All posts filed under “Industry Relations and Culture

comment 0

…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.

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

comment 0

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.

comment 0

Qualification and Certification

At the May meeting of CCIF in Toronto there was the start of a revival of the discussion around Certification. It was not on the agenda and the conversation started in the halls but it did make its way into one of the panel discussions. The discussion did not go into much depth but the most important step was the acknowledgement that there was an elephant in the room.

To this point we have been mixing the two quite different things of Qualification and Certification into the same category. Qualification is based on the capability a repair facility, its equipment and people. It can be earned based on the right current equipment, the right current training, the right systems in place and the right demonstration of customer service. Qualification should be given by, to use my favorite word of this week, a ‘disinterested party’. Disinterested does not mean uninterested or uncaring. It means that 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.

Looking outside the collision repair industry 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. No outside agency or business can provide this licensing or qualification.  It is provided by a ‘disinterested’ government agency and without this license an electrician cannot work.  There is not a lot of confusion among the consumers about the legitimacy of his 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. 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.  The choice of facilities that an insurer would prefer to work with is also very market and administratively driven.

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.

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.

comment 0

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…

comment 0

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.