All posts filed under “Industry Relations and Culture

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Qualification and Certification

Until around early 2019 the collision repair industry did not have a very clear vision of Certification and worked on the assumption that Certified meant Qualified and that Uncertified meant Unqualified.

The two quite different things of Qualification and Certification had been mixed into the same category.

Qualification is based on the capabilities of a repair facility, its equipment and people. A qualified facility has the right current equipment, the right current training and the right systems in place.   Qualification in itself does not have to be conferred by an outside party.  An outside party however is needed, because, to protect consumers,  there does need to be verification of that qualification.

Qualification should be verified by a ‘disinterested party’. Disinterested does not mean uninterested or uncaring. It means that the party has no stake in the outcome. The outcome will be fair, but the granting authority has no financial or competitive stake in the granting, or not, of the qualification.

A good example can be found in electrical services.  A very important difference between electrical work and collision repair is that all commercial electrical work requires technician licensing. A company cannot present themselves as Electrical Contractors without having government licensed electricians on staff. The designation or license for the contractor is provided by a ‘disinterested’ government agency. There is not a lot of confusion among  consumers about the legitimacy of the contractors work as he has been licensed by the only authority allowed to provide that license.

Private companies can then choose to certify any of these licensed electrical contractors to work with their products.  Staying with electrical as an example Eaton has an Eaton Certified Contractor Network.  Eaton has not issued licenses that are an alternative to mandatory government licensing but has selected companies and individuals from within the existing licensed pool. This inclusion in the network will likely imply that these electricians may be more efficient with Eaton products, or it may be more of a marketing or administrative function.  The electrician with Eaton certification may have technical, or marketing, or administrative advantages, but there is nothing in that certification that diminishes or takes away from the electrician who has chosen not to join the Eaton network.

In Canada, this is where the CCIAP (Canadian Collision Industry Accreditation Program) could serve the same purpose as government licensing.  The program is administered by the AIA, but the AIA does not profit by more or fewer shops, it has no stake in where those shops are, and it has no business affiliation with qualified shops.  A consumer will know that a CCIAP facility is operating within industry standards, with current equipment, well trained staff and a proper business structure.

Certification by OEMs or insurance companies is a different thing entirely; the basis for certification by an OEM has a tremendous amount of marketing included and there are a range of financial interests in that certification.

Vehicle owners are bombarded with information about the virtues of the OEM Certified or insurer approved facility but are not told what criteria were used for including a facility in the program or leaving it out.  For example a facility cannot be certified by Toyota without a sponsorship from the dealer in their market area. If that dealer has its own repair faculty it will not sponsor an outside facility, even if that facility is better qualified.

If insurers and OEM certification programs selected only from the qualified pool of shops in the CCIAP system the consumer would know that these choices have reached a high base level and will be able to do the right repairs. But they will also know that the CCIAP shop without outside OEM or insurer certification will also be able to provide fully capable and professional repair.

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Losing Ground and Dornbusch’s Law

The first posts to RFINA were made in 2015, focusing on the level of technological change we would see in vehicles in the next 5 years and what the industry may have to do to prepare for these changes. The suggestion at that time was that the greatest obstacle to making these changes was the industry culture that had been built up in the previous 50 years of not very much change.

Now, five years later, after a few days of webinars and videos at SEMA360 it appears that not only has the collective industry not made the changes needed but has lost ground. The industry made some moves in the right direction, but technology moved much faster and the manufacturers have been unable to bring repairers and insurers along. We are farther behind than we were 5 years ago.                                 

  • In 2021 mainstream vehicles will have electronics, for example hands off highway driving capabilities, well beyond anything we have seen before in these vehicles. Meanwhile, insurers and repairers are still talking about Pre and Post Scans and are they really needed.
  • The types of materials used and the number of different materials in a single vehicle continues to grow steadily. Meanwhile, repairers are upset at having to buy something as basic as a spot welder because ‘it will just sit in the corner.’
  • Manufacturers are showing significant lists of components that need to be checked after an accident and then standing back as repairers and insurers either argue about these checklists or simply ignore them.
  • I-CAR redesigned their courses along with slightly more rigorous requirements for their Gold and Platinum levels while providing a two-year lead time to adjust to these requirements. Repairers responded by ignoring the changes for most of the two years and then complaining that it was too expensive and too hard to get their techs to take these courses. Certification organizations responded by diluting their training standards.

Economists recognize that there is a lot more to finance than just numbers and many of their principles apply to a very broad range of circumstances and behaviour.   

Rudi Dornbusch was an economist who worked at several prestigious American universities from the 70s to the early 2000s. Students of international macroeconomics are fond of quoting “Dornbusch’s Law.” 

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

He could have been talking about the 2020 collision repair industry when he wrote this.

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Current Estimating Systems – Following the Money

I have not written for over a year but I had been thinking about getting back at it for many months. The very serious COVID-19 pandemic and shutdown has affected everyone, but we are starting to see attention being paid to the business of repairing cars.

This morning in RDN, John Huetter has an article about SCRS and Audatex feather, prime and block that then went on to discuss other issues with Audatex.

I had drafted most of the following last week for an internal discussion, but when I saw John’s article I realized that it was topical and relevant

Money has a lot to do with almost everything.

An account rep for an estimating platform will sell very few (maybe zero) programs to repair facilities based on the virtues of his program. He will sell many copies of that program if it has been accepted and mandated by an insurance company. In fact he will, with very little effort, be able to sell a mediocre program to a repair facility if he has first convinced an insurance company to use that program.

The money is between the insurance company and the estimating platform company and it would be naïve to think that as the seller in the relationship the estimating company does not pay close attention to what the insurance company wants.

There is an example from motorcycle training that the total traction demand on a front tire cannot exceed 100%. If 80% is being used for braking only 20% is left for cornering; if 100% is needed for braking there had best not be a corner in the equation. Following this analogy if the estimating company puts 80% of its energy into making a sale to the insurance company they have only 20% left for the repair facilities. As the sale to the insurance company will guarantee the sale to the repair facility 80% may be a low number. With the sale to the insurance company the amount of effort left for the repair facility is acceptable as that operator will have little choice about buying the program.

The repair side has to know that the program has been influenced by a group that would rather pay less than more. This means that the program will pay for the minimum required to get an acceptable repair. In many jurisdictions outside regulation is minimal so the rules of repair are effectively set by the buyer of that repair.

What does this mean for where we are now and the theme of this site, which is correct repairs? Proper repairs can be done, and they will be paid for, but the repairer who wants to do these proper repairs and get paid for them will have to present facts in a very clear and honest way. This takes time and for most of the industry it will be easier and more profitable to follow the procedures as presented, do what they are asked to do and get on with the next repair.

Movement will not come from the overall mass of the industry insisting on a better result, but from some number of progressive operators who have the knowledge and are willing to put in the effort to expand the circle of what is needed.  These operators will not be thanked for most of their work, but they will move procedures first to the accepted category and then to the expected. At that point they may see a monetary return, as they will be ready to do the expected, with proper equipment, staff and company culture while others are scrambling to catch up.

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How Do We Get To Correct Repairs?

We need to get there, within 18 months correct repairs will not be optional and inadequate repairs will be very hard to hide. It will still be possible to hide incorrect structural repairs, but it is the ADAS systems that will force everything into the open. The owner cannot see the frame rail that should have been replaced or the improperly welded door post. But they will very quickly notice that the camera is giving wrong information or the lane departure is not working as it should. $25,000 cars have had these systems for two years now and by next year a lot of people will be driving them.

What is keeping the collective collision repair industry from getting there?

Repairers would have us think that if it was left up to them all cars would be fixed properly and safely, and everyone would be happy. The picture painted is that they cannot fix cars properly because insurance companies are interested in nothing other than profits and are preventing good, honest and contentious repairers from doing the right work.

The insurer’s message is, not surprisingly, different. In our jurisdiction of British Columbia ICBC has added at least 50 estimators province wide. In a June 18thBC Government press release the reason alluded to for this increase in staff was not to make sure that cars are repaired properly and safety, but to make sure that over-billing concerns were addressed.

In March of this year Aviva in Ontario set up a sting operation to catch fraudulent repairs and this was covered by W5 on CTV

From the repairer side the messaging is that the insurance companies are getting in the way. From the insurer side the message is that they are protecting themselves and their customers from dishonest repairers.  Neither of these positons are coming from a place of trust and collaboration.

If the insurance industry does more messaging about fraud and overbilling prevention than it does into quality control it is sending a negative, but planned, message to its customers. If the industry side continues to harp about the insurance companies preventing them from doing good work the message they are sending to their clients is that the insurance companies are who they need to be protected from. The vehicle owner will tune out both sides and make decisions on who knows what criteria.

Why is This Happening?

A very real problem that insurers face is that the repair industry is not a monolithic body made up of only one type of operator. The repair industry participants run the gamut from fully equipped, well trained and ethical to a small number who are outright dishonest. Between these two there is a range that includes both ‘sincere but not there yet’ as well as the ‘what worked last year will work today’ crowd. In this middle there are thousands of repair facilities operating with inadequate equipment and incomplete training plans for their technicians.

There has been a resistance from the industry to certification and tiering of shop capabilities. This resistance does not come from those operators who have chosen to invest and stay current. I saw a comment posted after a recent conference that ‘mom and pop’ shops need to be protected from insurance companies and backroom deals by the banner companies. The contracts between the banner companies and insurers probably should be exposed to the light of day more than they are but ‘mom and pop’ shops also have to face the reality that today’s cars cannot be repaired in under equipped facilities with untrained staff.  We once were, but we are no longer a ‘mom and pop’ industry

The banner operators are not as on side with correct repair procedures as they would like us to believe. At another conference a few weeks ago there were two comments from the banner operators that spoke to the truth. On the one hand they talked loudly about the importance of safety and training, but when asked about equipment they admitted that they license shops to carry their banner but they do not buy equipment. This means that they are delivering a product without a brand standard; there are around 600 Canadian shops flying the banners with a far broader range of capabilities and standards than the head offices would like to admit. They will get to the right standard quicker than 600 completely unaffiliated shops, but they are not there yet.

While the insurance companies do take advantage of their market control they also have a significant issue in that they have no way of knowing who they are dealing with. An unregulated industry cannot be counted on to deliver anything close to standardized predictable work. With minimal or nonexistent outside penalties for poor work the insurance companies have little choice other than to make their own rules. This can easily look like the fox guarding the chicken coop.

Looking at the above paragraphs it appears that I am putting the problem on the repair side of the industry more than the insurance side. In fact it is the solution that is being presented to the repair side. Collectively they have a lot of control and can affect real change in the overall industry.

One Solution

The concept of a self-regulated industry has been gaining traction in the last year. Self-regulation means just that; it is not certification by manufacturers or insurers but by the industry itself. Many models are available as templates or guides.

For the collision repair industry CCIAP (Canadian Collision Industry Accreditation Program) managed by the AIA nationally and the ARA in BC can serve as the nucleus for this self-regulation.

However for this self-regulation to work there needs to be some initial momentum and here is where the insurance companies can cooperate; with repairers and each other. If they all insist that as a base level all facilities repairing their cars have to have CCIAP certification they have moved together and one of them has not put themselves at a monetary disadvantage by moving ahead of peers and competitors.

Manitoba can be looked at as an example. MPI controls most of insurance in that province and has let the repair industry know that I-CAR Gold status is required to work for MPI. Of the roughly 450 Gold Class shops in Canada about 240 are in Manitoba. CCIAP is similar in spirit and objective to I-CAR Gold Class. If there were a requirement for CCIAP accreditation to do business with an insurance company many facilities would take the steps.

This help from the insurance companies works very well for them in the long run as well. They, along with the manufacturers, will continue to have a say in repair procedures and the discussions becomes a far more efficient, collaborative and open process with communications managed through a central body.

This boost from the insurance companies will allow the development of the needed critical mass. The hard work for the repairers will be to make sure that is truly industry self-regulation, run by repairers with the insurance companies kept at a distance (foxes and chicken coops again.)

Another huge advantage of an industry program is that regulation of the complex repairs we are doing is inevitable, with government safety agencies soon enough seeing the need for enforceable standards. If they see strong voluntary progress on the part of the industry, they will be far more likely to add credibility to that effort than to expend the energy and money to build their own regulatory system. The models for this relationship are also out there now.


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

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.

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,\ 

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

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Safe Repairs Through Regulation

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.

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Safety, Competition, and Money

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…

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September 2016 Revisited

A short update on the posts of September 2016 is that they are all still valid, with no significant changes yet evident. I believe that there is work in the background and these significant changes are closer to the surface than they were last year, but for now they are still beneath the surface.

Next Accident Ready Leadership still faces the challenge of competition between many parties. The insurance companies and OEMs have not reached any agreement and at the shop level the flat rate technicians, with the ready ability to move between employers on a moment’s notice compete with owners on the quality of repairs and the time needed for these repairs. That owner is also competing with the shop down the street, which is keeping its customers (and insurance companies) happy with shiny cars and on time delivery ‘Fixing them All Wrong’.

Several of the September articles talked about technology and vehicle complexity. The issue that can be added to these posts now is the unwillingness or inability of the industry to accept the training required to use the equipment needed to do these correct repairs. Facility owners are buying the equipment needed to achieve certification, but are unable to train their employees. This inability to train is a direct result of being Stuck in the Past with the Future Looming and the need for new business models A New Business Model for the Repair Side.

Another topic last September Collision Repair and Certification has seen some changes in the past year, but there is not yet any clarity or true focus. This was covered again in two posts in December ‘Certification- Muddying the Waterson the 9th and Certification-Another View a Week Later on the 20th.

The changes since these posts were written are incremental, but the focus is not much clearer. In an undated news release on the CCIAP website it was reported that the over 1,000 shops nationally had registered for the CCIAP program in the first six months, which may have been in early spring 2017. This was due in a large part to the requirement by Economical Insurance, stating in a December 22, 2016 article on the CCIAP site that they would only work with accredited shops. At September 27, 2017 only 46 shops of these 1,000 registered facilities had achieved accreditation.

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Vehicle Owners and Repair Complexity July August 2016 Posts – Revisited

At NACE/Automechanika in Chicago I had a hallway conversation with a knowledgeable and interested industry participant. He referred to the Mary Barra comments I had quoted at the start of this project in 2016. He did not remember when she had made these comments and he used 10 years where she had said 5, but it does indicate that awareness of change is building.

The second post that appears in July of 2016  was lightly edited in January of 2017. Since that time there has been slow change in the right direction, but to a very large extent the situation described a year ago still holds; if the cars looks clean and shiny and drives well everyone is happy. What this means is that the 5 years needed to get to the right place has now been compressed to 4, with not a lot happening since mid-2016. This is a lot shorter than the 10 that my colleague in Chicago had been thinking.

Looking at the RIOO post of August 31 again not much has changed. The consumer continues to be busy with all the other (in most cases of more immediate urgency) concerns in his or her life and as a result there has been minimal engagement on the part of the car owning public. In this vacuum the major players in the repair industry are still continuing to compete and protect positions; they have not yet reached a significant level of collaboration.

It is starting to look like it will be the vehicle manufacturers who will take the lead in educating the vehicle owner about safe repairs. One challenge for them will be working with insurance companies to come to an understanding of safe repairs. In March 2017  I had commented that the OEMs were not helping their case by sticking to procedures that are more market and lawyer driven, rather that safety. Examples of this were the use of OEM used parts and the repair of wheels. At one of the 2017 NACE sessions wheel repair was brought up as an example of OEM overreach

The other two August posts (Honda Civic Cutaway and the How and What of Repair) , related to the complexity of modern vehicles and could have been written this month; not a lot has changed in the overall market. There have certainly been some improvements, but the industry has made very little movement toward acknowledging the need for specialization and at NACE two weeks ago  a presenter still talked about  ‘seeing what it looks like after a pull’  which is very outdated thinking to be coming from a presentation podium. There were also casually tossed out comments about what the information the estimator needs to pay attention to, but no discussion of the time and training involved in getting at this information.

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RFINA One Year Out

The first posting on RFINA was in July of 2016, with brief comments supporting the views given by Mary Barra of GM in an article from The 2016 World Economic Forum. 

The statements made by Ms. Barra are as relevant now as they were a year ago, and even more so because we are one year further along in vehicle technology evolution.

At this one year mark of the RFINA project it may be of value to go back over the other articles posted over that time to check their current relevancy and validity. Progress made, or not, on the issues will also merit comment.

This week the NACE/Automechanika Conference in Chicago will bring together leaders in the collision repair industry and I expect that new and current statements and announcements will be coming out of that conference.

It will be more effective to wait until after the conference for a review of RFINA to date and the one year review will start in August.