable wage” is something that, in my opinion, requires training, mastering of skill(s) and perhaps college. By the way, on a recent trip to the local McDonald’s, instead of three registers with cashiers as in the past, there were three kiosks with one cashier. I rest my case. NJA
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AASP/NJ Release Schedule of 2018 Training Seminars
LOCAL NEWS
The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) is excited to announce a schedule of brand-new training seminars for 2018. These sessions will feature content addressing some of the most relevant topics in the collision repair industry, offering attendees countless opportunities to become more knowledgeable business owners moving forward. AASP/NJ President Jerry McNee (Ultimate Collision Repair, Inc.) and John Niechwiadowicz (QLC, Inc.) will be presenting the first seminar at Ultimate Collision Repair, Inc. in Edison on June 25. As two of the most popular speakers at AASP/NJ’s NORTHEAST® Automotive Services Show, McNee and Niechwiadowicz will be sharing one of their renowned and engaging presentations with attendees, guaranteed to be a crowd favorite. The second session will be a GM Certification class, where those in attendance will learn the ins and outs of the manufacturer’s new certification program right from the source, and leave with a certificate that counts towards the renewal for the New Jersey Auto Body License Law. Sponsored by Flemington Car & Truck Country, these sessions will be held on July 17 in Totowa and July 19 in Toms River, providing two convenient locations for members from all over the state. Mike Anderson (Collision Advice) will return to the Garden State on September 29. Another NORTHEAST favorite, attendees can expect an exciting, informative session from one of the industry’s most celebrated speakers. “The association is looking to give back to its members,” says McNee. “Everyone needs to be willing to get out and learn - whatever the topics may be - and invest back into their businesses. Saving the dates is a must. Our members need to make time to come out and better themselves. The only way we can do that is to share the
information, the success stories and the trials and tribulations that we endure every single day.” AASP/NJ members should also keep an eye out for the Annual Meeting in October, and another training session in November, to round out a year full of
education that no one will want to miss. More information on these seminars - including how to register – is available on pages 10 and 11. Check aaspnj.org for updates on these training sessions and other AASP/NJ events. NJA
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LOCAL NEWS by Kristen Dalli
A LIFE IN COLLISION REPAIR: An Inside Look at Industry Member Tracy Flannery
Tracy Flannery’s introduction to the automotive repair industry came when she was in elementary school. As a child entrenched in the family business (Bill Flannery Automotive) it seems only natural that she would not only be at the forefront of the business today, but also make immeasurable strides and contributions to the industry. With four locations in Bensalem, PA, Telford, PA, Philadelphia, PA and Freehold, NJ, Flannery is no stranger to the hard work and demands of this fast-paced industry. “I began in the industry at seven years old. My dad started the business in 1978, and I would help with invoices and accounts receivable at home after my homework was done. I rode in his truck with him on days off from school.” When asked what initially led her to
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Tracy and her father Bill Flannery
pursue a long-term career in this field, Flannery said it was the timing of her father leaving the partnership he was in and going out on his own to start his
business. However, as Flannery’s passion for the industry took off, her responsibilities and role around the store began to evolve. “I began working in our first store around 1984 or 1985. I mixed paint and answered the phones, and I waited on customers at the counter as I grew older. In 1989, I began working in outside sales and continued to do that for about 12 years. In the early 2000s, I made the move inside and began handling purchasing and inventory.” Bill Flannery Automotive became PPG Platinum in 1995, and Flannery held a position on the PPG Jobber Council from 2006-2013 and again from 2016present. “This group of distributors meets with PPG’s Management Team to better the network and address changing industry dynamics. I took part in Advisory Committees for local technical high schools during my years as a salesperson, and I chose to remain part of that process up until last year.” In 2011, Flannery received the John M. Headley Award from PPG, which is given to an individual based on their contributions to the industry. She currently sits on the Board at Paint Body and Equipment Specialists (PBES), which hosts a variety of different paint brands, and she “enjoys the diversity in the group and the networking it facilitates.” On a typical day in the store, Flannery admits to doing “a little bit of everything.” “My days consist mostly of managing our contract negotiations with both our customers and vendors. We are also fortunate enough to be in a growth mode, and so managing new customer expectations is exciting!” For Flannery, the most enjoyable part of her job is spending her days with her family and sharing the energy and passion they all share toward a common goal. “What I like best is working with my parents and two of my brothers, as well as my two sons. I love that we have several staff members who’ve been part of our success for more than 25 years.”
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As a longtime industry member, “I didn’t know Tracy until she opened Flannery has seen considerable up her store in Freehold,” shared Rainer changes over the years, with the “I am unbelievably impressed with what technician shortage and advances in she’s doing. She thinks outside the box technology as two major ones. with a lot of different things, and she’s a “There is a definite lack of new class act all the way around. It’s neat to technicians coming into the industry, see somebody not just carrying the torch, which makes it difficult for some shops but leading the charge forward in many to be staffed adequately and to get instances. repairs done efficiently and properly. “We need more people like [Tracy] in our industry. She believes in the The cars have changed. The level of industry, and she’s at the forefront of knowledge to repair a car properly today the latest and greatest that goes on. is incredibly vast. Tracy's children (left to right): Kyle, She’s an incredible person.” “In my early years in the business, a Madison and Chadd NJA skilled craftsman could repair a vehicle and the owner and their family would be safe. Today’s vehicles and the computers that run them require an entirely different technician. Price versus service has become an equation that seems to continue to have a growing impact on distributors today. The consolidation on every level is something that has changed the marketplace; whether it’s collision centers, distributors or manufacturers, it all has an effect on our business.” Outside the shop, Flannery enjoys spending time with her family in addition to countless other hobbies and passions. “My passion would be my children [sons Chadd and Kyle and daughter Madison]. Anything that has to do with them is fun for me. I like to garden, and I enjoy being on the river.” Flannery is also an avid supporter of Breast Cancer Awareness and research and has participated in the Susan G. Komen three-day walk for the last 11 years. Simply put, Flannery loves what she does. “I have grown up with many of our customers, and I enjoy meeting and learning the stories of how new customers have arrived at today in their businesses.” Flannery credits her involvement in the family business to be the driving force behind her considerable time in the industry. “I would never have had the flexibility I had with my children in any other position. I get to see my parents most days, and a hug from your dad each morning can make the worst work day better. I am truly blessed to do what I do each day.” AASP/NJ Board member Ted Rainer (Ocean Bay Auto Body, Point Pleasant) is particularly impressed with Flannery’s wide-ranging skillset, and her profess516-361-9220 www.collisionequipment.net ionalism and passion for the industry. New Jersey Automotive | June 2018 | 33
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LOCAL NEWS
Park Avenue BMW Showroom • Rochelle Park, NJ
Park Avenue BMW, the family-run luxury car destination celebrating its 40th anniversary, hosted the Grand Opening of its all-new showroom on Thursday, May 17. Mayor William Hauser and Deputy Mayor Michael Warren of Rochelle Park led the ribbon cutting and were joined by Park Avenue BMW President Roy Sommerhalter, Jr. and General Manager Wayne Carenza. The community is invited to see the new showroom, enjoy refreshments, and enter for a chance to win a pair of Cartier watches and a year of BMW payments. The new Park Avenue BMW showroom is located at 216 Route 17 North in Rochelle Park, NJ. To learn more about Park Avenue BMW or to shop online, visit www.parkavebmw.com. New Jersey Automotive | June 2018 | 37
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NATIONAL NEWS By Joel Gausten
Data Ownership, Right to Repair Roadblocks Detailed at AASP National Meeting Vehicle data ownership and the accessibility of mechanical repair information are critical issues that require immediate attention. This was the major takeaway from a guest presentation by Tom Tucker, director of state affairs for the Auto Care Association, during the May 4 AASP National Board meeting in Chicago. Tucker updated AASP state affiliate leaders on a number of Auto Care Association initiatives currently underway to improve conditions for repairers/ service professionals and the public they serve. Tucker urged attendees to work closely with his association in addressing telematics and the control of consumer data. “We have a fundamental belief that the data should be controlled by the consumer. If the consumer chooses to send their data to the auto manufacturers, we’re fine with it. But we think the consumer should make the final decision… You buy the car, insure the car and make your monthly payments for the car, but the auto manufacturers say that all your data in the vehicle belongs to them.” Currently, the Auto Care Association is considering what Tucker called a “two-pronged attack” of pursuing legislation on the federal and state levels to ensure that consumer privacy is preserved. “Can you imagine a future [where] they’ll give you a vehicle for the control of your data?” On the Right to Repair front, the Auto Care Association is working to guarantee that automakers provide independent facilities with vehicle service/repair information in an appropriate and responsive manner. Recent compliance testing performed by the Auto Care Association in Massachusetts revealed that Kia and Hyundai have been slow in meeting the cloud-based diagnostic requirements of the agreement. Additionally,
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Tom Tucker
the testing uncovered issues with the subscription platforms currently offered by Mercedes-Benz, Nissan and Volvo. Tucker also noted that General Motors is changing to a VIN-based subscription platform, which he noted may not comply with the law. The Auto Care Association plans to pursue action under a Right to Repair statute against non-complying companies if these problems are not addressed. “While we have the agreement, we are concerned that some of the manufacturers are not fully in compliance. There are definitely some issues with how some of the vehicle manufacturers have approached the MOU [Memorandum of Understanding] that need to be worked out.” In regards to the Garden State, Tucker noted the Auto Care Association’s support of pending New Jersey Senate Bill 1712, which requires vehicle manufacturers to provide new vehicle buyers with a statement of their rights under the Magnuson-Moss Warranty Act within 90 days of the date of sale. The Act prohibits original equipment manufacturers from tying a vehicle’s warranty to the use of OEM parts or services. The bill was introduced last session in both the Assembly and the Senate; although the Assembly bill was unanimously voted out of the first chamber, it ultimately died in the Senate. Members of the Auto Care Association include manufacturers and distributors, parts stores, service/repair shops, importers, business services, manufacturers’ reps and more. Members represent all major product segments of the aftermarket industry (automotive, heavy duty, engine rebuilding, trim, paint and body, electrical, tools and equipment and other specialized sectors). More information is available at autocare.org. NJA
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INDUSTRY ADVICE
ASK MIKE
Do you have a question for Mike? Contact New Jersey Automotive Editorial Director Joel Gausten at joel@grecopublishing.com or (973) 600-9288, and we’ll ask him in a future issue.
How does being an association member most impact a person’s career and experiences in the industry? This month, we “Ask Mike” about some of the benefits he’s derived as an active and longtime member of an industry association. We at New Jersey Automotive 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. New Jersey Automotive: Mike, you have a vast history as a member of your local industry trade group, the Washington Metropolitan Auto Body Association (WMABA), which is headquartered in Virginia. How did deciding to be an association member most impact your career and experiences in the collision repair industry? MA: I first got involved in WMABA through Sheila Loftus, who was the executive director at the time. She kept on my dad to join the association, but he said, ‘I’m not going to join unless you help develop some kind of industry standards.’ At that time, WMABA came out with some standards, where members agreed to do quality work that was warrantied. That’s why my dad decided to join. The fact that the association stood for quality was a big thing for us. My father joined and started going to meetings, and I would go to all of them. When I joined WMABA around 1986, I started getting involved. I eventually joined the Board and took
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piece of being in an association. The seminars they hold and the publications they distribute to inform members of what’s going on are extremely important. A lot of times, shops don’t have the manpower or can’t afford to go to major national industry events. An association like AASP/NJ can still keep you in touch with those issues. Members can read New Jersey Automotive and know what’s going on around the country even if they don’t have the time and financial resources to go to these things themselves.
on the role of secretary and then vice president. One night, I went to a meeting after being really frustrated with an employee that day. A fellow member named Jerry Dalton was there, and I sat next to him during the dinner part of the meeting. He asked me what was wrong, and I replied, ‘Man, sometimes employees stink! I’m so sick of this stuff.’ He started laughing. I said, ‘I don’t think it’s funny, Jerry. What’s so funny to you?’ He said something very profound to me: ‘Mike, if everybody had the same dedication, passion and drive that you do, they wouldn’t be working for you – they’d own their own businesses.’ That just really resonated with me. I think that one statement really sums up what I see as the value in an association. It gives you the ability to network with people and take advantage of the wisdom of those who have been around for a long time. Talking with them can keep you from making mistakes. Education is another important
NJA: Based on your experiences traveling around the country, what are some things that members of any regional association can do to get the most out of the experience?
MA: Getting involved and reading their publications. When you get New Jersey Automotive, share it with your other team members. Don’t just leave it on your desk or keep it to yourself. Also, you should attend the events your association holds to get and share ideas. You have to get off the sidelines and get in the game. At the end of the day, if you don’t like your circumstances and you want the world to change, you can’t sit around and wait for someone to ride into town on a white horse and save you. You need to become that guy on the white horse who will make a difference. NJA: What are some specific issues you see shops facing that can be better addressed through participating in an association?
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MA: The biggest thing with any association is that you have a point of contact if you can’t find something. For example, if you can’t figure out how to perform a certain procedure, you could reach out to AASP/NJ; they’ll know the right person to answer that question Moving forward, I think trade shows will still bring value from an educational standpoint. I think the future will also see more webinars and associations utilizing similar technologies for training. But I think AASP/NJ’s NORTHEAST® Automotive Services Show has really come up in ways that no one has ever seen before and has been recognized as a really great event. It’s second to none, and that’s a very clear example of what a regional association can accomplish. NJA
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).
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COVER STORY by Joel Gausten
They’re HERE!
The Consolidators Aren’t Coming – Predatory pricing is the competitive strategy that firms may employ to drive the competition out of the market. The theory behind predatory pricing is straightforward. In a market, a predatory firm [or predator] lowers its prices to the point where they fall below its average cost and the average cost of the competitors. This causes the competitors (or prey) to follow along by lowering their prices below their average costs in order to remain competitive. With other conditions remaining the same (such as ignoring customer loyalty, cash reserves of the prey, etc.), a strategy other than lowering prices by the prey will mean an inevitable loss of market share. This consequently incurs a loss for every unit sold, until bankruptcy is unavoidable. After the competition has been removed from the marketplace, the predator firm increases its prices to a profitable point [a monopoly price] in order to offset its losses while predating [period during predatory pricing] and thereon gain monopoly profits.
The above passage, published as part of a thesis by Trinity College student Francisco Bedoya in 2013, was used to describe allegations made against Standard Oil, an entity founded by John D. Rockefeller that was found guilty of these and other practices in a landmark – and, to this day, highly controversial – US Supreme Court case in 1911. At its peak, Standard Oil controlled more than 90 percent of the oil business in the US. In short, the company was accused of using its size to move into new markets and substantially cut prices until its competitors either sold out to it or went bankrupt. After the Supreme Court decision, Standard Oil splintered into
dozens of companies, including what stands today as ExxonMobil. While a trip through the internet reveals endless debate between economists over the legitimacy of the claims made against the oil giant, the concept of predatory pricing is something that any independent collision repair business needs to understand – and quickly.
The Wolves Come to Town “They’re like wolves in sheep’s clothing,” remarked a New Jersey body shop owner in a recent call regarding collision repair consolidators. “They’ll promise the world to the insurance companies, and those companies will
jump all over it. All of the prior DRP relationships they’ve had over the years with shops that have built their business models around those companies are now going to suffer.” While other states have seen considerable growth in consolidation in recent years, the trend has been little more than a boogeyman in the Garden State – until now. New Jersey Automotive has received reports from readers that at least one major consolidator is approaching larger shops in the state with offers to buy. Additionally, this consolidator is reportedly attempting to entice insurers into relationships with a promise of freezing severity for 24 months – a lofty goal in the days of the Audi A8 and other technologically advanced vehicles that require high-level equipment and repair methodologies. Does this rumored cap on severity make sense in an era of heightened OEM recommendations and requirements? If you’re a repairer striving to provide manufacturer-level quality in your work, definitely not. But if you’re a bean counter at a massive corporation that can shoulder the financial loss of an improper repair, it presents a monetary – if not necessarily a moral – advantage. (See sidebar.) New Jersey Automotive | June 2018 | 47
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COVER STORY When a shop caps severity, it demonstrates that it is willing to perform repair work for less than what the market allows – to the point of potentially being below the actual cost to repair. Large consolidators are able to do this because they have enough profits from other areas of the country to afford to throw things against the wall and see what sticks in a particular market in order to gain volume. That is a huge problem for a mom-and-pop shop that needs every profit dollar available to stay alive. (That said, it could be argued that a growth in consolidation in New Jersey could be a boon to the post-repair inspection side of the industry.) Perhaps most troubling of all, this push to freeze severity is occurring at the same time that average repair costs in the US are increasing. According to a January 2018 “Industry Trends” video by CCC (available online at youtube.com/watch?v=Mq0XeDbo5M), repair costs for non-comprehensive losses rose in 2017, a trend pushed along in part by an increase in sales of newer-model vehicles that cost more at the time of purchase and at the time of repair. “Growth in the number of labor hours per claim, the average hourly Labor Rate, the average number of parts replaced per claim and the average price paid per part are all contributing to higher repair costs overall,” noted CCC Lead Industry Analyst Susanna Gotsch. “Further growth of the overall vehicle population, as well as a growing share of newer-model vehicles within auto claims, suggests both claim counts and costs will experience further growth in the next several years.” Additionally, Gotsch indicated in the latest Crash Course that average severity had increased in just three quarters (2016 Q4 to 2017 Q2) by 11 percent on vehicle data they reported on. Mitchell’s Industry Trends Report shows a similar increase, with nearly nine percent from Q2 2015 to Q4 2017.
Not for Sale Close to home, representatives from a major consolidator recently touched down at Ultimate Collision Repair in Edison with the intention of talking to the shop’s owner, AASP/NJ President Jerry
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The Poor Repair Buy-Back Get out of Jail Free Card
Let’s take a $20,000 vehicle that was repaired by a consolidator shop at a 75 percent threshold ($15,000). If that facility operates at a 40 percent gross margin, they made $6,000 on that job. Now, let’s say that repair results in a hacked car and an upset customer, and that consolidator’s Customer Satisfaction Agreement with an insurer partner is to replace the vehicle when a consumer is not happy with the repair. The consolidator location buys back that car at $20,000 and sells it “as is” at a wholesale vehicle auction for $17,000. At the end of the day, they’re still $3,000 ahead – and a potentially unsafe vehicle now enters the marketplace.
McNee, about selling. At the end of the day, he wasn’t interested. “If you run a successful business, it’s hard to walk away if they’re going to be paying you 40 to 50 cents on the dollar – that’s the best-case scenario. Consolidators coming in won’t affect me much, but there are going to be other shops that could end up hurting big time if they can’t compete and they start losing their employees to these companies.” While selling to a consolidator is not on McNee’s current to-do list, plenty of shops in other parts of the country are joining the trend. Last summer, Fix Auto USA added 17 new franchise locations (mostly in California) to its 100-plus shops. This led former AASP/NJ President Eddie Day (Collision Restoration; Fairfield) to opine on consolidators – businesses that he says “blend a little Walmart and a little Nordstrom” – during a segment on the August 16 episode of the Out of Body Experience podcast (available online at grecopublishing.com/podcastarchives.) “They’re coming our way; they’re in Central Jersey right now. I think what they’re going to find in North Jersey is the size of the shop is going to be a deterrent, because they like that big warehouse-style [facility with] 20,00030,000 square feet – or they’re going to pick MSO owners who are already multiple shop owners, and they’re going to grab a market. There are [businesses] in our area that have three shops now.” Day predicted that the consolidation in the Garden State would mostly threaten smaller operations.
“They’ll pull a lot of work from an area. They’ll sell themselves; they’ll have a marketing plan and go to the insurance companies, open their books [and say,] ‘We’re profitable; our efficiency is there.’ They have real numbers in front of them. When they go sell that, it’s attractive. “I don’t know if a big independent can survive if they go in [that shop’s] area. It’s going to hurt them; there’s no doubt, because they’re aggressive.” Aggressive, sure, but not unstoppable. When considering that very few shops in North Jersey are larger than 3,000 square feet – and that the tax structure in some of the more affluent areas of the state isn’t exactly cheap – it is a stretch to assume that massive, name-brand facilities will be popping up in all parts of New Jersey in the near future. As Day said, “There’s a 60,000square-foot building in my town that’s for lease right now. When I checked the taxes, they were $90,000 a year.” Although consolidators could have a steep mountain to climb if they attempt to plant themselves in certain parts of the state, they might succeed if they approach shops that find themselves at a crossroads. “You’re in a very crucial point in your life right now with the business,” observes AASP/NJ Treasurer Tom Elder (Compact Kars, Inc.; Clarksburg). “Do you invest in new diagnostic and welding equipment, training and certifications, or do you hand over the reins to somebody else who’s going to make that investment?”
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COVER STORY
LYNNES
Like many other shop owners nearing retirement, Elder has had to consider these and other questions very carefully in recent times. Last year, he was approached by a consolidator with an offer to buy. However, he had already made the decision to sell his business to his son by that time, leaving the MSO with one less name on its list of potential facilities. Not surprisingly, Elder can only respond to any outside entity’s attempt to freeze severity by shaking his head. “How do you manage the severity of a car when every car is a different situation? Do you just not repair it? There’s only one way to fix it – and that’s the right way. Whether you get paid for it or not is a whole different story.” With major consolidators slowly making their presence known in New Jersey, shops of all sizes now need to consider where they stand on the matter. The ultimate success or failure of these entities may come down to how willing shops are to join them – and how far the industry is willing to bend to allow the train to roll into town. While only time will tell if consolidators’ interest in New Jersey will be a flash in the pan or a major industry trend, AASP/NJ Collision Chairman Dennis Cataldo, Jr. (D&M Auto Body; Old Bridge) sums up the prevailing sentiment of some existing shops in the state quite beautifully. “Are they going to hire all the techs who are non-existent and pay them less than they’re making now? You’re either going to fix parts that you were going to replace or pay people less. You can’t make the damage go away.” NJA
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Flemington Volkswagen 213 ROUTE 202/31 FLEMINGTON, NJ 08822 TOLL FREE: 877-657-2787 FAX: 908-782-1795 rmuir@flemington.com www.NJPARTS.com
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© 2018 MINI USA, a division of BMW of North America, LLC. The MINI name, model names and logo are registered trademarks. New Jersey Automotive | June 2018 | 53
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Diagnostically speaking, there is no substitute. Porsche technology. Porsche Genuine Service & Parts. Contact one of these authorized dealers. Town Porsche 105 Grand Avenue Englewood, NJ 201-227-6505 Fax 201-227-6553 town-motorcar.porschedealer.com
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ARANJ 2018 Officers
President Rodney Krawczyk Ace Auto Wreckers (732) 254-9816 aceautonj@comcast.net
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Past President Bob Dirkes Dirkes Used Auto Parts (609) 625-1718 dirkesauto@gmail.com Executive Director Brian Snyder Auto Recyclers of NJ (609) 714-2339 brian@aranj.org
ARANJ 2018 Board of Directors David Yeager EL & M Auto (609) 561-2266 elandmauto@aol.com
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Norm Vachon Port Murray Auto (908) 689-3152 portmurrayauto@yahoo.com Dylan Rinkens East Brunswick Auto (732) 254-6501 ebautonj@comcast.net
ARANJ
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Wharton Insurance Briefs
The economy can create many changes in the insurance industry – some good and some not so good. When an insurance company has lost premium income, they may lower premiums to attract new customers or enter into a field of business they have not entertained before. The latter has become a concern to me and should be a concern to you. Be very cautious when you are approached by an agent representing an insurance company that you don’t recognize, or has not written insurance for your industry in the past. A new company is willing to lower premiums to get a market share of the industry business. Although the premium may be less, you need to thoroughly evaluate the coverage, exclusions and conditions of the policy. When making your decision, look for an agent and insurance company that is experienced in your industry. They understand your exposures and provide proper coverage to meet your needs. If you have any questions or concerns regarding quotes you have received, please feel free to call me to discuss it. Mario DeFilippis, AAI Vice President 800-221-0003 (ext. 1320) 908-513-8588 (cell) mdefilippis@whartoninsurance.com
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Wheel Collision Center ............................................45 New Jersey Automotive | June 2018 | 55
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Unsurpassed Quality. Genuine Hyundai Parts. HYUNDAI IS PROUD OF ITS REPUTATION FOR QUALITY AND SERVICE. SO ARE THE DEALERS AND BODY SHOPS WHO RELY ON GENUINE HYUNDAI PARTS. TO MAKE CERTAIN THAT YOU GET THE RIGHT HYUNDAI PART, ASK FOR THE WHOLESALE PARTS SPECIALIST AT THESE FINE DEALERS. Buy Hyundai Parts. For Genuine Hyundai parts, contact these Authorized Hyundai Dealers. MAXON HYUNDAI 2329 ROUTE 22 WEST UNION, NJ 07083 TOLL FREE: 800-964-7281 FAX: 908-851-5631
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