View From The Trenches

I’ve always wondered if I’m an optimist or a certified pessimist. I’m pondering if I can qualify now as a futurist. Being in the auto glass business for more two decades (and nearing three) I’ve seen many trends come and go. I’ve seen the effects of recession on my business and others. I’ve seen expansions and contractions from installation chains and glass distributors. I’ve seen the births of many companies and watched them die as well.

With the mortgage meltdown as a harbinger, we are in for some tough times ahead. Wall Street has always been the barometer of economic health for this country and they have shot themselves in the foot making credit, the lubricant of America’s economy, harder to get and more expensive to use. The implications of that injury, along with the increasing oil prices (mainly due to increased competition for those energy resources from the emerging manufacturing economies from the East) bode ill for us all. The times they are a-changing and it looks bleak at the moment. Americans are a resilient people, although an impatient one. Turnarounds are inevitable.

I do read and contribute my humble opinions on the AGRR/glassBYTEs.com message board. One of the things that chaps my hide the most is the overall paranoia that our largest installation firm invokes among the people who post their opinions. My personal view is: Focus on making your business a success and don’t worry about Big Brother. The energy you use to vent is wasted. There are numerous ways to overcome size. Your time is far better spent improving what you can change for yourself as opposed to complaining about what you have no control of.

Now that doesn’t mean that we should lie down like lambs and allow issues like steering to continue and become the law of the land. We all should work in the common goal to try to at least have a level playing field when it comes to acquiring certain kinds of work.

With that said, I could easily use the conflict in Vietnam as an analogy for success against a bigger entity. I personally saw ignorant illiterate peasants that had purpose politically defeat a much larger nation. Simply put, America had the resources but the Vietnamese had the will and flexibility to “win.” I see the same thing as many of us face the size and economic power that exists in Columbus, Ohio.

No matter how much money a corporation spends to brand itself, it will find it very difficult to remain neighborly, flexible and local. Many decisions are made from outside the area and perhaps the nation. Scripts are used, schedules adhered to and oftentimes even pricing decisions are out of the hands of the people answering the phones. Some people like going to Wal-Mart. Others resent the monolithic giant and refuse to do business at the nation’s largest retailer. It will be up to smart, inventive shop owners to focus on what they do right. My point is; Act, don’t react. Do the best you can to retain a good reputation and profit margin for many times that c an be the difference between success and failure.

This may or may not be a sign of hope but it raised my attitude adjustment level last week. A person in the insurance claims industry that uses a certain Solution to administer its glass claims contacted me to install their windshield. The dealership they bought their car from gave them my name and after checking my reputation online offered me the job. I’ll be installing an OE windshield today with no offer to reduce the client’s deductible. Columbus won’t go broke with the lost job but in some ways that economic decision to use my services reflects an opinion that all is certainly not lost from my side and that no matter how many millions are spent to “humanize” themselves, even those close to them in a claims sense would opt for someone else. I’ve thought about branding myself as well, but after viewing reruns of “Rawhide,” I see what they do to steers.

Well, it seems that April tax time is coming up. For many of us in retail, that usually means once the 15th passes, the country’s consumers, in a way, begin to relax their death grips on their wallets. The financial news has been fairly bleak. Oil prices have broken and remained above the $100/barrel price and in the wake of the mortgage meltdown, the federal government has seen fit to provide “welfare” to those who need it the least, our Wall Street moguls.

For us in the AGRR sector, this April has brought more NAGS discounting and the news of reorganization by one of our largest installation companies. I wonder in this case if it is a case of ‘live by the discount and die by the discount.” In some ways, these two factoids are indeed related.

I always thought the Leo Tolstoy’s “War and Peace” was one of the most convoluted works of fiction ever created—at least until the NAGS list was created and then “re-balanced.” Samson was alleged to have killed thousands with the jawbone from an ass. I believe Mitchell’s is more familiar with the other end of its anatomy. I have begun to see discounts off of NAGS “creeping” up to close or even exceeding 50 percent. The question is, who is doing this?

All I can say is, “It’s not me!” I truly think that one has to turn to our industry giants and start to point fingers at who is playing this carrot and the stick game of “discountitis.” As much as I would like to lay blame on uncertified and unlicensed hack firms, the real culprits are the major national and regional chains who are jockeying for market share or just plain survival. These are the real provocateurs of this downward spiral of pricing.

Which brings up the case of Diamond. I profess to know very little about Diamond or its management except of what I’ve read. I know over the past few years that they have actively sought business by “meeting or beating” competitor’s glass bids. One would suspect that they have actively approached insurers offering them extensive national coverage at an extremely competitive pricing model. From my point of view, it seems that the chickens have come home to roost. In the re-organization plan, Diamond lists glass distributors as many of their largest creditors. In short, they can’t even pay for what they install. In many ways they have become trapped into a vicious cycle of price dropping. Even if they close under performing stores, they will still need to make profits somehow and to me the only way to do that is to raise prices and not just volume.

I have no idea what is ahead for Diamond or any other large multi-point installation chains. One’s pricing model based on increasing growth very well may be thwarted by what looks to be a very gloomy economic forecast. While it may seem wise from a marketing standpoint to offer lower prices to attract more business, you seem to get trapped into a tar pit of debt or inadequate returns that you’re unable to extricate yourself from. It’s a lesson that all shops no matter what size, need to learn and stay away from. If we don’t follow basic economic laws, there is another price to pay … one’s demise.