The New Normal

Today the competitive landscape in the auto glass repair and replacement (AGRR) industry in the United States was dramatically altered. We saw this morning an announcement that Safelite, the largest company in the space, purchased the second largest company. As the clear market leader Safelite was perhaps 14+ times or so larger than TruRoad Holdings. By acquiring the companies that make up TruRoad and bringing them into the Safelite platform the gulf between Safelite and the possible number two AGRR company Glass America is even more gigantic.

You’d have to believe that auto insurers, fleets and even consumers would have a strong interest in ensuring that competition continues to exist for AGRR services. Insurers and fleets especially would have interest in seeing a strong national competitor emerge to keep pricing and service levels in check considering the market share Safelite controls. The prospect of building a true competitor and all that would be required to compete against Safelite in the marketplace would be an incredibly daunting task and in my opinion is highly unlikely considering the new competitive landscape in the AGRR space with Safelite acquiring TruRoad.

Baseball player and coach Yogi Berra was once quoted as saying when asked about the chances of the New York Yankees winning a pennant race one year, “It ain’t over til it’s over.” I’m sorry to say that competition in the AGRR space might be over. Welcome to the new normal.

Just sayin’

20 Years Ago

Twenty years ago today the United States subsidiary of Belron International Ltd. (Belron) operating under the trade name of Windshields America (WA) merged with Joe Kellman’s U.S. Auto Glass (USAG)/Globe Glass & Mirror (GG&M) companies to form a company named Vistar. The second and third largest automotive glass repair and replacement (AGRR) businesses merged on February 26, 1996. If memory serves me WA had 274 stores in 43 states and the retail arm of Kellman’s two companies, GG&M had approximately 200+ locations in maybe 20+ states. USAG was the network call center arm of the business covering all 50 states. The merger provided Belron with a majority shareholding in Vistar, but management control fell to USAG/GGA. WA had annualized sales at the time of approximately $ 225,000,000+ and USAG/GG&A had annualized sales were approximately $ 200,000,000+ so as one sales totaled $ 425,000,000+ with approximately 500 store locations.

At the same time Safelite Auto Glass (SAG) was the largest AGRR company in the United States both in the number of stores and total sales. SAG had well over 500 stores and sales of approximately $ 500,000,000+. So if you had been able to combine the largest AGRR company together with the second and third largest AGRR company’s sales would have been over approximately $ 925,000,000 in 1996. A very tidy sum by anyone’s measure. The race was on two determine who could become the true market leader in the United States AGRR industry.

Lo and behold just two and one half years later on December 17, 1997 the shareholders of Vistar and SAG decided that they could achieve their market goals better together than apart so they agreed to merge. SAG at the time was owned by the Boston based private equity firm Thomas H. Lee Partners. When the merger took place Belron received the largest shareholding followed by Thomas H. Lee Partners and Joe Kellman. After the merger Vistar was absorbed by SAG with SAG and Thomas H. Lee Partners holding management control.

As you would expect, when in just 1 year 9 months 21 days the three leading companies in any industry merge, attempting to bring together three distinctly different cultures would be a big challenge. Especially when the largest and smallest shareholders of the new SAG didn’t have management control even though they had considerably more experience in operating AGRR companies than the shareholder with control. I’m not going to delve deeply into what happened next, but the newly formed company lasted just 2 years 5 months 23 days before heading into bankruptcy via a Security and Exchange Commission filing on June 9, 2000. As reported at the time a SAG spokesperson said,

“In papers filed in U.S. Bankruptcy Court in Wilmington, Delaware Friday, Safelite, based in Columbus, Ohio — with 500 U.S. locations — listed $ 559.2 million in assets and $ 591.4 million in debts. A spokeswoman for closely held Safelite, Dee Uttermohlen, said the Chapter 11 filing was related to a debt-load from an acquisition three years ago–but added that the company has been renegotiating debt with creditors.”1

So with that bit of historical background of the two mergers that took place in 1996 and 1997, along with the fallout from those mergers with the subsequent bankruptcy in 2000; I read with interest the 2015 financial results released by Belgium based D’Iteren n.v., majority shareholder of Belron International (and its subsidiary SAG). SAG’s 2015 sales, as per a SAG press release from February 3, 2016 (follow link), are $ 1,500,000,000 ($ 1.5 BILLION). That certainly sounds like a lot of sales doesn’t it?

Looking back to the total sales of WA plus USAG/GGA plus SAG in 1996 ($ 925,000,000+) and reading the sales that was reported today for SAG (remembering that the company now comprises WA, USAG/GGA and SAG) I found it surprising. Very surprising. DollarTimes.com calculates the value of a dollar in one year and adds the cost of inflation to determine that value to today’s dollar. Using the DollarTimes calculator you will find that $ 1.00 in 1996 would equate to a value of $ 1.54 today. The site shows an annual inflation of 2.18% or a total inflation of 54.09% over the past 20 years. When you calculate the 1996 value of $ 925,000,000, today’s value is worth $ 1,425,313,518. So when you look at SAG’s reported 2015 sales against the 1996 sales you see a real growth of 5.24%.

 

There has certainly been a lot that has happened in the AGRR industry in the United States over the past 20 years. While SAG has faced a number of challenges over the past 20 years they have always come out somewhat unscathed. Bankruptcy, legislative issues, what have you they seem to always come out on top. But in real dollar growth they’ve seen a 5.24% increase in sales. Seems small doesn’t it?

But arguably there is a problem if you only look at the growth in sales dollars over the past 20 years. Sales figures really don’t take into consideration calculating the effect of the large increase in windshield repairs that existed in 1996 versus today. Nor does it take into consideration the price compression that was wrought on the industry in the late 1990’s and early 2000’s by the insurance industry. Determining what those two factors have in the calculation of real sales growth is difficult as it requires you to look at both the industry’s and SAG’s 1996 mix of products sales and customer versus that mix today. SAG and Belron unquestionably know what those factors mean to the performance of the company, but I’ll leave that for speculation and debate by you.

In my looking back over the past 20 years I’m taking a positive spin as you can see that today there are competitors both old and new that are busy chasing SAG. Be they local, statewide, regional or national competitors; there are countless companies working hard to take on SAG and its position in the AGRR space. There are AGRR retailers, alliances, networks, collision and glass companies, internet platforms chasing after consumers, insurers and commercial customers alike that need the services that the AGRR industry provides. Competition abounds and although it is always difficult to take the throne from the market leader, you’ve got to continue to try at the local, statewide, regional or national level if you want your company to find success in the industry with you’ve chosen to compete.

So when you look back 20 years ago to today at the AGRR industry and at what the landscape was like then versus what it is like today, what comes to my mind is a joke about a pony attributed to President Ronald Reagan.

“Worried that their son was too optimistic, the parents of a little boy took him to a psychiatrist. Trying to dampen the boy’s spirits, the psychiatrist showed him into a room piled high with nothing but horse manure. Yet instead of displaying distaste, the little boy clambered to the top of the pile, dropped to all fours, and began digging. ‘What do you think you’re doing?’ the psychiatrist asked. ‘With all this manure,’ the little boy replied, beaming, ‘there must be a pony in here somewhere.'”

I admit that I’m an eternal optimistic and I always see the pony in the room, but I think that opportunities abound for those who want to take on any leader in any industry. Never give up. Never.
Just sayin’.

 

1. Desert News article titled “Safelite Glass files for bankruptcy after listing $591 million in debts”

2. http://www.tomfishburne.com / http://www.marketcartoonist.com

Credibility Leads to Success

It really doesn’t matter what it is you do in life, to find long-term success in your chosen field or business you have to have the skill set to adapt and find solutions to the problems you and your business face. To be able to continually build on successes and achieve goals that you’ve set for yourself, or those that your boss or board-of-directors have set for you and/or the business, is key to finding long-term success. That then earns you credibility.

 

How do you achieve credibility? There are a lot of ways to do so, but as a mentor once told me years ago, that way was to “fulfill the promise”. “Fulfill the promise” meant delivering on the budgeted fiscal year revenue and EBITDA that we developed for the company. The person who told me that was the President and Chief Executive Officer (CEO) of a multi-national company and I reported to him as President and CEO of the U.S. division. He taught me a great business and life lesson.

By surrounding myself with a talented team of like-minded individuals, together we fulfilled the promise year after year. That gave us credibility. Credibility provided greater influence in moving the business forward. Credibility also provided us flexibility to pursue new business opportunities, money for acquisitions to further the growth of the company and to build innovative software solutions that provided us with greater success. The key is that you have to work continually to fulfill the promise. It’s not an easy task but it’s the only way secure the future for yourself and the team.

Ultimately when you establish credibility, gain influence and flexibility in what it is you do you will find that new opportunities abound. It really doesn’t matter what it is you do in your life, if you have credibility it speaks to the ability to inspire others.

“In government institutions and in teaching, you need to inspire confidence. To achieve credibility, you have to very clearly explain what you are doing and why. The same principles apply to businesses.”

Janet L. Yellen, Chair of the Board of Governors of the Federal Reserve System

When you have credibility you gain influence. Your ideas and views have greater meaning and weight, which will help shape the direction of the company that you work.

“Leadership is not about a title or a designation. It’s about impact, influence and inspiration. Impact involves getting results, influence is about spreading the passion you have for your work, and you have to inspire team-mates and customers.”

Robin S. Sharma, Author

With credibility you also gain flexibility.

“What is clear is that business leaders must commit to champion change – to be transparent about their goals for change, to align their incentives systems to drive the change, and to make sure their work environments are flexible in a way that allows men and women who choose to work to be able to achieve all of their potential.”

Beth A. Brooke, Global Vice Chair – Public Policy, Ernst & Young

So working to gain and then maintaining credibility should serve you well in whatever endeavor you choose. Credibility is achieved when the actions you’ve taken allow others to believe in you as a leader.

Just sayin’.

 

EBITDA – earnings before interest, taxes, depreciation and amortization

An Encounter with Jack Welch

This past Friday, while attending an automotive aftermarket conference (Auto Glass Week 2015); the keynote speaker was business icon Jack Welch. Instead of giving a speech, he answered questions from the audience for almost an hour and a half. Jack Welch in person is what I expected him to be. He’s certainly not afraid to answer any question asked and I found myself nodding and/or clapping to each of his answers. In a world of political correctness it was refreshing to know exactly what Jack’s position was on any question that he was asked.

Photo Courtesy Auto Glass Week™ 2015

It didn’t matter whether the question was related to business, education or politics; he answered every question without hesitation. Jack’s view on business is all about winning. All about transparency. All about honesty. Telling those that worked for him when he was the CEO of General Electric for 84 consecutive quarters that the business they worked at needed to be either number one or number two in the world or figure out quickly how to become number one or two or the consequence would be that the business wouldn’t be a part of GE.

Jack isn’t big on tenure in education either. He believes that the customer should determine whether a professor or teacher is good or bad and whether they should stay or go. With the cost of education so high there is no room for mediocrity at Jack Welch Management Institute.

In politics Jack is a Republican.

After he took questions from the audience I had the opportunity to sit on an industry panel consisting of him, along with panelists from the automotive industry:

     Paul Heinauer, President of Glasspro Inc.

     Troy Mason, President of Technaglass

     Michael Schuch, president of XLNT Window Film Tinting

     Donna Wells, Vice President of Signature Shutters

     Ed Golda, president of Michigan Glass Coatings

Suzy Welch, renowned bestselling author, television commentator, Harvard Business School graduate and who also is Jack’s wife, was the moderator of the panel. It was an amazing experience where the panel answered questions posed by Suzy and the audience. Everyone answered questions including Jack and then he provided further commentary on the answers that were given.

Photo Courtesy Auto Glass Week™ 2015

There isn’t much you can say about Jack Welch and Suzy Welch that hasn’t already been written so I won’t try. I can only say that the two of them make one heck of a team and are about as down to earth as you can be. In this day it was refreshing to see two people who didn’t hold back in answering questions.

It was an honor meeting them both and sitting on a panel with them was certainly an experience that I will never forget. Thanks to them both for the chance to spend a few hours with them last Friday. And thanks to Deb Levy for inviting me to join the panel.

Just sayin’.

What’s Your Formula for Success?

Is there a formula that you use to measure success in your career or to measure the performance of employees of your company that determines the success you achieve? What are the metrics or goals that you follow to measure success (or failure) that drives (inhibits) sales and profits for you company? Having metrics is obviously critical to ensure that employees know what is required of them allowing companies to be successful.

Sports are another example of the importance of metrics and formulas managers and coaches use to ensure success. If you like basketball you’ll know who Rick Majerus was (he passed away in 2012). He attempted to be a walk-on college basketball player for the Marquette Golden Eagles in 1967, but didn’t get a chance to play. Instead he became a student assistant at Marquette. After being an assistant coach to Al McGuire for 11 years; Majerus went on to become a head coach at Marquette, then to Ball State, Utah State and ending his coaching career at Saint Louis. Majerus had a short stint as an assistant coach with the Milwaukee Bucks in the late 1980’s.

During his coaching career he developed a statistics formula he believed a college basketball team needed to achieve in order to be successful. Majerus developed a metric he called the “165 Formula”. It combined three key game statistics that were added together for each individual player on the team. He totaled each player’s shooting percentage during the season for field goals, 3 pointers and free throws; believing that a successful team needed at least one of his players have these three stats add up to a total of 165. Over his coaching career Majerus won over 70% of his games, so he must have found players that he felt could hit his magical 165.

There are a lot of ways to achieve success on the basketball court. Just take a look at men’s college basketball’s current AP number one ranked team the University of Kentucky Wildcat’s. How many players does Coach John Calipari (Coach Cal) have that meet Majerus’ formula? Take a look at the graph below and you’ll see how many.

Now let’s take a look at the team that I follow, the University of Illinois Fighting Illini men’s basketball team to see how they compare against The 165 Formula. As you will see in the picture below (from the game versus the Hampton University Pirates  on 12/17/2014), the Illini have four players that beat the formula. Great!

After last Saturday’s game versus the Ohio State Buckeye’s, the season statistics for the Fighting Illini’s six leading players show that Rice, Hill, Eguw and Nunn continue to exceed the formula target of 165.

Fighting Illini
Name	FG %	FT %	3-PT %	Total
Rayvonte Rice	49.7	79.7	45.5	174.9
Malcolm Hill	53.2	73.3	41.7	168.2
Nnanna Egwu	50.0	87.5	36.8	174.3
Kendrick Nunn	44.2	90.9	42.9	178.0
Ahmad Starks	36.1	88.9	32.2	157.2
Aaron Crosby	30.1	84.0	33.3	147.4
Average as of 1/3/2015				166.7

U of I Fighting Illini Statistics for 104-2015 Season

So the Fighting Illini has a record of 10 wins versus 4 losses for the year and they are not currently ranked in the AP Top 25 and they’ve lost their first two Big 10 Conference games. You’d think they’d either be ranked or winning conference games with four starters with numbers that exceed 165 as per The 165 Formula Rick Majerus felt was needed for success. Perhaps Illini Head Coach John Groce thinks that they are successful? I’m guessing not as much as he’d like.

Now let’s compare the Fighting Illini to the number one ranked team in men’s college basketball, the Kentucky Wildcats. How many players do the Wildcat’s have that meet the Majerus 165 Formula? Well…..just one.

Kentucky Wildcats
Name	FG %	FT %	3-PT %	Total
Aaron Harrison	37.0	66.7	27.3	131.0
Andrew Harrison	36.7	77.8	32.1	146.6
Karl-Anthony Towns	51.9	74.3	20.0	146.2
Willie Cauley-Stein	60.7	60.5	0.0	121.2
Tyler Ulis	51.1	80.0	52.2	183.3
Dakari Johnson	60.5	56.7	0.0	117.2
Average of 1/3/2015				140.9

University of Kentucky Wildcats Statistics for 2014-2015

As you can see the one player on the Wildcats that scored a 165 using the Majerus formula is Tyler Ulis. He became a starter after Alex Poythress was injured after the 10^th game of the season so his stats may be an outlier. The Wildcat’s had already found phenomenal success prior to Ulis getting more playing time. With the Wildcat’s averaging 140.9 points (110.4 if you take out Ulis) to the formula and the Illini averaging 166.7 points there must be more to achieving success. Besides the entire team of players performing at a level it also takes the head coach, assistant coaches, trainers and doctors to achieve success. You can add to the mix scouts, recruiters, training facilities, athletic director, along with support from students and alumni. So Coach Cal has obviously found his formula to achieve success at the University of Kentucky. He’s surrounded himself with the best players, along with the all the best people and resources needed to support the team.

So John Calipari (along with Rick Majerus) obviously found a formula that he has used to find success in his career. It’s the same in business isn’t it? Don’t we all want to be Coach Cal? To achieve a consistent level of success you need to develop your own formula. But a key ingredient is the need to surround yourself with the best people, the best team you can find to help you find great success for your organization. It doesn’t really matter what your business is, if you don’t have great people it’s going to be more challenging for you to find success against those you compete with in the marketplace.

Just sayin’.

Previous blogs on the importance of assembling a great team:

                What’s Your Line-up? – December 26, 2012

                What’s Your Line-up? – “Updated” – January 17, 2014

“Follow-up” Interview with Sika Corporation’s John King (who is retiring)

John King is retiring this year as the Vice President – Aftermarket at Sika Corporation. In his role at Sika John has been a key influencer in the auto glass repair and replacement (AGRR) industry both in North America and the world. I wanted to get John’s thoughts on the industry prior to his retirement and he agreed to talk.

Thank you for taking the time to talk again John. I know that you’re going through some changes in your life. You saw an auto glass installation for the first time in 1997 and a lot has changed since then to today. As you prepare to depart an active role in the AGRR industry can you tell us your view of the state of the industry as it relates to the safe installation of auto glass?

            John King:  For Auto Glass Retailers that continue to provide their Customers with Safe and Cost Effective Glass Replacement and Repairs, the future is bright, as there will always be a need for quality work.

Do you feel that there are more safe installations done today for consumers versus when you first entered the industry in 1997?

            John King:  Statistics like this are difficult to define, as it becomes more of an observation and opinion, than fact based.  However, Economics always drive business decisions, and unfortunately, for the Auto Glass Industry, the Economics of today are much more stressful, than in 1997.  For a number of reasons, the size of the Replacement Industry has shrunk over the past 7 years, resulting in a competitive climate that has far too many Glass Shop Companies and Independent One-Off Installers making Installation decisions based solely on the Revenue then need to survive.  When that happens, Safe Installations take a back seat, to getting the job done cheaply.  While “cheaply” does not necessarily mean incorrectly, it can mean that shortcuts in an installation may occur; “Slipping the Cowls, Short Urethane Beads, Incorrect Use of Priming Systems, No use of Priming Systems, and Not Holding the Vehicle until it is safe to Drive, are all symptoms of an unsafe installation”. 

            Unfortunately, I still believe that far too many Installers sacrifice a Complete Job, for a Quick Job.  Therefore, my answer is that today, that are still far too many unsafe installations being done. 

            On the bright side, those Shops and Installers that are doing a Complete Job, have vastly improved since 1997.  There is more adequate training available today, and for quality installers, who have kept up with training, and who are using the latest technologies of Urethane and Installation Equipment that better equip the Technician for making a Safer Installation, they are light years ahead of the best installs of 1997.

Do you think more needs to be done to ensure that replacements are being done correctly and are there any further steps you feel should be taken to ensure that auto glass is installed safely?

            John King:  No one likes or wants Government Intervention.  However, unless the Industry takes it upon themselves to collectively raise the “bar of performance” when it comes to proper installations, it will only take a high profile auto glass installation related death, to raise the awareness of the Public and those that Govern to actively do something about it.. The Television Program 20-20, that aired 12 years or so ago, raised awareness for a period of time, but unfortunately, that awareness petered out and the public is still at risk.  Quality Glass Shops who can “prove” to the Insurance Industry that they do perform Safe Installations, will be rewarded with business in that segment of the market.  Glass Shops who implement and use “Net Promoter Scores” and track their Customers’ Satisfaction and Continue to Train their Technicians will be doing what the Consumers need them to be doing.

            The Cash Market is another issue, and because it is structured differently and because there is “little to no quality barriers” for someone to enter the Auto Glass Industry, Consumers that utilize the Cash Market vs. the Insurance Market are subject to the unknown. 

Have you any advice or hopes for the industry?

            John King:  Again, there will always be a need for Quality Work in an Industry.  Just look at what 2014 has brought to the Automobile Manufacturers, with record numbers of Recalls. Consumers now have the lowest confidence ratings ever for Car Companies and those Manufacturers will only change that conception when Recalls are reduced.  Auto Glass Retailers, Glass Manufacturers, Installation Equipment Makers and Urethane Producers need to work together to ensure the Public gets quality installations.  There are many great people within the Auto Glass Industry and I believe that those committed to providing Safety will win their fair share.

Fill in the name of who is replacing you at Sika. I know that you’ve been transitioning him into your role as you are nearing retirement. Will there be any changes in direction for Sika?

            John King:  Mr. Marius Mavrodin replaced me, effective July 1, 2014, although I have still been consulted on important issues.  That followed 5-6 months of us working very closely together so that he understood the Industry and our Customer Needs as much as possible. Marius has been with Sika for a number of years, so he knows our capabilities and he is blessed with an Organization that works very hard to provide Quality Products, Services and Support to our Customers.  I know there is still room for improvement in what we do and Marius will lead this cause.

As an avid golfer I’m sure golf will play a major role in your retirement. Do you have any other plans you’d care to share?

            John King:  For the short term, my wife Marilyn and I will take a couple of months to catch our breath.  The last 45 years together have flown by and we have been blessed with 5 wonderful children, with the Grandchild count, now at 4.  They have been and will continue to be our major focus.  It is not so much that I want to retire, but rather, I don’t want to work 50 hours a week anymore.

            Fortunately, there are some opportunities for me that might take root.  While deciding that, Marilyn loves to play golf as much as I do, and that is a major blessing.  We will stay active in Church and Charitable Activities and perhaps do a little travel, but the one thing I will not miss are Planes, Trains and Automobiles, if you catch my drift.  I will miss the People, for they have made it all worthwhile, and to all whom I have encountered over the years, I am truly grateful.  And lastly but most importantly, I thank My Lord and Savior, Jesus Christ, for looking after My Family and I.  We would have been lost without Him.

Thank you very much for your thoughts and insights John. You have provided great leadership to the auto glass repair and replacement (AGRR) industry and I’ve certainly valued both our business and personal relationship. You will be missed by our industry. I’m sure everyone wishes you the best in your retirement and/or the new opportunities that await you.

I was honored at Auto Glass Week™ 2014 to present John with an inaugural AGRR industry award. The award begins a new tradition through which the industry honors an individual for the body of their contributions through the years. The award was once known as the Len Stolk Award (as you will remember Len was an individual focused on the advancement and education of all facets of the AGRR industry). John was an excellent choice to receive this inaugural award.

Photo courtesy of http://www.glassbytes.com

Just sayin’.

 

 

Below is the original interview that was done with John King on September 9, 2011

 

Welcome John King, Vice President – Aftermarket at Sika Corporation. Sika celebrated its 100 year anniversary in 2010, a true testament to the quality of their products and dedication to their customers. Sika has developed product systems in the automotive, construction, and industrial markets with a continuing focus on safety and sustainability.  In the AGRR world, Sika produces adhesives for sealing and bonding windshields in the aftermarket auto glass industry that meet and/or exceed OEM (original equipment manufacturer) requirements.

What changes have you seen in the auto glass world since you first joined Sika and began working in this industry?

            John King:  My first exposure to an Auto Glass Installation, was in 1997, in Zurich Switzerland, where I saw the Technician wearing a shirt and tie, and a smock.  This was how this tech dressed every day.  To him, his job was his profession.  While I certainly do not think that USA Installers need a dress code, I do see that many glass shop companies want to “raise the bar” of customer perception, installer performance and the glass shops’ commitment to safety, within our industry.  I firmly believe that this country has many technicians who are committed to this cause, and take pride in their work.  Unfortunately, over time, I have seen far too many technicians that care little about quality work, and even less about safety.  We have an Industry with an extremely low “barrier of entry”, meaning that anyone can put a phone number on the side of their truck and advertise auto glass repair and/or replacement.  However, that does not mean that they know what they are doing, and both the Public and Insurance Industry, know little about how to discern the difference between those who care and those who do not.  As our country’s economic conditions have worsened, our industry has become a haven for persons looking to find some type of income.  While it does not mean that those techs necessarily perform improper installations and repairs, we have to ask ourselves, have these new industry participants been trained?  How are they kept abreast of the ever changing details of vehicle glass replacement?  How many of them even care to know anything about “doing it right”?

What changes would you like to see in the future?

            John King:  Some States have talked about “Licensing” of auto glass technicians.  While I do not want glass shops to have to spend any more money then necessary, we have to ask ourselves, “How can we raise the barrier-of-entry into this industry?”    Licensing may be one avenue of doing this, while at the same time, providing a means of “raising the bar of safety” within AGR.  In any industry where the safety of the public is at stake, there are usually steps that those industry participants must take to first, truly understand what their work is to accomplish, and then secondly, prove they are worthy of doing the work.  In essence, become Industry Certified.  In AGR, the goal should be to provide correct and safe auto glass installations, meaning the vehicle’s passengers should not be placed at risk after their vehicle is returned to them.  Today, responsible Glass Shop Companies take this task upon themselves.  They see to it that any new technician receives adequate training, and spends time observing experienced and qualified technicians, before turning the new techs loose, to do jobs on their own.  The question to all of us should be, “How does the Public and or the Insurance Industry know that adequate training has taken place?”  In today’s AGR market, Glass Shop Companies spend their CSR’s time or their Outside Sales Rep’s time trying to convince prospective customers that “their installations are safer than their competitors”.   Unfortunately, there are many Glass Replacement Companies that are either ignorant of a truly safe and quality installation, or they are outright lying.  Licensing, which would include testing and certification, may be one of the ways to accomplish industry wide compliance of correct installation standards.

How long have you worked at Sika, and what do you find most rewarding about your job?

            John King:  January 1997 is when my career at Sika began, and I must admit it took me a while to have an understanding of how this industry works.  However, without a doubt, the most rewarding part of the business is getting to know people.  There are always business issues, business problems to solve, and strategies to implement, but at the heartbeat of this industry, is its’ people.  For me, there is nothing I like to hear more, than an unsolicited positive comment about how our Sika people are perceived by customers.  Whether Distributors or End Users, if our salespeople, or our customer service department are liked and appreciated by customers, that means that more than half the battle is already won.  The bottom line, is that most people, want to do business with good people. Therefore, if we can hire honest people with good interpersonal skills, and then adequately train them, and provide our customers with quality products, in the end, our sales people will provide excellent service and support to those customers, which would be ultimately rewarded with an ongoing business relationship.

Sika recently created a great animated cartoon called, “No Shortcut to Safety.” It’s a wonderful tool for glass installers and consumer alike, and describes the process of safe windshield installation without using laymen’s terms that can sometimes feel unfamiliar to people who don’t speak AGRR garble.

John, why did Sika Corporation feel it was important to develop this animation video?

John King: The AGR Industry is a cross section of groups.  We have the makers of product, the distributors of products, and the users of products, and those who need those products and services, who are collectively the Consumers, or Fleet Customers, or Insurers.  Communicating to a wide array of groups, with a single message, is always a challenge.  Our message needed to be part technical, part educational, part logical and if possible, part entertaining.   Most groups can understand all 4 parts of the message, if the message is short, and studies indicate, even with very intelligent persons, that 4 minutes is tops, to maintain someone’s attention.  We investigated a number of ways to develop and communicate our No Shortcut to Safety message, and when we came across the animated concept, it made sense to use the video’s simplicity.  We also found from experts in video communication that presenting a new message with an entertaining format, also maximizes the listeners retention of the subject matter; hence a cartoon format. 

What were your goals and target audience for this important message, “No Shortcut to Safety?”

John King: The message was still the key objective, and a message of a Safe and Reliable auto glass installation needed to be created and delivered to the Shop Owner, the Technician, and their Customers.  .

How would you like to see this video utilized? In other words, what do you feel is the most effective way to reach out to drivers to educate them about safe windshield installations?

            John King: Ideally, it is a combination of utilization of the video.  First of all, we know safety is important to most consumers.  This video has been shown in glass shop waiting areas to hundreds and hundreds of vehicle owners, and feedback from them has been exactly what we desired.  They have told those glass shops that they understand what they are doing for them.  Nothing has been more rewarding than reaching the Public with this message of No Shortcut to Safety.  Currently, glass shop waiting rooms are still the most common place where the message is shown.  However, with smart phones and the internet, we would hope to experiment with some glass shops being able to forward this video, to their customer, once they have scheduled a job.  The video then acts as an explanation to that customer as to what they should expect, when the job gets done.  This approach could then create a real value added marketing piece for shops to make the whole glass replacement experience, an even better one for their customers.

Thank you for joining us John.

The Future in the Automotive Aftermarket Industry

For me, listening to keynote speaker Tony Aquila, CEO of Solera Holdings, Inc. at Auto Glass Week in Baltimore was most interesting. He led Solera’s purchase of LYNX Services, GTS and GLAXIS from owners Pittsburgh Glass Works LLC and PPG Industries, Inc. earlier this year. Tony’s accomplishments are considerable, especially considering that he grew up sweeping floors working in his uncle’s body shop and he has a 9^th grade education. You have to be incredibly impressed by the guy.

The “Strategic Focus” web page for the company states, “Solera is the world’s leading provider of software and services to the automobile insurance claims processing industry.” (Link to corporate history) Solera will certainly be changing the world of auto glass repair and replacement (AGRR) with innovative software solutions that will simplify the claims handling process surrounding glass repair and replacement. The organization has the potential to affect the way all consumers and influencers ultimately buy AGRR products and services dramatically. Depending upon the vision and direction Solera heads automotive aftermarket parts and service providers, including the auto glass repair and replacement industry (along with the collision repair industry and parts distribution industry) could be in for some big changes. It’s all about taking out market inefficiencies and reducing costs associated with those inefficiencies.

Just look at the AGRR industry. To ensure that service level expectations of the consumer is ultimately met, any software program would need to have access to the real-time inventory level of any supplier or distributor warehouses in the area, the inventory levels of any AGRR shop or technician in the vicinity vying for repairs or replacements, along with the schedules of all technicians available to properly repair or replace the part.

Imagine when an auto glass replacement is required, if it would be possible for the software program to instantly search for the part determining which supplier(s), distributor(s) or AGRR shop(s) has (have) the part in stock; perhaps ranked by cost for the part while finding the best auto glass replacement technician suited to properly install the part; when and where the consumer wants it installed. With that capability you then have to start asking some questions like:

Once the software program has all of the information required to start processing an auto glass replacement, who or what company is directly buying and paying for the part(s) required?

It could be:

1. The AGRR shop or technician facilitating the replacement or
2. Maybe the customer’s insurance company or
3. If it’s a cash job the consumer could pay.

Which of the three above pays for any part required is important to determine the all-in price to be paid for replacement parts, along with the price paid for required installation supplies and labor.

So which organization determines the pricing level for the various scenarios outlined above?

Who is buying and paying for the part and installation supplies required?

Who is paying for the technician to install the part?

Answers to these and many other questions will give you an idea as to where the industry could be heading. There will be changes coming and margins are probably going to change in the AGRR industry in the near future. And probably not for the better.

What is it you’re doing to be prepared for the future?

Just sayin’.

Courtesy of TomFishburne.com – Marketoonist.com©

Vehicle Miles Driven Improving?

You may have seen statistics recently relating to the increase in miles driven in July 2014 versus July 2013. Seemingly great news for any business in the retail automotive repair industry as miles driven is one of the key drivers that affect the industry and any increase is a positive indicator. As shown on the United States Department of Transportation Federal Highway Administration web site[1],

“Travel on all roads and streets changed by 1.5% (4.0 billion vehicle miles) for July 2014 as compared with July 2013.”

Region	Total Travel	Percentage Change
North-East	38.3	0.0
South-Atlantic	55.4	2.4
North-Central	61.1	1.3
South-Gulf	53.4	2.2
West	58.6	1.3

o    Estimated Vehicle-Miles of Travel by Region – July 2014 – (in Billions)

o    Change in Traffic as compared to same month last year.

Great news it would seem. The governmental web site further shows that,

“Cumulative Travel for 2014 changed by 0.6% (10.1 billion vehicle miles).

That sounds like continued improvement and more great news for the industry, but perhaps not…..

In the Thursday, September 18, 2014 edition of the USAToday™ a small graph was shown in the USA SNAPSHOTS® section on the front page with the header “USA’s driving stalled” (click link). According to Advisor Perspectives, the organization that provided the information shown on the graph, miles driven in the United States:

 

 “Adjusted for population growth, January to June miles driven this year are down 8.5% since 2007 peak”

 

Down 8.5%! That certainly isn’t great news for automotive retailers. You can read the article titled “Vehicle Miles Driven: A Structural Change in Our Driving Behavior“, that was written by Doug Short for Advisor Perspectives that was the source of the information on the declining number in its entirety by following this link (click here). The article takes an in-depth look at how miles driven are being affected by gasoline prices, changes in driving behavior, the effects of an aging population, unemployment trends and changes in the ways we interact with one another due to ever changing improvements in communication technologies.

 

Miles driven, along with weather and the economy are the three key drivers[2] for the automotive retail industry. How have these three key drivers been affecting your business? Based on Mr. Short’s perspective on miles driven, automotive retailers will have to rely on improvements in the economy and favorable weather to offset a real decrease in miles driven to help drive growth. You’re going to need to take greater advantage of your push and pull marketing strategy to attract customers.

If you have a desire to continue to grow your business (and who wouldn’t) into the future; it would seem advisable to work hard on ways to differentiate and separate yourself from your competitors. The decline in the miles driven has certainly had an effect on volumes to date and will unquestionably continue to influence the automotive retail industry going forward. With declining miles driven the opportunities for replacing or repairing damaged auto glass, for collision repairs, for tire replacements, oil changes, etc. will also obviously continue to decline. It’s critical for smaller retailers to find new ways to attract customers just as the large market leaders aggressively pursue those same customers with name brand awareness campaigns. Now is not the time for complacency.

 

Just sayin’.

 

Courtesy of TomFishburne.com

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[1] http://www.fhwa.dot.gov/policyinformation/travel_monitoring/14jultvt/

[2] Just Sayin’ Blog – Winds at Our Backs? – Part II

 

 

 

Help Wanted: Writer Wanted for Social Media Conversation Page on Auto Glass Repair & Replacement

 

An interesting email hit my inbox on Monday from a company representing Service AutoGlass, a part of Safelite Group, Inc. The email came from Fun Online Corporation which is headquartered in New York, New York. Mike Schoenback  (and his partner Ron Luks) sent the email and it started with,

“Hi David,

I came across your contact information through Glassbytes.com.  Our company (Fun Online Corp) is working with Service AutoGlass®, a national provider of wholesale vehicle glass products and installation materials, to launch a social media conversation page in the fall of 2014.”

So the wholesale division of Safelite wants to interact with its customers via social networking sites such as Facebook, Twitter, Pinterest, YouTube, along with numerous other social media sites? The email went on to say,

“We are interested in connecting with a person with good writing skills who has technical experience with auto glass repair and replacement and a familiarity with the industry. We are looking to hire such a person on an ongoing (freelance) basis to respond to posts on the social media page and work with us to develop conversation starters. Experience as a blogger is a big plus. This is a paid position.”

I guess I tick a couple of the boxes they’re looking for. I’ve spent my career in the auto glass repair and replacement (AGRR) industry, I am on some social media sites so I’m familiar with how those work and I blog. Even though it looks like the opportunity is being “outsourced” to Fun Online, the fact that it is a paid position is also great to know. The email ended with,

“I’m writing to see if you may be interested or if you have a colleague who may be interested in this opportunity.  We’re happy to have a phone or email conversation if you’d like more information about this.

Thanks very much!

Mike Schoenbach

Ron Luks”

Their email didn’t mention Safelite, just Service AutoGlass. I replied to let them know that I really appreciated the email letting me know about the opportunity, but I didn’t think I would be an appropriate person for the role they were looking at for a variety of reasons and I guess they didn’t look at some of my blog posts. I replied to Mr. Schoenback explaining that I was pretty sure that Safelite wouldn’t want me to fill the role even if I was interested. That being said I was once a part of Safelite filling a number of positions in the mid to late 1980’s leaving as the regional vice president of New England in late 1989; so I do have some familiarity with the company. I just didn’t think I’d be a good person to help “develop conversation starters” for them at this point in time. I’m sure that I could come up with a few “conversation starters” though. Here are some possibilities:

“If an auto glass replacement somehow slips through the hands of Safelite and you’re lucky enough that the opportunity comes to your company would you consider giving us a call so that we could sell you the part?”

“Here at Service AutoGlass we’re your all-in-one source for products and service, even if Safelite is spending countless millions on television and radio ads and is your biggest competitor. Come on…..give us a call. Won’t you?”

“We know that Pilkington, PGW, Mygrant and other wholesale distributors aren’t in the retail AGRR space installing auto glass in competition with you, but that shouldn’t stop you from giving us a call should it?”

I’m sure that you can come up with a few of your own. I asked a friend in the industry for a social media conversation starter for them and he suggested,

“They say you get what you pay for…. What did you get from us?”

I wished Fun Online success in finding someone to fill the social media role for Safelite…  er’ I meant Service AutoGlass. I found out that they sent the same email to a few other people in the AGRR industry as well. Imagine my disappointment hearing that. Perhaps they contacted you to see if you were interested? If not and you’re interested in the freelance position you can contact Mike and Ron to find out more. The Fun Online web site states:

“At Fun Online Corp. we’re your eyes and ears during business hours, evenings, weekends and holidays. A round-the-clock business infrastructure is expensive and can be a logistical nightmare. We can create a social media team or expand your current team and save you money. You’ll have 100 percent full coverage.”

It seems like a great opportunity.

Just sayin’.

 

 

* Cartoon courtesy of TomFishburne.com/Cartoons

Hobson’s Choice (a Free Choice or No Choice at All?)

I recently read the argument that attorneys for Safelite Group Inc. (Safelite) made relating to Connecticut’s Public Act-13-67(c) (2) in a glassBYTEs.com article. They argued that,

“it puts appellants Safelite Group Inc. and Safelite Solutions to a Hobson’s choice….”

“Hobson’s choice”[1] refers to a businessman by the name of Thomas Hobson who ran a livery in Cambridge, England in the 1600’s. Hobson required that every rider asking to hire one of his horses to always take the horse nearest the door. If a patron didn’t want to use that particular horse no other horse could be used. A “take it or leave it” choice. As another source on the origins of the phrase states[2], “A Hobson’s choice is a free choice in which only one option is offered.” I thought using “Hobson’s choice” in this particular instance an interesting one considering the origins of the term. More on that later.

This link to the summary of the act that was first introduced in the Insurance and Real Estate Committee of the Connecticut House and ultimately signed by the Governor of the State of Connecticut required that in the handling of any insurance auto glass claim in the State of Connecticut that:

“The act requires that a glass claims representative for an insurance company or its third-party claims administrator, in the initial contact with an insured about automotive glass repair services or glass products, tell the insured something substantially similar to: “You have the right to choose a licensed glass shop where the damage to your motor vehicle will be repaired. If you have a preference, please let us know. ” By law, appraisals and estimates for physical damage claims written on behalf of insurers must have a written notice telling the insured that he or she has the right to choose the shop where the damage will be repaired (CGS § 38a-354).”

Fairly straightforward.

A public radio program called “A Way with Words” talked about Hobson’s choice on one of the program segments. One of the hosts of the radio program, Martha Barnette tells us:

“The phrase Hobson’s choice goes all the way back to 17th-century England. For 50 years, Thomas Hobson ran a stable near Cambridge University. There he rented horses to students. Old Man Hobson was extremely protective of those animals. He rented them out according to a strict rotating system. The most recently ridden horses he kept at the rear of the stable. The more rested ones he kept up front. That meant that when students came to get a horse, Hobson gave them the first one in line—that is, the most rested. He’d let them rent that horse, or none at all.”

Perhaps you see where I was thinking that Hobson’s choice was an interesting phrase for the attorneys to use in their argument. First, Public Act-13-67(c) (2) is a duly enacted Connecticut law so their client really doesn’t get a choice in deciding whether they wish to follow it or not. As is their right, they can dispute the law which is obviously why the company is filing the appeals to the act which provides Connecticut consumers a choice in what company repairs or replaces their damaged auto glass. It’s just that at his stable Hobson didn’t want the same horse(s) being used each time by his patrons. Hobson wanted his patrons to use only the horse(s) that he wanted them to use. You can understand why Hobson wanted to rotate his horses so that each got equal use. Safelite wants Connecticut consumers to only use the auto glass repair and replacement (AGRR) company that Safelite wants them to use. In this case it would appear that Safelite is Hobson.

By enacting Public Act-13-67(c) (2), the State of Connecticut took steps it deemed appropriate to protect consumer choice for residents of the state. There are any number of AGRR companies operating in the State of Connecticut for consumers to use when they sustain auto glass damage. So is it “A Matter of Self-Interest or Consumer Choice”? Isn’t it Safelite that is attempting to provide Connecticut consumers with a Hobson’s choice?

Just sayin’.

Another example of a Hobson’s choice would be from Henry Ford’s book titled My Life and Work and written in 1922 referencing options available for the Model T Ford.

“Any customer can have a car painted any colour that he wants so long as it is black.”

 

[1] Merriam-Webster.com meaning of Hobson’s choice

[2] Wikipedia.org description of Hobson’s choice

Other sources:

http://www.glassbytes.com/documents/07302014SafeliteLettertoCourt

http://en.wikipedia.org/wiki/Hobson’s_choice

http://www.merriam-webster.com/dictionary/hobson’s%20choice