Archive for January, 2012

Just Sayin Blog – Be Smart In 2012

There have certainly been a number of events happening since the first of the year that are effecting or may affect the auto glass repair and replacement (AGRR) industry in 2012. Where to start? Well let’s see:

 

1.    First the earth shook on January 2, 2012, when Safelite® Solutions officially took over the responsibilities for administrating Allstate® Insurance auto glass claims from PGW Lynxservices®. By all accounts Safelite® Solutions must be doing a masterful job in this new role administering claims for Allstate® as I’ve heard from a number of you that your auto glass claims from the second largest insurer in the United States are dramatically lower since the administrator change took place. Mild weather could also be a contributing factor. Adding to the pain of lost units, the pricing for those Allstate® replacements are also lower.

 

Have you seen your auto glass claims with Allstate decline since January 2, 2012?

 

2.    On January 6, 2012, glassBYTEs.com™ reported that Grey Mountain Partners Acquires Binswanger. Binswanger is a truly amazing full-service glass company with its roots going back to 1872 with its first location in Richmond, Virginia. It is certainly great news to hear for all of the Binswanger employees that they have a new owner who is interested in working with them to help build the company. I think that a strong Binswanger is healthy for the glass industry in the United States.

 

How about you?

 

3.    Neil Duffy recently announced in his very well written blog View From The Trenches that he’s considering a new career by starting a ‘new third-party glass claims administrator’. It sounds as though he’s thought it out pretty thoroughly by looking at all the pros of this new venture and I for one think he should go for it. I don’t see any cons.

 

What do you think?

 

4.    Then there is that anonymous letter from a ‘Concerned Citizen’ that surfaced yet again last week titled “New Anti-Trust Concerns”. This letter had a postmark from Bloomington, Illinois, and its resurfacing at this time might have some relationship to #1 above.

 

It does seem pretty obvious that the letter was written by someone in the auto glass industry as no one else would really care about the issue. The letter does raise a number of interesting points, but the conclusion of the ‘Concerned Citizen’ is that:

 

‘While the relationship between a TPA and its insurance company clients may not be illegal, the abuse of that position could be unfairly excluding independent competitors.’

 

There are a number AGRR initiatives taking place in various states where attempts are being made to try to restrict the big guy from taking your lunch money day in and day out. If one of them was successful it would certainly be good for independents in the industry.

 

Are there any legislative initiatives happening in your state that will be of any help to you in your business?

 

5.    For those of you who happen to follow @Safelite on Twitter you may have seen them sending out ‘Tweets’ asking for your input. One ‘Tweet’ poses a question to its followers and directs you to a web page survey question asking ‘How likely are you to recommend Safelite?’ Safelite® gives you the opportunity to answer with a ‘Not Likely’ – 0 score to an ‘Extremely Likely’ – 10 score.

 

I’m not sure to whom exactly Safelite® is targeting the question, but you’ve got to provide an email address in order to answer the question which is somewhat problematical. If you’d like to offer your view anonymously I guess you could use a fake email address.

 

I know what my number is in answer to the question. What number would you mark as your answer?

 

6.    And finally there was an article in the Chicago Tribune on January 18, 2012, reporting that the average age of vehicles in the United States has climbed to 10.8 years. The article stated that in 2010 the average age of vehicles was 10.6 years with the average age of vehicles having climbed steadily since 1995 when it was at 8.5 years. Over the past several years low new vehicle sales has certainly been a major factor in the increase in the average age, but with new car sales picking up new car manufacturers are expecting a great year in 2012. That will help to slow the growth in average age and hopefully bring it down. What does average age have to do with the AGRR industry?

 

One byproduct of an aging vehicle fleet is that you see an increasing number of the ‘do nothings’ (consumers that delay replacements) when auto glass breaks. Consumers obviously will be more accepting of a repair over replacement if the vehicle is older. New vehicles typically provide a higher average invoice value since the only replacement glass initially available to consumers will be auto glass manufactured for the vehicle by the Original Equipment Manufactured (OEM) glass company (i.e. Pilkington-NSG, PGW, Saint-Gobain Sekurit, etc.). The cost for non-OEM manufactures to reverse-engineer a replacement part for new vehicles is initially too expensive due to the low volume of parts needed in the aftermarket. The older the age of the vehicle fleet the more opportunities for non-OEM suppliers to sell reverse engineered replacement parts that are typically cheaper than the OEM’s. Ultimately that can mean less profit for the AGRR industry as a whole. New vehicle sales should mean more profit opportunities for those in the AGRR industry.

 

What do you think?

 

 

I hesitate to mention other things going on so far this year that may have an effect on your business like the lack of a severe winter in the East, the predictions for much higher gasoline prices later this year, a sputtering economy, the price changes that have taken place in the State Farm® Insurance Company auto glass program and various people coming and going from here to there. How you’re dealing with the variety of issues that you’ll face in 2012 will determine how you survive the year. Someone I’ve known for a long time in the industry commented to me last week that, ‘2012 is shaping up to be a watershed year for many in the industry. Survive this year and hope that next year will be a better one.’ That outlook makes sense to me. We’ll see if he’s right.

 

In closing, a former Princeton University men’s basketball coach by the name of Pete Carril wrote a book titled “The Smart Take from the Strong”. It’s a great book. Pete Carril was 5’6” tall, he was an All-State Pennsylvania high school basketball player, an Associated Press Little All-American in college and he coached at Princeton for 29 years before going on to the NBA to become an assistant coach for the Sacramento Kings. Coach Carril is also a member of the Naismith Memorial Basketball Hall of Fame. When he was young man his father told him:

 

            ‘The strong take from the weak, but the smart take from the strong.’

 

So be smart in 2012!

 

Just sayin’…….

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Just Sayin’ Blog – Hopes for the New Year

I’m hoping that 2012 turns out to be a great year for those in the automotive glass repair and replacement (AGRR) industry or if great is too high a bar to set at the very least better than 2011. In my opinion there are few key things that need to happen (and perhaps more than a few) for 2012 to be a great year. I’ve listed some of my hopes for 2012. Perhaps some are on your list as well.

  1.  Our industry is affected by three key business drivers:  weather, the economy and miles driven. Sadly we have no control or influence over any of these so I’m hoping for some luck for 2012.

Weather – I’m hoping to see “good” weather this year. I think you know what the definition of “good” means. For the most part 2011 was a “good” weather year.

In many markets, the AGRR industry and all those affected by it rises or falls depending upon the severity of the winter season which means snow. A severe winter brings increased breakage while a mild winter has the opposite effect. Annual demand obviously can vary considerably based on those weather fluctuations. I have many friends that compete in the snow-belt and at this time of the year they are looking at weather reports day-in and day-out to see when and where that next big snow will be. That snow, of course, has to come in the right amount and at the right time of day for maximum effect and that would be during rush hour. It would be great to see snow come in every other week so that after that big snow there would be sunny weather that follows allowing all those new repairs and replacements to be completed.  If there is no snow, owners/managers are forced to make tough decisions they’d prefer not to make relating to cutting expenses, so please let it snow. Snow brings out plows and salt trucks. If the area you live in still uses gravel or coal or sand, even better. 

Then there is ice. Ice can be even better than snow for the AGRR industry. Then there are cold snaps that can cause star breaks to run out when drivers go out and clean frost off windshields on cold mornings with scrapers or   even better – hot water. And when drivers turn on the defrosters to get rid of frost and warm air hits cold windshields. 

Hail is nice too. Of course not too small that won’t break the glass, but not too big either.  Just the right size will do. Rain isn’t ever really that good for our industry, but if it does rain please let it rain at night.

The Economy – My hope for 2012 is that in the United States and everywhere else in the world the economy becomes robust.  Since 2007 -2008 the economy in the United States obviously has not been robust.  During economic downturns many who experience auto glass breakage – the “do nothings” – delay repairs and/or replacements.  Everyone in the industry hopes that as the economy improves those “do nothings” will replace that broken auto glass.

A fully-employed workforce in the United States would be great. My hope for a robust economy includes the wish that everyone has a great job and that its a great paying one. All those fully employed people should have a car too — actually several cars would be even better. It would be great if all those cars would be fully insured with a zero dollar comprehensive insurance deductible. And, since these are my hopes for 2012, I hope that all those cars are fully insured with an insurance company that doesn’t use Safelite® Solutions as its auto claims administrator (I’m guessing most of you’d agree with me on that one). I hope everyone is going on vacations this year and preferably driving to all the beautiful places there are to visit and see in our great country.

A bad economy requires those competing in the AGRR industry to take an introspective look at their businesses.  That introspective look should include “SWOT” – your strengths and weaknesses versus the opportunities and threats you face. How you deal with SWOT generally determines how successful you’ll be.

Miles Driven – Miles driven are key to auto glass breakage and my hope is that for 2012 gasoline prices remain “low” which will equate to more miles driven by putting more people in their cars and on the road providing more opportunities for drivers to break auto glass.

The total monthly vehicle miles driven have been growing since the federal government started tracking the data. In September 2011 the Department of Transportation’s Federal Highway Commission released an in-depth Traffic Trend Report. If you follow this link to a graph on miles driven, after hitting a moving 12-month high of 3.039 billion, yes billion miles driven in the rolling 12-months ending in November 2007 the graph shows a down-tick in estimated vehicle miles driven that occurred in 2008 – 2009.  Thankfully the miles driven appear to have somewhat stabilized for now.

But the cost of gasoline is a major influencer relating to total miles driven. On December 18, 2011, a Chicago Sun Times (Chicago Sun Times article) article titled “At gas pump, 2011 was the year of the big squeeze” reported on the annual cost of gasoline for the average American family in 2011. The opening line of the article stated, “It’s been 30 years since gasoline took such a big bite out of the family budget.” The article goes on to report, “the typical American household will have spent $ 4,155 filling up this year, a record.  That is 8.4 percent of what the median family takes in, the highest share since 1981.”  This wasn’t good news for AGRR retailers in 2011. 

On January 6, 2012, a Los Angeles Times (Los Angeles Times article) article titled “Gasoline prices start the year at a high – and rising” reported on how gasoline prices are starting out this year. The article states, “but this also may be the year of the gas-pocalypse, analysts warn. That’s because gasoline prices are the highest ever for the start of the year, and they’re on the rise, supercharged by expensive oil and changes in refinery operations.” That’s certainly not good news for AGRR retailers looking for 2012 to be a better year than 2011.

The AGRR industry really needs to see lower gasoline prices that will cause a spike in miles driven for its business outlook to improve in 2012. Based on predictions made by Edward Morse, head of commodities research at Citigroup Global Markets, Inc., on December 22, 2011, on Bloomberg Television’s “Surveillance Midday” that doesn’t seem likely. If you follow this link Mr. Morse talks about factors affecting the crude oil market and the outlook for oil and gasoline prices. You’ll see that he holds out little hope for “low” gas prices in 2012.  Mr. Morse sees the floor for gasoline prices to be $ 4 by the end of May 2012. That’s certainly not good news for AGRR retailers in 2012.

My hope for 2012 is that gasoline prices are low and miles driven are high. Based on the realities of the marketplace and comments from experts you’d better cross your fingers and say a prayer for that one.

  1.  I’m hoping that in 2012 some entity – some organization or company in the AGRR industry steps up and becomes a leader for the industry. By the way, I’m certainly not suggesting that the “market leader” can assume that role.  I don’t think that’s possible. I am hoping that leadership is shown by someone who really cares about the AGRR industry and the issues that it faces, offering positive ideas for all to improve the valuable services that the industry provides to consumers.
  1. I hope to see fewer imports of auto glass manufactured overseas coming to the United States/North America and the imports that do come to our shores at least be from those companies that are major suppliers of Original Equipment Manufactured auto glass to car manufacturers and not those who primarily make after-market parts.
  1. I hope that every windshield that needs replacing in 2012 is replaced using the Auto Glass Safety Council’s auto glass replacement standard known as the AGRSS® Standard.  The standard is accredited by the American National Standards Institute (ANSI) standards development organization.  The AGRSS® Standard (ANSI/AGRSS® 002-2002 Automotive Glass Replacement Standard) is North America’s only auto glass replacement standard and it addresses the proper procedures that must be used by auto glass technicians, along with other company employees who are also important to ensure the safe installation of auto glass.  No other company or organization maintains any standard remotely similar to AGRSS®.  I also hope that replacements are completed using a urethane that provides a 1 hour safe drive away time.  Your customers deserve nothing less.
  1. My final hope is that someone steps up and attempts to compete on a larger scale against the market leader. The industry really needs a strong competitor to Safelite®.  I really don’t care who that is, but come on already.  Somebody step up on the retail or third party administrator side and give them a go.

I hope everyone who competes in the AGRR industry the best of success and luck in 2012.

And finally I’m hoping for a great 2012 for myself.

Just sayin’……..

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