Panel discussions including shop owners and industry trainers and consultants sharing what they see as the benefits of implementing the concept of “lean” were held both at the 2-day Women’s Industry Network (WIN) Conference held in Chicago, and at the Society of Collision Repair Specialists (SCRS) annual meeting held in Philadelphia.
But it was other speakers and discussions at the events that helped make each unique.
Impact of industry, economic trends
About 125 women from all segments of the collision industry attended the WIN event, which included presentations on labor and employment law, dealing with workplace conflict and stress, and capitalizing on the use of customer service indexing.
Susanna Gotsch, industry analyst with CCC Information Services, kicked off the second day of the conference with a summary of insurance and broader economic trends impacting the collision industry.
The news she had to offer was mixed. On the plus side, vehicle leasing is back on the rise, accounting for about 30 percent of new car sales last year; owners of leased vehicles are more apt to have damage repaired. The number of paid claims rose slightly last year, the first increase in nearly a decade. And as widely reported earlier this year, the percentage of vehicles being declared total losses has more recently leveled off or even declined slightly after a number of years or rapid growth.
On the down side, Gotsch said, new car sales are the lowest they have been in a decade; vehicle crash avoidance technology is on the rise as automakers and regulators shift from a focus on just crashworthiness to accident prevention; and total vehicle miles driven declined last year for the first time ever.
Gotsch said unlike in the past when there were fewer vehicle makes and models and sales of more than 400,000 units of a popular model were not unusual, virtually no automaker today sells more than 100,000 of any particular model.
“So the variety of vehicles that a technician or estimator will be asked to deal with is going to grow exponentially,” Gotsch said. “Instead of seeing the same vehicle once every week, you may see that same vehicle once every two months. So the ability to stay on top of the technology and stay on top the different features of different vehicles, is going to be that much more critical.”
Gotsch said that although crash avoidance technology is primarily being introduced on higher-end vehicles today, it will trickle down to more and more models.
“If we look forward 10-15 years, as more of these technologies are present on vehicles on the road, the industry will probably see fewer repairs but the cost of them and the complexity of them will probably grow,” she predicted.
She said that although it varies by market, collision labor rates nationally have continued to rise by 2 to 3 percent per year. The average number of labor hours has stayed at 23 to 25 hours per appraisal.
“We have seen a pretty steady decline in OE parts usage in terms of dollars spent on parts, and a pretty steady increase in alternative parts, whether recycled, aftermarket or remanufactured,” she said. “In 2007, about 69 percent of dollars spent on parts were for (new) OEM (parts).”
Role of insurance regulators
Although the state insurance department representative who spoke at the SCRS event in Philadelphia was from Pennsylvania, much of the discussion may offer insights to those in other states trying to interact with their own state’s regulators.
Cindy Fillman, a consumer liaison with the Pennsylvania Insurance Department said she liked several ideas she heard from attendees at the event, including development of an independent shop labor rate survey, saying her Department does some of that sort of thing with regard to some medical insurance.
“It would be a gigantic undertaking, I think, but I like that it’s much more fair than the way it’s currently being done.”
She said she would like to see the Governor’s office create public service announcements (PSAs) about various insurance-related issue, given that the average household spends about one-third of its income on various types of insurance. Steering of collision repair consumers could be a good topic of such a PSA, she said.
“I may speak to 5,000 people a year, but you put something on in the middle of a decent TV show, and you’ve touched a million people,” she said.
She also suggested that auto insurers may follow the lead of some insurers in the medical field by helping fund shops’ efforts to adopt “lean” or other cost-saving practices.
“Insurers are putting money upfront because they’re looking to save money down the road,” she said. “Maybe they will put money into some of these initiatives because it’s got to be expensive to get some of these (consultants) to come into your shop and look at your processes, etc. My request to insurers would be to think about that, providing money to (encourage) that just like they’re doing in the health field.”
She encouraged shops to, when appropriate, spend the 10-15 minutes that she said it takes to file an insurer complaint with the Department on behalf of a consumer, noting that fewer than 100 such complaints are received each year. She said that while the Department cannot address general complaints about business-to-business conduct between shops and insurers, they can act upon complaints filed by consumers or shops about how an individual consumer has been impacted.
“I think a lot more complaints would raise the bar in terms of being able to go to the Legislature and say, ‘These seem to be unfair across the board, not just in these limited cases,’ ” Fillman said.
Speaking at another industry event the next day, an investigator with the Pennsylvania Insurance Department said just such a complaint helped force an insurer to pay shops in a rural area for hazardous waste removal just as the insurer was in urban markets.
Fillman was asked if the Department would be more apt to act if shops, much like medical providers, charged consumers rather than just absorbing a loss for procedures for which an insurer will not pay.
“Yes, especially if there was a trend,” Fillman said. “I’m not one for creating problems for consumers, but the issue is, to put it bluntly, all we hear when we discuss these issues is, ‘The marketplace is taking care of it. People are still being able to get their car fixed.’ That is the push-back that we get.”
But voicing a frustration felt by many shops in other states, Steve Behrndt of the Pennsylvania Collision Trade Guild (PCTG) told Fillman the association’s website has logged more than 200 complaints against insurers “and we see no enforcement.”
Another PCTG member said the Guild is backing away from trying to work through the Insurance Department or Legislature and is instead trying to get the state’s Attorney General involved.
John Yoswick -a freelance writer based in Portland, Oregon - who has been writing about the automotive industry since 1988 is also the editor of the CRASH Network (www.Crash Network.com). He can be contacted by email at jyoswick@SpiritOne.com.