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Supplement, Fall 1999

AGRReports     breaking news

 

CONSUMER WATCH

 The Check is in the Mail

A number of companies have begun sending signed checks to entice glass shops and other businesses to use their services. The catch is that the person or business that cashes these checks, which are usually made out for a minimal amount of money, also signs up for the business’ service.

One example of this kind of promotion is from Publication Management Inc. of Boulder City, NV, which is an independent reseller of advertising space on the Yellow-Page.Net website. The company sends out a signed check for $3.50 to prospective customers. However, once the check is cashed customers are required to pay $12.50 per month for advertising on the Yellow-Page.Net website.

 

HEADLINE NEWS

Apogee Redirects Harmon;
Baumgartner Out

Disappointed by second quarter forecasts, Apogee Enterprises Inc. of Minneapolis has decided to restructure its auto glass operations around Joe Deckman and bring outside consultants in to evaluate all strategic options regarding auto glass. Deckman will pick up the duties formerly held by Bob Baumgartner.

The company attributes its problems in auto glass to continuing distribution price pressures and soft market demand in its retail marketplace. “We are taking aggressive and immediate actions at Auto Glass,” said Russell Huffer, Apogee’s chairman, president and CEO. “We have reorganized to focus accountability at the local market by combining our sales, marketing and operations into four regional teams. We are realigning our business unit senior management team around Joe Deckman and have engaged outside consultants to help us examine all of our strategic options. These options include changing the focus of the business or considering all strategic alternatives.”

Michaela Diercks, vice president of marketing at Harmon, says these options will not include downsizing. “There are not going to be any layoffs or shrinkages,” she said. “If anything it will be just the opposite. It is about cost management, sales maintenance and getting bigger. We are working to become more cost-effective and drive sales higher.”

Huffer is also optimistic about Deckman’s ability to lead the auto glass segment. “Joe demonstrated his capabilities when he led turnarounds at Wausau beginning in 1995 and Harmon Inc. in 1997, and he was also an integral part of the exit from international curtainwall operations,” said Huffer. “Wausau and Harmon have become solid businesses, with good returns, substantially higher margins and excellent cash flow.”

The figures that led to this change at Apogee were a diluted earnings per share in the range of $0.18 to $0.20 from continuing operations compared with $0.27 per share in last year’s second quarter. The fiscal 2000 second quarter earnings expectations include the effect of approximately $3 million, or $0.07 per share, for the reorganization in the Auto Glass segment.

 

ELECTRONIC COMMERCE

CIECA Glass Subcommittee
Looks for Final Approval

The Collision Industry Electronic Commerce Association’s (CIECA) Glass Subcommittee is near completion of its electronic payments remittance advice and is hoping for final approval at its October meeting. The committee had a meeting in July to review and correct the draft.

 

LITIGATION

Insurance Company Sues
14 Glass Shops in South Carolina

In what it says is an effort to eliminate the AGR industry’s practice of dual pricing, Insurit Casualty Group of Columbia, SC, has brought suit against 14 AGR companies in South Carolina, alleging unfair trade practices, negligent misrepresentation, fraud, breech of contract, interference with contractual relationships, conspiracy and negligence. Insurit estimates damages to be in excess of $28 million per year. The companies charged include Ace Glass Corporation, ACI American, American Auto Glass, Astro Glass Company, Century Glass, Diamond-Triumph, Elite Auto Glass, Glass Masters, Glass Pro, Harmon Auto Glass, PPG Industries, Safelite AutoGlass, The Carolina’s Connection and Turner’s Custom Auto Glass.

“The primary reason behind the suit is the dual-pricing system used by glass companies in that the insurance company is paying more money than the customer off the street,” said Insurit president Jay Specter. “In South Carolina there is a law that forbids this from happening.”

Under South Carolina law it is an unfair trade practice for someone to “submit bills, or requests, for payment for work covered by insurance that is in excess of those submitted for similar work not covered by insurance.”

As expected, the glass industry in South Carolina is fighting Insurit’s suit on a number of fronts, primarily the basis of its suit. “He is citing some obscure state law that I am not sure is applicable to this particular case,” said Dan Fishburne, president of the South Carolina Glass Association (SCGA) and owner of Glass Works of Aiken, SC.

On the other hand, Specter thinks it is time for the practice of dual pricing to end. “Why should I pay more for a windshield replacement than someone walking in off the street,” he said. “People are always claiming that insurance is too expensive. One reason it is too expensive is because of claims payments. We have to get a handle on our claims payments. It [dual pricing] is hurting those in the public getting their windshield replaced and it has to stop.”

This is not the first battle about dual pricing, which is a different set of prices glass shops offer to customers off the street and insurance companies. Last year, Consumer Reports magazine published a story about the issue, causing a furor in the industry (see USGlass, February 1998, page 58).

Michigan Shops
Sur Harmon
As previously reported, 48 independent glass installers in Michigan have filed a lawsuit against Harmon Glass and the American Automobile Association (AAA) of Michigan for allegedly directing customers to Harmon Autoglass (see USGlass June, pg. 14). The lawsuit claims that customers who call AAA for glass claims are transferred to a Harmon Glass customer service representative, who is identified as an AAA representative, and told not to use other glass shops for service. AAA public relations manager Nancy Cain said the AAA-Harmon agreement allows customers to go to the shop of their choice. The case is still pending.

In an effort to investigate the charges, Brad Lindberg, of the Grosse Pointe News of Grosse Pointe Woods, MI, called the Harmon call center and reported that he and several of his co-workers were all directed toward Harmon Autoglass by AAA. The only calls not directed to a Harmon shop were ones in which the caller specifically requested a city in which the company had no shop.

 

EXPANSIONS

NAGS® Introduces Service Part Numbers

In an effort to address the need for extra service operations performed by AGR shops but not including its labor times, National Auto Glass Specifications (NAGS) of San Diego, CA, has assigned 12 service part numbers for peripheral operations. The part numbers will cover air bag activation/deactivation, glass cut to size, decal application/removal, freight, hazardous waste removal, mobile service, removal and installation, rust removal, window tinting, VIN etching, vinyl peelback and storage. The company says additional numbers could be added if necessary.

According to Catherine Howard, vice president of NAGS, these separate line items are used by the collision industry to recognize labor-costing services. “We are now offering this opportunity to the glass industry,” she said.

While these services have been given numbers, they have not been given values. They are there for the glass shop to alert its customers that it has performed a service, not to set the price of the service. Howard says the values will be determined by the glass shop and the customer.

 

Visteon Looks to Expand

With a possible spin-off from Ford looming on the horizon, Visteon of Dearborn, MI, is exploring the possibility of new mergers and acquisitions, according to a Reuters news report.

Speaking about possible expansion, Visteon president Craig Muhlhauser said, “We’ve done a lot in the first half, and we’ll do a lot in the second half. I think you’ll see us doing more things in Asia.”

According to Reuters, Visteon, the world’s third largest auto supplier, is the center of a number of rumors including a spin-off from its parent company Ford and a purchase of Naldec Corp. of Japan.

 

RECALLS

 GM Fights Recall of SUVs

General Motors (GM) Corporation is fighting to keep 279,000 of its sport utility vehicles from being recalled for failing a government airbag test, according to the Associated Press (AP). GM is arguing that the test should be disregarded because it says airbag failure is not related to the vehicles’ safety.

GM is arguing that few, if any, people would be at serious risk for a neck injury if the vehicles are not recalled, according to the AP. It also says the neck injury criteria is too strict.

In the test, the head of an unbelted dummy went through the airbag, hit the frame of the windshield and then snapped back. The test was conducted on a 1999 Chevrolet Tahoe, according to the AP.

 

DaimlerChrysler Announces Recalls

DaimlerChrysler is recalling 1991-1993 Town and Country, Dodge Caravan and Plymouth Voyager minivans because of a possible problem that could cause the hatchback or liftgate to fall once it is open, according to the Associated Press (AP). The company also is recalling the same group of vehicles to fix a possible problem with the windshield wipers, according to the AP. The recalls are in response to motorist complaints that the wipers have stopped functioning during storms.

 

FINANCIAL

Donnelly Corporation Announces Results

Donnelly Corporation of Holland, MI, has reported record sales and earnings for the fourth quarter of 1999, according to the company. The company also says it recorded its best ever six-month period during the third and fourth quarters of 1999.

Donnelly’s sales for the fourth quarter were $234 million, which was an increase of 15.9 percent versus the 1998 fourth quarter results. The company posted net earnings for the quarter of $7.3 million, which was more than twice the $3.5 million number posted in 1998. The company also had a one-time gain of $2.0 million, which was a cash payment upon the formation of Schott Donnelly LLC Smart Glass Solutions.

 

KUDOS

Pilkington Earns
Prestigious GM Award

wpe2.jpg (7804 bytes)David Huntoon (right) of GM awards Terry Wolfe (left) of Pilkington LOF.

The General Motors Truck Group has bestowed Pilkington Libbey-Owens-Ford (LOF) of Toledo, OH, with an award in recognition of its quality performance for prototype parts in 1998.

According to Pilkington, it received the award for its work on the full-sized GMC and Chevrolet truck models. Pilkington LOF was one of 16 companies to be recognized by GM out of approximately 850 prototype suppliers who worked on the 1998 truck development projects for the company.

“This is an important award for us,” said Terry Wolfe, Pilkington LOF original equipment and tooling facility plant director. “It recognizes the hard work all of our OE tooling and development employees have contributed to ensuring continued customer satisfaction that goes beyond the expected.”

 

Auto Glass Plus Holds FarAway Day

Auto Glass Plus of Carrollton, TX, has an interesting way to keep morale up among its employees: allow them to dress up in silly costumes once every quarter.

Each quarter employees will dress to go on real or imagined vacations. For the last party employees sipped pina coladas as they went on a Caribbean vacation.

Company owner Kris Homer credits his company’s employee relations, including this concept, as one of the reasons for its rapid growth. The company grew from $175,000 in 1994 to $7 million in 1998. “You can take care of people in all the traditional ways such as compensation and benefits. And of course, we do,” he said. “But FarAway Day is a way we can show we sincerely care about our employees as people. They appreciate that we are not unapproachable corporate stiffs in designer suits. Because we promote fun at work, our employees equate work with fun.”

AGRR

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