The week of May 04, 2009
The End of the Fantasy
by Dennis Lipardt
That's it; the second in a series titled "What if?" that was published two weeks ago will be the last. I was attempting to get your thinking juices flowing so you would respond with your own thoughts about the possibilities of what might be for the collision industry. I failed. Only a few people expressed any interest at all in the series so why waste time, space or computer bytes continuing.
Yes, the thoughts I expressed in the two parts that were published were ridiculous dreams, but from dreams a certain amount of reality can take place. For those of you who did spend the time sending in your comments, thank you. Hey, I never know what is going to turn you on and obviously this wasn't it.
The collision industry as a whole needs to take a look at the big picture and stop focusing on the issues that have been the industry hang-ups for years. I admire those people who are involved in the non-DRP movement. I don't agree with them, but I do have to admit that they are least trying to do something about an issue that is important to them. If everybody got behind some of the industry's more important issues certainly things would have to change. But, alas the "let the other guy do it" has prevailed for decades. Think about the main topics of interest to most collision shop operators. Labor rates always lead the list, followed by DRP or non-DRP, aftermarket parts, insurer domination and yes, even waiving deductibles. If I had written this commentary twenty years ago the topics would be the same. Look very quickly at the facts in each issue.
Labor rates, ah yes, it is the insurers fault that labor rates are suppressed. This is the simplest problem to solve yet too many shop owners refuse to take a stand and charge what they really need to make a profit. This has lead to cost shifting and funny times which now are not even a viable method to make up for what is lost because of low rates.
DRP or non-DRP will be a never-ending argument since in my opinion DRPs will not go away; in fact they will be more prevalent. Those that don't believe in them will continue to fight a losing cause. These folks would be better off trying to develop business from other sources in they want to stay in the business. They won't agree, but that is their right.
Aftermarket parts have been good for the industry even when the parts were truly JUNK. Because of the aftermarket competition each shop owner has more cars to repair because parts prices in general have been reduced thus less totals. Some shop owners will continue to take a hard anti-aftermarket stand while others will find the good parts and use them. Nothing changes.
Insurer domination. The one who controls the money wins. Nuff said!
Waiving deductibles. I hate it, but it is a business decision that each shop owner must make for himself. Besides what is the difference between giving an insurer discounts and giving those same dollars to the customers.
What are just some of the issues we should be concerned with instead of continuing to spend time rehashing problems that you have already talked to death over the years?
I think shop certification leads the list. We have seen the cost associated with a shop being certified by high-end foreign car manufacturers. As technology makes all cars more difficult to repair does anybody think that all manufacturers (those that are left) won't follow suit? How will independents deal with this issue since they now repair everything that has four wheels?
New insurance policies certainly has to be an important issue although we can only guess what might be going through the mind of those devious folks in the ivory towers. I'm sure they are at least considering HMOs, but I have thought that for years. I guess we will just have to be watchful for change.
Over capacity is really on everybody's mind since there is just not enough work to go around. There are ways to deal with this issue, but the collision industry seems to have closed their minds to what must be done to correct this problem.
Concierge type programs. When Progressive initiated this program most of thought it would never work. Kind of shows what we know. Now AAA Michigan has followed suit. Who will be next is anyones guess. The industry for the most part hates the program, but customers seem to like it. You can be sure collision repairers will see more of this type of program in the future.
Here is a new one, foreign labor. With Mexican labor going for about $1.90 an hour including benefits, it surprises me that states bordering Mexico have not found insurers who want to ship repair jobs South of the border for repair. Of course that is far fetched, but I'm sure that a lot of shops would be willing to hire illegals to do body work cheap. This may become more of an issue than you think.
Cost of technology. With waterborne paint and all the new equipment that is not even on the market yet, you can be assured that the cost of doing business is going to increase drastically in the coming years.
Industry support. A lot of help that repairers will need in the future will come from industry associations. But, in order for this to happen they will need more and better members willing to pay the price for their associations to provide support. The cost of joining should increase. An association to provide services must have more money and this money needs to come from dues. The associations must, in my mind, also realize that they cannot be all things to all people. When and if this happens they will attract the more progressive thinkers in the industry.
Lets spend more time focusing on what will probably happen to the collision industry instead of what has been the focus of most people since I can remember.
NOTE: This editorial expresses the opinions of its sole author only and does not necessarily reflect the opinions of Autobodyonline, or any of its subsidiary companies, clients, or supporters.
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