View From The Trenches

One of the auto glass industry’s non-events took place just more than a week ago. Would anyone care to guess what that was?

Time’s up! Wrong answers would include: Xinyi writing a settlement check to Saint-Gobain or Tom Feeney’s birthday.

What actually took place was the publication of the NAGS quarterly price calculator and, if the truth be told, who really cares anymore?

History has shown us many times over that change is constant. The telegraph has given away to the cell phone. The Conestoga wagon has evolved into the “soccer mom” van. Thanks to cyberspace, we are witnessing the end of paper publications such as books and newspapers. In fact this website did not exist 15 years ago simply because the method of delivery was so limited.

So why should anyone care if the auto glass industry admits that wide apathy and misuse killed NAGS as a pricing tool? Its time has come and gone and we should simply move on.

Apologists for NAGS pricing say that, without it, there would be “chaos” within the industry. How would those same people interpret the current state of auto glass pricing? How could anyone today not use the term “chaotic” when it comes to describing the actual state of market pricing in our field?

In five short years, a NAGS price has gone for many from being a benchmark to a footnote. At one time, the quarterly publication of that price list affected every segment of our industry both in wholesale and retail. Today it seems its only application seems to be in insurance claims and that vestigial use seems to have the limiting effect as pricing controls being applied by insurers or by their contracted administrators.

I once heard an executive of NAGS offer the opinion that the glass industry would decay into a “Tower of Babel” without the existence of having a national auto glass list. He said that the industry needed one unifying platform of part identification and pricing on which all sectors of the collision, insurance and glass industry could effectively communicate. Can I pose some rhetorical questions, such as: If you call what exists today as effective, effective for whom? Where else does this specific function exist within the collision or auto repair system?

It simply doesn’t and I ask this: Why keep beating a dead horse? No glass distributor base wholesale prices to retailers on the NAGS list anymore. In many cases, retailers use a myriad number of formulas to create a sale price to the public but one surmises the most used method has been one that adds a fixed profit figure to the actual acquisition cost of the part being sold and installed. The actual part number assigned by NAGS may be used to denote correct identification but the pricing part along with perhaps the suggested labor time is usually totally ignored. The only obvious beneficiaries for the last two functions seem only to be those connected to insurers or software sales to the industry. For them, it seems a vested interest exists to keep the status quo as it is simply due to self-interest.

NAGS helped create the bizarre world of auto glass. Prices on their lists used to be set so high; retail discounts of 70 to 85 percent off were given routinely. Even when “rebalanced” (meaning reduced) discounts nearing 50 percent are being demanded by TPAs. Labor times simply have become a wishful myth. Many make no sense whatsoever and if there are conditions that warrant extra time, insurers dismiss it as non-permissible and possibly fraudulent routinely.

The use of Guaranteed Average Invoices (GAIs) has become a favored marketing tool to insurers by glass claim administrators. Here an insurer client has some price protection built into their contracts by paying a set price per claim to the TPA. A NAGS list price only comes in play when the TPA demands from an outside vendor a set discount based off of the listed price of the installed part. In short, what NAGS has evolved into is simply a medium for insurance billing purposes and in no way helps an auto glass shop pricing or marketing purposes. Corporate bean counters want simplicity and continuity. The NAGS price list has become a means of pricing control of insurers over independent glass shops.

What can replace it? Should it be replaced with another pricing system? Do we even need a unified parts identification method? These are questions that the denizens of our existing Babel residents need to decide. Retail pricing already resembles a bazaar type atmosphere with few estimates ever matching each other. Any shop owner who conducts price surveys knows that statement to be true. The poor consumer is further confused because they are ignorant of what actually constitutes a retail installation bid much less how the shop reached the price being offered.

One of the milestones of NAGS’ demise came when distributors created their own internal price lists and unlocked themselves from using NAGS as a basis for its wholesale model due to its ineffectiveness. Unless that link is re-established, any hope of unifying all segments with the retail glass chain is just smoke and hope. If anything appears to have a Humpty Dumpty existence it is the pricing model power that NAGS once wielded or at least expressed. It is irrevocably broken and no further attempt should be made to reconstruct it. It has become a device that has abducted by the insurance industry and in order to free independents from its grasp, we should ignore it as well.

Do I have solutions? Unfortunately, I have nothing simple or easily attainable. Would I support a GAI system based on parts cost and complexity of install? Perhaps. The model would need to be wide enough to encompass the numerous variations that exist in setting an overall price. That would appear to require three to five levels of pricing. Also any retail price has to be tied to wholesale costs. However, like everything in this industry, nothing will ever be universally accepted or practiced. There will always be someone who will gladly discount their pricing to garner increased volume. In that case, what this industry really needs is a Tower of London more than one from Babel to help restrain and contain the number of scurrilous characters that inhabit it.

As the Independent Glass Association (IGA) annual conference in Fort Myers, Fla., is looming, I thought I would post a few thoughts that could be discussed to help act as a springboard for discussion.

First of all, I think having Mike Russo coming on board as the new executive director is a good thing. I met him at a convention a few years ago and have read his blogs and comments on the AGRR Forum. He comes across as pugnacious and honest. He’s been in the business and has experienced firsthand some of the major issues that are affecting independent glass shops. The IGA is at a crossroads and it will take time to see if Mike is up to the task of making the IGA a force to be reckoned with and a voice to be heard. We certainly need someone.

Mike cannot do it alone. If the goal of the IGA is to truly represent the interests of independent auto glass shops, it has to increase in membership. With size, the group gains power and influence. With membership, the group gains the ability to obtain operational funding that allows the IGA to act both as a bulwark to defend our interests and an offensive weapon to extend our message. Currently we are puny and extremely divided when compared to insurers and the international vendors who service their needs.

First of all, how do you get more members? It is the classic chicken or the egg conundrum. My first thought is provide services that appeal to small operations. That means serious insurance products like medical, dental, workman’s comp and liability insurance. There are hundreds of glass concerns that need these types of coverage. I had a very hard time getting liability coverage since I was a mobile service in lawsuit-happy California. As an NGA member years ago, I was able to buy that coverage through its association provider. Perhaps the board or the executive director of the IGA can contact agencies or just put out request for bids to insurers to see what sort of coverage IGA members could buy at a reduced association rate. For some, the savings a company or individual could realize would easily pay for IGA member dues and that could be a major sales point for becoming an IGA member.

Without a good foundation, a structure becomes inherently weak. I strongly believe that the IGA needs to build state chapters to meet and service regional needs. “All politics are local”—so goes a savvy maxim. Independents need to come together for a whole host of issues such as insurance steering and easy entry into our craft that can only be dealt on a state-by-state basis. It is inside state legislatures and offices where insurance lobbyists dominate. In order to be seen and our interests heard, having a native voice expressing the concerns or desires of a number of local voting businesses before a state agency or legislative hearing becomes a much more powerful and effective act.

How can we accomplish this? One suggestion is to get a few independent glass distributors involved. Companies like Mygrant need to be approached and convinced to become active in our organization. Many of them have the same issues with the same international corporation as we do. Distributorships are places where we congregate and connect. Perhaps the association could consider trying to set up buying groups with affiliate glass wholesalers where IGA membership is the qualifier. Wholesalers know the local market and who in fact are candidates to be approached and pursued to become members. A decade ago, I met the highest number of local glass shop owners I ever have seen at once at a Carlite-sponsored meeting at a glass wholesaler. Despite being tough competitors, many of us actually communicated several concerns and some relationships sprouted because of that. This industry desperately needs something like a watering hole that occurs in nature whereby all types gather and co-exist for at least a short time.

The IGA also needs to either create or (piggyback atop perhaps a distributor) more regional or local shows. Here again if the IGA could establish some symbiotic relationships with national service providers, the association could organize a one-day meet-and-greet in several metropolitan areas throughout the year. The IGA simply has to sell itself to more shops in order to increase its foundation and this type of occasion could give the association exposure to the “silent majority” of our industry.

The IGA also has to help the Auto Glass Replacement Safety Standard (AGRSS) become branded to the public. While technically not connected, there exists a relationship. A major obstacle that AGRSS has to overcome is the simple fact that few people really care if a shop is registered, why should that shop go to the effort and cost to do so? I will not dispute the fact that this industry needs some sort of defining mark of quality that can distinguish certain shops from the crowded market. However if the public, much less insurers, are ignorant and uncaring of such trademarks, why should any shop undergo the process and cost that AGRSS demands (and rightfully so)? AGRSS is run on a shoestring budget and again this becomes a large economic issue for both its existence and for its subscribers. For my customer base, being AGRSS-registered means absolutely nothing. Dealerships care only if you have a heartbeat and will show up on time with a low price. Phone shoppers care mostly about cost and little about a group of letters behind one’s shop’s name. That has to change for it to become a success. If an increasing segment of the general public actually becomes informed and begins using an AGRSS-registered shop, the benefits of membership become obvious. The only way the American consumer will learn of AGRSS is to have it promoted via some media outlet. The IGA is the present conduit for AGRSS. Both can benefit from an increased public awareness.

Money becomes the real and only issue here. Shop owners need to learn that many problems are far beyond their ability to alter and they need to organize among themselves to promote the greater health of the auto glass industry. There are too many Goliaths out there and at the present time, independent glass shops are using spears and slingshots when the competition possesses modern weapons of mass destruction. A local shop becomes at risk when millions of dollars are being directed at it via insurance lobbyists at both the federal and state level and when international companies use national media to promote their visions and brands. Using ocean tides as an example, the sea usually wins as it incessantly crashes against the shore as erosion takes place slowly over time. Belron is very aware that branding works and how we respond will determine the future of many independents.

The IGA is in the best position to help independents. The IGA, on the other hand, has to convince independents that it is worth the dues. Members have to understand that it takes real money to act effectively to mount legal challenges or political defenses. These things come at a high cost and that economic fact has to be borne by independents willing to join the IGA. Yet, I agree with criticisms that comic books are not the real answer to steering. Having an executive director that has come from the auto glass industry may be a sign of maturity for our organization. However, more credibility and visibility have to be attained to increase our membership. Hopefully Fort Myers will give those who attend some ability to create opportunities for growth in the IGA. It is more important than ever to have a voice that can serve the independents’ interests. If efforts fail to connect the IGA with apathetic or crusty owners in the near term, chances are neither will be around for the long term. That is something that can’t be allowed to happen.

The new Safelite ad campaign has hit the TV screen. I wonder if installer “Mike” will become the new Clara Peller of “Where’s the Beef?” fame. Or will the commercial become an auto glass media test of the maxim: You can fool some of the people all of the time … ?

In many ways, the ad is generic as auto glass goes. A windshield is always seen being dropped in to the “hole.” A satisfied customer is seen showing approval. A jingle and a phone number are being repeated as the commercial ends.

But like the Smithfield ads that show a matronly Southern belle promote Virginia hams but not the process of how those meats got to market, Safelite’s ads sure make the windshield replacement a clean, antiseptic and certainly a painless event for the customer.

I guess what got me was how “laid back” Mike was. He drove to the job relaxed, found the car is a roomy parking lot on a dry sunny day and did his job. (I suppose he did, since there was actually very little detail.)

We saw urethane being applied to a pinchweld, (whoa, not the glass?), the glass placement using a suction cup and that was pretty much it. Did anyone see a cowl? Wipers? Blue paper tape? What about a Blackberry®-generated invoice? Mike must be one heck of a fastidious person because I saw no urethane on his uniform, hands or arms, much less any kind of dirt or grime anywhere on his person or vehicle. Best of all, when we saw the Safelite van driving away, it was at a very slow speed like Mike had all the time in the world. It seemed that he could have been heading to Starbucks for a mid-morning latte to read the newspaper. Ironically, the ad did speak of speed; speed based on having the largest inventory of glass but not on install time spurred by technician workload or production bonuses.

That is the most annoying thing about advertising—decide what myth one wants to promote and try to codify that via the small screen. It is of greater irritation to me what our national glass giant wants to gloss over. I also will admit to a wee bit of jealousy of not having a multi-million budget for promotion. Still, any glass technician knows how far from the truth that or any commercial really is from reality.

Glass does not fall out of cars. At least it should not. People who watch me work are constantly surprised about how glass is removed. Silicon Valley is filled with all sorts of engineers who want to see the entire process of glass replacement, especially if they are entrusting their Mercedes, BMW or Audi to some stranger. The last thing they want to witness is someone who first pulls out a tool that resembles a mini-jackhammer and enters the passenger compartment with it.

What about the famous cowl slide? Some customers who have had windshields installed previously have expressed astonishment that a tech will actually remove that cumbersome part of the vehicle. They would relate how the earlier team would just leave it in and work around it. What I am trying to express is why is the removal process being glossed over in ads? In the Smithfield ads, I’m quite sure the executives of the company don’t want to show the public what goes on in its slaughterhouses. The same may be very true with Safelite.

Time is money and that premise is carved in stone and across every tech’s forehead at Safelite. Techs simply do not have the luxury of inefficiency. For all of the district or store managers, CSRs, sales staff that Belron has along with upper management, the rubber meets the road when it comes to the technicians. It is only through their efforts at installation and repair that income is actually generated. The pressure to perform is intense because that is where corporate profit is earned.

I guess another question is how many real “Mikes” exist at the company? How many “Mikes” work in fleet installs or in the car rental accounts? Does every Mike observe Safe Tech guidelines on every install? What could surprise me the most is how many Mikes actually observe the speed limits in both driving and install times.

Tom Feeney recently spoke about how the new ads would feature its most important assets—the technicians. I just wonder how many employees look and act like Mike of ad fame.

What worries me the most as this ad campaign unfolds is this fantasy world that is being promoted. Nothing is said about the glass quality or the scripts being spoken or foisted on an unsuspecting public. I did notice that in the ad the warranty guarantee was hanging from the rearview mirror. That’s chancy! If I were Mike, I’d probably hand it to the customer since those in the know rarely trust the integrity of the glue bonding the mirror bracket to the glass of certain in-house brands. Mike might hate doing warranty charge backs.

Independents have to be concerned about these ad campaigns. Money simply buys integrity when a company uses TV to promote their services or product. The average American uses an auto glass company once every seven years or so and Safelite is doing its best to embed its name inside the public’s psyche. The commercials certainly help validate the company’s position among insurer referrals. The ads very well may have the effect of increasing the company’s market share of call-in work. When a consumer has a choice of a clean van and a tidy red uniform over a mini-pick up and dirty fingernails, image usually wins out. You can’t blame Mike for trying to change that. We have to do much better.