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March/April  2004

Al Speaks
   a ceo's perspective

Are You With The Times?
by Allan Skidmore

I’ve been going to trade association meetings since 1968, when membership was in the mere hundreds and many current members weren’t even born. I would accompany my uncle, Herb Skidmore, who founded our company with my father, Art.

During these meetings, Herb impressed upon me the importance of keeping up with change. For that, I am truly grateful, because things have changed and will continue to change. 

The Good Ol’ Days
The auto glass industry has changed tremendously since our company entered the U.S. market in 1984. At that time, distributors only sold glass produced by the major North American manufacturers—PPG, LOF (now Pilkington), Carlite and MOPAR (now Chrysler)—and a few in Mexico. 

I assume the manufacturers, among others, would call those the “Good Ol’ Days.” I must admit, the marketplace was much more stable. Everything, including NAGS pricing, was simple, tidy and predictable.

Moving into the Now
Those days are long gone. Like most other industries today, the auto glass industry has become global. Wholesalers can now cherry-pick from manufacturers in many countries around the world. Meanwhile, technology is wreaking havoc on the old ways of doing things—especially pricing, which resembles a Moroccan bazaar these days.

Almost anywhere in America today, retail cash customers can buy glass for 80 to 90 percent off the NAGS list price. Most agree this can’t go on indefinitely. As Catherine Howard, then-vice president/general manager of NAGS, said in the last issue of AGRR magazine, this pricing structure makes the whole industry look ridiculous.

So, how did we come to this? NAGS started out in the 1930s as a family business providing data, patterns and subsequently assisted auto glass shops in determining their prices.

Today, NAGS is a subsidiary of Mitchell International Inc. It also assists body shops, auto dealerships and the insurance industry (incidentally, a major purchaser of Mitchell data and software). In the past 15 years, NAGS has undergone two Revaluations and has since devised a new pricing methodology—which it has not made known (see page 44). How times have changed.

NAGS insists it doesn’t set prices, is not influenced by either the insurance or the glass industry and that its prices are basically benchmarks based on (classified) marketplace analysis. We can only guess what factors are analyzed, but in any event, the publisher’s new methodology isn’t working. Auto glass resellers are obliged to pay for the right to use NAGS data, then have to turn around and use the NAGS Calculator to chop off huge percentages. How ridiculous is that? 

NAGS says it supports the aftermarket glass industry; no doubt it does. To be fair, the company doesn’t have it easy. 

Still, I daresay auto glass resellers can be forgiven for concluding that NAGS prices are based on some mysterious, artificial standard rather than anything logical—like auto manufacturers’ list prices. After all, Mitchell publishes one price list for dealers (set by the manufacturers) but a different one for the glass industry. Wouldn’t you question why there are different list prices for the exact same part?

How Shops See It
Despite NAGS’s efforts, auto glass pricing is still in a shambles. But, in the end, the fault isn’t all placed with NAGS. We’re the ones using (and discounting!) the company’s numbers.

In my view, if prices were based on the manufacturer’s list price, with a reasonable labor component factored in, the problem of ridiculous discounts should go away—which NAGS also would prefer, no doubt. 

But will it? There are still those with vested interests, on both sides of the coin, who don’t really want it to go away. They didn’t learn, as I did long ago, that maintaining the status quo is a fool’s game.

Watch for changes. I can’t tell you when or what, I only know something has to change. You can say “I don’t want to change.” But there comes a day when we all have to change. And the changes we make will determine whether or not we’ll be in business. 

AGRR

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