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Monday, 25 November 2013 17:56

PartsTrader, Insurer Mandates Draw Industry Ire at Collision Industry Conference at SEMA

Following a panel discussion on parts procurement at the Collision Industry Conference (CIC) in Las Vegas in early November, attendees spent nearly an hour voicing criticism of mandated use of any particular system.
Tom McGarry of Axalta Coatings ProfitNet Management System noted that unlike several other systems, PartsTrader interfaces with estimating systems but not management systems. He also said a shop ordering parts might need to use one electronic system in order to receive an automaker rebate, but the shop’s preferred vendor might use a different system, with State Farm requiring yet another.
“It’s not a procurement decision anymore; it’s a marketing decision,” McGarry said. “How do you handle that?”
Nebraska shop owner Andy Dingman, who participated on the CIC panel, agreed that shops could be faced with using multiple systems. “And that’s going to be very efficient,” he added, sarcastically.

California shop owner Randy Stabler, also on the panel, agreed. “The challenge here is the insurance community doesn’t understand by and large that when they increase the body shop’s costs, they have to pay for it somewhere,” Stabler said. “Lowering the payout isn’t increasing efficiency. If the insurers could take that back to their corporations and figure out ways to reduce the body shop’s operating costs, then they can share in it, but reducing the payout doesn’t increase efficiency.”
Stabler also said, however, that he’s “kind of perplexed” why the PartsTrader mandate has become “such a lightning rod” for an industry that has been accepting insurer mandates since the early days of computerized estimating.
“That was then. Today it’s parts. Tomorrow it’s paint materials. What happens the day after?” Oklahoma shop owner Gary Wano responded. “If we don’t stop the mandates at some point in time, what are we doing?”
Janet Chaney, who serves as the executive director of several state body shop associations, said it clearly comes down to the role parts play in a shop’s profit.
“How many times have we been told what to do and we’ve agreed to it and it’s turned on us,” she said, drawing applause.
Tony Passwater, executive director of the Indiana Auto Body Association, said he was struck by how often insurer specific mandates are about business processes, like parts ordering, that really have no benefit for customers, rather than on things like equipment, training and certifications that affect the repair quality a customer receives.
Scott Biggs of Assured Performance Network said that when the federal government sets fuel-economy standards for new vehicles, it doesn’t tell the automakers how they have to go about meeting those goals.
“If an insurer said we can’t sit idly by and let you continue to order parts via phone and fax when that’s such an incredibly inefficient process, they could say instead, ‘You have to use electronic parts order and procurement,” Biggs said. “But they don’t have to name the exact brand because it kills competition.”
Similarly, Nick Bossinakis of Overall Parts Solutions, which offers a electronic parts ordering system, said one of the reasons this mandate is frustrating shops is that they may already be using an electronic parts procurement system that for them works better than PartsTrader.
“You have (shops or parts vendors) that are out there listening to digital music on their iPod, and instead are now bringing them an 8-track tape,” Bossinakis offered as an analogy.
Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), also noted that a mandate to use a particular system can elevate that system above other systems that shops find more efficient to use.
“And why is the expectation that we as (shops) are forced to embrace things whether or not we believe they are good for us,” Schulenburg asked. “What I think is a more appropriate expectation is that the insurance industry embrace open platforms and choice. In instances where they’ve done that, it’s been more successful.”
John Mosely, owner of one of the Mississippi shops suing State Farm over its PartsTrader mandate, said he has yet to find a single shop owner anywhere in the country who says he or she likes PartsTrader. He said the industry “knows how to adapt and we’re not against parts procurement,” but opposes being required to use a particular system. He addressed his comments directly to George Avery of State Farm (also the chairman of CIC), who was sitting in the audience during the panel discussion.
“George, I’ve had two conversations with you on the phone, and I appreciate your sincerity,” Mosely said. “You’ve always been, I feel, very honest. But this isn’t working. Is there anything you can do to please take this back to your company and tell them this is just another bad idea out of Illinois, kind of like ObamaCare.”
Virginia shop owner Barry Dorn also addressed some of his comments directly to Avery.
“George, your folks need to talk to your partners. I’m one of them,” Dorn said. “You need to explain to them why, at the end of the day, one stakeholder is taking away from the other two – how that’s fair, how that’s efficient, how that’s right and frankly, George, how that’s not corporate greed. I don’t blame your company or any insurer from wanting to make more profits. That’s why every one of us came in this room, for more profit. I get that. But if we are partners, we need to sit down and talk, and not just mandate to me how it’s going to be.”
Dan Risley, executive director of the Automotive Service Association (ASA), said State Farm has not closed the door to discussions about PartsTrader, and that he feels they have “gotten the message.” But, he said, the association is also pursuing other avenues, including asking states if State Farm’s PartsTrader mandate is legal, and if so, considering legislation to make it illegal. Risley said, in his opinion, litigation should be only the last option because it shuts down communication.
“You don’t see PartsTrader up there,” Risley said, pointing to the panel at CIC. “You don’t see State Farm up there. It’s for that reason: litigation.”
Indeed, panel moderator Rick Tuuri said every effort was made to get State Farm and PartsTrader to participate on the panel.
“The reality is once there’s litigation, everyone that’s involved has a tendency to move away from public discussion,” Tuuri said. “People stand down and cannot speak without their attorney present.”
Consultant and former CIC Chairman Lou DiLisio was among the last to speak during the discussion. He circled back to an earlier comment Tuuri had made about how employees can inadvertently end up wasting company time working on something when the actual goal of the assignment they were given isn’t clear. DiLisio reiterated that a mandate to use a particular system may be less effective than conveying the big picture and working together to find the best way to get there.
“Maybe if these companies that have a desire to achieve a goal shared what that goal is, collectively we could come up with a better solution,” DiLisio said, drawing applause at CIC.

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 weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at:
jyoswick@SpiritOne.com.

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