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Volume 7    Issue 6            November/December 2005

Independent's Day
    
Guest Columnists

 
State Farm's
New O&A
by Mark Anderson

A relatively small number of urban shops located offices in rural areas to take advantage of the zone pricing, which State Farm once thought a good idea. State Farm has now changed its mind, ending zone pricing. Price will no longer be determined by the location of the shop. Instead, it will be determined by the location of the job with the exception of shops which do jobs in Zone I, in which case all their invoices will default to Zone I pricing. 

State Farm has said it will look at the service areas described in METRYX to determine if there is Zone I shop coverage in a Zone III market. If so, they will only pay a competitive price in Zone III.

That means rural shops that have always traveled into cities to do jobs will not just lose their price advantage on those jobs, but all of their invoices will default to urban rates. It also means those rural Zone III shops that never leave their service area will either lose jobs from steering or will lose (on average) $133 per job if there are urban shops that cover their market. And, it means that larger, urban shops with multiple locations and shops covering whole states which are now being paid Zone III rates for Zone III jobs, will be paid Zone I rates for those jobs. Everyone loses. No matter how you spin it, thatís price erosion based on information provided to METRYX. 

And thereís the rub.

LYNX officials are adamant that METRYX is about professionalism, not price. Maybe. Maybe not. Only time will tell. But, before their train has even left the station, State Farm has said they will use registry information to degrade prices. If LYNX wants to understand why there is distrust, this would be a good place to start. 

When big companies launch a program, are we entitled to believe the effect of the program is what they intended? If so, doesnít that mean the effect of the program is its 
purpose? 

True enough, METRYX may eliminate the worst of the bunch, i.e., those that could care less about quality, those with phantom locations, etc., but if the real world impact is to degrade prices, doesnít that make METRYX a Trojan horse? We donít know. We just ask the questions. 

Marc Anderson is the executive director of the Independent Glass Association (IGA), headquartered in Hopkins, Minn.


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