What is 2009 going to bring to the auto glass industry? Load up on Alka-Seltzer and secure your seatbelts, it’s going to be a stressful and interesting year for all of us. If I may suggest a visual, it would be sitting atop the crest of Gibraltar and having Mt. Everest lowered on you. In that situation you would truly be between a rock and a hard place and that my friends, may very well describe the times we live in.
In manufacturing, there have to be cutbacks ahead. Every major auto manufacturer has announced lower production numbers for the first part of the year. That fact alone will be causing ripple effects in the companies that supply original parts whether stateside or overseas. In most cases, manufacturing cutbacks either by layoffs and perhaps plant shutdowns or worse (closures) will be the likely form taken to offset the loss of demand. The overseas suppliers of aftermarket glass have just begun to feel the sting as distributors have cut back on purchases and orders as they try to manage and navigate their own inventories during a shrinking economy.
Since mid-year, precipitated by the high fuel price spike, demand for replacement glass has dropped. People first started driving less, which in turn caused a corresponding drop in need of windshield replacements. As gas prices came down, fear and doubt caused by the collapses and bailouts taking place on Wall Street and inside the banking community have made consumers very reluctant to spend money on most anything and we in the industry have seen that fact reflected in our lower installation numbers and requests for quotes. People are postponing purchases out of both fear and of need. They simply have higher priorities like food and shelter.
One of the interesting industry stories that may play out in the year ahead is: Will 2009 mark the end for PGW, nee PPG, as it exists today? I simply don’t know and it seems that those who are in charge aren’t saying. Manufacturing plants have been shuttered. With the decline in the demand for new glass, route and even warehouse consolidations with corresponding layoffs have been occurring in the distribution side. Severances that affected middle management took place before Christmas. Any or all of these actions seem to point to either a serious retrenchment or a primping of a bottom line prior to a sale. GM stated before Congress that if America lacked confidence in its ability to have a future, it would exacerbate its efforts for its future. The same could be said of PGW inside the AG sector. I’ll leave it at that.
I will openly wonder on how our vaunted insurance industry is going to act in 2009. The collapse of both the stock and commercial real estate markets has seriously impacted their speculative assets and net profits for them. Investment income and net worth are down meaning that any sort of claim will not be cheerfully welcomed despite projecting through the media having the good hands of a neighborly amphibian who sounds like Crocodile Dundee.
The more likely scenario is for insurers via their contractual TPAs to demand deeper discounts as many installation firms are being squeezed by falling sales. As sharks congregate in a feeding frenzy as a bleeding victim thrashes in agony, one expects the same sort of reaction to be emulated by their industry towards our own. Survival is not always a pretty thing and it is usually a solitary affair.
Speaking of TPAs, what’s in store for our industry leader in 2009? Probably sort of in a holding pattern for the next year, one would surmise. Commercial credit has tightened considerably worldwide, making expansion problematical through acquisitions. Along the same lines, the question may be asked; why buy if one can get it for free? If this recession deepens as predicted, the auto glass industry will certainly lose more than a few of its members through attrition and if there are large bones to be picked clean, one is quite sure Columbus won’t miss an opportunity to sniff and forage over the remains.
Still it should be noted that as big as D’Ieteren and its AGRR subsidiary Belron is, both companies are heavily dependent upon the international auto industry and that segment of the world economy appears to be one of the most affected in this downturn. One cannot expect that this international corporation to go completely unscathed during these hard times. No one is going to endure this recession without suffering pain to some degree.
As independents, we know what the words “suffering” and “pain” mean from a personal perspective. It doesn’t matter if you have a chain of five stores, a Mom and Pop stand-alone or a lone wolf mobile, if the phone won’t ring, the birds don’t sing. Nor do they eat.
We are truly going to be between a rock and hard place as the economy continues to shrink and I implore some of you to re-think your past marketing and pricing efforts. Those who have worked and survived on thin margins are likely to find out that as demand and install numbers decline, they have painted their businesses into a corner and are left with no reserves nor wiggle room. You cannot defy gravity indefinitely and most will likely pay a severe price for that refusal.
No doubt as personal incomes shrink and corporate demands increase, we all will be faced with pricing issues that will suggest less will get us more. What about selling value over pure price? What can you give to your customer that they cannot get elsewhere? Better glass and mouldings? A more qualified installation? Service that actually benefits the customer?
Those are issues and sale points with which you must wrestle. My personal experience lately is that I have had several women comment that it was nice talking to the owner and they were thankful that I could answer their questions. What I sense is people want to hear what they can get for their hard-earned money. There are enough customers smart enough out there that realize spending $40 more will save them much more in the long run. It is an economic fact that no business can get every potential customer. Focus on those that can provide a mutual benefit.
Enduring these hard times does mean an increase in business. People are far more likely to maintain their cars better since they feel buying new is out of reach or unwise. Auto dealers will market used cars more since the purchase prices are lower. Rental fleets may stay static since travel plans for many will be postponed or cancelled outright.
Unfortunately I will also assume that auto burglaries will increase with its collateral need for tempered replacements. That sad statistic is certainly a social barometer of a faltering economy.
Last item and it has nothing to do with predictions. Don’t worry about what you have no control over. You cannot change nor can one alter what your competitor does. It becomes wasted energy that can be better spent improving your own business or marketing efforts. If you are a tech and your installations drop, do those fewer installations better. You have time now to improve your skill set. I will say this, be prepared to get some real stinky jobs. It seems that every slow time brings them out and it becomes a mental and physical test for us to bear. That is the time when you really want a rock nearby. So that you can drive the darn car off a cliff and be done with it.
