Ted Stein, 52, has been an officer for the California Autobody Association (CAA) for many years, and for 2016-17, he is the organization's State President for the second time. Stein is the Fixed Operations Director at Penske Ford in La Mesa, CA and has a total of 38 years in the industry. Autobody News sat down recently with Stein to discuss the state of the collision repair industry in California and nationwide.
Q: What are some of the obstacles that body shops are encountering now?
A: So the struggles today are the same as they were 20 years ago. Getting paid for everything you need to do in order to return these cars to their pre-accident physical condition is still the main issue. Today’s cars are so sophisticated and training is ongoing and continuous if you want to stay up-to-date. The expenses keep going up and yet our rates are the same after twenty years, so we’re being held back that way when all we want to do is a good job. People say there are not enough trained technicians, but I don’t believe there is a shortage. I think there is an over abundance of repairers. There’s too much capacity, so if 30 percent of the shops in the country closed tomorrow, we’d have an ample supply of available technicians.
Q: So have you had any problems with anybody trying to take your employees?
A: Somebody once said that the reason body men have wheels on their tool boxes is because they jump ship so much, but we’ve been blessed with a lot of longevity. We haven’t had that problem. I’m told it seems like if you have one slow pay period, technicians are looking to move on. It’s tough and other shops often tell me that the loyalty just isn’t there. That’s one of the strange things about this dealership, we’ve had so many employees with 25-30 years of service here and everybody that comes to visit says that’s just unheard of. You can take care of your people and weather the storms and sometimes it's not all about the paycheck. My son wanted to go into body and paint and I just wasn’t going to hear of it. It’s not the same business it was when I got into it. His argument was that I’ve had a great life and it provided well for all of us. And then I told him that's why you’re going to college and you better stick with it.
Q: What do you think about the "Rush to Aluminum" that has been a big deal for the past 2-3 years while shops gear up for these new vehicles?
A: There’s a race to make the car stronger and lighter. And if there’s somebody with that technology that can bring it to an auto manufacturer – that’s your next billionaire. That race continues. What the auto manufacturers are spending to save ounces on a vehicle and still make it safe – it’s jaw dropping. So I think you’ll continue to see material changes, and I believe many of them haven't even been invented yet.
Q: Do you think self-driving cars will hurt the collision repair industry?
A: I have to admit that I’m a little nervous about these autonomous vehicles. A friend of mine, George Avery from State Farm, said that in a world where it’s all autonomous vehicles--do they still need me and you? And it was a great question because these vehicles don’t get into accidents. So, I told him that there will always be shopping carts that run into cars and trees and hailstorms that fall on vehicles. There will always be body shops, but not as many once self-drivers become prevalent.
Q: What would you tell somebody considering entering this industry now – either as an owner, technician or estimator?
A: To someone who wants to own a shop, I would tell them that there is still opportunity for the stand-alone collision repairer to make it and be successful, but they’re going to have to know their numbers. I would strongly urge them to be involved in a trade association. They need to be an active participant in their facility and work on the business as much as they work in the business. For someone entering the industry as a tech or estimator, I think it’s a great business. It has its ups and downs—it’s a retail business and there are all those challenges in the retail world but there’s always somebody coming up with a niche. The cars are safer today and they just don’t wreck as frequently. There’s crash avoidance technology like crazy and it’s only going to increase at a high rate. And I see consolidation, but I actually believe that it's going to peak at some point. I don’t think that’s a viable book of business for any insurer to have all their eggs in two or three consolidators' baskets. That’s just my personal opinion.
Q: People say that prior to 1990 was the Golden Age of collision repair, but now many shops say they're chronically underpaid by the insurance companies. Do you agree with that?
A: Yes, that’s the case because it’s back to the capacity issue. There’s always the guy down the street that’s willing to do it for less to get the volume because he can’t get the volume otherwise. In many ways, it feels like a race to the bottom. It simply cost more to repair today’s vehicles compared to yesterdays’. But there are some insurers that are more concerned with CSI and quality repairs and retention – right? Retain that insured so he renews his policy. Now of course they all have to be cognizant of claim costs – right? But I think at some point retention becomes more important than claim cost.
Q: What would you say to shops that are thinking of getting involved in the CAA?
A: Well, you wouldn’t be a doctor and not be a member of the AMA, right? I don’t know if people understand the value that the CAA brings to their facility. This is my second time as State President, because I believe that this industry can exist where shops can be profitable. There’s a triangle here (insurers, vendors and repairers) and I believe we can achieve a triple win and everyone can succeed. Some folks tell me I'm crazy, but I believe it can happen.