View From The Trenches

Last week, I repeated a question that I asked a few years ago to a group of auto glaziers. The question was: “If you were 25 again, would you want to start over again in the auto glass replacement business?” The unanimous negative answer given was the same but with even more emphasis. While the replies did not shock me in the least, one has to concede that it reaffirms the fact that our way of life is changing and not so much for the good.

What has made America so great is that it is a land of opportunity and that we have been able throughout most of our history to maintain a very large middle class. For argument’s sake, let’s define middle class as one in which our earnings can allow us to enjoy a sustainable lifestyle; adequate food, clothing, shelter and transportation are a given, along with education and leisure. Also, most people hope and dream to be able to afford to buy a house and make it possible to send our children to college so that they have the tools to advance higher in life than their parents.

This quest to compete in a flat world economy has had at least one very serious complication for the United States. It is shrinking our middle class and transforming our society into one that is becoming more of the have and have-nots. Our very own industry is a microcosm of that very fact and it should be a troubling one for all of us. The U.S. Department of Labor reports the national average annual salary for an auto glass installer as under $33,000. If we average that, think what CSRs and warehouse/drivers make. It simply is not a wage that supports much more than subsistent living. Now take what a district manager makes and then start climbing the corporate ladder. How many CEOs make 10 20 or 30 times the average salary of the person doing all of the grunt work? I’m sure in a few cases, that factor is higher. However, in most cases especially when it comes to “mom and pop” shops, that differential may not even exceed two times an installer’s pay. In my case as with many others, I am the installer.

Obviously with production bonuses, technicians with some firms can double that published average salary. What numbers and at what quality levels those installs end up becoming is a timeless and egotistical debate. My opinion is that however many installations Supermen can do, burnout occurs over time. Monday through Saturday workweeks with 10- to12-hour days are not normally sustainable over half a decade. Many of us with 20 years or more in the business profess that more than five mobile installs in a normal workday stretches the limits of quality.

Thanks to bean-counting MBAs, our business like many others has simply become a numbers game. If craftsmanship has always battled with volume in this trade, that conflict has become a rout. Revenue per unit, revenue per installer and per location or per district are yardsticks that accountants and analysts revere and drool over. I am sure statistical studies exist that validate that most customers are unable to detect generic glass and probably only detect the worse production flaws that occur—meaning the data only encourages mediocrity, which appears to be a concept that large production companies endorse and for which they strive.

On the other end of the spectrum, in my world, I observe the following on a daily basis; two guys in a mini-pickup stuffing a windshield down a cowl and grossing less than $60 for that 45-minute “effort.” In their minds, they are just trying to make a living and should not be deprived of the ability to do so. Many of these folks are using our easy entry as a starting rung up our economic ladder. However, both the large corporations and the smallest mobile operator have the same diminishing effect of lowering the overall economic standards of most members of our industry.

So why does this happen? How can an entire industry devalue itself so much and so quickly? I have steadfastly maintained for decades that the skill set we possess and the responsibilities of a correct, safe installation on what is usually the second highest priced asset in most Americans’ possession should be worth something. However, just using a current-model Chevrolet pick-up that has a sale price ranging from $15,000 to $45,000, it appears that far too many shops chop this out and stuff it back in at a price far too low to mention. Since most shops have a minimal wholesale pricing advantage, one has to look into the proverbial retail mirror to lay blame. The ability to maintain profit levels falls and everyone linked on this economic chain is put at risk.

Profit is the all-encompassing lubricant. Many of us look for ways to cut corners to maintain those levels and while efficiency is a laudable effort, when does raising or a least maintaining pricing levels come into consideration? A basic economic law is being violated almost by the minute in our industry as we slash prices to gain or just to meet a competitor’s quote. By doing so, we are merely bleeding ourselves dry drop by drop and prolonging our demise. If anyone wants a lesson in maintaining profit, just look at our oil companies. When the wholesale price of crude dropped below $50 a barrel, refineries went off line for “maintenance,” pinching the gas supply somewhat, keeping prices higher than the market should have dictated. That was something no one would have seen voluntarily when a barrel of crude was $125. I acknowledge that the glass business is far different one than oil, but intelligence has to be a prevailing trait in running any business.

In systems, all bad news runs down hill. When profit falls, something has to give. Any time cuts have to be made or volume increased, it comes to the grunts in the field or the CSRs on the phone to pay the piper. More work, less money, or more hours at the same wage. The tenuous handholds that many of us have in our economic life are being pried away finger by finger and the newcomers in this trade are being greeted with a much lower expectation in wages and lifestyle.

As one of my industry colleagues said last week, “There aren’t any DW847s out there anymore.” No, the most replaced windshield is not a 20-minute exercise in “bonemanship” or a well-placed pair of feet. The skill set is higher, the risks are higher and the physical toll that it takes on us is far greater. The inflamed shoulders, wrists and elbows don’t get better over time. The lower back does not want to straighten along with the fingers. All of us are sacrificing our bodies in exchange for a way of life we feel we deserve. We seem to be slipping down that ladder of success more than going upwards. All I know is this: as I try to climb ahead, I keep finding wet urethane on the ladder rungs slowing me down.

In the business world, we have talked of “free enterprise” as though it is the magic talisman and the purest form of capitalism. I would like to politely suggest that if you believe that exists here in the United States for mega corporations, I have a bridge to sell in Brooklyn and I bet that I could get the government to finance it without recourse.

Most are quite aware that these are extraordinary times. The unregulated actions of a few have caused a massive ripple effect across this planet that has placed much of the world’s economy in jeopardy. Here in the States we have embraced the “too big to fail” policy as the government has interjected itself into corporate boardrooms while it injected capital into the business.

This week will see the genesis of “Government Motors” as both the United States and Canada assume more than 70 percent of the stock of the formerly largest business concern in the world: GM. Hopefully the brains behind the military procurement program will not be drafted into providing support for new car design of this new lean, mean company. If they are, look for a toilet in every back seat at a cost of more than $50,000. There is also a chance that a UAW retiree will be sitting on it.

Does anybody realize that we as Americans are fighting and losing an economic war and our entire future is at stake? We have become a nation of debtors, spending far more than we take in and have become far too beholden to countries that do not have our best interests at heart. Most empires or countries lose military battles and a transfer of power becomes obvious. I surmise that scenario will not be the case for America ebbing away as a superpower. It has a much greater chance of dying from greed aided by economic dementia. China, the country that is holding many of our T-bills and notes, is in a certain ironic position. The United States may be “too big to fail” and has placed China in a circumstance where it is somewhat forced to go along with continuing to finance our massive debt. Your reality check of the day: from a geo-political attitude, the United States has lost much of its leverage with China due to our debt with them.

Think Americans are smart? I am beginning to believe that the United States has become a corporate patsy for the rest of the world. Mercedes Daimler comes in and buys into Chrysler. Mercedes brings us the Pacifica and the Sprinter, then loots Chrysler of its assets. Freightliner, owned by Chrysler, the most successful large truck manufacturer in the United States, was left without cash to operate, as was the rest of the company when Mercedes bailed out of Detroit. Many of the current problems of Chrysler could be laid more at the feet of German executives and not at a union or consumer backlash.

Here in our industry, Belron, a foreign-owned company, has taken advantage of American bankruptcy laws to acquire the assets of the two largest glass installation chains in this country. By being able to shed debt and cherry-pick the assets, Belron assembled and reconstituted dissonant parts and now has become the most influential auto glass corporation here in the states by size and scope. Belron saved untold millions of dollars in acquisition or capital expenditure costs by benefiting from the mismanagement of others.

How will this week’s bankruptcy affect us in the auto glass industry? I surmise it will affect the same suppliers that we have. Guardian has been a major vendor. I would expect PGW has exposure. It has been so busy cutting staff and costs this past year, you can’t tell how directly the cutbacks GM has made has and will continue to affect PGW’s volume and bottom line. Just be sure that there is a marked effect. Adhesive and plastic encapsulation companies also will feel pain. Many of us who have GM dealership glass accounts already have felt the ripples of distress with the decline of sales and warranty claims. With the intent to divest various badges like Pontiac, Saturn and Hummer, the actual number of dealerships will also shrink by a third, causing a complete loss of sales volume to a number of us.

Let’s see, in 2009, we have a “new” GM and an Italian-accented Chrysler. Ford, after it saw what the Treasury Department did to Goldman Sachs, decided that perhaps staying private was its best chance for survival. Remember, small cars mean small profits and that is an economic law that hasn’t changed in 50 years for auto manufacturers. Will America embrace a Cobalt in every garage? Who knows? GM’s new advertising tag line could go like this: Owned by the USA, please drive a Chevrolet.