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All I Want for Christmas

Does anyone out there still remember the Sears’ Christmas Catalogue? For those out there who are not past a certain age, this was literally the best connection a child had to Santa. Devilishly mailed to homes somewhere at the end of October, it gave a child of the 1950s far too many ideas early enough to create and lobby Santa’s elves (aka, the parents) for the ideal presents that could be acquired in the great delivery drop on the night of December 24th.

Sad to say, kids grow up and much has changed. Amazon and UPS have ascended while Sears and the Postal Service fight for survival. Yet, the urge to create a wish list for me has hardly diminished over time. I’ve been blessed with the opportunity to fulfill a few children’s “fair and reasonable” (just love that phrase) requests. However just one more time, I wish I could put out the milk and cookies and try to lure Santa into granting me a few wishes concerning one of my life-long loves—automotive glass replacement (AGR). Below are some long-time industry aspirations on my list.

AGR is a craft. Let’s treat it as such.

One of the most tired arguments I hear revolves around the numbers game. “How many can you do a day?” is perhaps the most superficial and egotistical question one can boast in AGR. I’m sad to say, for many in our industry remuneration is purely based on that metric. From “Mr. Big” in our industry to a large number of one-person operators, AGRR professionals should be asking “How good?” instead of “How many?”

I can understand the reasons for performance-based pay, but all too often it is the direct cause of bad, unprofessional work. I have never seen such overall poor craftsmanship in jobs. Product quality needs to improve.

It is very hard to install properly when either the windshield or sidelite simply just does not fit, or it is scratched or distorted. Hey, we may be able to install a new door glass $50 cheaper than 10 years ago, but if hardware does not line up or properly stay in the channel, or we go blind looking through it, why are we patting ourselves on the back? Have we become so thankful that our end user is oblivious or just plain ignorant to the fact that the replacement product we use usually is not of the same quality that they had before?

Third-party glass administrators (TPAs) need to be banned.

There is no justification other than protecting insurers from liability and from having increased employee costs for having outside companies manage glass claims, one in particular. The fact that the nation’s largest TPA is owned and operated as a subsidiary and golden funnel of the nation’s automotive glass installation company is simply a travesty. It may be a better built mousetrap for the company but all it connotes to the rest of the industry is that it is more of a rodent infestation that should be stamped out. Its signature behavior revolves around the three S’s: steering, slow pay and short pay.

Six Sigma is not a panacea for success. People are.

I try to operate in the most efficient manner possible. Small operators, especially mobile ones, more often react to orders and jobs than larger operators do. The issue I have with companies that embrace Six Sigma principles is that the employees usually bear the brunt of said “efficiencies.” Cheaper products or logistics can be chosen, but the more oppressive option is if two employees can be made to do the work of three. Or the more commonplace option is the one man installation where two people is better. The bottom line may not suffer but quality often does. The term “installation sub-contractor” is sadly becoming more frequent, which does not add to the overall professionalism of AGR. Is “Uber-Glass” just around the corner?

Can the AGR industry regain the ability to be the master of our own domain?

The largest shift in AGR over the past 30 years is the loss of control we have over product and practices. Insurers dictate to us (through TPAs) what we should charge and install via an anachronistic pricing system that has no bearing or influence on our current purchasing ability. While there are far too many small operators that poison the marketplace with subsistent pricing models, they lack the foresight and vision to realize they aid and abet larger corporate bodies that actually can and do influence or control markets.

Ethics Transfusion

AGR almost rivals Wall Street when it comes to misleading and even lying to its clients. For many in this industry it is a commonplace practice. Clients calling in insurance claims are blissfully ignorant of who is actually handling the scheduling of their glass replacement. When do certain DOT numbers like 563 and 65 appear on an OEM windshield? Is the roll of generic moulding that is used on vehicles an exact match in shape, size and density that came on the car? How much education concerning safe-drive-away time (SDAT) do we spend with customers? It is my personal observation that in trying to make a caller a customer, truth or honesty tends to be the loser.

Hire More Veterans

The one thing this industry needs more of are folks who are responsible, mission-oriented people that possess esprit de corps. I can think of no one more suitable for the responsibilities, discipline and pride in craftsmanship for AGR than a returning veteran.

Easy Entry

I appreciate the courage and optimism of anyone who wants to open up a business. I personally would like to be plastic surgeon but California, for some strange reason, actually wants me to have a medical degree, train for six more years and pass a competency test put out by that specialty. Personally, I believe my rights have been squashed by not being allowed to perform mobile augmentations. This industry cares very little about its professional reputation by not demanding entry standards that must be met before doing installs. Selling to anyone and everyone glass products dilutes the professional reputation of all in AGR.

Leadership

Every week I see blogs on leadership. So why is our industry suffering so much from a lack of it? Are we owned by higher interests? Has AGR been divided so much by the giants and the little guys that nothing improves? Should NAGS be banished to the trash pile? Can the industry create a substitute that won’t be co-opted? Can entry and installation practices be created and enforced? By whom? Should TPAs be allowed to exist? If not, can they be “purified” of corporate glass ownership to end biased internal steering? These are real industry-wide issues that may have been acknowledged but absolutely no one has been able to make progress, much less even move the needle toward solving these troubling and stifling issues.

I’m sorry Santa if I’ve unloaded an impossible set of wishes on you. I presume you may make a return demand of baking enough cookies to feed the residents of both India and China five times over. If you can’t fulfill this list, who can? Should I contact Amazon? After all, they have a fulfillment center.

Merry Christmas and a “Fair and Reasonable” New Year to all.

 

Posted by on December 15, 2015 in Uncategorized

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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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