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Thursday, 22 September 2011 16:03

CAA Pasadena/Foothill Chapter Hears Larry Baker & AQMD Rule 1147

The CAA Pasadena/Foothill General Chapter meeting was held September 15, 2011, at the Brookside Country Club, Pasadena, CA, was presided over by Linda Holcomb, President. She announced that she and a few other members of the CAA had met with an AQMD committee about Rule 1147 recently. The rule would have required many shop owners to install expensive equipment to control noxious emissions. At the meeting, the CAA members succeeded in getting the AQMD to postpone costly regulations for shops.

The September 15 meeting was essentially divided into two parts. To amplify what Linda and her group had accomplished, there was an expert update on Rule 1147, by Anthony W. (Tony) Endres, president of Furnace Dynamics, Inc. His clients include companies that generate millions of BTUs monthly and yet the AQMD rule affects body shops that generate a tiny fraction of that.

Endres notes that a typical collision repair shop generates less than a pound of pollutants per month, and only about 12.4 pounds of NOX per year. Mr. Endres has challenged both the deadline for implementing the rule and the appropriateness of the rule at all for collision shops. In his update he was able to announce a five-year extension for implementing the rule for collision shops, and eventually for making shops totally exempt from the rule.

The rule could have required shops to install special gas meters and retrofit spray booths with low NOX burners at an approximate cost of $25,000 for a typical shop. Endres noted the fact that the rule failed to provide for any inspector to actually read the gas meters. In his testimony before the committee, he noted that a simple way to identify the volume of gas use would be to look at the shop's gas company bill that specifies the number of therms used in a month. Less than 2400 therms would indicate less than a pound of pollutants per month, even for as many as three spray booths.

With these convincing facts, Linda Holcomb, several members of the CAA, and Mr. Endres were able to bring about a postponement of the requirement until 2017, and a probable elimination of all collision repair shops from the requirement before then saving shops an enormous unnecessary investment.

The guest speaker for the evening was Larry Baker, a two-shop owner from South Carolina and a DuPont “Executive Facilitator,” specializing in providing management solutions and systems for DuPont customers. The title of his talk was, Who's Winning, Who's Losing & Why In The Collision Repair Industry, but he quickly made the point that his focus would mainly be on who is winning and why. He noted that his father managed their business from 1951 to 1975, and he has managed it since then, following a pattern of winning that yields more than $3 million a year these days. In his role for DuPont, traveling the U.S. and seeing scores of shops, Baker says he sees examples every day of shops that are winning and those that are losing, including more than 300 shops that have closed in Southern California during this recession.

Baker points out what we all know: There are fewer cars to repair these days, so the name of the game is beating your competition to get more of those vehicles into your shop to repair. He says there are four aspects of a shop that have to be improved to beat the competition, and four questions a shop owner should be asking:  (1) How can I better select, train and equip our staff? (2) What internal processes can I improve? (3) What additional or new value can I deliver to customers, and (4) How can I improve our financial performance and output?

On better selecting, training and equipping staff, he told the shop owners in the audience that most of them already knew there were people on their staff who were not top performers.  He said to compete in today's very challenging market, a shop can no longer afford to have less than top performing personnel. To win, a shop simply has to have better people than the competition. A shop owner has to face up to eliminating poor performers and paying what it takes to get the top people who can enable the shop to win.

To determine what internal processes need to be improved, he noted that many shops still function on 1952 processes and technician expectations. He said that today a top technician should be able to turn out $250,000 a month for a shop. He said the old paradigm of a manager telling a top technician how to do his job is more than obsolete. He says every tech should be capable of watching for continuous improvement and adding his or her knowledge and experience to help the shop win.

On the element of a “value proposition,” Baker provided an extensive printout of items for a shop owner to consider. In his shops, he says, they don't bother to fight insurance companies or adjusters. He says the game of maximizing the estimate is not the way to win. He agrees with the “lean procedures” philosophy that there is a massive amount of waste and inefficiency in most shops. By removing these impediments to success, he says a shop should be able to provide customers with greater speed, higher quality and lower cost.

Finally, on financial performance, he emphasized that a top winning shop owner should know how to read the shop's financial statements and balance sheets and how to fine-tune leading indicators—not lagging indicators—to continuously correct for changes in our volatile economy and still come out ahead.

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