All posts filed under “Industry Relations and Culture

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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.

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A Quieter Phase of Getting the Work Done

I have not posted anything for over a month for two related reasons. There seems to have been less Next Accident Ready related news and we have been busy in our own operation incorporating new procedures while remembering that we have to keep fixing cars and generating revenue.

Neither of these, the lack of news or the focus on day to day operations suggests backsliding or giving up on anyone’s part.  In an operating environment, whether a single local operation or a very large national organization, changes cannot be continuous and piled on top of each other. Change happens in steps and after a number of steps there needs to be a period of ‘level ground’ operation to allow these changes to be to be fully understood and integrated into operations with minor or major revisions as this is done. After some period of level operation, perhaps extending weeks or months the next series of change steps can be taken.

In 2015 there was a flurry of activity (and tension) around structural repairs. In 2016 and the first months of 2017 there was a significantly more stressful period of activity and discussion around electronic scanning and calibration. The 2016/2017 period was more stressful partially because the electronic issue was harder to understand. But it was also more stressful because this came up right on top of the structural repair changes. The industry had not had a chance to settle into a new equilibrium before the next round of changes hit.  Now after two big and separate issues there is a collective need to allow the changes to settle in and become understood.

We are now at a stage where a measurable number of operators in the industry recognize that this work needs to be done and are in implementation stage. There is less tension and disagreement than there was last year, so the work is being done more quietly without much controversy or noise. But this is new work and all participants need a period of time to work through many variables and scenarios to develop a workable model. In the coming months these new procedures will have made a significant move toward mainstream acceptance as requirements for proper repair.

This is not to pretend that we have solved the problem of new technology and all cars will be properly repaired from now. We are only just over a year into a five year transition and many more changes will be needed. But the period of relative calm now is a very good sign. Two years ago there were things that were new with a capital N or in all caps. The industry has worked through this New and the lessons learned will mean that next year’s changes will be lower case new and will be managed with much less tension.

Those who have had their head in the sand to this point will however be faced with a mandatory all caps NEW if they wait until next year to poke their heads up.

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Scanning; White Noise and Progress

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.

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The Information Needed to Get Past ‘No’

At the CCIF meeting in Toronto in January of this year Mike Anderson moderated a panel of OEM and insurance reps to discuss electronic scanning. During the course of the discussion Mike made a point with a quote he attributed to another insurance rep in another conversation. “No doesn’t mean no. It means I need more information.”

But the manufacturers are putting out lots of information, so why is it being met with ‘No’; what more information could be needed?

Two examples of long standing OEM information are useful here.

Many manufacturers state that ALL repairs have to be done with new OEM parts and the industry does not takes that position seriously. An honest repairer and insurer will recognize that many electronic parts are best replaced with new, used bearings are not a good idea and most welded panels are also best replaced with new OEM parts. Neither the repairer or insurer, or especially the self-paying owner will have any trouble with using a clean part such as a hood or front headlight from a 2014 car to complete the repair of the same 2014 model.  Aftermarket parts are a different story, but when the manufacturer states that no used OEM parts cannot be used no one pays much attention.

Wheels are another example of an information problem. All or most manufacturers state that alloy wheels cannot be repaired or repainted and have to be replaced with new. The manufacturers have had this position for years and the repair industry has been repairing and repainting wheels for 30 or 40 years with no issues. An alloy wheel ‘repaired’ on the floor with a bit of heat from a torch and a few hits with a hammer is not a safe repair. An aluminum wheel can be repaired safely by a qualified technician using accurate gauges and a known amount of slowly applied hydraulic pressure at a specific heat. $200 for that safe repair compares well to $675 for a new wheel.

Now the manufacturers are putting out clear position statements on how electronics have to be managed during repairs on their vehicles. They may be correct in these statements, but those paying have to be thinking ‘is this real or is this another new parts all the time or wheel repair thing?’

A negotiating tactic that was used by labour unions quite often in the 70s and 80s was ‘work to rule.’ This meant that everything was done by the rules and was usually the last step before a strike was called.  Following rules to the letter caused a significant reduction in productivity.

This not mean that the rules were silly and getting in the way of production, What it did mean is that a knowledgeable work force could safely work to the spirit of the rules and still meet good production levels. That work force, in cooperation with good management, would know when to apply the rules strictly and when they could be relaxed. New employees or a new situation would require a much stricter adherence to rules, but as the process became better understood efficiencies could be found that increased productivity without decreasing safety or quality.

Vehicle electronics are very new and very rapidly changing and we do not have the knowledgeable work force that can interpret the rules to combine efficiency with the needed safety. In this case it would be best to follow the rules but there is a tremendous resistance to the costs involved. Repairers’ costs include equipment, training and productivity as new techniques are learned and implemented. Insurers’ costs are very easy to see dollars. No one wants to lose competitive position by being the first to take on these costs.  However, the current situation of the OEMs sticking to their firm rules and the rest of the industry applying ad hoc interpretations is neither safe nor sustainable.

The current challenge is cultural as well as highly technical. The culture of the manufacturers is to stay firm to their requirements, the culture on the repair and paying side is to use alternatives to absolute adherence every time. There is work to be done to get to an understanding that allows the very high volume of high-tech vehicles to be properly repaired. That will take honest discussion and also movement on the part of all participants.

Once again; we will get there but we are not there yet. The five years I first brought up in July 2016 is now down to 4 ½ and we will probably need all of that.

 

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Capacity at the Manufacturers

The last post discussed industry capacity, with the emphasis on the physical and knowledge capacity of the repair side to do the highly technical work that is required for correct repair of modern vehicles.

The other two participants in the overall repair industry, the manufacturers   making and selling the cars and the insurance companies who are involved in paying for the majority of repairs also have serious capacity issues.

Of these two the manufacturers are probably facing the bigger challenge. They are prescribing more and more detailed and rigorous repair procedures but have not addressed the practicalities of performing these repairs. In common with all other very large organizations they have to find a way to get the understanding and belief in these needed repairs down through their organizational chains to the people who are actually tasked with the repairs. Just as with the repairers, organizational culture gets in the way. In addition to a very long communication chain, they are faced with a number of profit seekers along that chain

The manufacturers do not own the dealerships that sell their cars, nor do they employ the people working in the service departments of these dealerships. The dealer principle is pressured and incentivized to sell as many cars as possible. In turn his service department is pressured and incentivized to keep customers reasonably happy while making as much money as possible. The service manager has to report to the fixed operations manager and the important things in his report will be; are the customers reasonably happy and are we making money. The easiest way to make money is to do what you know how to do, as quickly as possible.

If a new recalibration procedure involves 4 to 6 hours and results in a correction that is mostly invisible to the driver there is not a lot of satisfaction in the procedure and there will be a resistance on the part of the buyer, whether owner or insurance  company to pay for those hours. The result will be a lot of talking and negotiating to get to an agreement to do the work for perhaps a 5 hour invoice. But the flat rate technician is accustomed to booking 5 billable hours in 2 to 3 hours and he will feel that he is losing if he is paid only 5 hours for the actual 5 hours he puts in (the service department model also depends on his billable hours). Nobody is making money under these conditions.

The collision repair shop that calls in with a request for a specific calibration can easily be told ’No it’s ok, you don’t have to do that calibration.’ The collision shop is happy to hear that because they would not make any money from the sublet calibration and they can get the car through much faster if they don’t do it. The insurance company is not going to complain about a lower bill, But does it really need to be done? The answer now is yes. The technology has been built in the cars and current requirements are that this calibration has to be done in specified circumstances. The capacity issue is that these requirements have been set by one department, or silo, without consultation with other departments about how to implement the required procedures at the scale required.

One long term solution may be to improve the technology so that it becomes much more self-calibrating. One very difficult interim solution will be for the manufacturers to recognize that technology has outgrown their current business model and a new model is needed for this part of their operation. Perhaps off site dedicated calibration centers, perhaps release of information to the aftermarket to allow entrepreneurs to set up these dedicated calibration facilities.

Once again; I could go on, but then you will stop reading. The existing problems are not at all trivial and a lot of collaboration will be needed to reach solutions.