Feature

A Global View
Belron CEO Talks About the Worldwide AGRR Market
by Katie O’Mara

Gary Lubner has been the CEO of Belron S.A. since 2000. Prior to that, he was the chief operating officer of the company, responsible for the company’s European operations. He studied finance at the University of Cape Town and joined Arthur Andersen after graduation where he qualified as a chartered accountant in 1981. He earned his master’s degree in business administration at London Business School in 1991 and joined Belron soon after graduating. Katie O’Mara, contributing editor for AGRR™ magazine, sat down with Lubner at the Best of Belron US competition in February. Below are excerpts from the interview. For a full transcript, please visit www.glassBYTEs.com/Lubner.

AGRR: I know there were some recent acquisitions in Canada. I was wondering if you could comment on that.
GL: The acquisitions we’ve made are all ex-franchisee businesses, both English and French-speaking in Canada. Belron’s philosophy around franchising is that we’d prefer to own our stores and, really, Canada being such a huge country that has been historically partly owned and partly franchised, these acquisitions are to try in those primary markets–city/town markets–to earn their business. We think that’s going to be better for the end customer. Our standards will be much easier to apply across the business, and that it’s a smarter decision for the Canadian insurance companies and Canadian consumers.

AGRR: Are you seeing anything different in the Russian market?
GL: No, we’ve made our acquisition there and are very pleased. We’re the market leader in Russia, in three cities primarily. It’s an interesting market, great but also challenging. It’s exciting and we’re making great progress.

AGRR: Are there any other markets where you’ve seen significant changes in operation?
GL: I don’t think so. Even though local markets are different—the fundamental Belron model is the same. We set out to deliver outstanding service to the motorist. We do that by having great relationships with our key account, and we make sure we have a brand that people in the market recognize, and they use us because we’re the preferred option. That’s true from Russia to China to any very developed market in Europe like Belgium or Netherlands. That’s the model we’re sticking with.

AGRR: Is there anything about franchising that you’ve learned?
GL: The only time we actively franchise is when we go into a new market. In 2011 we opened up Croatia and Estonia, but we license an entire market. We do that because we don’t feel we have sufficient local skills to understand the fairly undeveloped market. Then, over time, like in Greece and Turkey, which were ex-licensees, we acquire those businesses. We don’t see franchising as an integral part of what we do other than a means to an end to move into some new countries.

AGRR: Last time we spoke, you were really excited about China …
GL: Very excited. In 2011, we doubled our business there, and for 2012 our plans are to double it again. We are represented in 11 cities around China. We have about 15 stores. We’re growing very strongly. Interestingly, it’s the same old strategy: forming relationships with the big insurance companies in China, making sure we start building the brand, training our technicians to the highest possible standards, measuring customer satisfaction; even in China every one of our technician is measured on NPS. I was in Shenzhen recently visiting stores, and up on the wall—I couldn’t understand anything other than percentages—but it was the NPS per technician. We remain extremely excited about China. One statistic for you that I learned recently, the level of car ownership in China is 50 cars per 1,000 people. That’s the same level of ownership as there was in the United States during World War I. The amount of cars that are going to be in China in the next few years is just extraordinary, and we feel excited about being there.

On Repair

AGRR: Repair quality has been a big topic of interest in the industry. Do you think this is a worldwide issue?
GL: Yes, I think quality is always an issue, whether it’s repair or replacement. If you’re asking me my views, whether it’s an issue around the world, I can’t really comment. I can comment on Belron who is the leading repairer in the world, and all I can say is the quality of our repairs is the best it’s ever been; particularly with the launch of our new resin HV Extreme. This is a resin we’ve been researching for a while that we’ve tested, and that we’re making strong claims about, because we know that they’re correct. If you look at the quality of our repairs worldwide—and it’s no different in the United States or Russia or Turkey because it’s the same resin and equipment—I’m very confident in saying the quality of our repairs is the best it’s ever been.

AGRR: How is the rollout of the new resin going?
GL: Really well. I visit a lot of stores all over the world. I’ve been in the U.S. this week visiting a fantastic market here in Louisiana. I asked all of our technicians here about the resin, and I get the same answer wherever I am. Last week I was in Greece, Turkey, then Istanbul. Every single technician I talked to says this resin is quite extraordinary. I literally have not talked to any technician anywhere in the world who has anything bad to say about the resin. We’ve rolled it out around the world in all 33 countries, and we’ve been very pleased with that.

On the Future

AGRR: What is your job forecast in the U.S. and abroad for 2012?
GL: I think 2012 will be a challenging year for two reasons: globally, economic effect particularly in developing markets, is still extremely volatile. We’ve seen extremely tough markets particularly in Europe. I don’t see any short-term correction. I think it’s going to continue in a very tough way. 2012, however, is going to be compounded by the effect that we’ve had no weather. In Europe, we had no weather in November, December or January. Fortunately things seemed to be getting colder in Europe last week. But the U.S. and Canada have been pretty mild, so I think when you compound the market situation with the weather, my view of 2012 is it’s going to be tough.

AGRR: You used to be very against cash pricing. It seems your stance has softened a bit?
GL: I don’t think I never liked cash pricing, I can’t not like something that just happens. My personal feeling is people are not charged for the service that we provide. Safelite has demonstrated over the past few years that that’s changing. Certainly worldwide, with economic factors the way they are, cash pricing is always going to be the one that gets put under pressure. My views about cash pricing haven’t in particular changed.

AGRR: What’s your current acquisition strategy?
GL: We’re always looking at acquisitions; that’s part of the Belron growth story. But as you can imagine right now around the world, there are many acquisition opportunities, and not only for the right reasons. So we’re going to stick to doing acquisitions the same way we’ve always done them if they’re the right fit for our business, and if they allow our business to grow. I think out track record speaks for itself frankly. There have been very few acquisitions that haven’t worked out because we are very strict about what we do. Just because there’s lots of opportunities doesn’t mean there’s going to be lots of acquisitions.

AGRR: I know it’s been a busy year for your company, but how does fighting legislation in the United States impact the company as a whole in your opinion?
GL: My response to what’s happening in the U.S., is frankly, slightly amazed. I’ve never come across a situation anywhere in the world, where a group of competitors attempt to change the rules or the dynamics of a market by going to law. I’m a strong believer that competition is a good thing, and that the best companies should win. The fact that people in the U.S. feel the only way they can win is by going to change the law is, frankly, something you don’t see anywhere else. I’m just quite intrigued by it all. In terms of, is it causing Belron a big issue? Not at all. We are very confident in the fact that the way we’re going to win business is by delivering outstanding service to both the motorist and the key accounts. And that in the end is all that’s important. All of our efforts are geared around making sure that’s what our businesses do. Whatever else will happen, will happen.

Katie O’Mara is a contributing editor for AGRR™ magazine. She can be reached at komara@glass.com.

AGRR
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