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Volume 7    Issue 4           July/August  2005

AGRReports
    
Breaking News

MEETING REPORT

Minneapolis Redux for NGAMinneapolis has not been a lucky venue for the National Glass Association’s (NGA’s) Auto Glass Conference.

The first time the group scheduled its meeting there turned out to be on 9/11 and it was cancelled. The city’s second try at hosting the event this past May proved better timing. However, luck was not necessarily on its side again either as this year’s event contended with being the third auto glass meeting in nine months (following the conference’s move from September to May) and its positioning in May before the Memorial Day weekend. These factors were cited by a number of people for keeping attendance down.

But a variety of activity had been tied into the Auto Glass Conference (ROLAGS, AGRSS, and NWRA as well as association and individual company meetings) and, according to NGA officials, the final attendance figure did top 700 including exhibitors.

The focal point of the Auto Glass Conference was the show, where, though smaller than in previous years, attendees still had new things to see and were able to get an overview of what industry suppliers have to offer. (See article on page 28.)

Whose Price Is Right?
A highlight of the seminar program was presentations from representatives of the Chicago Automotive Glass Group (CAGG) and National Automotive Glass Specifications (NAGS) to update attendees on the current pricing situation.

CAGG was formed by representatives from a number of auto glass companies to offer an alternative pricing structure to NAGS. Wes Topping, representing the group, explained to an interested crowd that partial funding has been raised for the test of the figures which the group has developed in cooperation with accounting firm Grant Thornton. The templates for distributors and retailers have been developed, the companies selected and polled, and the results were expected in the middle of June.

Upon completion, the test results will be presented to the industry and to insurance companies for feedback. Topping estimated that three or four big insurance companies would be approached for their input in September or October, three or four months after the results come in.

Once all this data has been collected, he said that CAGG would take it to NAGS and ask them to publish it. “If they will publish the information, that will be the easiest solution,” he told attendees.

NAGS General Manager Jesse Herrera pointed out that there would be a certain redundancy in his NAGS presentation from the one made in February to the Independent Glass Association (IGA) at its convention in Florida.

He went through the rebalancing which took place February 28, and said that it has achieved its objective of getting pricing back on a realistic track, but that it would take time for the market pricing to completely settle.

Herrera said that his company, “all along has been open to publishing the data from the Chicago Group.” He added, “As a publisher we would evaluate the information and see if it would improve our product and if we have confidence in it, we would publish it.”

Listen and Learn
The educational program also had a number of management seminars. A look at business management and the importance of net profit was led by Terry Dennis of Auto Glass Masters and Michael O’Hara with Salem Glass and Mirror. They took the audience through a very basic income statement and explained what the important factors to profit are; they also outlined how shop owners should figure out the “real” cost of a job—factoring in inconspicuous money spent such as wages and operating expenses.

To help explain where money goes, Dennis and O’Hara not only used examples from their own companies, but they also used a basic, mock income statement to show the effect of a 10-percent discount off of NAGS—and explained just how much less money a company would make in the long run if they also waived a deductible.

That’s not to say that Dennis and O’Hara want everyone to waive every deductible that comes across the threshold; rather it was their desire to let shop owners know what happens when they do and decide if waiving a deductible is worth it.

Sometimes, they explained, it is—if the job is profitable overall—and in those cases, waiving might help a shop get more business, but it’s a decision that should be made with plenty of knowledge.

In another session, Bob Dunn and Kevin Bauer with 21st Century Media lectured on consumer education of auto glass safety and professionalism. In a seminar that closely mirrored and built on their “Building an Affordable Advertising Campaign” session at the 2004 NGA Show last September, Dunn and Bauer concentrated more on the value of radio placements and concluded the session with a discussion of some available promotional items that glass shops can use to endorse their business.

Following that seminar was a panel discussion by Leo Cyr, representing CASPA, Rich White, with the Automotive Aftermarket Industry Association (AAIA) and Mike Gill, of the American Automobile Association (AAA), discussing the relationship among the three organizations and how they each hope to promote safe windshield installation among consumers, including allowing shops to become AAA approved facilities. They also opened the floor to questions and ideas from the audience. 

The next day, Cyr, vice president of NGA’s auto glass division, shared the podium with Glen Moses of Safelite Glass Corp., for an entertaining debate about licensing and the perceived need for it within the industry, both echoing the same sentiments they had written about in a previous issue of AGRR (see March/April 2005, pages 34-36).

Next year NGA will hold the conference on May 17 to 19 in Tucson, Ariz.

LEGAL
Safelite, IGA Lawsuit Moves Ahead
Attorneys for Safelite have formally filed a motion to dismiss the case against the third party administrator brought by the Independent Glass Association (IGA) and others in the U.S. District Court of Minnesota. 

IGA, in turn, responded to the Safelite motion with a Plaintiffs’ Memorandum in Opposition to Defendants’ Motion to Dismiss.

Among the arguments for dismissal, Safelite states that the plaintiffs (IGA et. al.) “seek to invoke Minnesota’s Consumer Fraud Act to regulate alleged conduct that, according to controlling Minnesota authority, is outside that statute’s scope;” that by pleading that if successful, the plaintiffs would raise the average automobile glass repair bill for consumers by approximately $200, they “have thus pleaded away their ability to show the public benefit required to bring claims under Minnesota’s ‘private attorney general’ statute;” that those “plaintiffs who plead that their dealings with defendants have no connection to Minnesota give [the] Court no grounds for applying Minnesota statutes to regulate those dealings” and that “the plaintiff who pleads her claims anonymously has failed to invoke this Court’s jurisdiction.”

In the body of the motion, Safelite argues that the claims against Safelite Fulfillment should be dismissed because the plaintiffs plead only “that Safelite Fulfillment ‘is engaged in the business of providing automobile glass repair and replacement products’ ... [and] ‘do not plead that Safelite Fulfillment operates a call center, speaks to insurance company customers, processes insurance claims, pays auto glass invoices or has collected paper invoice processing fees.’” Two other branches of Safelite are named in the lawsuit (Safelite Solutions Inc. and Safelite Group Inc.).

The IGA memorandum states, “Using the unique access to glass repair customers that Safelite has as the auto insurers’ third party administrator, and despite State “right to choose” laws designed to thwart Safelite’s obvious conflict of interest, Safelite uses novel but illegal means to “steer” customers away from their choice of glass shop and toward one of Safelite’s proprietary glass shops. Safelite’s illegal steering typically occurs before either the insurance customer or Safelite’s competitors realize what has happened.

“Through its two-fisted control of the market, Safelite has been able to force upon its independent competitors various rules and regulations, the financial and administrative benefits of which inure only Safelite. Moreover, with the power of the Network, Safelite has such dominance of the market that no independent glass shop, acting alone, can mount any sustainable challenge to Safetlite’s nefarious practices.”

The memorandum then goes through the history of what happened to one of the plaintiff’s when he got a crack in his windshield and the independent glass company that he wanted to do the work.

The memorandum concludes: “In its motion to dismiss, Safelite incorrectly focuses on its relationship with its insurance company clients and bases its arguments on fundamental mischaracterizations of the Complaint and the relief sought therein.

Safelite’s motion to dismiss and to join additional parties should accordingly be denied.”

The memorandum points out that the plaintiffs do not seek to prevail on any of their claims at this time. It states, “They seek only to preserve the right to make them …

For the most part the Plaintiffs ask the Court only to pass on the legality of some of Safelite’s most controversial business practices. The Court should deny defendants’ motions in their entirety.”

FINANCIALS
Diamond Triumph Reports Profitable First Quarter
Kingston, Pa. based Diamond Triumph Auto Glass Inc. (DT), reported that its net sales for the quarter ended March 31 increased $100,000, or .3 percent, to $53.5 million compared to $53.4 million for the same period in 2004. Net income for the quarter was $800,000, a $900,000 increase from the $100,000 loss the company had for the same quarter the year before.

In the press release announcing the financial results, Michael Sumsky, Diamond Triumph’s president and chief financial officer stated, “In light of our sales performance, we are pleased that we were able to maintain positive cash flow during the first quarter. Our challenge is to broaden our revenue base to generate additional cash flow to allow us to de-lever the company [reduce its debt].” 

“Despite relatively flat sales versus 2004, the company was able to increase earnings by leveraging costs throughout the organization. Based on the uncertainty surrounding pricing within our industry, we must continue to explore further opportunities to become more efficient in all facets of our business,” said DT’s CEO Norm Harris.

AGRRS Council Meets, Elects New Board Members
The Automotive Glass Replacement Safety Standards (AGRSS) Council and a variety of its committees met in Minneapolis late in May in conjunction with the NGA Auto Glass Conference to continue its work promoting safety in replacement auto glass. The marketing, credentialing and membership committees of the Council all met, as well as the Standards Committee and the AGRSS board of directors.

The Marketing Committee continued its work on development of consumer materials and new information for prospective registered companies and new registered company kits.

The Credentialing Committee provided an update of the newly expanded application for conformance assessment for registered companies. The changes were made as the result of a pilot program conducted with 11 auto glass retailers throughout the country.

The Membership Committee reported great growth in numbers of registered companies to more than 1,100 shops throughout the country.

The Standards Committee elected two new members to its board of directors: Carl Tompkins of SIKA Corp. and Bob Beranek of Auto Glass Consultants. Current chairperson Cindy Ketcherside of JCs Glass and Jean Pero of Mygrant Glass were re-elected. All will serve three-year terms beginning in January 2006.

First Conference Scheduled
The AGRSS Council will hold its first ever conference October 16-17 at the Rio All Suites Hotel in Las Vegas. The announcement was made following the group’s Minneapolis meeting.

The AGRSS Council, which developed the auto glass industry’s ANSI standard, is holding the event to provide more education and information to those interested in the standard and to AGRSS-registered companies. An agenda is expected to be published within the next few weeks.

“We are very excited about this conference,” said Ketcherside. “It’s the first opportunity we’ve had to bring all our committee members and registered companies together to talk about how they are using the standard to advance their businesses.” 

She said the group was also working on a day-long program for insurance company representatives who want to understand the AGRSS standard and who put safety first.


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