A Pox on Both Houses

Recently, I had to seek authorization for a 2015 Toyota Highlander windshield. I received the okay for the glass and upper moulding immediately. However, as I have not done that model before, the Toyota parts person recommended getting the two side mouldings and ten clips saying I could always return them if not needed. So I added the twelve parts into my request.

When questioned by the third-party administrator (TPA) customer service representative (CSR), I explained what Toyota’s parts’ person had recommended. Anything unused I planned to return. The answer I received was pure classical insurance doublespeak: “I can’t approve anything on speculation. If you find out that you need these parts when the job is being done, you may call at that time and seek approval.” Thanks, lady. You tell my customer it’s not a problem for me to leave a job incomplete without a moulding or two. Should I just use “liquid clips” to secure that moulding somewhat permanently?

Incident two: I had a 2014 Odyssey windshield to replace at a Honda dealership. Upon inspection, it was obvious the glass had been replaced prior. The prior replacement included OE Honda glass, but T-105 generic moulding was used (and crooked) as an upper moulding. The person who did the installation broke every clip and used urethane to adhere both post mouldings to body. I ordered all new clips and mouldings and returned following day to do the job. I can’t read the installer’s mind who handled this job, but it was obvious he was not a Boy Scout. “Be prepared” was not the mindset. “Be cheap” was.

These two common tales underscores so much what is going on in AGR.

First of all, what is the prime directive in AGR? Is it doing the job right or squeezing the most revenue or least liability out at the given price point?

From every indication I’ve come across, the vehicle’s owner is the real loser in most cases. It just doesn’t matter if the client has insurance or not. What is usually put back in his car is not of the same quality in both product and workmanship.

We have a “corporate poster child” whose vans are filled with rolls of generic moulding and private-label glass. Trained on rental cars first, their pay plan basically is: More jobs, more pay.

On the other side, we have hordes of ignorant hacks whose only objective is “Sell it cheap, do it even cheaper.”

Let’s touch upon the virtual splintering of the once strong automotive glass retailers pricing structure into the morass that it is today. To put it bluntly: We are our own worst enemy. There are several factors that have led to this, but none larger than the efforts of insurers to set retailers against each other. It becomes a scenario of bid demands which have morphed into the ‘fair and reasonable” phrase that reflects only what is equitable to the insurer.

With “big glass” controlling much of the insurance market, a company is faced either with carving out market niches or adapting to the cyber shopping world of low pricing. Add in the fact that there is a low cost to enter into the business, and we have a minion-like marketplace awash with tiny players, many of whose business models are simply designed to undercut the competition in price and make it up in volume. To do so, cutting costs in materials and labor time is of paramount importance. That last sentence is also the mantra for our largest installation company as well. What they don’t produce internally, they have the size to attract or demand favorable acquisition pricing. I am professionally embarrassed when I see some of their installs and observe what they use to substitute for OE mouldings. In some cases, what they use are as bad as the worst out there.

In fairness, any insurer doing a cash market survey would easily learn competition between shops has brought down pricing. Any large insurer would logically use its market size to pressure its existing vendors to give it discounts and achieve savings on glass claims.

The ascent of TPAs have further weakened the economic position of glass retailers. TPAs make it possible for insurers to minimize administrative and overall claim expenses. They also insulate an insurer to some degree in liability. If variations of the guaranteed average invoice pricing (GAI) are used in contracts between TPAs and insurers, derivatives and other re-insurance contracts can be purchased insulating both parties from unexpected events that would increase claims and impact profits. One other outcome is that the use of TPAs generally removes the local selling agent from the claim process. In the past, that person or agency could financially benefit by directing claims to favored vendors. In reality, some local remuneration still goes on but it has moved much more up the corporate ladder between the major players.

The existence of TPAs do not benefit AGR retailers in the least. At the minimum, they set pricing parameters and delay payments. They act as a disruptive entity between vendor and customer. However, when the nation’s largest TPA with the most insurer clients is a subsidiary of the world’s preeminent automotive glass corporation it becomes an ethical minefield that screams for reform. These screams go unheard.

There is an unspoken but very real adversarial relationship between insurer/TPA and retailer. This is justified by issues of short pays and other sins on their side to fraud from ours. However, only in America can the biggest wolf be found guarding the insurer henhouse as a TPA owner.

Yet, the greatest frustration comes from the lack of unity among the thousands of glass shop owners. While AGR has some fair-sized regional players, the greatest number of shops are single to dual point stores. We lack the will to unite, and unless we can do that, our political and economic futures will continue to decline and be controlled by larger corporate and social forces.

I have observed a real downward spiral over the past two decades in AGR and if we had some prior intestinal fortitude to speak up and act collegially, we could have affected some outcomes. Are we typical Americans who only react when disaster is imminent instead of looking ahead and seeing and avoiding danger? You had better look up fast because that tipping point is far too close. To repeat my oft cited cartoon adage “We have met the enemy and he is us!”

Better get cracking!


Posted by on October 14, 2015 in Uncategorized


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Where’s the “Party” in Third Party?

I had an incident this week where a third-party administrator (TPA) suggested very strongly to an insured client that she have her windshield installed by a particular glass company. When the insured told me the name of that company, I was confounded. I simply had never heard of them. The customer said that the CSR had assured her that the company was one of their “most favored vendors and was very well established.”

When placing an order with a glass distributor, within the hour of hearing those words, I had to ask, “Who are these guys?” The reply came quickly that they ordered glass from several of their outlets and had various installers come and “will call” the orders. The fact was, this company was not a “real” brick-and-mortar corporate entity but a recipient of insurance glass claims that farmed out installs to a select group of self-employed installers. The “company” paid for the glass centrally and processed claims as well. So with a certain amount of irony, installing auto glass is also evolving into business models that use the third-party definition as well. Like so many things in the AGRR business, it is a sad trend for both customer and installer.

Why is it sad? For one, it is a sure sign of a disconnect. How much real responsibility (as in legal liability) does a cyber-company actually have and retain? How much is a consumer protected in the event of a rust issue that was created three years earlier by a lazy or incompetent sub-vendor?

I acknowledge the economic truths of contract workers and sub-vendors. I just don’t like them installing auto glass. If a company wants to compete against the giants of our industry or one-man mobiles, there has to be a better way rather than farming out installs (most likely to the lowest bidder). Some call it capitalism. I call it cowardly. Building a brand or company should involve people that have something more invested than a service fee remuneration, a keyboard and a fax number.

No doubt, what we do in the auto glass business is not on par with brain surgery but it does require some technical expertise and physical skill. Having a conscience and personal pride in your accomplishments certainly helps in making a technician a complete package. Yet why does this industry keep embracing practices that encourages a death spiral in quality and accountability?

I “get” pay for performance. If you do more, you get paid more. It’s an easy concept to understand. Yet, what does that do for the overall quality of our practice? We have invented all sorts of labor and health-saving devices that either will shorten removal or install times. What kind of pressure exists on technician employees to maximize installation numbers? For me, that is the weakness in the method.

The independent contractor system used in the AGRR business is a hoary dodge against paying benefits, insurance and taxes. One pays a person a fixed amount to do installs. In my area of Central California, this practice is evolving into a fine art and has grown significantly due to the maturation of the Internet. We have companies that exist in a living room that offer quick and low prices quotes on auto glass that use a network of freelance installers. We also have brick-and-mortar companies that have built up a clientele of body shops and car lots based on low prices that would not be able to compete unless they evaded the employer mandated responsibilities of workman’s comp and social security taxes by calling their techs “independent.” Now we have third-party installers making deals.

The question I want answered is: where is this trend going? I would want myself and my company name associated with quality workmanship. How can I do that if I lack control and oversight over people associated with that brand? I have and remain critical of several of our largest corporate installation companies with their preoccupation with numbers and metrics but at least they actually have real employees

The cost of maintaining a workforce is substantial as any owner knows. Taxes, insurance and ancillary benefits add substantial costs to doing business. What I find reprehensible is the ongoing and evolving method of evading such costs by some and attempting to gain a pricing edge by skirting the law or in some cases purposefully ignoring it.

California (along with many other states) has a substantial underground economy. Under-employment, high taxes, cultural acceptance and an ineffective, overworked, politically neutered regulatory system are just some of the reasons that make such a situation so conducive for growth. I am motivated by self-interest to buy business liability insurance that costs more $3,000 a year. I wonder how many installers I see waiting by a distributor’s fax for a new job carry such coverage and are saddled with just that cost of doing business. What do they have to lose if sued? A 15-year-old mini pick-up? What about the “company” that sent them the job? Claim the person’s laptop as the most viable asset in the event of a judgment? All in all I have witnessed several cases where an owner or an installer has gone out of business one day and re-started the next under a different name or credit source.

I understand that the “easy entry” (exit as well) fact of our industry cannot or will not cease any time soon. There are too many powerful forces in and outside the AGRR business that find that condition beneficial to their own interests. With that said, it mystifies me when TPAs give out names of preferred shops which in reality bought their way onto that list with favorable pricing, no matter their status actually is. In short, there is very little background investigation it seems when being approved for vendor status. I presume a TPA (if not the client insurer) wants deniability; after all, one very prominent reason TPAs have come to exist is the fact of separation from a an insurer to the insured’s claim. The onus of liability weighs far more heavily on the referring or dispatching party than the actual insurer.

On a personal note, it just truly bothers me to see this new form of “doing business.” Both a physical and emotional disconnect exists. On one hand, you have a facilitator who gets the jobs and dispatches work, usually all digitally. Some buy the glass or sell the lead. They actually can exist anywhere on this planet. The installer is local and his qualifications are what? His charge for completing the job is the cheapest available? It is the perfect response to a consumer market that is deluded into thinking that having a windshield installed is like shopping for a box of cereal—that everything is equal but the pricing. Most of us who are called into fixing someone else’s butchery can and will attest differently.

So let’s hear it for the employee-less installation company. It the latest devolution within the AGRR business. The Internet has brought so many new twists to auto glass from how it is sold then to being installed in vehicles. There are so many third-party constructs occurring that I am waiting to discover third-party installers farming out work so they can collect a piece of the pie without actually performing the work. If the AGRR business continues in this race to the bottom jettisoning both quality and accountability we are going to find that pie completely inedible due to the crows that have made it so.


Posted by on November 25, 2014 in Uncategorized

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Where To Saint Peter?

I’ve been taking a break from writing mainly due to a case of AGR blues. As news filters in concerning the automotive glass industry, there is so little to be hopeful about the way the industry is trending from this observer’s perspective that it is simply too painful and pointless to comment on. Say it ain’t so, Joe!

I view blogs on leadership all the time on this very site. They may be useful to motivate employees but since far too many of us are one- to two-man single point outlets, the advice or homilies aren’t as relevant, or better said, universally applicable to the majority of us.

What we need is real industry leadership. That concept is sorely lacking and even more so desperately needed. Is this writer mistaken in his observation that it feels that AGR is lost in some sort of desert and is condemned to wander aimlessly into mediocrity or worse? Where are the captains of our industry who are willing to act, much less even speak out to improve the product, professionalism and craftsmanship instead of trying to please a stock analyst. I haven’t heard one yet but I should be reminded that miracles do occur as evident by the fact the Kansas City Royals have a winning record and should make the baseball playoffs this year.

What constitutes leadership these days? To me, there are far too many of us that have become either sheep or lemmings and meekly accept the downward spiral that has either been imposed upon us or embraced by us.

Is there a comfort that cheaply made products and hacks that install exists in other trades? My dear wife made a water heater purchase decision six years ago based on price. We replaced that water heater three months ago at almost double the cost of the first one, a fact that I had to mention to the owner/operator of the plumbing business who installed the replacement. Not only was the brand of the old heater a generic one, I was shown the poorly soldered copper joints of the first “plumber” and two other major installer no-no’s were pointed out. The venting system was not to code and since California is seismically active, water heaters are physically strapped in place. The installer secured metal straps to the heater by using sheet metal screws into the heater itself. In short, I told my wife, this was an everyday object lesson that I endure as a shop owner about price shopping a craft service. The public is deserving of a poor outcome when it bases it choices purely on price.

This writer is not aware of a single CEO of a major installation or glass manufacturing company that has been consistently outspoken on the major issues that confront this industry. Those being easy entry for practitioners, poor product quality, monopolistic and incestuous practices that exist in the insurance sector and zero accountability for all of the above.

Why would they speak out? Almost every one of those companies directly benefit from the lack of regulation, oversight and let’s not forget consumer ignorance.

Take steering, since Connecticut enacted a law that required a certain third-party administrator (TPA) to give out a name of a secondary glass company as well as its usual presumptive practice of handing the glass replacement over to its in-house self, the company has subpoenaed job acquisition records from glass shops in the state as well as other TPA competitors. What’s next? Subpoena car wash establishments that entice ignorant customers to have a chip repair done after the hot wax? One can be very assured that this company will fight like a cornered grizzly bear in order to keep its monopolistic golden funnel intact because it fears that if even a small diversion occurs, more will follow. However one’s ears will burn as the company will howl about its philosophical attachment to the free market as it seeks to retain its stranglehold on its own.

Since a windshield is just glass does that mean all brands are all of the same quality?

This myth (and this is a myth) is one that is embraced by far too many consumers and promulgated by glass shops selling on price or corporate relationships. In many cases, there is a significant difference in finish quality, visual acuity, weight and most likely product longevity meaning; does it crack easier?

I recently ordered a FW2047 from one of our corporate manufacturer/suppliers. When the part arrived, I realized that I had somehow missed that the lite did not come with rain sensor hardware and since this was for an older Mercedes SL, I was uncomfortable about using a replacement pad. I contacted my only independent distributor and for almost three times the price I brought in a Sekurit windshield. My customer was unhappy about the inevitable price change until he saw the actual differences between the two lites. The cheaper glass was far lighter, had a somewhat rippled top line and the customer noted that the Sekurit was “easier to see through.”

Globalization has brought vast changes to our economy and we in AGR are in the catbird’s seat to view and react to these forces. More competition equals more product. More product means the need to expand markets as prices drop and saturation of existing accounts takes place. Sad to say, the craft side of automotive glass requires little proof of proficiency and low demands for licensing and start-up capitalization. Many see the only way to break into the retail marketplace is to price product cheaper and accept lower profit margins. They are encouraged by customer-hungry distributors which offer them pricing factors equal to many long-time businesses. AGR has created a very vicious and self-defeating circle of destruction by demanding lower prices but accepting lower quality as well. On any given day, I have to deal with scratched or distorted glass, mis-bonded parts, mouldings that do not fit, nozzles that won’t thread properly on tubes, etc. Many of these issues start at the manufacturing level where the same economic pressures exist to squeeze profits out for shareholders, Wall Street analysts and executive bonuses, all at the expense of the product itself.

So, I for one, would like to see some real leadership from those who really matter. Improve our products! Increase prices if need be to do so. If TPAs are the way of the insurance future, ban ownership and management of them by anyone that has a remote interest in glass production or installation. Push for ways to improve the craft of auto glazing and those who practice it. Demand a higher entry bar and back it up with continuing education with proof of proficiency.

A gadfly blogger can only raise issues. CEOs have the ability to effect internal changes and attempt to gain consensus from their peers. The lobbying groups they finance can be used to promote laws that can raise professionalism instead of restricting change or oversight. One’s bottom line may hurt briefly but if the, “Please stay on hold. Your business is important to us” really was important, you would hire more people to answer the phone.


Posted by on August 13, 2014 in Uncategorized


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