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Volume 7, Issue 1        January/February 2005

AGR Reports
    Breaking News

I N D U S T R Y

SAFELIGHT DENIES FINANCIAL PROBLEMS
RESCINDS FEE

SGC, the network administration arm of Safelite Auto Glass, has announced it is “suspending” a $15 fee it had imposed in November on non-network shops submitting paper invoices and plans to refund all such fees it has collected since November 1.

According to a release, Safelite says that it was “pleased that more than 1,500 shops responded by contacting us to pursue electronic invoicing” and that network providers are “receiving payment approximately ten days faster than when they were using paper.”
The company release also reported that many non-network shops wanted more time to investigate and establish electronic invoicing options and that is was suspending the fee for the next 80-120 days and refunding paper invoicing.

The reasons behind Safelite’s implementation of the $15 fee had been subject to great speculation in the past few weeks. Some theorize it was put in place to make it more difficult for non-network shops to conduct business; others say the company was seeking new ways to reduce costs and increase income. 

But whatever the case, the fee triggered a massive reaction among non-network shops. The Independent Glass Association had raised the issue among its membership and issued a number of communications to its members and urging them to contact insurance companies to report the discrepancies and bill the insurers for the difference. 

“When you send someone a bill, and they arbitrarily decide “paid in full” is less than you charge, then you have a right to go over their head for your money,” said IGA executive director Marc Anderson. “And that’s what our members did.” 

“We also applaud the many insurers that were contacted who recognized the inherent lack of fairness in Safelite’s actions and who, I believe, exerted pressure on them to correct the wrongdoing. Their efforts toward fair business practices are appreciated,” Anderson said.
The Independent Glass Association is the country’s only association of independently-owned auto glass shops in the United States. IGA has long taken what it perceives as unfair business practices by the networks to task and has made no secret of its intention to file a lawsuit in the near future against network providers allegedly involved in illegal steering.

Safelite had no response to a query from AGRR magazine/glassbytes.com on the influence the IGA exerted in getting the fee removed.

Meanwhile, rumors of financial problems at Safelite are nothing more than that, according to a company spokesperson. 

“There have been rumors, we hear them too,” said vice president of marketing Denise Klapper in an exclusive interview with AGRR/ glassbytes.com™ in December. “But Safelite is fine. Our November sales were the strongest of the year and we are very profitable.”

When asked about coming changes in the company’s 401(k) plan, Klapper said the Columbus-based company had recently announced it would not make any employer matching contributions to the plan in 2005. 

“Like GM and many other companies, we are cutting back,” she said. “But the program remains in place and all employees’ contributions are in place as well.” 

Klapper also confirmed that Don Giles had left the company and that senior vice president Beth Wolszon was to leave at the end of January.

“Obviously there have been changes,” said Klapper. “Everyone has changes. We have been looking at our overhead costs and trying to reduce them and invest more in sales and services. It’s no secret that pricing has declined drastically in the auto glass industry and we don’t see that changing in the near future. But I can assure you we are not in trouble.”

Klapper said that Safelite is just making sure its cost structure is in line with this reduced level of profitability.

Klapper responded “no” when asked if she had heard an unconfirmed report that one of Safelite’s main financial backers had declined to renew its financing. 

“I am not aware of anything like that,” she said. “We are making all our payments on a timely basis.”

Unsubstantiated rumors of another impending Safelite bankruptcy have also been circulating. Industry insiders say that Safelite is profitable and if it were to consider bankruptcy it might be of its wholesale division. 

“They don’t need to shed debt this time, they need to get out from some existing contracts,” said one industry insider.
“I know nothing about anything like that,” said Klapper. “It’s the farthest thing from the truth I can imagine.”
NAGS Winter Publication Effective February 28
National Auto Glass Specifications (NAGS) announced in November that it is moving forward with the rebalancing of the winter U.S. benchmark price list, changing the effective date of the data. Previously set for January 10th, the new pricingis now set for February 28th, 2005. 
“We are proceeding with the rebalancing because it is an important step to enhance the value of our data to the industry,” said Jesse Herrera, general manager of NAGS. “We have decided to move the effective date of the winter calculator to give the industry extra time to evaluate the new benchmark and revise their trading agreements as they deem necessary.”
The effective date for NAGS’ Spring publication will follow the normal schedule of early May 2005.
“The decision to continue forward with the rebalancing is based on a few critical factors. First, many industry participants are encouraging us to move forward with the rebalancing on schedule,” Herrera continued. “Not only will the change allow NAGS to eliminate ‘R’ parts, but it is also an important step toward strengthening the credibility and usefulness of the NAGS benchmark. Second, after additional discussions with the Chicago Auto Glass Group, it is clear that they are at least several months away from having a complete data set. They are in the process of conducting a preliminary test of their proposed methodology for 250 parts and are unable to provide a definitive date as to when they will have fully tested their proposed benchmark for all 12,000 parts currently priced in the market. NAGS looks forward to reviewing their preliminary test results and remains open to input and participation of CAGG in our ongoing efforts to improve our products.”
To assist customers with the transition, NAGS will offer a proprietary Excel analysis tool. This tool allows customers to enter their unique business mix and analyze the before and after scenarios of proposed trading terms. The NAGS pricing analysis tool uses Excel and is available on disk, along with the top 700 glass parts (with the part number), the previous benchmark price, the rebalanced price, the benchmark price percentage change, adhesive quantity and labor hours. Disks can be purchased for $50 for one copy and $10 for each subsequent copy through the NAGS website. 
yyä www.agrrmag.com/infocenter
MERGERS AND ACQUISITIONS
PipeKnife® Co. Acquires 
Glo-Tech Products, Property
The PipeKnife Co. of Lakewood, Colo., has announced the acquisition of the Power Advance cold knife, Easy-Pro Advance Cold Knife and Side Buddy Rack product lines and intellectual property from Glo-Tech Industries of Meridian, Idaho.
According to a PipeKnife news release, the Power Advance cold knife is an ergonomically designed cold knife that utilizes an interlocking Y- and T-handle design to eliminate the traditional twisting of the barrel. Taking the Power Advance one step further is the Easy-Pro, which eliminates the Y-handle feature and allows for the use of both standard cold knife blades and utility blades. The Side Buddy rack is a glass rack system used to carry oversized windows for the side of a truck or van. These three items are currently stocked and sold by Equalizer, Mygrant Glass, North Star and AG Distributors.
yyä www.agrrmag.com/infocenter
NATIONAL
Government Tightening Rules On Power Windows 
The federal auto safety regulators have unveiled new rules anticipated to make the design of power windows safer for children. The National Highway Traffic Safety Administration (NHTSA) has issued a 49 CFR Part 571 (RIN 2127-AG36) Federal Motor Vehicle Safety Standards to “amend the standard for power-operated windows, partitions and roof panel systems to require that switches for these windows and other items in new motor vehicles be resistant to accidental actuation that causes those items to begin to close.” The agency states in its summary that its intention is to reduce the number of injuries and fatalities that occur when power-operated items are unintentionally closed.
The amendment became effective on November 15, 2004 and all vehicles manufactured for sale in the United States must be compliant with the rule on or after October 1, 2008. 
Minnesota Glass Association Network Operational
The Minnesota Glass Association (MGA), headquartered in Saint Paul, Minn., has announced that its Glass Network is now operational, with 48 retail locations participating.
In an MGA newsletter, the association has committed to service all 87 counties in the state, allowing participants access to insurers associated with the network. Jobs are assigned on what the association calls a “fair rotation,” which it says gives all companies equitable opportunity regardless of size.
Participating companies are required by contract not use its association with the MGA Glass Network for marketing purposes on promotional pieces (including leave-behinds), process all independent insurance claims through the network (regardless of source) and charge insurance companies non-network insurance rates if the insurance company does not have a contract with the MGA Glass Network.
yyä www.glass.com/info
INTERNATIONAL
Pilkington Reorganizes Three Chinese Manufacturing Plants
Pilkington Automotive has announced the reorganization of its three Chinese manufacturing plants. 
Pilkington operates three automotive glass plants in China: one fully owned plant in Guilin and two joint venture plants in Changchun and Wuhan, in which Pilkington is the majority and managing shareholder. A newly established umbrella company, Pilkington China Holdings Co. Ltd. owns Pilkington’s interests in these plants.
A single, Pilkington-led, organization will be responsible for sales, NMI, purchasing, logistics, finance and production of all three plants. 
The plants, which are now fully integrated into Pilkington Automtive’s global organization, will be known as Guilin, Changchun and Wuhan Plants of Pilkington Automotive in China. 
Every customer will have a primary point of contact in the form of a key account manager, responsible for business negotiations and dealing promptly with any operational requirements.
Guardian Industries, CEO Receive 2004 Luxembourg American Business Award
The Luxembourg American Chamber of Commerce in the United States has announced that it will bestow its 2004 Luxembourg American Business Award upon Auburn Hills, Mich.-based Guardian Industries Corp. and its president and chief executive officer William M. Davidson.
The biannual award signifies a special and longstanding relationship between an American corporation and Luxembourg. The award will be presented to Mr. Davidson at a dinner presided over by H.R.H. the Crown Prince Guillaume of Luxembourg, with remarks by New York Mayor Michael Bloomberg, to be held at the Rainbow Room in New York City on September 22, 2004. 
The Luxembourg American Business Award acknowledges the vision and leadership of Davidson, who has made Guardian Industries a leader in the global flat glass and automotive supply industries. Luxembourg’s business environment has been an important contributor to that success, most recently by supporting the establishment of Guardian Luxcoating in Bascharage in 2003, a state-of-the-art facility that is the largest coater of glass products in the world.
“We look back upon a past and forward to a future of great promise for Guardian and Luxembourg, and to the cooperative transatlantic enterprise that has been so mutually rewarding,” said Luxembourg minister of the economy and foreign trade Jeannot Krecké.
yyä www.glass.com/info
Fuyao Laying Off Scores
Fuyao Glass Industry Group Co., headquartered in Fuqing, in the Chinese province of Fujian, has laid off more than 1,000 employees recently, CHINAdaily.com, the online site for China Daily newspaper reported. 
According to the report, Fuyao’s chief executive officer, Cao Dewang, has denied that the layoffs were market driven. 
Fuyao holds nearly half the domestic market share of auto glass.
German Company Now Makes Large Polycarbonate Sidelites
Battenfeld Injection Molding Technology, of Meinerzhagen, Germany, along with Summerer Technologies and Exatec, both also headquartered in Germany, now produces large car windows from polycarbonate using the IMPore injection-compression process.
The companies are able to manufacture windows with a surface area of 1 squared meter. 
yyä www.glass.com/info

BRIEFLY ... According to a report on AutoIndustry.com, the use of laminated glass in vehicles has increased with 4.5 times more cars being fitted with them than in 2000 … RepairOne® Automotive Concepts LLC has announced plans to launch its “Just One” national franchise program, which will operate in conjunction with the RepairOne franchise agreement to pay a royalty based on the store’s gross retail sales of parts and labor revenue.

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