Texas Automotive September 2018

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September 2018 $5.95

The official publication of the Auto Body Association of Texas and the Houston Auto Body Association

Fixing a Broken Industry

The Fight for Proper Pay: Shops Speak Out on Scanning

Todd Tracy How Can You Live With Yourself ?

Mike Anderson “Who Pays for What?” www.grecopublishing.com

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September

Will Rogers

14-16

Memorial Center

2018

Fort Worth, TX

This show is open to all collision industry professionals Managers, Owners, Painters, Technicians, Parts, Es mators, Repair Planners, Opera ons, O ce Managers. ***Technicians get in FREE Saturday & Sunday***

•

Educa onal Seminars from na onally recognized speakers

•

3M DEMO unit– a full body shop on wheels

•

Over 45,000 square feet of exhibits- live demonstra ons on welding, calibra ons, OE cer ca ons, and much more

•

Sign up for the NEW General Motors Repair Network

•

Paint guns, sanders, impacts, Matco gi cards and other tool giveaways

•

Saturday car show and celebrity KC Mathieu meet & greet

•

Live calibra on demonstra on from asTech

Texas legisla ve panel with government o cials and Texas Department of Insurance representa ves– ask them your ques ons and get some answers!!

Speaker lineup Jason Bartanen, Roger Cada, Shawn Collins, Sco Ellegood, Kurt Lammon, Robert McDorman, Mark Olson, Ron Reichen,James Rodis, Pete Tagliapietra, Todd Tracy Visit www.abat.us for more detailed informa on about the show

Meet Todd Tracy and see the Infamous Honda t crash test cars Be among the FIRST to see us make na onal news – major industry changing announcement and unveiling at the show!!

3 September 2018 Texas Automotive

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Contents

September 2018

FEATURES

Official publication of the Auto Body Association of Texas and the Houston Auto Body Association

guest

FEATURE

ABAT BOARD OF DIRECTORS

Vice President Brandon Dodd Lloyd's Body Shop brandon@lloydsbodyshop.com (903) 734-5175

DOWNTIME: President Burl Richards Burl's Collision Center burl@burlscollision.com (903) 657-8082

Understanding Wastes in Collision Production

By Ted Williams

Chairman of the Board Corey Pigg S&W Expert Collision Repair coreyp@swcollision.com (936) 634-8361

20

cover The Fight for Proper Pay: Shops Speak Out on Scanning

By Joel Gausten

Executive Director Jill Tuggle jill@abat.us (817) 899-0554

ABAT BOARD MEMBERS

Kelly Allen Kelly's Carthage Collision kjkcse@gmail.com (903) 693-2328

Robert McDorman Auto Claim Specialists rmcdorman@autoclaimspecialists.com (817) 756-5482

Chad Neal Innovative Collision Equipment Chadwneal@yahoo.com (817) 527-2143

Drew Miles Classic Toyota drew@myclassictoyota.com (903) 579-0655

Darren Davis Davis-Green Paint & Body Inc. darren.davis@davis-green.com (903) 581-0020

Eric McKenzie Park Place Dealerships emckenzie@parkplace.com (214) 443-8250

Dean Griffin Moritz Dealerships dean.griffin@moritzmail.com (817) 696-2000

on the

Treasurer David Osburn South West Collision Center dosburn@southwestautogroup.com (855) 395-2720

Chad Kiffe Berli's Body & Fine Finishes chadk@berlisbody.com (512) 251-6136

Kevin Ellison Westway Ford kellison@vtaig.com (972) 584-9033

Mike Williams All Star Collision Center sales@allstarcollision.us (903) 589-3160

HABA BOARD OF DIRECTORS

24

President John Kopriva Kopriva Body Works tkopriva@koprivabodyworks.com (713) 923-4412

DEPARTMENTS

8 Fixing a Broken Industry 10 Welcome!

12 How Can You Live with Yourself?

17 What are the “Who Pays for What?” Industry Surveys?

28 Shop Rates vs. “Prevailing Competitive Rates” pRESIDENT’S MESSAgE By Burl Richards

EXECUTIVE DIRECTOR’S MESSAgE By Jill Tuggle lEgAl pERSpECTIVE By Todd Tracy

INDUSTRY ADVICE: ASK MIKE By Mike Anderson

Vice President Ronnie Brush Westside Lexus Collision Center rbrush@westsidelexus.com (281) 584-2285 Chairman of the Board Greg Luther Helfman Collision Center gluther@helfman.com (713) 533-6226

PUBLISHER Thomas Greco / thomas@grecopublishing.com SALES DIRECTOR Alicia Figurelli / alicia@grecopublishing.com ADVERTISING SALES: Michael Jackson / mjackson@grecopublishing.com CREATIVE DIRECTOR Lea Velocci / lea@grecopublishing.com EDITORIAL DIRECTOR Joel Gausten / joel@grecopublishing.com EDITORIAL/CREATIVE COORDINATOR Alana Bonillo / alana@grecopublishing.com OFFICE MANAGER Donna Greco / donna@grecopublishing.com Published by: Thomas Greco Publishing, Inc. 244 Chestnut Street, Suite 202, Nutley, NJ 07110 Corporate: (973) 667-6922 / FAX: (973) 235-1963

ASK THE EXpERT By Robert L. McDorman

ASSOCIATION NEWS 3 TEXAS AUTO BODY TRADE SHOW 30 ABAT MEMBER pROFIlE

31 ABAT MEMBER ApplICATION

S&W Expert Collision Repair, Lufkin & Nacogdoches, TX

4 September 2018 Texas Automotive

www.grecopublishing.com TEXAS AUTOMOTIVE is published monthly and is sent to ABAT and HABA members free of charge. Subscriptions are $24 per year. TEXAS AUTOMOTIVE is published by Thomas Greco Publishing Inc., 244 Chestnut St., Nutley, NJ 07110. The editorial contents of TEXAS 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.

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5 SEPTEMBER 2018 Texas Automotive

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We are experienced in negotiating claims with insurance companies.

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President’s Message Fixing a Broken Industry When you take a good look at today’s industry, there’s a lot to get excited about.

W

With new technology hitting our field every day, we’re in a position to explore a level of repair methods and training we couldn’t have imagined at the start of this decade. Most of us grew up loving cars, and there is no better time to get under the hood and check out what’s going on than right now.

Unfortunately, many of us are trying to embrace these changes while getting held back by insurers that don’t seem to understand the importance of repairing these advanced vehicles in a safe and proper manner.

Many of the problems we face with insurer steering and overall control are nothing new, but technology has really brought these issues to the frontline.

We can’t repair vehicles the way we did five or 10 years ago. It’s a different world now, and we deserve to be compensated for the work and skills required to live in it. e industry is broken; we all know that. Shops should be following OEM procedures and investing money to be certified, but we also need to realize that the “prevailing rate” here in Texas doesn’t mean jack. is is a made-

up phrase insurers have come up with to suppress the Labor Rates and our industry in general. Not all shops – or insurance companies – are the same; therefore, we should not all be reimbursed the same. e only way to realistically grow our businesses in 2018 is to get proper training and equipment. You can’t do that on a suppressed Labor Rate.

Our state’s collision industry has the responsibility for setting the example of how to do things the right away. After all, the John Eagle lawsuit happened right here in our backyard, and it was our association – and my shop in particular – that worked with Todd Tracy in having aftermarket parts crash tested in California. e results of that test showed an increased potential for injuries related to vehicles with aftermarket parts than those that are repaired with OEM parts. We have to repair these vehicles correctly. If we don’t, we’re liable. at’s the bottom line. ings in our industry are not going to get any easier, so I urge you to work with auto body groups like ABAT

One of the "Todd Tracy crash test" Honda Fit vehicles

8 September 2018 Texas Automotive

Burl Richards ABAT President and the Houston Auto Body Association (HABA). I also encourage you to work with legislators and other automotive professionals in repairing a situation that can no longer stay broken. Let’s work together in doing the right thing for our customers, our livelihoods and the future of our industry.

On another note, many of you will be reading this magazine for the first time from the floor of the 2018 Texas Auto Body Show – the largest event of its kind in the state! ABAT started out because a handful of body shops were tired of having others dictate our businesses and refuse to reimburse us for fair and reasonable compensation for services rendered. at is still a driving force behind our association, but there is so much more to ABAT and HABA. It is about education, awareness and the sharing of information so that you truly know what your peers in the industry are doing and asking for. e Trade Show is the best venue in the state for getting up to date on current industry trends and information!

Please know that a handful of body shop owners, jobbers and industry equipment and paint companies have contributed greatly to our associations.

Without them, there would be no Trade Show.

TXA burl@burlscollision.com

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Executive Director’s Message WELCOME! Greetings and thank you for taking a moment to check out the first issue of Texas Automotive!

W

We are so excited to have our own publication to bring you the latest industry trends, news and topics that are custom-tailored to the Texas collision market. Since this magazine is uniquely ours, we promise to deliver relevant information that, in many cases, will hit your desk before it’s released to the rest of the country! ere’s a good chance you are reading this from the floor of the 2018 Texas Auto Body Trade Show. If so, you are in for a weekend packed with education and excitement. First, pat yourself on the back for getting up out of your chair and making education a priority. You have made an important step in a positive direction for the future of your career, your shop and the industry as a whole. e educational segments we have planned for you have been a year in the making to ensure that we bring you valuable information that can be implemented the very next day. ese locally and nationally recognized speakers are guaranteed to inspire and change the way we do business.

In addition to our break-out sessions, we have some unique exhibits on the Trade Show floor. e 3M DEMO Unit is a 53-foot mobile educational experience; stop by to find out why they call it a “body shop on wheels.” Many of our equipment manufacturers are doing product demonstrations, live welding and even debuting never-before-seen products right here at the Show. Stop by the Mitchell International booth to see if the new GM program is a fit for your shop and be among the first to sign up.

Stroll through the “streets” of Gasoline Alley, where the car manufacturers have set up shop to answer your questions and display top-notch vehicles. Be sure to make time for the car show happening right outside on Saturdaythere may even be a celebrity appearance!

I have personally spent the last year traveling the country to attend other trade shows in search of new products and services just for you. Please take the time to stop by every booth – I can guarantee you will discover something

Jill Tuggle ABAT Executive Director new! ere is so much to offer here – the biggest Auto Body Trade Show to hit Texas in 14 years – that if you missed it, you must plan to attend in 2019.

As executive director of the Auto Body Association of Texas (ABAT), I would like to invite you to learn more about our association. If you haven’t attended one of our regional meetings, I urge you to try it out. Unlike associations of the past, we take a positive approach on education, legislation and communication. We find our strength in numbers and are working toward resolving the issues and obstacles we all face in our industry. I’m inspired daily by working with amazing people and having a front-row seat watching the evolution of the collision repair business.

We hope you will join us. Please visit our website, join our mailing list or reach out to me directly if you would like more information.

God Bless Texas!

TXA

jill@abat.com

10 September 2018 Texas Automotive

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PHONE: 732-495-7900 FAX: 732-495-7904 E-MAIL: bill@rae1.com www.raeservice.com VISIT US ON FACEBOOK www.facebook.com/ReliableAutomotiveEquipment 11 September 2018 Texas Automotive

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Legal Perspective

By Todd Tracy, Tracy Law Firm

HOW CAN YOU LIVE WITH

YOURSELF? F

or too long, insurance companies have demanded that auto body facilities use non-OEM-approved repair methods and aftermarket/imitation parts under the guise that their way is just as safe but much more fiscally responsible to the consumer. ABAT and the Houston Auto Body Association (HABA) decided to challenge the insurance industry and see what would happen when a vehicle repaired with aftermarket parts and another repaired using nonapproved methods were tested using a 40mph moderate frontal offset impact. e results were shocking. e vehicle with an aftermarket bumper reinforcement bar, radiator support, hood, hinge pillar, front quarter panel, wheel and windshield had a decrease in lower leg protection of 844 percent, 176 percent in higher ankle loads and a 62.5 percent difference in seatbelt restraint performance when compared to the OEM. e underbody crush was so bad on the aftermarket part vehicle that the fuel tank buckled.

Imagine this: e insurance industry and the Insurance Institute for Highway Safety (IIHS) rallied together and tried to downplay the significance of the tests.

However, Repairer Driven News called the IIHS out and cornered them into admitting that they have no idea what “LKQ” means. More importantly, IIHS officials admitted that there were substantial decreases in safety and performance when comparing OEM parts to the aftermarket ones. Ford then tested OEM hoods against an aftermarket version, and they too concluded that the aftermarket hood lacked structural integrity, safety and reliability.

Did the insurance industry finally back down? Sadly, no. ey contended that a vehicle with OEM parts would have performed in the same manner as one with the aftermarket parts. Again, the insurance industry took a position without testing and engineering to support it. As a result, ABAT and HABA decided to address the matter by doing something that will be showcased and discussed at length at the 2018 Texas Auto Body Trade Show. I highly recommend that you attend my presentation, as it will help those of you who have been fighting for OEM-approved parts and procedures sleep well at night.

For those of you who have been cutting corners, I can only say this: It’s never too late to start doing the right thing. For those of you who will continue to cut corners, a lawsuit or criminal indictment may be in your future. But here’s a thought that’s even more important than money or freedom: How can you live with yourself knowing that your repairs could be the difference between a mom or dad, brother or sister or husband and wife making it home safely?

For those of you who have been cutting corners, I can only say this: It’s never too late to start doing the right thing. For those of you who will continue to cut corners, a lawsuit or criminal indictment may be in your future.

“

continued on page 34

12 SEPTEMBER 2018 Texas Automotive

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13 September 2018 Texas Automotive

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16 September 2018 Texas Automotive

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Industry Advice: ASK MIKE What Are the “Who Pays for What?”

Industry Surveys?

This month, we “ASK MIKE” to discuss his ongoing work in coordinating the free “Who Pays for What?” industry surveys with John Yoswick of CRASH Network.

We at Texas 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.

Texas Automotive: What led you and John to formulate the idea of the “Who Pays for What?” surveys, and what are the general goals that they aim to accomplish?

Mike Anderson: When I had my shops, there was a guy by the name of Charlie Baker, who had something called Collision Repair Industry INSIGHT. I used to subscribe to it, and Charlie would send out a survey that people could fax back to him; this was long before email. It was a one-page sheet that asked, ‘How often do you get paid for these things?’ I found great value in it; it helped my business at the time with not-included items and showing me that I wasn’t the only one.

After I sold my body shops, I still continued to promote Charlie Baker’s efforts. One day, he stopped producing it; shops didn’t have it anymore. After a couple of years went by, I decided that if Charlie wasn’t going to do it anymore, I would do it – but do it a little differently and make it much more intense. I didn’t have the time to do it, but I had the

knowledge. I contacted John and asked him to do it as the third party, and I would provide all the questions and the commentary. He agreed, so we partnered up. We’ve been doing this for three years now.

Charlie’s survey was about 20 questions, but mine ended up being more than 100. We decided to break it down into quarterly surveys, with each quarter being a different topic. e first quarter of every year is always on refinish; the second quarter is on body work, then we have structural/mechanical, aluminum and miscellaneous shop supplies. ere are four different surveys every year.

It’s just grown. We had about 700 people take the first survey, then we got to 800 and we’ve broken 1,000 people a couple of times. We started out by showing who gets paid for the procedures “always,” “most of the time,” “some of the time” or “never.” ey also have the option to say it’s a procedure for which they’ve never sought to be paid. From there, we break it down by insurer and compare DRP versus non-DRP. We sort it by region

17 September 2018 Texas Automotive

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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Industry Advice: ASK MIKE

“

Shops have told us they use it as a training mechanism to train their staff on what’s not included. We’ve even had some shops tell us they use it to show consumers that what they’re asking for isn’t unfair or unreasonable when an insurer refuses payment.

as well. For any state from which we get 100 responses to a survey, we will actually publish the results just for that market. We did that for Texas, which was the first state to reach that number of responses. e survey has also grown to help us gather other statistics like the types of OEM software and management systems that shops are using. We’ve heard of shops using the survey to show insurance companies that they’re not the only facility charging for something. Other shops have told us they use it as a training mechanism to train their staff on what’s not included.

We’ve even had some shops tell us they use it to show consumers that what they’re asking for isn’t unfair or unreasonable when an insurer refuses payment.

My team and I conduct classes around North America. When we do a class, we ask people to bring an estimate so we actually see estimates where people got paid. at way, we can substantiate and verify that people are truly getting paid. Also, I will occasionally contact some of the survey participants – always confidentially, of course – and review some estimates with them. We work very hard to verify that the results are accurate and true.

We run the quarterly surveys for 30 days at a time, and they each take about 20 minutes for a shop to fill out.

We’ve had some people say it takes too long to fill out, but if you spend 20

minutes to do a survey and then capture another hour on an estimate because of greater awareness, what is that worth to you?

One myth about the surveys is that people think they have to pay for the results. We do not charge shops anything for those; they’re free. ey can go to my website, collision advice.com, and download earlier survey results for free. I fund the project myself 100 percent.

I’m very happy to announce the new partnership that we have with the Database Enhancement Gateway [DEG; degweb.org]. Every time John and I release the results of a survey, DEG Administrator Danny Gredinberg will include the results in the DEG’s response to any inquiry that supports or proves that something is a not-included operation. I’m very excited about that next level and partnering with the DEG. TXA: Some people in this industry are understandably reluctant to share information about their shop. How do you protect the information you receive from each participant?

MA: e only people who ever know who takes the surveys are John Yoswick and myself. We do not sell our database list, and we don’t share it with anyone. I know if I ever did that, it would breach confidence with everybody. I own all the intellectual property, and I own the

database list. We never attach anybody’s name to it. We only release cumulative data, never any individual shop information.

TXA: Let’s talk about something that’s big in the industry right now.

What information have you been able to derive concerning where the industry is in embracing pre- and post-repair scanning and getting paid for those procedures?

MA: Pre- and post-repair scanning has actually grown each year. More and more shops are getting compensated for it. at’s encouraging, but it’s also discouraging because that should be 100 percent. Another thing that’s discouraging is when we ask shops, ‘Why don’t you scan?’ and they say they don’t think it’s necessary. at’s scary. at’s what led me to start the different webinars I’ve been presenting on OEMs each month. ere is a link at collisionadvice.com for people to view the previous webinars.

TXA: Are there any trends in particular that you’ve seen that were actually very surprising and changed your expectations of the results you had anticipated?

MA: A lots of times, people believe that DRP shops are not getting paid for everything they do. In certain questions, I’ve seen that DRPs do get paid more than non-DRP shops. I have to believe that’s because those shops can just write the estimate and have it uploaded, and they don’t have somebody there negotiating with them face-to-face. I can also tell you there was an insurer that contacted me to tell me they saw a result and realized they were the only company not paying for something. ey started paying for that one specific thing; they changed their policy.

continued on page 33

18 September 2018 Texas Automotive

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Guest Feature

DOWNTIME:

Understanding Wastes in collision production

“O

ut of sight, out of mind.” The old saying holds true in today’s collision repair industry, as shops struggle to control production waste, not knowing that some of the best opportunities to improve efficiency are hiding in plain sight. In any lean manufacturing environment, measurement is a fundamental principle. The trouble is that an operator can only measure what they see.

Even the most tightly managed shop is susceptible to losing production efficiency in a few frequently overlooked areas of waste, including:

Defects; Overproduction; Waiting; Not utilizing talent; Transportation; Inventory excess; Motion waste; and Excess processing.

These eight areas of waste comprise the acronym DOWNTIME. Ensuring these areas are visualized and measured will have a direct result on individual and team performance in any shop.

Let’s take a look at how each of these areas relates to everyday collision repair operations.

The facility should be designed to avoid wasted movement.

Defects Defects are mistakes that require additional time, resources and money to fix. ese can be found throughout the repair process, resulting in rework. In collision repair, defects commonly result from poor quality controls, poor repair, poor documentation and weak or missing processes. Perhaps the biggest (and most avoidable) source is misunderstanding internal and external customer expectations. is is easily prevented by better listening and a stronger focus on customer needs.

Defects can be limited by the application of standardized work, more stringent quality control at all levels, a full understanding of work requirements and customer needs and simple job aids (such as standardized checklists).

Overproduction In many shops, workers blindly build a flag sheet even when those who receive their output aren’t ready for it or don’t need it. is is a major flaw, as overproduction can tie-up significant working capital. In collision repair, this often happens when we take in too many repair orders and produce work in progress (WIP) in different departments beyond capacity.

Overproduction can result due to a number of reasons. A major one is goal misalignment. is can arise from compensation built around individual flag sheets instead of completed work. Not connecting internal customer needs to company goals creates misalignment. e solution to overproduction is to establish a reasonable workflow for the benefit of the customer. A shop that puts in the work necessary to establish – and stick to – procedures and processes, moving resources and preventing excessive WIP is far less likely to struggle with overproduction and bottlenecks.

Waiting is occurs whenever work has to stop for any reason – the next person in line is overwhelmed, something broke down or parts or materials are unavailable. From unbalanced workloads and long setup times to insufficient staffing and work absences, causes for excessive waiting are everywhere.

Many shops create waste by waiting through scheduling. ey overschedule work beyond the team’s ability to process it. is forces people to rush, injecting more wait time for parts, supplements, etcetera.

Whatever the cause, the effect depends on how the shop reacts.

Many workers either wait for a bottleneck to be cleared or continue producing. By adding to the bottleneck, a bad situation becomes worse.

One way to address this is through better work scheduling with an adequate and versatile staff that can be moved to address the workload at the bottlenecks. is may mean shifting people to other tasks as needed to address WIP increases in departments.

20 September 2018 Texas Automotive

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By Ted Williams, Sherwin-Williams Automotive Finishes

Poor process around parts storage can create defects.

Parts organization creates a visual process that speeds first time repair quality.

Not Utilizing Talent Underutilization of talents, skills and knowledge can have a detrimental financial and cultural effect on an organization. Centers can experience benefits when recognizing the value of skills and improvement ideas from all levels of the business and can suffer when not effectively engaging in the process.

Assigning staff members to tasks that do not match their skill set, insufficient training and poor communication are just a few failings that can result in a lack of employee engagement and retention. is can hamstring any organization’s productivity. Key solutions include empowering your employees, elimination of micromanagement and increased training opportunities.

Transportation Collision centers spend a lot of time moving vehicles and parts around. Too much transportation tends to increase costs, wastes time, increases the likelihood of product damage and can result in poor communication. In general, transportation waste can be caused by an inefficient parts department layout, unnecessary or excessive steps in the repair process or a misaligned process flow. e goal is maximizing technician touch time. Limiting transportation waste can be easily addressed by common-sense efforts such as simplifying processes, addressing physical layouts and locations, handling products less often and making distances between departments as short as possible. A good example is the movement of the parts departments to the production floor, utilizing carts rather than the traditional centralized parts department.

Inventory Excess Inventory excess occurs when there is supply in excess of real production demand, which masks problems. is can result from overproduction, poor monitoring systems, mismatched production speeds and long setup times. is can also be caused by poor communication with internal customers in the business. A department taking in 14 cars on Monday when it only has the capacity to assess 10 is inventory excess. Assigning technicians five repair orders when they can only physically repair one at a time is also excess inventory. is excess inventory waits and negatively impacts throughput performance.

Motion Waste Any excess movement, whether by employees or machines, that doesn’t add value to the product, service or process is motion waste.

The inventory should be visibly managed to reduce excess.

Poor shop layout is a common cause, as is workstation congestion. When measured, many are astonished about the number of miles technicians walk daily to compensate for process and layout inefficiencies that costs valuable touch time on the repair.

One solution for motion waste is to re-arrange layouts to decrease the distance between stations and make it easier to reach things that are often used. Common examples include parts and material carts that move the needed items closer to the technician performing the task or a mobile estimating cart that moves that process to the vehicle and eliminates the redundant task of repeatedly walking back and forth to an office.

Excess Processing Excess processing often occurs due to the creation of multiple versions of the same task or long-winded, poorly designed processes.

It frequently results from reports that require multiple signatures, redundant data entry, overdesigned equipment and poor communication.

Each of these areas of waste unnecessarily increases costs and drains valuable shop time and resources. Operators must first examine and map their organization to analyze their processes in order to fix them. e traditional teardown and supplement process is an excellent example. is process forces the technician to make judgement calls on a repair in isolation. at handwritten information is then provided to the estimator, who then re-enters it into a database. If there is any confusion, the estimator verifies again with the technician while also making any needed photo documentation. is process repeats over and over.

Collision centers must focus on the systematic elimination of these wastes. In doing so, they are rewarded with faster processes, lower costs, higher quality, happier workers and, most importantly, happy (and repeat) customers.

TXA

Ted Williams is the business consulting services manager for Sherwin-Williams Automotive Finishes. He is a secondgeneration collision repairer and former, multiple-time Skills USA/VICA Collision Repair Champion. This year, he celebrates 30 years of experience in the collision repair industry and works closely with some of the largest collision repairers in North America.

21 September 2018 Texas Automotive

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23 September 2018 Texas Automotive

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Cover Story

The Fight for Proper Pay: Shops Speak Out on Scanning

Texas Automotive_0918.qxp_Layout 1 8/31/18 3:50 PM Page 25

By Joel Gausten

A

s members of the ABAT community know, pre- and post-repair scanning is an absolute must in today’s industry. With OEMs stressing the process more than ever before, shops have an obligation to perform scans to ensure the quality of their work and keep their customers safe on the road. “e [scanning] requirement from the OEMs has been around for quite some time, but I would have to say that the Honda Fit lawsuit with Todd Tracy brought all that to the forefront,” notes

ABAT Treasurer David Osburn (SouthWest Autogroup Collision). “e position statements helped, but [our move to scanning] was helped by the education that I received from our ABAT meetings and Trade Shows. at made me realize how important this was and how it affects consumer safety.”

Unfortunately, this message is sometimes still lost on insurance companies. At a time when vehicle sophistication mandates that all repairs are conducted to manufacturer specifications, repairers regularly find themselves in a tug of war to receive payment for providing appropriate care.

But when this happens in Texas, insurers find themselves grappling with opponents willing to dig in their heels and not let go.

Osburn has fought hard against insurer pushback on scanning for years now. As a team member at a company with several OEM certifications, he has no choice but to stand his ground. Fortunately, the resistance he felt in the beginning of the scanning wave is starting to subside, allowing him and his crew to perform their duties as vehicle safety professionals.

“Some insurance companies now just ask for an invoice. ey won’t put any kind of dollar amount on the estimate up front. Once we request it on the first supplement, then they’ll usually put some type of notation in the body of the estimate saying, ‘Post-repair scan.

Invoice required,’ and leave it as a zero-dollar amount. I’m fine with that, but initially when we started doing this, I was getting insurance companies saying, ‘We’re not paying for it. You don’t need to do that.’ I would just go ahead and do it anyway and send them the invoice showing all of the codes that were in the computer of the vehicle that had to be cleared and say, ‘Here are all the codes that the car had. We did it, it was required, those codes needed to be cleared out and you need to pay.’ ey ultimately paid it; [we] just had to force their hand.”

25 September 2018 Texas Automotive

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Cover Story Although pre- and post-repair scanning has earned a sizable spotlight in recent years, it’s nothing new to repair professionals who keep up with the constant changes impacting the vehicles in their bays.

“I was scanning before scanning was cool!” says Greg Luther, body shop operations manager at Helfman Collision Center in Central Houston.

“It’s not really something we started because of the position statements; it’s something we started because of the data we saw in our own products. If a car has a front-end impact and certain circuits are damaged, our computers actually shut those circuits down. We found out about this the hard way; our technicians were spending a lot of time trying to find out why that new headlight or fog light didn’t work. After a couple trips to our service department, we came to find out that Chrysler had changed the way our systems work and, without telling us, started turning the circuits off whenever they were damaged.”

According to Luther, it wasn’t until after OEMs started issuing position statements on scanning that he faced issues in collecting for it. When these OEM documents first began hitting the industry, he encountered insurers that claimed they didn’t owe for diagnostic time or don’t accept OEM position statements or documented procedures because the automakers only recommend the processes. Fortunately, several carriers have since come around, mainly due to Luther’s tenacity. “e vast majority of them are now paying for it because we don’t give up.”

“

All of these cars have this data in them.

It all can affect the way [the vehicles] perform in the future. I’ve taken the stance that I have to address it and fix it whether or not I’m getting paid. I can’t put somebody in a car that may or may not react properly. - Greg Luther

With the reverberations from the recent John Eagle verdict still felt in Luther’s home state and beyond, Helfman Collision is not about to let a vehicle leave one of its three body shop locations without going through the scanning process.

“All of these cars have this data in them. It all can affect the way [the vehicles] perform in the future. I’ve taken the stance that I have to address it and fix it whether or not I’m getting paid. I can’t put somebody in a car that may or may not react properly.”

As director of body shop operations for Park Place Dealerships’ three collision center locations, Eric McKenzie is responsible for ensuring OEM-quality repairs for various lines.

Considering Park Place’s prominence in Dallas – ground zero for Todd Tracy’s $42 million verdict against John Eagle Collision – McKenzie knows the importance of adhering to what the manufacturers – not the insurers – have to say.

“All of these vehicles are extremely sophisticated. ere’s no reason not to [scan].”

Although McKenzie initially faced pushback when scanning began gaining attention in the industry, he reports that

Helfman Collision Center, Houston

things have improved recently thanks to Park Place’s commitment to actively educating insurers on its importance.

“We haven’t run into a situation where there isn’t something that comes up [in a scan]. If you disconnect the battery, there’s going to be a soft code.”

One critical element of McKenzie’s work in addressing scanning with insurers is informing them that a dash warning light – illuminated or not – is not a realistic indicator of a potential problem in an automobile.

“Most of the manufacturers will tell you that the dash lights are meant strictly for the owner of the vehicle – and no one else. ose are not meant to be repairer diagnostic lights.”

Interestingly, one instance of insurer reluctance that comes to McKenzie’s mind is when a carrier flatly refused to pay for the scanning of a Porsche. In that instance, the customer agreed to pay the charges himself and take the matter up directly with his insurer. at customer’s name? Todd Tracy.

26 September 2018 Texas Automotive

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TXA

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Ask the Expert

By Robert L. McDorman

Shop rates vs. “prevailing competitive rates” Dear Mr. McDorman: I own and operate a collision facility in East Texas. We are OEM-certified for each make and model that we repair. Except for two insurance carriers, we are always paid our listed rates. When we perform collision repairs for clients who have these two insurers, those clients are left owing the difference between our rates and what their insurance carrier states are the “prevailing competitive rates.” These two carriers will not provide any type of supporting documentation to support their “prevailing competitive rate” assertions. Typically, when questioned by the insured as to why they owe an amount over their deductible, these two specific insurance carriers will tell my clients that their shop of choice (mine) is the only one charging these rates. In the interest of customer satisfaction and full transparency, we never want our clients to doubt us as to why we have charged a specific rate. How can my clients be sure their insurance companies have properly indemnified them from liability for their proper OEM-certified collision repair? ank you for your great question. is topic arises often in our office from our clients and collision facilities across the United States. When an insured calls our office seeking assistance for this issue, we always begin by going to our database and researching the current market rate at OEM-certified collision facilities for the specific repair in question. We use a 100-mile radius for our market survey. If our research finds that the quoted rate by the collision facility is in line with our database of like operations and repairs, we then go to our insurance policy library and research the policy of the responsible carrier. e policy will always have what the carrier is liable for listed under “Limit of Liability.”

In most policies, “prevailing competitive price” means prices charged by a majority of repair facilities in the area where the vehicle is to be repaired, as determined by the carrier. is is the contract language under which the carrier is liable. Any assertions on behalf of the carrier or their representatives concerning their legal liabilities must be fully supported and documented. As the writer of the contract, the burden of proof falls on the insurance carrier. us, each carrier must support any assertion about perceived competitive rate calculations, any application of an exclusion in the policy and any exception to (or other avoidance of ) coverage claimed. Should our research find the rate is in line with the market, and that an insurance carrier’s prevailing competitive price assertion is out of line with reality, we will issue a demand on the carrier for such

support in challenge to their specific liability.

When seeking such clarification from the carrier on Texas claims, we always point to the Texas Department of Insurance Consumer Bill of Rights – Superseded by Commissioner’s Order No. 12-0862 and the heading EXPLANATION OF CLAIM DENIAL (tdi.texas.gov/rules/bor-auto-english.html). Your insurance company must tell you in writing why your claim (or part of it) is denied. When you file a claim on your own policy, you have the right to have it processed and paid promptly. If the insurance company fails to meet required claims processing and payment deadlines, you have the right to collect 18 percent annual interest and attorney fees in addition to your claim amount. e liable carrier should be held accountable for any short gaps and misrepresentations of such.

In support of the actual rate in a market area, we always reach out to the Variable Rate System (nationalautobodyresearch.com), which is an unbiased authority on the subject of collision facilityrelated charges. It is my understanding that the Variable Rate System has been retained by one or more state regulatory agencies as an unbiased authority to assist in identifying the true prevailing rate on every related charge in the collision industry. is specific question on the perceived competitive rate calculation issue is far greater than a dispute between the insurance carrier wanting to pay less and the collision industry wanting to be paid more. In most of the cases we see, the insurance carrier is using a perceived competitive prevailing rate factor to administer claims that is inaccurate and not supported by facts for the specific repair, and the insured is having to pay the difference between the true prevailing rate and the insurance carrier’s perceived prevailing rate. In each of these instances where we see that the wrong prevailing rate is used to administer the claim, the insurance carrier has escaped liability and not made the insured whole. I have raised this concern in a recent meeting with the Texas Department of Insurance management.

In closing, the insured should always ask for written proof with supporting documentation from their insurance carrier for any application of an exclusion in the policy and any exception to (or other avoidance of ) coverage claimed by the insurer. is is their policy right.

I thank you for your question and look forward to any follow-up questions that may arise.

Sincerely, Robert L. McDorman

TXA

28 September 2018 Texas Automotive

Robert L. McDorman is a recognized Public Insurance Adjuster and Certified Vehicle Value Expert specializing in motor vehicle-related insurance claim resolution. As the general manager of Auto Claim Specialists, Robert expertly leads the National Public Insurance Adjuster Agency, which is currently licensed in 11 different states and specializes in providing automotive-related claim liquidation techniques, strategies and motor vehicle valuation services to all parties, including individual consumers, body shops, auto dealers, repair facilities, towing and storage operations, lenders, finance companies, banks, legal professionals, governmental agencies and others. The firm’s consistent success can be attributed to Robert’s 35+ years of automotive industry knowledge, practical hands-on experience and multiple certifications, including licensure by the Texas Department of Insurance as a Public Insurance Adjuster. Auto Claim Specialists clients can absolutely trust that they will be provided with analytical, sophisticated, state-of-the-art, comprehensive, accurate, unbiased and up-to-date data and information that all parties can rely upon as both factual and objective.

Robert can be reached at (800) 736-6816, (817) 756-5482 or rmcdorman@autoclaim specialists.com.

Texas Automotive_0918.qxp_Layout 1 8/31/18 3:50 PM Page 29

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ABAT Member Spotlight

By Kristen Dalli

S&W Expert Collision repAir Lufkin & Nacogdoches, TX

A professional image and exceptional repairs define S&W’s success.

S&W Expert Collision Repair has been a hallmark of East Texas since August 1975, serving as a constant provider of the highest-quality products and services for its customers. ree friends opened the doors of the business over 40 years ago in Lufkin; less than a year later, two partners moved to Houston, leaving 21-year-old Wendell Matchett the sole owner of S&W. It was his tireless work that turned S&W into a fast-growing enterprise. In June 2001, the shop’s prominent success enabled him to open a second location in Nacogdoches.

Today, current owner Corey Pigg says S&W’s mission statement is reminiscent of Matchett’s relentless passion and dedication to his shop and the industry.

“Going the distance. Every person. Every car. Every time. We believe this is what makes S&W so unique.”

With the business’ expansion to two locations, S&W also had to grow in terms of employees. What started as just a few people in one shop turned into over 40 employees at the two locations combined.

“Each person brings value to our business, understands the importance of being a leader in the collision repair industry and is always continuing their education through ICAR classes and ABAT meetings.”

S&W’s reputation tends to speak for itself, as the business has been lucky enough to rely on word of mouth from its loyal customers.

“Marketing is important to us, and we run ads from time to time, but your reputation and word of mouth in a small community carries a lot of weight, too. A lot of customers will come by for advice on how to handle a small scratch or a cosmetic issue on their car. We’ve learned the

value of simply helping customers navigate the complex world of collision repair, whether the issues are big or small.

Whether insurance is involved or not. Whether we repair the vehicle or not.”

S&W is one of the founding members of ABAT, and Corey believes the association to be one of the greatest tools for his business and his employees in terms of staying educated, informed and involved.

“Being a part of [ABAT] has made an enormous impact on our business. By stressing education and bringing in some of the most reputable collision industry leaders to teach, ABAT has established a platform for shops of all sizes. ABAT provides accurate information and goes so far as to bring in vehicle manufacturers to share information with shops.”

Like most body shops in the market today, S&W often struggles with new technology and proper compensation.

“Most of the key issues of our shop revolve around new vehicle technology, continuous training and how to pay for it. e amount of research it takes to repair one vehicle bears an incredible cost that no one seems to think exists – except those who are paying the salary of the researchers and blueprinters. is research has to be done and, in my opinion, needs to be billable in some form.”

Looking to the future, Corey is confident in his team and predicts continued success. “e future is always uncertain. However, I believe that those repair facilities that accept the challenges of the future and continue to train and adapt to new technologies will thrive in the years to come. Having the opportunity to truly help our communities navigate through this complicated process is what we enjoy.”

30 September 2018 Texas Automotive

TXA

Texas Automotive_0918.qxp_Layout 1 8/31/18 3:50 PM Page 31

Auto Body Association of Texas Membership Application Company Name:______________________________________________________________________ Primary Contact: _____________________________________________________________________ Position: ____________________________________________________________________________ Phone Number:________________________________ Direct Line/cell: ________________________ Email: _______________________________________________________________________________ Business address: ____________________________________________________________________ Years in Business: _____________ Website: _______________________________________________ ⃝ Full 2018-2019 Dues $500 – MSO $250 per shop ⃝ 2017-18 Affiliate Dues $500

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Questions? Please contact Jill Tuggle at 817-899-0554 / jill@abat.us 31 September 2018 Texas Automotive

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Industry Advice: ASK MIKE continued from page 18 TXA: How did it feel to recently receive the SCRS Collision Industry NonIndividual Service Award for the work you and John have been doing with these surveys?

MA: It was definitely a surprise. People were texting me and saying, ‘Hey, you got this award. Congratulations!’ I replied, ‘What award?’ A couple minutes later, John was nice enough to text me. It’s just a complete honor. ere are so many worthy people in the industry – I think of Toby Chess and how much he gives back – who could have been recognized with that award. It was an honor; I appreciate it and I will never take that for granted. I just want my legacy to be that I made a difference.

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TXA

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33 SEPTEMBER 2018 Texas Automotive

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Legal Perspective continued from page 12 My presentation at the 2018 Texas Auto Body Trade Show uses movie clips in a way that keeps the viewer engaged as I hammer points home about the testing that ABAT and HABA have conducted. I’ll focus on the John Eagle $42 million verdict as well as the tests that were done a few months ago. Again, I remind you that there will also be a major surprise in store for those who attend.

If you aren’t heavily invested in ABAT and HABA, then step up and get involved. ey care about your industry, your shops and your customers. Also, remember that your customers and social media are your best friends when you are fighting the insurance industry. Don’t be afraid to tell that insurance adjuster in writing that you will not stand by and let them kill your customer because the carrier insists on using aftermarket or non-OEM-approved parts. By following ABAT, HABA and I-CAR, you will ensure that your customers make it home safely so that you can sleep well at night knowing that you did your job.

Remember that you are safety professionals who work in vehicle safety labs, and people put their lives in your hands. It is an awesome responsibility, and ABAT and HABA are just the types of organizations that are needed to fight for safety. ere is power in numbers, so band together and become a wolfpack that attacks the insurance industry with science and engineering. You will find that those two things happen to be the insurers’ Achilles heel.

TXA

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