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March/April 2003

 

Here and Now
    The Issues Facing Independents in 
by Penny Beverage

We live in the fast-paced world of 2003. We’re surrounded by giant chains such as McDonalds, Wal-Marts and Best Buys begging for our business—and calling out lower prices than some smaller companies. National chains exist even in the auto glass replacement industry, leaving independent glass shops wondering where to turn. Independent shops, which are spread across the nation in small towns and big cities, face a number of issues, including a lack of qualified employees, price compression, network issues and increased liability.

Help Wanted
Among the toughest issues independent shops face is a search for qualified installers who are skilled and trained in how to complete the job correctly. Unlike large chains, independent shops don’t necessarily have time or money to deal with high turnover rates and training employees. They need installers who know how to do the job immediately.

Marcos Darosa, president of Alpha Auto Glass in Fort Lauderdale, Fla., maintains a staff of approximately ten employees, but says it is hard to find an installer with everything it takes to make a solid employee.

“I have ads in the newspaper and fliers I give out,” he said. “But then you find a good installer and he has no driver’s license. Or, you find a good installer with a driver’s license, but he has a horrible attitude.”

Linda Croddy, owner of Indianapolis-based Speedway Glass, said her company sees the same problems as her competition, but as a family business, avoids most of these downfalls in its own dealings.

“We don’t have a lack of it here because those who work here are family and we make sure they’re all trained,” she said. "However, I know there are many out there who are not [installing glass] properly."

Donovan Trana, owner of Express! Auto Glass in Muscatine, Iowa, attributed the problem not to a lower calibur of people in the industry, but to how much many companies depend on completing one-man installations.

“When you have one guy going out there alone, how in the world are you ever going to get an apprenticeship going?” he said.

Raising Profits
In a world of dropping NAGS Benchmark® prices and competition, low profitability is also among independents’ toughest issues to face (see May/June 2002 AGRR, page 38, for related story).

“Marginal profitability on insurance work, combined with the inability to recoup higher costs, make it increasingly difficult for retailers to stay profitable,” said Tim Smale, chief executive officer of the Independent Glass Association (IGA).

Many blame the increasing discounting problem on San Diego-based National Auto Glass Specifications International (NAGS)—particularly the 1999 Reevaluation of its list prices and its dealings with insurance companies.

“NAGS educated the insurance companies about our industry to a fault,” said Cindy Minon-Ketcherside, owner of J.C’s Glass in Phoenix. “Benchmark prices did not change our pricing structure. It was how deeply NAGS brought the insurance companies in[to] our industry that changed our pricing structure.”

However, NAGS vice president and general manager Catherine Howard said that when NAGS conducted its 1999 Reevaluation, insurance companies resisted involvement, despite invitations from NAGS to become more aware of the program. 

Croddy, however, did not attempt to blame the pricing problem on NAGS; instead, she attributed price compression to the insurance companies and networks.

“It’s nice to put original equipment back in a car and I always try to do that, but the problem with the networks is that they pay such a low amount that you have to put in an aftermarket windshield or not take the job,” she said. “[The networks] almost force you to do things that you don’t want to do.”

Others blame the independents themselves.

“The independents themselves drop their pants doing jobs for nothing,” Darosa said. 

Brian Gleason, owner of Visions Auto Glass & Repair in Fort Dodge, Iowa, said his company does not have much of a problem with pricing because it bills directly.

“We don’t have too much of a problem with pricing in our area because we set up our own rates and bill the customers directly,” Gleason said. “I think that’s the number-one way for independents to come back and surpass the other guys.”

Network Vision
Some of the topics most discussed by independents are perceived problems with the networks, including the aforementioned pricing problem, and steering: why it happens, how often it happens and especially how to fight it. 

The steering issue came to the forefront several times in the past year, as Kingston, Pa.-based Diamond Triumph filed suit against Columbus, Ohio-based Safelite Glass Corp. for allegedly practicing steering (see "AGRReports" for related story). 

Since the suit was filed, the IGA has been requesting reports of steering from its members and, according to Smale, it happens even more often than some might think.

“I always knew that steering was rampant, but until we began collecting evidence to offer the court supporting evidence in the Diamond Triumph v. Safelite steering lawsuit, I never realized just how much it was occurring on a daily basis,” Smale said. “The outright lies being told—that consumers will not be covered by a warranty or have to pay out-of-pocket costs—continue.”

Darosa said that steering is certainly the largest problem he faces in the Fort Lauderdale, Fla., market.

“The number-one problem is always the network,” he said.

Gleason agreed and said it’s getting progressively worse in his area.

“They sign up a few more insurance companies and erode the market a little more all the time,” he said.

While all admit the steering issue is imminent and must be solved, few know what the solution is.
“There’s not much I can do,” Croddy said. “It happens a lot, but I don’t know how to fight it.” 

Safety First
Falling right in line with the issue of low profitability is another big hurdle independents must cross: the safety hurdle. With the development of the ANSI/AGRSS safety standard (AGRSS), shops will be forced to consider whether or not they are completing safe installations and, to the best of their abilities, protecting their customers from harm.

“Now that the standard is there, it’s your option to tell every consumer in the world that you know the standard and practice it,” said Carl Tompkins, Western states area manager for the Sika Corp. of Madison Heights, Mich., at a recent industry meeting. “Becoming accredited by AGRSS is important.”

Chuck Lloyd, attorney for Livgard and Rabuse in Minneapolis, said legal ramifications and liability issues should also compel independent shops to agree to adhere to the standard.

“Whether you like the standard or not, knuckleheads like me are going to force it down your throat in court,” Lloyd said.

“It’s not whether or not you sign up for the credentialing standard that makes the difference,” Tompkins said. “It’s the fact that it exists.”

Gleason has already signed up for AGRSS credentialing and said safety is his number-one marketing tool.

“We market that we do safe installations using OEM glass and quality adhesives,” he said. “That has been the thrust of our market drive and it’s working.”

Croddy said she wishes the industry could ban together to inform the public about the safety factor of an auto glass installation.

What’s To Come
While all of these issues have faced independent auto glass shops for several years, it is hard to predict what the future may hold in store for them.

However, Trana said he thinks that despite all of these individual issues independents face, they actually all face one major, overriding issue. 

“I think that probably the biggest issue facing independents is the issue of evolution—how [auto glass shops] need to evolve their business models over the next five years and adapt to industry changes,” he said. “Steering [and these other issues] are only a small part of the larger 
disease.”

Croddy agreed.

“I think it’s very hard for independents to hold on and be in business and do a good job and just survive right now,” she said. n

 


Penny Beverage is the editor of AGRR magazine.

 

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