Wednesday, 18 December 2013 22:43

A Look Back at the Key Industry Events and News of 2013

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As a new year kicks off, here’s a look back at a significant or interesting news story from each of the last 12 months—including some stories that are likely to continue in the year ahead.

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January

As 2013 began, many in the Northeast were still coping with the impacts of Superstorm Sandy, which ravaged the region about six weeks previously. Bill Shaw, president of the Collision Industry Foundation, asked for donations for shops damaged by the storm and its aftermath.

“So just think of the effect on your business if you took out all the work-in-progress you had and all the vehicles that were sitting in your lot, and you lost all that revenue, plus weeks of production,” Shaw said. “And because it was a natural storm … insurance claims were denied. These businesses had to take cash out of their pocket to just rebuild.”

The Collision Industry Foundation, which raises funds to help those in the industry following natural disasters, eventually donated $4,000 to two shops in Brooklyn, NY.

February

The Certified Automotive Parts Association (CAPA) reported that six out of seven non-certified non-OEM sheet metal parts it had recently tested were made of non-galvanized material. As part of its certification process, CAPA requires sheet metal parts to be galvanized even if the corresponding OEM part is not.

March

Dan Risley joined the staff of the Automotive Service Association (ASA) initially as executive vice president but within months was chosen by the board as president and executive director. Risley, 42, surprised many when he’d joined Allstate in 2008 after almost eight years as executive director of the Society of Collision Repair Specialists (SCRS).

At ASA, he succeeded Ron Pyle whose 10-year tenure with the association was at times rocky. Pyle and ASA helped enact (and defend from legal challenges) legislation banning insurer-owned shops in Texas; but ASA’s ongoing opposition to federal and state “Right to Repair” legislation has been questioned even by many ASA members. Pyle led ASA when it chose to hold NACE in Las Vegas in conjunction with SEMA before later deciding, based on competition from SEMA, to move NACE first to a different week and then to different locations. Under Pyle, ASA also reduced its staff count, sold its office building, and was the victim of theft by an employee who used an ASA credit card for “many tens of thousands of dollars” of personal purchases.

April

Collision Industry Conference (CIC) Chairman George Avery last spring called for an end to CIC’s multi-year discussion of “industry standards.”

He said some people expressed concern that CIC was “over-reaching,” particularly when it began to suggest a structure for a new organization to oversee the final development and implementation of standards. He said CIC, by its published mission statement, is solely a forum where “industry stakeholders come together to discuss issues, build broad understanding, find common ground and communicate…findings and possible solutions.”

“We’re not going to saw sawdust any more with the topic,” Avery said. “Because CIC comes up to a point and stops. Then if companies want to take it from there and create inspections and verifications and programs, that’s for them to figure out and offer to the repair industry. That’s someone else’s bailiwick.”

May

A memorial service was held in early May for Matthew Ohrnstein, managing director of the Symphony Advisors consulting firm and the former CEO of Caliber Collision Centers, who died at age 57. Ohrnstein pioneered consolidation and the entry of Wall Street investment in the collision repair industry, adding 68 Caliber shops during his 7-year tenure with the firm, thanks in part to investment capital from insurance companies and private equity funds. Ohrnstein went on to be involved in many of the shop mergers and acquisitions in the industry after he left Caliber in 2004.

June

Ten years after the Auto Body Association of Connecticut (ABAC) filed a class action lawsuit against The Hartford, a Connecticut Superior Court judge awarded them $20 million in punitive damages. This was in addition to the $14.7 million in compensatory damages a jury in the lawsuit awarded the repairers (about 1,500 are represented in the class) in 2009.

The suit charged that The Hartford suppressed labor rates by using unfair and deceptive trade practices to steer customers to its DRP shops, and by pressuring appraisers to enforce artificially low labor rates.

“The court has placed the entire (insurance) industry on notice that forcing their appraisers to violate the code of ethics by writing estimates at unreasonably low labor rates must stop,” attorney David Slossberg, who represented the repairers in the case, said.

The Hartford is appealing the ruling. The ABAC has a similar lawsuit pending against Progressive.

July

Despite a last-ditch effort by insurers calling for a veto, Rhode Island Gov. Lincoln Chafee signed into law unique legislation that requires a vehicle-owner’s written consent before a vehicle is declared a total loss if the cost of repairs is less than 75 percent of its value.

Rhode Island shop owner John Petrarca had this advice for shops working on legislation in their own states.

“You have to get engaged and stick with it. Nothing gets done in a day,” Petrarca said. “We had so many disappointments so many times. But you know what? We picked ourselves up, we got back in there, we kept informing. I believe the only way we can correct our industry is through legislation. Because the other side will absolutely do nothing unless you have legislation.”

August

PartsTrader last summer began eliminating the “fax-only” option which had allowed shops to use the system to buy from vendors not participating in PartsTrader. Also in August, the Mississippi Collision Repair Association and more than two dozen body shops, dealers and other parts suppliers in that state filed suit in an effort to prevent State Farm’s mandated use of PartsTrader. The suit alleges that State Farm’s implementation of PartsTrader tortiously interferes with existing business relationships shops have with their parts vendors.

September

State Farm’s PartsTrader mandate also led to actions by both ASA and SCRS last fall. SCRS issued a new position statement, condemning insurer mandates, “particularly those that specify required vendors, business platforms or internal processes that must be followed.”

And ASA’s Risley sent a letter to State Farm saying the association is “taking a firm stance against insurance company mandates that limit a repairer’s right to choose their vendors, distributors and suppliers.” Risley wrote that State Farm’s mandated use of a vendor “that solely financially benefits State Farm is more dictatorship than partnership.”

October

ASA then went a step further and sent a letter to state insurance regulators and attorneys general, asking if State Farm’s mandate to use PartsTrader violates state law.

“We believe this mandatory parts procurement program stifles competition and harms both the consumer and the small businessperson,” Risley said.

November

A year after Toyota introduced the concept of “predictive estimating,” the automaker announced a partnership with Mitchell International to deliver Toyota recommended procedures and bulletins within Mitchell’s new mobile/online estimating system in early 2014.

When a user adds a part to an estimate, all of the appropriate Toyota vehicle information will automatically appear, including related Toyota bulletins or procedures and information on such things as one-time use fasteners.

Toyota’s Rick Leos said he expects other automakers to make similar announcements in 2014.

December

The Automotive Body Parts Association (ABPA) last month filed suit against Ford Motor Company, challenging the validity of the automaker’s design patents on collision repair parts. The suit alleges that Ford “uses design patents on automotive body repair parts to limit their distribution and increase cost of the repair parts.”

In 2009, Ford settled two of the legal battles it waged to protect its design patents through an agreement making LKQ Corporation the only distributor allowed to sell certain non-OEM parts for Ford vehicles. In exchange, LKQ paid a royalty fee for each of the parts it sold, and agreed not to challenge the validity of Ford’s design patents.

John Yoswick is a freelance writer and has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (visit www.CrashNetwork. com). He can be contacted by email at: jyoswick@SpiritOne.com.

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