Paul West, manager at Nurse Collision Centre in Whitby, Ontario, knows that the winter months are supposed to be good for the collision repair business. He takes the time to explain the difference between most dry-road collisions, with their higher speeds and often total-loss outcomes, versus the glancing blows Canadian auto body specialists have come to expect from snow-covered roads. It's the kind of damage that those in the collision industry like to see--because it is damage that can be fixed, inside of an insurer's cost matrices. But, as West sits at his desk on this cold January night, the roads are bone-dry, and have been almost all winter. "Business so far this year is worsening," he says. "This time last year, we were running at full capacity, but weather determines so much of the business in the winter, and we've had, what, an inch of snow all season?"
Despite the slow start to the year, West says the shop is exploring all of its options for attracting new business, that may not necessarily come via one of their Direct Repair Providers. "You wrack your brain and bend over backwards to get your DRP agreements--and we obviously appreciate all of that business--but today repairs are down, totals are up, so we've got to look at other ways to increase volume," he says.
Fortunately, one tool at their disposal comes right from the showroom floor. West's shop is part of a larger General Motors dealership in the city, and he says the company's policy now is to introduce new dealership customers to the collision side of the business as part of a general introduction to the firm. "I'm not a hard-sell kind of guy," acknowledges West. "We just try and be as pleasant, helpful, and courteous with the customer as possible. We find once people have dealt with us, they'll choose to come back."
West's story of poor weather and low-volume challenges is just one issue we heard about over the course of our 2010 Outlook Survey research. It seems that perhaps more than any other time in recent memory, there is little consensus on how 2010 will play out in terms of profitability and overall success, and even less consensus as to why that might be, or how those problems might be solved. So, while the strategies West's group has employed might work for some of you, the research numbers would indicate that many respondents feel the issues lie elsewhere completely.
Taking a look at the first two questions on the survey, the complexity of the issues and the divides across the country only begin to reveal themselves. Looking at the results of question one (Figure1), we see that those who responded can't even come to any kind of agreement on whether or not 2010 will be much better than 2009, a year when a dismal economy dominated the daily news headlines. In fact, the final result is almost split right down the middle, with some 52.5% believing that 2010 will be better or much better than the year past, while the remaining 47.5% think that 2010 will be the same or worse.
The next question, designed to dig a little deeper into the true confidence of those running collision repair facilities in 2010, produced an even more opaque view. On the issue of capital investment plans (a sure sign of businesses regaining confidence in the year ahead), the results were just about as statistically split as they could possibly have been (Figure 2) among those who are looking to make some serious capital investment in the coming year, those who are looking to do so in the second half of 2010, and those who will simply be riding out a potentially tumultuous year with what they've got.
With each option garnering approximately 25% of total responses, it's clear that we are indeed looking at a very fractured marketplace in 2010--perhaps not so much in terms of overall industry cohesion (as recent CCIF meetings show), but through an industry full of players with some very different views on how to survive during this period of supposed economic recovery.
The remaining questions on the survey show just that. When asked to elaborate on a few critical points about 2009 and moving forward in 2010, with more probing questions like "What was the biggest challenge your shop faced in a difficult 2009?"; "What do you see as being the number-one challenge facing the industry going forward in 2010?"; and "What strategies do you have in terms of facing those chal lenges? What suggestions could you offer others in the industry?," the salad of replies was as varied as you might expect after seeing the final tally from the first two queries.
In terms of top challenges for 2009 and moving into 2010, the replies were typically wide-ranging: "Low door rate, driven by insurance company's stranglehold;" "making a profit--we were busy but the bottom line was not good enough," "cost to change over to waterborne paints and the upgrades," "locating qualified manpower," and "we had a record year."
As one can see, there is little agreement there. In fact, even on the perennially cited grievance, "rates from insurance companies," there is hardly a national consensus. In fact, while compiling the final results, we spoke with operators in different parts of the country personally, and heard wildly different stories. Several shops in Manitoba who asked not to be identified by name for fear of repercussions, suggested they are nearly on the verge of a "farmers-driving-their- tractors-to-the-Parliament buildings" type of revolt against that province's public insurance practices, while some like, Paul West in Whitby, said that-- on the insurance front anyway--there is little concern. "I've worked with the same insurance partners for years, and they support what we're trying to do here," he says. "No one wants to argue anymore."
Finally, in terms of strategies moving forward the results, predictably by now, were as varied as the overall survey itself. Suggestions from those who completed the survey included, but were not limited to:
"Communication. Create maximum value with minimum waste. Make the hard decisions and keep moving forward. Do not continue to follow ritual without thinking about the actual purpose."
"Spend more time educating customers on repair practices, claims handling, and follow-ups. Being in the community for so many years has helped us develop a solid reputation in uncertain times."
"Insurance company seminars. Educate them on the new repair process on clinching/bonding on high-end vehicles."
"We must get our rates to a level playing field with other trades if we want new blood. Why would I want my son to work for depressed wages?"
And one that we at the magazine tried not to take too personally: "This industry has enough talking heads and salesman; we need more qualified staff. It seems there is an abundance of people to tell us how to do things but nobody with any ability to do it."
In terms of that "ability to do it," another shop manager from Ontario states flatly that gross sales are going to be his key aim in 2010. "Even if you're as fiscally responsible and as lean as you can be, it can still be a challenge, especially as a DRP shop, to increase your margins," he says. "So you have to do it with gross sales." According to him, the strategy for accomplishing this is a never-say-quit approach to insurance companies. "The number-one key is always going after new insurance accounts," he states. What's more, he says, the effort needn't be concentrated only at the insurers' respective national levels, which can be intimidating or logistically difficult for some shops. "We focus on our own local marketing with the brokers here. We focus on our insurance KPI numbers and we make sure to advertise and tell them about our successful cycle time, average severity, and alternative parts numbers. We're also sure to advertise our 99% CSI number."
All in all, the final result of this annual exercise is telling, albeit difficult to focus. It's clear that many collision repair shops are facing some serious threats in 2010 from labour issues (perceived or real), waterborne conversion, and insurance company difficulties, not to mention a sputtering economy. There are those in the business who are thriving though, and it is their examples and ideas that we at the magazine will try and bring to light in each issue, for the benefit of all. On that note, if you have any suggestions, technical or managerial, we'd like to hear them at any point, and not just at annual outlook time. After all, we don't want to be just talking heads.