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Volume 7    Issue 6            November/December 2005

AGRReports
    
Breaking News

NATIONAL

HURRICANES AFFECT INDUSTRY

Hurricane Katrina, by far the largest natural disaster to strike the United States in recent memory, made its impact felt far and wide, and the auto glass industry did not go unscathed. 
Binswanger Glass Co., which has 126 locations in 21 states with most of them located in the South, had a distribution center in New Orleans, one of the cities hit hardest by the hurricane. According to a spokesman for the company, it still had not been able to locate nine of its employees from that facility as of September 6.

Asked if the company had seen a spike in business or shifted any employees around as a result of the storm, he pointed out that, in the flooded areas, water damage is the big problem and that the cars probably would be totaled anyway. 

Roy Sherman, president of S&S Glass Service Inc. in Jonesboro, Ark., said he didn’t see much of an immediate impact either. 

“We put in a couple of windshields for some people from Jackson, Miss., who had come up here because they had family here, but that’s been it so far. However, I’m sure we will see some because about a thousand people are going to be relocated here,” he stated.

While some companies were hit hard by the hurricane, the entire nation felt the ripple effect that was the oil industry. 

“The gas prices are affected though,” Sherman said.

In Ethel, Miss., near the center of the state, Arthur Sartain noticed that gas prices definitely played a factor in business in his area, and that glass is secondary on people’s minds.

“People are not getting much auto glass done because they’re spending more money on gas [to keep the cars running]. The gas stations here are running out of gas and they’re only getting one shipment a day,” said Sartain, owner of Attala Glass. “People are worrying about more survival than glass. It’ll probably pick up more later when things get better.

That’s the scenario I’m picturing. Some of my customers don’t even have telephone service right now.” 

In Meridian, Miss., which saw significant storm damage, the local Novus Windshield Repair & Replacement Service reported a big jump in business as residents start cleaning up from the storm. A busy technician who answered the phone said that the company had been without power for three days after Katrina came through, but has been extremely busy since it got back up operating.

Returning normal, every day function for families displaced by the hurricane is even harder to predict.

“Right now everyone is scattered all over the states and in refugee camps. They can’t stay there forever. They need a place to live. Eventually sales will pick up, but it will probably be more than a year, as there are things you need like food and water and communication before you worry about replacing glass,” said Sartain. 

Members of the industry were quick to come to the aid of those affected by the storm.

The Texas Glass Association (TGA) collected funds to deliver to the American Red Cross Disaster Relief Fund designated specifically for the victims of the hurricane. 

TGA executive director Virginia Lee points out that many of disaster-stricken colleagues have lost even the most basic of housing and if anyone is willing to donate (or offer at a significantly reduced rate) their second home or garage apartment, TGA will make this information available to the proper people.

One North Carolina glass shop owner offered to lend his technicians to any shop that had been impacted by the storm. He said that his Florida shop had been through a hurricane so he understood how those affected felt.

Chuck Sulkala, executive director of the National Auto Body Council (NABC), reported that NABC will spearhead a united industry effort to relocate anyone in the collision industry who has either been displaced or who now finds that he or she doesn’t have a job.

“It’s important to note that the objective is not simply moving people from one location to another,” he stated. “The goal is to help our people with no home or job to start rebuilding their lives, to get back to functioning as families, with a job, basic work tools, housing, transportation and kids back in school.”

While many glass shops in New Orleans and other parts of Louisiana, Mississippi and Alabama were most drastically affected by Hurricane Katrina and the destruction it brought, glass shops in Pensacola, Fla. were also on the receiving end of high winds and rain.

Fortunately, Pensacola was on the edge of the storm system, and though the community faced some strong weather, they have fared much worse in the very recent past.

“We had very minimum damage. We probably sustained 60-70 mile-per-hour winds for eight to ten hours, but we didn’t receive a lot of physical damage to our facility or our homes,” said Woody Watters, general manager with Pensacola Glass Co. “We had a little tree damage, but other than that, we came through really lucky to be honest with you.”

It’s a good thing that they didn’t get hit harder, too. Pensacola is still rebuilding from Hurricane Ivan, which hit last summer.

“The storm hitting as close as it did to us certainly made more people aware of the situation and the respect people have for these storms has intensified that much more,” said Watters in an interview with a member of the staff of AGRR magazines’ online newsletter, GlassBYTEs.

Pensacola Glass Co., which handles both auto glass and flat glass, has a unique perspective on the state of the industry and the immediate future, having been through similar weather before.

“From an auto glass standpoint, people who sustained damage to their auto glass, they respond pretty quickly. It was the case in Ivan and it has picked up a little since [Hurricane Katrina.] We certainly have been busy. From a flat glass standpoint ... most of the big work is going to be [done] later, after the insurance adjusters are done, especially in the Gulfport, Biloxi areas and going back toward New Orleans. Those areas are pretty much obliterated.

That’s the only way I can describe it.”

What will the future hold? Plenty of demand for glass, that’s for sure—just not right away.

“There will be a lot of glass replacement in auto glass because of the hurricane, but so many of the automobiles in the main strike area of the hurricane were damaged beyond repair.

They were flooded with water, etc., and insurance companies are going to total those vehicles,” Watters said.

Just how much time is “some time” before things return to a semblance of normal? In Watters’ opinion, no less than three years.

“This ... is not going to be a short recovery time. It’s going to take years and years for the economies to get back on their feet. I projected that Pensacola would take three years to get back to where it was before Hurricane Ivan. The areas hit by Katrina will take a lot more than three years to get back to anything resembling what they were.” 

Two weeks later, Hurricane Rita also hit the Gulf Coast. 

TGA’s Lee, headquartered in Houston, Texas, informed AGRR magazine that TGA president Vickie Stewart and the 20 people who sought shelter at her house survived the storm with no injuries, but did run out of fuel and electricity. Stewart was able to obtain a generator to remedy the situation. 

Bob Lawrence with Craftsman Fabricated Glass of Houston was working to implement a relief project, but in the first days after the hurricane his delivery truck was not yet allowed into the area and he was working to define a new plan to get fellow glass industry members some help. 

The TGA also requested that any glass shop in the affected areas contact the office if they needed assistance and at press time, the Association was planning a conference call to develop a plan on how TGA could provide help in the recovery process. 

MERGERS AND ACQUISITIONS
Belron Buys Three More
Belron Canada Inc., a subsidiary of Belron S.A., the vehicle glass repair and replacement company, has signed an asset purchase agreement with TCG International Inc.’s Autostock International Division for the acquisition of its Canadian glass operations, headquartered in Burnaby, British Columbia. The transaction is expected to be completed in November, 2005 and is subject to customary regulatory approvals.

“We are excited about the opportunity to provide the best service in all areas of the country, taking advantage of the complementary strengths of the two companies and adding value to our partners and customers,” said Gary Lubner, chief executive officer (CEO) of Belron S.A. “I am confident that the valuable brands of Autostock International and Belron Canada, together with the employees and franchisees who operate them, will provide enormous value to our company and the Canadian consumer.”

“Belron is the best positioned company to continue to build these businesses and I am pleased to see these two companies come together” said Allan Skidmore, Co-Executive Chairman and CEO TCG International, CEO-Automotive Group. “I am fully satisfied that Belron will build upon the successful strategies and business we have put in place.”

In late September, Belron signed a letter of intent to purchase the assets of Auto Glass Specialists Inc., the well-known “little red truck” installation company based in Madison, Wis.

The sale is a reversal of direction for the 44-year old company, as president Robert Birkhauser had already announced it was in final negotiations to sell the assets of the business to Glass America. The deal had been expected to close in early September but did not.

Birkhauser had no comment on the change in buyers. Sources familiar with the deal who declined to be identified said negotiations had gotten increasingly more difficult and that both sides were unhappy with the progress being made.

Glass America president David Rohlfing had no comment, nor did Lubner. 

Belron re-entered the U.S. market earlier this year with its purchase of Elite Auto Glass in Denver. Elite’s former president, Wes Topping, now serves as president of Belron Inc. in the United States. The addition of AGS to its stable gives Belron a solid base in the Upper Midwest and a business model that caters to both consumers and insurers.

A week after the Auto Glass Specialists purchase came to light, Belron, Inc., the U.S. subsidiary of Belron, acquired Windshield Pros of Murrieta, Calif., an automotive glass repair and replacement service providing operating in Southern California. 

With this addition, Belron, Inc. now operates 34 stores in the United States under the trading names Elite Auto Glass, Glaspro and Windshield Pros. Wes Topping, CEO of Elite Auto Glass and Glaspro Inc. said, “We are extremely excited about teaming up with Mike Fox and the entire Windshield Pros Team. Windshield Pros is an outstanding company with great employees and a solid reputation in the market. The addition of Windshield Pros provides us with a stronger ability to service customers in this very important market. We are looking forward to a long and successful relationship with Mike and his team.”

“With service to customers in the Los Angeles, Orange, Riverside, San Bernardino, and San Diego Counties, Windshield Pros will benefit from the partnership with resources that now span over 28 countries worldwide.”

The partnership was an easy decision for Windshield Pros’ CEO Mike Fox to make. “We feel becoming a part of Elite Auto Glass and the Belron organization will create a tremendous amount of value for our customers and employees,” said Fox. “The resources and skills now available to us will allow Windshield Pros to further build on our commitment to training and supporting our employees so they can continue to deliver outstanding customer service. We feel this transaction will allow us to become a part of a great company for the long term.”

Windshield Pros was founded in January of 1994.

It has full service auto glass shops, mobile units, and service centers throughout Southern California. Windshield Pros is a member of PPG PROSTARS, Lynx Services from PPG and also a member of the Chicago Auto Glass Group. The company has more than 50 employees.

Belron is the world’s largest vehicle glass repair and replacement (AGRR) company and owner of well known brands in the industry including AUTOGLASS® and CARGLASS®. It operates in 28 countries, across four continents. 

State Farm Sends Out New O&A Agreement
State Farm has sent out a new offer and acceptance program agreement that updates the old one. It was scheduled to become effective October 19. 

According to the letter from Bob Bischoff, glass claim services manager for State Farm, with the agreement, the updates are designed “to ensure that the program remains a model for consistency in customer service, compliance to consumer choice and other regulatory guidelines, and open to participation by all qualified glass service providers...and provide our policyholders with their choice of the best in auto glass services by encouraging competition, improving efficiency through the use of technology, and, over time, affording our customers access to information regarding the qualifications and professional credentials of their chosen glass service provider.”

One change is that the contract now is held at the company level only, eliminating the need of having contracts for each service center.

The big change is that new agreement is an electronic agreement and communications of the program will be conducted via email and the METRYX industry services registry.

“The METRYX industry services registry, hosted by LYNX Services, provides glass service providers, State Farm, and ultimately our policyholders the ability to exchange a great deal more relevant information than has been possible or practical in the pass. Through the industry services registry, glass service providers will be able to specify their company’s service area and offering, as well as post differentiating information about credentials and capabilities.”

All current information on file for companies participating in the State Farm program has been loaded into METRYX. According to the agreement, new applicants to the program will also find their current company profile on the registry.

According to the first participants with whom AGRR magazine has spoken, the new O&A pricing, which went into effect September 19, is not changing. “This is consistent with the new pricing NAGS put out on Monday [September 12] where nothing went up and some things went down,” AGRR was told. 

To enable all retail glass service providers to enroll or re-certify in the State Farm program, a State Farm-specific section has been activated within the METRYX industry service registry, according to Chris Umble, vice president, strategic initiatives for LYNX Services.

“Companies will not need to complete multiple profile for the various programs available to them through METRYX,” he explained. “One set of company profile data, including their certification and professional training achievements, is all that’s required to enroll in all programs including State Farm. The only step that requires specific action relative to State Farm and other programs is electronic completion of the enrollment or re-certification section.”

LEGISLATION
Anti-Steering Legislation Progresses in South Carolina
The South Carolina Glass Association (SCGA) has been successful in getting proposed anti-steering legislation passed through the Senate Judiciary Subcommittee. Senate Bill 513 has now been passed along to the full committee for consideration despite opposition from the insurance industry and others. The legislature has finished up its year at this point and will reconvene in early January.

At that time, SCGA officials are “optimistic” that the bill will be approved by the entire Judiciary Committee, although as one activist put it, “We have our work cut out for us, but we’re where we want to be.”

SCGA officials also pointed out that many Carolina auto glass retailers showed up at the subcommittee hearings to show support for the legislation.

The bill, if accepted by the Senate, would make it “an unfair trade practice for a motor vehicle repair business to administer insurance claims for motor vehicle repairs.” 


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