Volume 12, Issue 4 - July/August 2010


AGR Reports
breaking news

 

COMPANY NEWS

Auto Glass Retailers Endure Price Increases; Report Reduced Supply

At least four industry manufacturers and suppliers have reported in recent months that they are instituting price increases on their auto glass parts. Pittsburgh Glass Works (PGW) was the first to announce an increase in mid-May, saying that it was re-evaluating its pricing on a part-by-part basis “in response to [a] broad-based increase in costs.” The announcement was made to customers by a letter from PGW director of strategic development Bill Marshall, who attributed the increases to the “cost and availability of supply inputs,” along with an increased demand coming from a rebound in OEM vehicle production.

Pilkington North America issued a similar announcement on May 19, saying it had instituted an immediate increase on “all automotive glass parts.” Director of marketing William George, who made the announcement via letter, also attributed the increase to rising costs.

“We have been unable to offset the escalating material, commodity and energy costs with our aggressive cost reduction measures,” writes George.

A similar declaration came from Vitro Automotive AGR business director Jesus Zubiria Luque in early June, citing “dramatic increases which severely impact [its] cost and which can no longer be absorbed.”

“Fuel and energy prices have driven raw materials related to automotive glass manufacturing to unprecedented heights as well as impacted our manufacturing process and logistics costs incurred in order to deliver our products,” says Luque. “Even though we have implemented internal cost reduction efforts, the current price levels are no longer sustainable under current industry conditions.”

Vitro pointed out that its pricing adjustments are being “applied selectively based on different variables.”

And the increases aren’t just limited to the North American market. China-based based Xinyi Automobile Glass (Shenzhen) Co. Ltd. announced recently that it would increase its prices by 10 percent for orders received after August 1. The Xinyi announcement came from general manager Charles Cha, who also attributed the escalation to rising energy, labor and material costs.

“You may be aware that the labor cost in China will be 20 percent increasing [sic] from July 1, 2010, and it will be still on the rise,” writes Cha. “The energy costs, which is one of the major cost factors in [the] glass business, have been increasing; the cost of raw materials has already increased by 40 percent so far this year and it is still on a high level.”

Is There a Shortage?
As these price increases have come about, many in the industry also have reported a shortage of available auto glass parts.

Allan Gurecki, owner of Atlanta-based Glass-2-U Systems, says the problem began for him early this year and the supply has “deteriorated since.”

“What is frustrating is that some of the most common part numbers for the most common, middle-of-the-road, working-class type vehicles often come into short supply,” he says.

And Gurecki’s not the only one seeing this issue. Rich Lutton, owner of Metro Glass in Omaha, Neb., says he’s being seeing a shortage in parts for the last couple of months, particularly for newer vehicles.

“We’re definitely affected by [a shortage], though not so far with the basic stock items, but particularly with the new windshields, especially foreign windshields,” he says. “We do work for Kia and we’ve had to get glass for Korea from Kia, because no one’s come out with it.”

Lutton also adds that normally he can find the windshield he is looking for—but choices are more limited.

“It’s not crisis proportion, but instead of the four distributors we look at on a daily basis all having the piece of glass we need, often just one of them has it,” he says.

Suppliers cite several causes for a possible shortage, including increased demand.

“We have been seeing an increase in demand not only for OE [glass,] but [for] aftermarket, too,” says Juan Carlos Rivas, who handles logistics, purchasing and exports for Vitro Automotive. “This is causing us some problems in order to get glass enough to cover our customers’ demand.”

Some of the delays are coming from afar, says Ramon Gonzalez Jr., vice president of sales and operations for Import Glass Corp.

“We have been experiencing shortages due to the Chinese extending their delivery time to almost 14 weeks,” says Gonzalez. “This change came suddenly and most distributors I’m assuming were not prepared.”

And Gonzalez says he’s seeing this from a variety of Chinese suppliers.

“It’s across the board,” he says. “They say that they’re really busy and very behind.”

Boyd Group Reports 13.6 Percent Decrease in First-Quarter 2010 Sales
The Boyd Group, which owns Boyd Autobody and Glass, Gerber National Glass Services and Gerber Collision and Glass, saw a 13.6 percent drop in sales for the first quarter of 2010, when compared with the same period of 2009, according to its first-quarter report, released recently. Sales for the first quarter of 2010 were $54.7 million, compared with $63.3 million in the same period of 2009.

The company reported an adjusted EBITDA of $3.4 million for the quarter, down from last year’s $3.5 million—a decrease of 2.9 percent.

Net earnings were $1.9 million, down 5 percent from $2.0 million in 2009.

“We are pleased to report stable net earnings and EBITDA, as well as increased cash available for distribution to begin 2010, despite the negative impact of the weakening U.S. dollar on our U.S. operations and the continuing negative impact of the economy combined with extremely mild and dry winter weather in many of our northern markets during the quarter,” says Brock Bulbuck, president and chief executive officer of the Boyd Group.

In addition, Boyd recently announced it has signed an agreement to acquire True2Form Collision Repair Centers for $18 million. The sale was expected to close by the end of August at press time. Boyd also recently acquired M&D Auto Body in Evanston, Ill., and the Collision Center of Owasso Inc. in Owasso, Okla. Both have been re-opened under the Gerber name.

Boyd Group’s First-Quarter Results

  2009 2010 Percent Chang
Sales $63.3 million $54.7 million -13.6 percent
EBITDA $3.5 million $3.4 million

-2.9 percent

Net Earnings $2.0 million $1.9 million -5.0 percent


LEGAL NEWS
Door-to-Door Auto Glass Solicitation Under Fire

The practice of soliciting auto glass repair and replacement work by going door-to-door has come under the microscopes of police departments in both the Florida and South Carolina markets in recent months for local concerns about the required peddler permits and possible door-to-door sales in these locations.

Police officers in Charleston, S.C., issued a warning to consumers in June that they have recently been receiving complaints about Coast to Coast Auto Glass soliciting door-to-door in the area, according to Sgt. Trevor Shelor.

In Charleston, those soliciting door-to-door are required to have “City of Charleston Peddlers Permits,” and these have not been issued to Coast to Coast, Shelor says.

Likewise, in April, two males working for Tag Promotions in Fort Myers, Fla., were arrested for “peddling” windshield replacement services without a license. Edward Albert Grano and Justin T. Herrero, were officially reported to be working for Tag, but Grano told AGRR magazine that he was working for Coast to Coast at the time of the arrest.

According to the police report, the two are charged with violating the county’s law addressing “hawkers” and “peddlers.”

“Edward [Grano] and Justin [Herrero] were going door-to-door peddling the service of a new windshield through a third-party company, Tag Promotion, without the proper permits, therefore violating a county ordinance,” reads the report.

Tag representative Matthew Grunske advised AGRR magazine that, on the day of the arrests, Grano and Herrero had gone out to a customer’s home to do a pre-inspection and then had checked with some other local residents to see if they needed work.

Grunske added that the company does not usually send its representatives door-to-door, and, hadn’t thought the “peddler” permit was necessary.

“We’ve got all of our licenses to be doing business,” he said, “and we don’t typically do door-to-door [work].”

Grunske could not confirm that the company for which Grano and Herrero were booking the work was for Coast to Coast, and said that Tag books work for “several different companies.”

AGRR magazine spoke with Rhonda Jacobson, who is listed as the public relations contact Coast to Coast on the company’s website, shortly after the incident.

“Tag Promotions does not work for Coast to Coast,” she said.

Company spokesperson Jigna Patel declined to comment.

 

 


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