Friday, 30 June 2006 17:00

Bogus, misleading phrases that betray the reality of our industry

Written by Dick Strom

Words, by which we live and die and conduct our business, have been sentimentally described as "pegs to hang ideas on," and "the thread on which we string our experiences." But one-time presidential contender Adlai Stevenson summed up the power of words as too often being "the great foes of reality." 

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Strom

Some within the insurance and collision industries have pieced together words into terms that, defying reality, hide their true intent - or lack thereof. Following are a number of such terms - foes of the reality they are intended to present - that scream for exposure. 

Industry accepted standards

This term often used by insurers and repairers, as it serves their various purposes, is a classic of blather. The plain, unvarnished truth is that the collision industry has no "standards," let alone "accepted standards," let alone "industry accepted standards." CIC has for years been poking at establishing some form of industry standards. But how can standards be established for an industry that has maintained perfect Missouri mule exclusionism since its inception? CIC's lists of "best practices" are toothless and unenforceable, and will never be anything more than suggestive in nature.

Insurers have exploited repairers' disdain for constructive organization and governance. This industry has no standards because, other than some state organizations and theCCRE, its associations and societies are kept in constant turmoil by insurer interference in their inner workings. If the collision industry has any "standards," it is as these have been dictated by the insurance industry. As a good friend in the industry says, "Industry accepted standards refers to the so-called standards certain repairers presumably accept because they are too cowardly to stand up to the industry that shoves these so called standards down their throats." My sentiments exactly!

Functionally equivalent parts

Though "functional equivalency" is not a new concept, CAPA has lowered it to the depths of despair. Try your best to follow this line of BS (pardon, reasoning) compressed from one piece of CAPA literature; "We believe that the difference between a CAPA certified part and [OEM] part should be invisible to both the repairer and consumer." [CAPA first admits here that there IS a difference between their parts and OEM. Next, CAPA states,] "…parts certified by CAPA as 'functionally equivalent' to (OEM) are of 'like kind and quality' in all significant respects to the corresponding (OEM) parts they replace." [CAPA states here that their functionally equivalent CAPA parts are LKQ. Then, they state in the same breath,] "'Like kind and quality' is frequently defined to mean 'equal to' (OEM) in fit, quality, performance, form, and finish." [Finally, stated in this same propaganda statement,] "CAPA chose the term 'functionally equivalent' because, literally speaking, 'functionally equivalent' is a higher standard than 'like kind and quality' - the former entails equality ('equivalent') while the latter implies only similarity ('like').

Therefore, parts certified by CAPA under the 'functionally equivalent' standard are most certainly of 'like kind and quality' in all significant respects to the corresponding (OEM) parts they replace." It's only one more small stretch of CAPA's ego-infatuated imagination for them to state that CAPA-certified parts are as good as or better than OEM - which they do. Maybe "Functionally Equivalent" isn't such a bad term for CAPA to use in their quest to appear "equivalent to" OEM.

Following CAPA's logic, one might also agree that though airport toilet paper is narrow, as thin as air, shreds like confetti as you try futilely to remove it from its five-mile roll somewhere deep inside that vault-like stainless steel holder, and provides a barrier of questionable quality between your hand and the object of its affection, if CAPA considers their parts functionally equivalent to OEM, airport toilet paper must be considered functionally equivalent to the kind you use in your home (as long as you scrub thoroughly with lots of soap and water afterward).

According to a quality-minded collision tech, "Aftercrap parts kinda sorta resemble OEM, but there is absolutely zero proof that they perform each and every function performed by the OEM parts and perform those functions in the same way that OEM parts perform. Therefore, the aftercrap part does not fit the definition of equivalent.

"Dysfunctional parts do not become "functionally equivalent" just because someone with a vested interest in them deems them so. Maybe CAPA should term their parts "Functionally Dysfunctional Parts" (FDP).

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Market survey and prevailing rate

These two terms are mutually inclusive - like "free love" and "babies" - in that one leads to the other. Though mysteriously formulated so-called "market surveys" mystically produce so-called "prevailing rates" that all shops in a given area are to believe they can not exceed, the idea that products and services should cost the same from one shop to another could only assume that all such products and services are identical, that all shops have identical tools in number and brand, that all employees are equally motivated, equally paid, and otherwise compensated equally, and the like.

The reality of business, though, is that your business is your own and your profits are based on your costs, not the assumed costs of shops that haven't a clue about how to figure their own costs of doing business profitability, or those supposedly calculated by a third party entity with a vested interest in keeping you barefoot and pregnant, and subservient to their whims.

So why under any circumstances would you ever even consider allowing an outside entity, that is totally disinterested in anything but maintaining their own profitability through randomly reducing yours, to determine the so-called "prevailing rate" that they expect you to comply with, especially when this rate is determined by the rate at which they were able to bully other shops in your area into compliance?

Says one within the collision industry, "They conduct a so-called 'survey' to find the lowest rate, which then becomes the prevailing rate. It's among the most sickening scams that bilk the collision industry. I did a 'market survey' of all the grocery stores in my area and found milk for as little as $1.99 a gallon. I went to all the other stores and told them the 'prevailing rate' for milk is $1.99 a gallon so that's all I'll pay for milk. Of course, I didn't bother to mention to them that the expiration date on the $1.99 milk is today's date. I just provided enough information to get a discount on my milk."

I'm betting that the other stores didn't lower their milk prices one penny. So, when you hear the terms "market survey" and/or "prevailing rate" you'd better cover your rear. And set your own rates according to your own true costs of repair, with reasonable profitability added in.

Pre-loss condition

After years of adverse publicity concerning shops and insurers use of this term, I still occasionally hear it or see it used to describe the repairer's finished product. The truth, as Jim Lynas of Wreck Check proved, is that pre-loss condition can never be attained in a repair, in a legal sense. Simply stated, a repair shop is not able to duplicate exactly the procedures and conditions of manufacture used by the OE (dunk-coating/galvanizing being one of many), and therefore, in lawful application, collision shops are not able to attain pre-loss repairs.

Your repair might even be an improvement on the pre-loss factory built vehicle (better body gaps, or tighter suspension tolerances than factory). But pre-loss condition in the legal sense, the sense that could potentially drag you and your business into a lawsuit, goes further than fit and finish, to the vehicle's resale value.

The standard against which a court of law could pit your repairs, should you continue to advertise them as "pre-loss," is "inherent diminished value." The prosecuting attorney would ask the jury which of two used vehicles, identical in every detail including price, they would consider purchasing - one having been repaired and the other never repaired. The stigma that a vehicle has been repaired is enough to cause it to be devalued significantly in the resale market compared to its undamaged, never-repaired counterpart.

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Most all insurers and consolidators have discontinued reference to "pre-loss condition" to protect themselves from liability. A technician states, "When I first attended I-CAR classes in 1992 the phrase "pre-loss condition" was used probably 200 times or more in 8 classes. But last year when I attended several I-CAR classes, only once was the term used. Asking the instructor why, he admitted that he wasn't even supposed to say it that time. I-CAR told their instructors to stop using the term "pre-accident condition" because there is no such thing, unless, of course, you're referring to a car that has never been involved in an accident."

Wipe the phrase from your memory, your literature, and your speech, unless you are interested in attracting the attention of sharp attorneys interested in sending their kids to college on your tab, making you look like a fool, and turning your business into one more scrap of history. As the tech stated above, there is no such thing as "pre-accident/pre-loss condition," unless you're referring to a vehicle that has never been in an accident.

Set-up and measure

This is the ultimate "set-up." These two distinct technical operations always seem to get lumped together, like ham-n-eggs, though they are two separate operations. The obvious reason is that it takes less time estimating when you lump things together. But itemizing operations is generally more profitable for shops. I've seen shop and insurer-generated "estimates" that lump together "Set-up, measure, straighten and align…", and there is no doubt in my military mind that 99% of the time the shop is letting valuable dollars slip through its fingers, or cutting corners at the vehicle owner's expense, by working off of non-itemized estimates and work orders.

To start with, no shop should ever be working directly off of an insurer-generated estimate, as insurer representatives seldom have the best interests of the consumers or repairer in mind when they write their sheets. Something I learned years ago concerning shops accepting insurers' bottom line figure, even after supplement billing it sufficiently, is that when insurers agree on a figure with you, you or your true customer (the vehicle owner) have still come out on the short end of the compensation stick. I strongly suspect this is true almost every time.

Insurers haven't amassed the fortunes they have in their $3.5 trillion enterprise by letting money slip through their fingers. And they surely haven't made it all on collecting premiums; a sizeable chunk of their change came from you and me in not fully collecting for our services rendered, and parts and materials not sufficiently billed for. Never work directly off of insurer- generated estimates. Rather, before re-viewing an insurer-generated estimate (if you should choose even to look at it), write your own sheet including everything you need to return the vehicle "as close as humanly possible to pre-loss condition," regardless of what the insurer rep may or may not have included in his sheet. Besides potentially adversely influencing how you will carry out the repair and what parts and materials you will use, working off of insurer-generated estimates may get you into legal hot water. Remember that you, not the insurer rep, are the repair expert. You have the time-in-grade, the cuts, stains, sore muscles and smashed fingers - not the insurer rep (if you have any further doubts, look at his/her manicured hands).

Back to set-up and measure, one reason I seldom darken the doors of NACE any more is hearing the frame rack vendors there tell shop owners and insurer reps that their rack was so superior to the competition that the lowest paid person in the shop could do any set-up and measure on any vehicle is as little as 15 minutes, and collect for 2.5 hours, or whatever.

Interesting, but I've noticed that as vehicles have gotten increasingly more complicated, insurer-generated set-up and measure times have been increasingly shrinking, and often are figured as body labor, not frame labor. I wonder if insurers' exposure to NACE had anything to do with this? Itemize every item needed, and at your rates, to assure a full, safe and proper repair.

Dick Strom, Modern Collision Rebuild, 9270 Miller Road, NE, Bainbridge Island, Washington 98110; (206) 842-3621; e-mail: moderncol@qwest.net.

 

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