Each year, ABRN hosts a “Collision Industry Roundtable,” bringing together a panel of collision repairers (see sidebar, “Who Was At The Table?”) to discuss what’s happening at their shop, the challenges they are facing, and what they see for their business and the industry as they look ahead. Needless to say, this year’s discussion was unlike any other, given all that’s happening in and around the industry. Here are some of the highlights of this year’s “roundtable” discussion (with responses edited for length or clarity).
ABRN: Let’s start with the pandemic and economic fall-out. With hindsight, how prepared do you feel you were at your business? What lessons have you learned? What’s gone well, or what do you wish you’d done differently?
Rosann Kramer: I don’t know how prepared we were because I don’t think anyone anticipated anything to this extent. I can say: I’ve owned the business for about six years, and I cannot imagine if this had happened in the first year or so. I don’t know that we would have survived it. The one thing that was good from a preparation standpoint was having a budget each year, reinvesting into the business and into our employees, but also making sure we had enough for operations, anticipating ups and downs, even if not fully for something like this.
Brad Zara: A byproduct of some of the lean processes that we’d been working on for 10 years made it much easier to transition into a touch-free type of service. We already had been offering online estimates. We had a night drop-off. Normally, we did an in-person delivery and walk around the vehicle, but we made a few adjustments to make the delivery process touch-free as well. That all happened pretty easily. We also learned from the past to utilize the downtime to get things done around the shop. We did some facility upgrades, some equipment upgrades, the types of things that tie up work space that we wouldn’t have given up in a stronger business climate.
Roy Schnepper: I’m in the Detroit metro area, a Northeast suburb. It was pretty dismal there for a few months. In hindsight, it may have been better to shut-down for a couple weeks and let the guys collect unemployment rather than stay open and keep them on.
Brad Shelton: It turned out we were more prepared that I would have thought. I admit when it all went down, we scrambled a little bit trying to figure out how to adapt. Contactless was a major adjustment for us because we pride ourselves on being very personalized and hands-on, trying to create a good customer experience. When that all had to go away, that was probably the biggest adjustment for us.
| Who was at the table? |
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Bob Gibson Jr. is the second-generation owner of Total Auto Body, which employs 13 people in Grafton, Wisc. Rosann Kramer spent 16 years with DuPont Performance Coatings before buying Runway Auto in South Burlington, Vt., in 2014. Roy Schnepper is the owner of Butler’s Collision in Roseville, Mich., and serves on the national boards of the Automotive Service Association, CIECA and I-CAR. Brad Shelton, the owner of Shelton Collision Repair in Derby, Kan., has been in the industry for more than 35 years. Brad Zara is founder and president of Zara’s Collision Center, now in its 34th year in business in Springfield, Ill. |
ABRN: Talk about a change you’ve made in your business in the last year or two, maybe not even pandemic-related, such as a new technology you’ve implemented.
Bob Gibson: We bought Chromebooks for the techs. Any technical data related to a repair goes in a file on the Google drive so they can access all that right at the car. We had a workstation back there and they would go on that and look at it before, or we’d print it out in hard copy, but now it’s all on a Google drive so we can save it. If there’s a question even three or four years from now, we have the file available to show exactly what was looked up on the OEM website and how the repair was done.
Rosann: One of the things we did before all this that has helped us out a lot is that all of our administrative staff have been cross-trained. During the initial slow-down, we took in any car we could get, without bothering trying to schedule. So the work didn’t hit the different departments as well as it normally does. So the cross-training was beneficial. Someone could slide in where needed. Another change: I hadn’t done a lot of marketing before this year. But with the slow-down this year, I started to do a quarterly email campaign and shooting short videos – 30 seconds to just over a minute – talking about us and different aspects of the repair process that hopefully will differentiate us from our competition.
Brad Zara: About two years ago, we started using Podium. They were initially trying to sell us on using it to drive more Google reviews. But what we found it to be most useful for was text messaging our customers from our desktops. That came in real handy as we developed new processes for estimates, drop-offs, pick-up. We’ve been able to push that information out in a text that customers can refer to as needed. Also, we’d had a manual production board for about 10 years and had planned to install Akzo’s CarBeat. So we followed through with that this year. Our work load had dwindled, so that made it a great transition time because we didn’t have a huge number of jobs to load into it, and we had some time to get everybody up to speed on it.
ABRN: If you had a chance to sit down for an hour to talk with the national claims manager at a Top 10 insurer, what is one thing you’d suggest they do differently that would help shops be more efficient and thus reduce the insurer’s costs or improve the customer’s experience?
Roy: [laughing] That’s a tough question. I’d probably have more complaints than I would suggestions. Through this, estimates are being scrutinized a lot harder, and reviewed by photos. As we know, not every photo tells the complete story. It appears some insurers are looking at how to keep numbers down, whether it’s fair or not. My suggestion would be to find some type of happy medium in terms of scrutinizing these estimates. Specific to State Farm, we’re being scored on how we handle their total losses for them. I think that for most shops, that’s being done for free, and yet now we’re going to be scored on how we handle those? That would be a conversation I’d like to have.
Brad Shelton: It seems they want to reduce their staff so much, to just a skeleton crew, with no field adjusters. So they don’t have enough staff to handle the work load. We find ourselves sitting here waiting three, four, five days – in one case, 14 days – for supplement approval. They’ve just wasted $400 on rental. It seems like they jump over dollars to try to save pennies. If you’re going to cut everything back and rely on somebody else to do the work for you, then at some point you’re going to have to give a little and trust us.
Rosann: I agree they either need to trust us or not. They spend a ridiculous amount of time over $10 here and $5 there, with multiple days lost in rental. This certainly doesn’t satisfy the customer.
Brad Zara: Eliminate needing preliminary estimates, whether one the insurance company writes or one they want the shop to write. Those just get in the way of everything. The repair planning or blueprinting process benefits everyone. You can hopefully get down to one parts order, for example, and to research OEM procedures correctly, you need to know the whole scope of the damage.
| Looking into the future |
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This year’s ABRN Collision Industry Roundtable were unanimous in their belief that there will be fewer body shops in the United States five years from now. “There are a lot of dealers in my market, and we are seeing the bigger dealers buying the smaller ones and consolidating services,” Roy Schnepper said. “I think the same will happen to the small independent shops. My guess is a decline of about 15 percent.” That said, the shop owners are feeling pretty optimistic about their own shop’s future. Shelton said he thinks there will be some improvement in business next year, even if it doesn’t fully rebound to 2019 levels. “I think 2021 will be down by 10 percent compared to 2019 because that was such a strong year economy-wise,” he said. “I think the effects of all that is happening in 2020 will take a toll, that getting back to where we were will take a while.” But Zara and Kramer foresee getting back to 2019 sales levels next year. And Gibson and Schnepper are even more optimistic, expecting 2021 will outpace even 2019. “I would expect our sales to grow possibly 10 percent or 15 percent over 2019,” Gibson said. “Advanced driver assistance systems are increasing the costs of repair.” “I think the OEM certified networks will start to have more of an impact on our industry,” Schnepper said of his forecast for 10 percent growth. Most of the shop owners also voiced little concern about competing against larger multi-shop organizations, rating their level of concern as a “2” or “3” on a 1-to-7 scale. “I feel that at my shop we have positioned ourselves to compete by getting OEM certified,” Schnepper said. “I believe a national MSO will come into our market, but we have been in business for nearly 40 years with a suburban population that values relationships with local people they know and trust,” Gibson said. Shelton agreed. “In my small market, people like to deal with local companies, and the MSOs that have moved in struggle both in offering a ‘local feel,’ and with hiring people because of the corporate feel,” Shelton said. |
Bob: To me they waste so much money on total losses. We’ve got a 2015 Cadillac in the back that’s been here 21 days now. The day after it was towed here, the insurance company was told it’s a total loss. We wrote a $40,000 sheet on the thing, and it’s still sitting here. They don’t trust the shop. I would rather fix a car than have it totaled. But if it’s a total loss, I don’t want to invest a lot of my resources to try to prove to them it’s a total loss. They should take the shop’s word on it, get the vehicle moved and get on with life. Instead, they have you bring them in, tear them down, and they’re then $3,000 into a total loss, just to say, ‘You were right two weeks ago. It’s a total loss.’ It’s a huge waste of money and resources.
ABRN: Let’s close with a prediction or two, something that you think will have happened or changed three years from now, by mid-2023?
Brad Zara: I’m not a great prognosticator, but I’m going to predict the total shop count will have declined by 10 percent. One impact from COVID-19 impact is that some folks who were on the edge, deciding whether to retire, will just do so. And a lot of those shops are not going to be marketable. I also think we’re going to see good talent that we haven’t seen before just because other companies are going to be cutting back.
Roy: I think the insurers are seeing there are some things they can do without having people on the road. They can be efficient that way. So I think we’re going to see that change in our business.
Brad Shelton: I think DRPs are going to go away. I think they are going to lose traction with the consumer. I think the shops that are going to survive are going to be the ones doing thorough tear-downs, repairing the car correctly, following OEM procedures. There’s not very many direct programs that align with those standards.
Rosann: I can see all of that happening. I think customers are getting much more educated. We explain to them what’s going to happen throughout the process: how long things might take, how many aftermarket bumpers their insurer wants us to order until they will pay for an OEM bumper, those kind of things. If the insurance companies actually care what their customers think, then the DRP model doesn’t work. So I can see that model, if not completely going away, changing drastically. I’m also guessing a 10 percent decline in the number of shops. It’s going to be interesting because usually shops that are larger and have multiple locations can weather some of the smaller dips. But this is harder to weather for the long term when you have that much overhead in your organization. If you’re small and agile, it’s much easier.
