Links To Background Information

/in /by

In many of the articles posted over the years there had been links included to articles and presentations that provided background information. Many of these links are no longer valid due to a variety of technical reasons. Most of pages in this current RFINA site have been updated from previous versions and have been edited to not require the links. Anyone interested in more information on any topic can request that through the comment section and a response will be provided.

“More change in the next 5 to 10 years than in the last 50 years.”

/in /by
Mary Barra, chairman and CEO, General Motors

Barra, the chairman and CEO of General Motors, used this statement as the centrepiece of a presentation at the 2016 World Economic Forum in Davos, Switzerland. If the manufacturers were planning change at that pace what would the repair industry have to do?

Five years on in 2021 her 2016 comments have been validated by the reality of modern cars. The repair industry, after 50 years of slow change, is struggling with the new reality.

Money and Operators Behavior

/in /by

The collision repair industry for many years had a reputation of having more than its share of scruffy, low skilled and unscrupulous operators. The bad ones looked the part, and the consumer stood some chance of avoiding these based on appearance. Now there is a different owner of potential concern. These new players in the industry do not give themselves away by outward scruffiness, but they may be just as dangerous.

At the same time that the industry is grappling with unprecedented technological change there is another significant change with a tremendous amount of outside money coming into the industry. The collision repair industry is now seen by private equity firms as an opportunity, made more attractive by the lack of regulation. To these new operators the better repair is the one that generates the most profit. In many cases this may be the safer repair, but if this safe repair is not mandatory and does not generate more profit then it will not be the first objective.

A recent trend of very large multi shop operators is contractual agreements with insurance companies (more in America than Canada to this point) that reward performance through rebates for good performance or penalties for poor performance, with good being lower costs for the insurance company and poor being higher costs.  It is seldom that a good repair will result in a lower cost than a ‘good enough’ repair. In an unregulated industry good enough is a very vague standard.

The front end of the operation will look bright and clean, the advertising and corporate image will be good, but if no one is seriously verifying the integrity and correctness of the repair then ‘good enough’ becomes the core of the business model.

…but, of course we all want the cars fixed right. …. but, you have to do the correct repair.

/in /by

Over the last serval months, perhaps going back as far as  a year, every discussion about the challenges and costs of modern vehicle repair ends with  a variation of the phrase  ‘but of course we need correct repairs ‘ . This is said with a tone that suggests;  ‘I have met my obligations because I have mentioned that correct repairs are needed.’  With this phrase and no further investment the speaker imagines or hopes that he has transferred all responsibility to the repairer and is now absolved of all liability or requirement in further investment in that repair.

This phrase is always aimed at the repairer and is always used by anyone who has an opinion on repair procedures and repair cost, but has no hands on responsibility for that real world repair. Insurers really like it and industry commentators, speakers and trainers always close with it.

The beleaguered ‘estimator’ being told to fix the car right is not being paid for looking anything up and in fact will be penalized for doing so.

If the car is fixed that poorly that a serious comeback results then there will be repercussions. However with all metrics centred on severity, cycle time and customer satisfaction an improper repair that gets past the customer will gain higher marks than the correct repair that takes an extra day and costs another $500. There is not a lot of incentive to spend extra time doing something he is not good at if the probable result is lower marks, and a bigger stack of files still on his desk.

With each year the active fleet being repaired gains added complexity and more and more cars requiring research and careful analysis before the repair starts are becoming part of the repair mix. A time will come, not that far in the future where the incorrectly researched repair will fail almost every time. But we are not quite there yet.

Mike Anderson gave a recent presentation about position statements in which he said that even if the manufacturer does not reinforce a procedure in a position statement you still have to follow that procedure.

http://www.repairerdrivennews.com/2018/08/13/anderson-oems-without-position-statements-still-say-to-scan/

He is without question correct in this, however he went further by saying that if a repairer does not research the correct procedures it is simply because of laziness.  He did not acknowledge that finding relevant OEM information is not a trivial issue, requiring both an investment in purchasing access and then a very real, and more costly, investment in learning how to use the program properly and efficiently. There are many real world obstacles to getting the right information that would need to be overcome before  ‘laziness’ became a factor.

Referencing back to a July 10 2018 article about a Collision Hub Repair U video,  http://www.repairerdrivennews.com/2018/07/10/we-have-totaled-this-poor-malibu-repair-u-blueprinting-class-reveals-work-necessary-for-minor-collision/\ 

A part of the discussion was that it took an hour to find the relevant OEM information and ‘more than that to read it and understand it.’  I am going to guess that there were no questions to answer about other files during this time and no significant time pressure to get to the other files waiting.  There is no denying that the procedures advocated in the article are the correct procedures, but there is also no denying that it is very difficult to get paid for these procedures.  Many people are quite good at getting paid but the majority of repairers do get tired of the fight to get paid.  The points made are valid and they do point very clearly to a future that will arrive, but they are not the current reality in most of the collision repair world.  In this same article the suggestion of resolving liability issues by working for free can only be described as a bizarre business model.

Repair report writing, repair procedures and the payment structures around these will have to change. For now, for most people, the old ways are still viable and still the standard.  Unfortunately the industry is waiting for this change to be mandatory before acting on it. There is only a very spotty and ad hoc process of preparing for the change.

‘Of course it needs to be fixed right’ is not preparation

Safe Repairs Through Regulation

/in /by

Over the last few weeks I saw an article and a symposium announcement that together showed a possible path to the future.

In this Collision Repair magazine article from mid July; Brad Mewes’ views on the current stage of industry consolidation are discussed and explained with extensive use of quotations. The research and business analysis he draws on is broad based and not specific to collision repair. If what he forecasts comes to pass there will be a very significant shift in power and the collision repair world will look a lot different.

Today the insurance companies have a tremendous advantage over repairers because each one controls a huge volume compared to any of their suppliers. A strong independent at $5MM a year is less than a blip, a good regional MSO at $50mm and even one of the big three or four at $500MM+ are only a fraction of what the insurance company will pay out in a year.  This imbalance gives a significant negotiating strength to the insurer with their ability to play one supplier against the other. They are very happy to put all the problems and issues back to the supplier using the blunt threat of moving their business. With many small players looking for business it is not hard for the insurers to use this as a key part of their cost control model.

In the next phase of consolidation with 3 or 4 large entities controlling the repairer side of the market each will start to approach the scale of the insurers and will be much less vulnerable to threat.

On the one hand this is a good thing for the vehicle owner as there may be some standardization of the repair experience, but on the other hand it may be a problem, because if the repair experience is not great there will not be anywhere easy to complain to. When was the last time you got great service and an excellent result from a call to a cell phone company?

While these big players are controlled to some extent by financial and anti-trust regulations there is currently very little regulation controlling or monitoring the physical repair.

This is an announcement about the Technology and Telematics Forum on August 8th at NACE.

Most of the topics listed should be familiar to progressive industry participants. Of interest however, is the 30 minute slot about Government Intervention and the possible need for legislation around repairs. My belief is that this intervention will have to happen and when it does insurers, consolidators, flat rate techs and the last independents standing will face a very different world with repairs that have to signed off by a qualified technician holding a valid license. Aviation industry regulation provides a very good model for the safe repair of today’s complex cars.

The 2017 car can be repaired without regulation today but planes (and the dog) need licensed technicians signing off on repairs

Government regulation is very hard to apply to a very large number of independent facilities as enforcement would be unworkable. Large suppliers could be mandated to provide very thorough reporting and auditing on their repairs and operations and they could afford to do this. A compliance office overseeing 500 locations would be a manageable cost per location while the compliance burden could well be the final straw for an independent.

The consolidators that Brad describes are probably already in the concept planning stages of their Compliance Departments.

Two hoods ready to paint, one new, one original from the car. If there was a third used OEM hood it would look a lot like these two

/in /by

I have written in the past about the tension between vehicle manufacturers and the other participants in the collision repair industry. In March of 2017 I criticized the OEMs for their insistence on new OEM parts for all repairs.  http://rfina.ca/2017/03/06/information-needed-get-past-no/

Since that time, they seem to have doubled down on the policy with All New OEM Parts on All Repairs. The next revision may be all caps and underlined.  Meanwhile the repair side of the industry and the paying end users, whether insurance companies or vehicle owners continue to use many used parts.

A hood with a small dent at the front edge may be removed to facilitate the repair and paint process as it is more efficient than dealing with the entire vehicle through the repair process including masking, baking and cleaning. If that repainted hood is re-installed (paying attention to the possibility of one time use parts such as washer nozzles or mounting bolts) the entire repair process has been done in an OEM approved manner. A hood has been removed, inspected, repaired, repainted and installed.

If the damage is something that cannot be repaired the correct OEM repair would be to buy a new hood for perhaps $900. However, if a used hood from the same year vehicle were available this could be bought for $450 or 500. The work required to ready either the new or used part for installation would be very similar, with perhaps an additional 15 minutes to clean the used part. The used part would have a thicker film build that the new part, but if this film build is within spec that is not a deficiency in the overall quality. Also, the paint thickness would be exactly the same as on the repaired, ‘approved’ original hood.

As a business owner with 30 years’ experience I would not be able to offer my customer any good reason why they should pay $400 or $500 more for the new hood. If I was to say that the manufacturer insists on new parts the next question would be why and my only answer would be ‘because they said so.’

If the replaced part is a welded panel I have no difficulty using the new part and defending the use of that part with a valid technical explanation of why it is needed.

There are many, with an upper case M, cases where OEM procedures are truly critical in the safe repair of a vehicle and OEMs are right in keeping the pressure on to insist that these procedures be followed. Unfortunately, by mixing non-essential requirements in with the truly important ones they are inviting interpretation of all of their policies.

Windshield Replacement and Calibration

/in /by

There was an article posted by CBC last week about a car in Newfoundland that tried to steer itself into the oncoming lane after a windshield replacement.

http://www.cbc.ca/news/canada/nova-scotia/camera-directed-car-toward-oncoming-traffic-after-windshield-replacement-man-says-1.4715817

The driver, while very surprised, had an easy time taking control and there was no collision or other damage. According to the article he had not been told clearly that a system calibration was needed after the windshield replacement.

The facility replacing the glass would have known that the calibration was needed but they also know that they do not get paid by the insurance company to manage the calibration process, with the result that it becomes a cost to the company. They will get reimbursed for the cost of the calibration, but they get paid nothing for the time spent getting the car to and from the dealership for the calibration or for the phone calls needed to set up the calibration appointment.  This post from November 2016 goes into some detail.

http://rfina.ca/2016/11/16/current-reality-correct-repairs-not-easy/

It is easier and to either ignore the calibration, or tell the customer that they should take the car to the dealer for this work.

The insurance company paying for the claim would also have information that the calibration was needed. Insurance companies are quite good at catching a $75 charge for a part that could be bought on the aftermarket for $50. This suggests that their internal systems are well set up to track how claims are managed and submitted. They have to pay for calibration in many cases and these numbers must be tracked as well. So why do they not flag a submitted claim that does not have the calibration included?

For both parties above, the repairer and the insurer, there is to date no financial incentive to doing the truly complete repair. This Newfoundland case cannot be the only instance of missed calibrations which means that repairers and insurers have been getting away with it until now. They will continue to get away with it for some period of time, but as more owners become aware of how their cars are designed and how they have to be repaired the getting away with it will not be as easy.

My sense is that owner awareness is building.

Safety, Competition, and Money

/in /by

As I have stated before in these pages, and countless other people have said in the past, money drives everything. This does not at all mean that actions with an eye on the dollar are unethical. What it does mean is that money is a mandatory component of all business activity and actions taken have to be based on that reality.

Awareness of and readiness for the right things is mandatory for long-run success but a rush to those right things, moving too quickly ahead of your competitors, can be very financially damaging. The balancing act in timing actions requires skill and nerve.

Going to my favorite source, John Heuter at RDN, there was an article on March 27th about the Boyd Group and its investment in equipment.

Brock Bulbuck, Boyd CEO and a solid and well-respected member of the collision repair industry, was quoted as saying “These proactive investments will position us to meet anticipated market needs.”

An analysis of the numbers spent based on the number of locations suggests that they are spending a good amount of money, probably more than most of their competitors.  Boyd recognizes the rapidly changing environment and the importance of safe repairs. The next day Bulbuck was wearing a seemingly very different hat.

In this article, he is talking to investors and explaining the performance of Boyd over the last year.

He stated that insurance company relations were very important to Boyd and they had maintained excellent relations with their DRP connected insurers. Insurers care about metrics and Bulbuck said the three most important are cycle time, CSI and severity. Reducing these terms to honest language, the faster and cheaper you can get it done the higher points you will score with the insurance company.  If you keep the customer happy you will score more points. None of these metrics give any weight to safety; cycle time and severity will suffer from the time and cost of these repairs.

A dealer calibration will add a few hundred dollars and a day or two to cycle time. The correct OEM mandated replacement of a damaged rail section will add hundreds of dollars of cost, and another hit to cycle time. The car owner doesn’t know much about how their car was built and how it should be repaired so if they get it back clean, shiny and as scheduled they assume it has been fixed right and on time they are happy. This uninformed happiness is a poor substitute for true quality control.

So why is Boyd buying the equipment if all it seems to do is get in the way of the important metrics? The answer to this is in Bulbuck’s quote with the words ‘proactive’ and ‘anticipated.’ Boyd is very aware of the need for safe repairs and they are in line with many other progressive operators in rapidly moving toward these safe repairs. It will not be, for Boyd or anyone else, a one day switch from past practice to best future practice.

For the best operators, it will be an honest and accelerating transition to these best repairs.  Progressive and intelligent operators know that they are to some extent ahead of current metrics but they also know the metrics will shift and the hard work of preparing of this needed change will pay off.  Balancing this with the need to stay alive in current market conditions is the skill and nerve part.

The participation of a large operator like Boyd in this move to best repair practices is a positive sign and will help all progressive operators…

Scanning; White Noise and Progress

/in /by

Last week, on March 29th, CCIF presented an all-day session in Toronto about vehicle electronic code scanning.

A statement in the introductory comments caught my attention; to paraphrase ‘everyone in the industry is interested in and motivated by the need to get the vehicle back to the same operational state as it was in before the accident.’ Pre-accident in all operations is a subtle but real change from the overly simplistic catchall of pre-accident condition. The wording suggests that changes in repair procedures are being recognized and accepted as required.

It was then said that one of the factors blocking movement toward the goal of pre-accident in all operations was ‘white noise’.

An interpretation on this comment could be that everything is new, everything is changing rapidly and there are many commentators speaking from different points of interest. There is validity in many of the comments and positions being taken, but they are not all of the same validity and integrity and collectively the result is white noise. Many steps will be needed to get to the right place; an understanding that we are still surrounded by a lot of noise is one of these steps.

The scanning seminar itself was a very good example of a step toward quieting the noise. Only a year ago the discussion was about whether or not scanning procedures were needed. At this session in March of 2017 there was essentially no discussion or debate about whether or not these procedures were required. Instead the questions were about how best to do the needed work.

Answers did not jump out, certainly not ‘The Answer’ but the acceptance of the questions as legitimate was a big step in itself.

Something New and Who are You Going to Call

/in /by

In the past few weeks and months I have been seeing a slowdown in the amount of new information related to Next Accident Ready repair. At the same time there does seems to be a lot supporting or collaborating the information and concepts that were being discussed last year. This tells me that those who were working actively with the principles of Next accident Readiness last year will be ahead of the curve as it becomes fully understood and accepted by all parties.

I do get information from sources other the John Huetter at RDN, but his daily articles are my first look every day. Today, March 17, he has written a very interesting piece about OEM parts and a major Australian insurance group.

FCAI praises ‘strong signal’ on OEM parts from major Australian insurer IAG

The one sentence synopsis is that OEM parts seem to be good for everyone involved.

In the something new department, there was a short quote attributed to the insurer IAG that included ’….repairers will benefit from strong technical support.’

This is an example of what seems like an incidental comment causing a flash of understanding.  Cars are getting far more complex and we have to check repair procedures on each repair, but if there is some ambiguity or uncertainty who do we call?

If you have bought the part on the aftermarket good luck with any call. If you have bought all the aftermarket parts you could and only one or two technical parts from the OEM that you will maybe get a response from the OEM. If you consistently buy all, or at least most, parts from that OEM they will take your call and offer support.

The car will be repaired and calibrated properly, your customer will be happier and safer and, while maybe not right away, in the longer term the insurer will be happier was well.