Wednesday, 16 March 2011 00:19

Recyclers, Repairers Look for Ways to Improve Their Business Interactions

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Mel Hunke said he’d like to eliminate the “wedge” between collision repairers and auto recyclers.

“We used to work together really well,” Hunke said of the two industries. “But once insurers stopped paying for clean-up or repair time on recycled parts, they basically said, ‘You two fight it out.’ And we’ve been doing it ever since. That’s the wedge that was driven.”

Hunke, a former shop owner who now represents the Quality Replacement Parts (QRP), a coalition of auto recyclers in nine states, was speaking at the third “Recycled Parts Roundtable,” held in Las Vegas. The gatherings, originally organized by QRP but now open to anyone, bring together representatives from all segments of the industry to discuss and work to resolve issues related to recycled parts.

“We need to blow out the wedge and put our relationship, our core business-to-business process, back together in a way that benefits everyone,” Hunke said as he opened the most recent roundtable.

It was clear by the end of the half-day meeting that many of the two dozen participants – primarily owners of shops and recycling yards – learned things that could help them eliminate that wedge. Here are some of them.

 

• Photos could help. A Texas shop owner at the meeting asked if recyclers can make photos of the parts they have available. Photos, he said, can help a shop confirm the color and condition of the part. It also could help recyclers with better quality (or more accurately described) parts compete with those selling lower-priced but lower-quality parts, because the shop could see, for example, that the lower-priced part has rust along the bottom edge.

Several recyclers at the meeting pointed out that yards meeting the Automotive Recyclers Association’s Certified Automotive Recycler program take as many as two dozen photos of vehicles before dismantling. Although few recyclers have photos of individual parts available, these “Gold Seal” recyclers can provide those vehicle photos upon request to the shop.

• Consider more part types. One potential win-win-win for recyclers, insurers and repairers could result if recyclers helped make shops aware of parts they are likely to need in a repair but that are not typically purchased from a recycler.

“If you buy a fender, hood and bumper from me, but you also need the windshield washer jug and battery tray and all the other stuff recyclers are currently crushing, we can amortize our overhead and dismantling costs over more parts, and you can increase your alternative part usage and save totals,” Hunke said.

A representative of one multishop operator at the meeting said his company is working with recycled parts vendors on just such an effort so the collision repair business can maintain insurer-required levels of recycled parts usage without having to use structural or other types of recycled parts it would prefer not to.

• Understand and use part grading and damage codes. Those at the meeting agreed that too few recyclers and shops recognize and understand the codes that have been standardized within the industry to grade recycled parts and identify the type and location of damage on those parts. Educational and reference materials on these description systems are available at the “Standards & Codes” section of  the ARA website (www.a-r-a.org).

• Understand estimating issues related to recycled parts. Industry consultant and former shop owner Mike Anderson said at the meeting that he serves on an Automotive Service Association committee that recently updated the “not-included operations” chart it created for recycled parts (a similar chart is available for new parts as well). The charts summarize what operations are not included in each of the “Big Three” estimating system times and thus may need to be added to an estimate when using such parts.

• More data would help. Participants at the Recycler Roundtable meeting have agreed that some data collection could help shops and recyclers work better together – and perhaps help influence insurer practices. Work has begun, for example, on a survey to better understand the expectations of shops, insurers and recycler in terms of recycled parts use to help each segment better meet more of those expectations. They survey is likely to ask shops, for example, how valuable the availability of photos of recycled parts would be.

One meeting participant also suggested that a statistical case study look at whether insurers could benefit from accepting lower values for salvage if it increased the availability, pricing and use of recycled parts.

A study could also look at how insurer-mandated use of particular recyclers or the “lowest-cost” part negatively impacts shop efficiency.

• Spend some time at each other’s business. Recyclers and shops at the meeting who had taken the time to visit the recycling yard they purchase from – or the body shops they sell to – agreed it was time well-spent. It’s a great way to see things that each side in the transaction may be doing or not doing that negatively affects the other.

Ordering parts ahead of determining if a vehicle is a total loss – or ordering the same parts from multiple recyclers to see which arrive first or in the best condition – are examples of shop practices that negatively affect recyclers, those at the meeting discussed. Recyclers’ dismantling practices, or failure to accurately describe part conditions, cost shops time and money. Time spent at each other’s businesses can help shops and recyclers work better together, those at the meeting agreed.

• Understand the value of the Gold Seal designation. Recyclers at the meeting said shops could help themselves and the industry by just asking the recyclers they deal with, “Do you have the Gold Seal designation?”

Gold Seal is earned by recyclers who meet the ARA’s Certified Automotive Recycler requirements and also conduct ongoing customer satisfaction surveying. A description of the program requirements, and a list of Gold Seal recyclers nationwide, is available at the ARA website (www.a-r-a.org).

Among the benefits to a shop of using a Gold Seal recycler is that those recyclers are required to use the ARA part grading and damage codes. Every part from these recyclers includes a Gold Seal tag that includes a toll-free number a shop can use if a part arrives not as it was described.

“Last year alone, we kicked three Gold Seal recyclers off the Gold Seal program because they didn’t meet the criteria,” a recycler who serves on the program’s oversight committee said at the roundtable meeting. “There was complaints against them from shops, and we removed them.”

Many of the shops at the meeting acknowledged they needed to go back and ask the recyclers they work with if they have the Gold Seal designation. Participants at the meeting also agreed that more needs to be done to identify in the parts locating services which parts are from Gold Seal recyclers. The industry also needs to work, they agreed, to help insurers understand that just as “certified non-OEM parts” are better than non-certified, that there are cycle time and other benefits to be gained from using parts from Gold Seal recyclers.

Janet Chaney of Cave Creek Business Developer said the goal of the Recyclers Roundtable is to continue such discussion between repairers and recyclers and to bring in other segments of the industry as needed. Chaney, who serves as the administrator of the roundtable, said the next meeting is being planned for April 16 in conjunction with the United Recyclers Group (URG) event being held in Denver. For more information, email Chaney at janet_chaney@earthlink.net.

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