View From The Trenches

Duffy’s maxim #33: Any rule or law that is enacted can be and usually is ignored or subverted. Given almost any situation, an alternative solution can be found or created by those supposedly affected.

Auto glass practitioners are an excellent example of Duffy 33. In fact, if glass retailers had a university (apologies to Bob Beranek), perhaps one of the most attended courses and possible majors would be Prestidigitation Policies or “It Ain’t What It Seems”- a study of appearing to do something when you are actually not.

The curriculum would cover all sorts of concepts of fooling either the customer or another billing source that the future owner or installer substituted various parts or practices in order to maximize profits.

Auto glass and body shops are notorious for finding loopholes when it comes to billing for insurance work. For one, it appears it is not an uncommon practice for some to order then return dealer parts then using the delivery invoice as a proof of purchase to bill for a higher priced part. One can assume that the same hanky-panky goes on with every day mouldings.

LYNX Services is the latest at trying its best to verify that the brand or source of glass being paid for is what actually got installed in the vehicles it is responsible for. It is now demanding “Pre-POPs” for OE glass before actual approvals are made along with those included at the time of billing. What idiot thought up this procedure? You would think if fraud is going to be committed, the shop would just make another copy to use twice. Why doesn’t any TPA or insurer demand a video documenting the arrival, the unpackaging then subsequent install of every OE part? Better yet, let’s get LYNX to send out one of its employees to document every OE install. In other words, it is getting more and more foolish to see the steps honest shops have to go through to prove they are being truthful.

The distrust between insurers and their lackey administrators toward glass retailers is a natural one. There is always someone trying an end run to maximize profits or increased business opportunities. Just as any insurer is trying to control costs and minimize fraud. It is a given that either side is so antagonistic and mistrustful of the other, there is little hope conditions can improve. Therefore it becomes a slide into an attitude of “getting them before they get me” mentality which only works to worsen relations.

Yankee ingenuity is a quality that should be appreciated. After all, when is creativity not a valued asset? Yet like the Cold War and its policy of mutually assured destruction when it came to the use of nuclear weapons, glass retailers are beginning to paint themselves in a corner. This adversarial attitude we have toward insurers seems to have spilled over to the general public. Do we ever think about what is best for a customer over our bottom line? Is a low price the only benefit when it comes to cutting corners in quality products?

The root of many problems of auto glass retailing comes down to “good” shops over “bad.” There simply are those who do it right, others who don’t. Some make cutting corners a veritable way of life while others go the extra mile for both quality and service. The sad part is that under our economic system both prosper. It is the customer who is forced to make choices and many times, they are sadly ignorant of what conditions to consider in making those selections or having others steer them in certain directions.

In a perfect world, we would have flawless glass, quality mouldings and clips to be installed under ideal conditions and be compensated properly for both the products used and the expert labor expended. Since that dream is far from becoming reality, you always need to adjust to changing conditions. The dilemma I feel we are in is that all too often we good retailers and installers are painted with the brush of deceit and misrepresentation that are the trademark of others. To do good honest work does not require genius or ingenuity, just a simple, oft-cited maxim: “Do unto others as you wish others do unto you.”

Ever see a medical show where there is a terminal patient who is only kept alive to have their organs harvested?  Sad to say, it appears, we in the auto glass industry could be seeing the same drama being played out in the case of Pittsburgh Glass Works.  This company, once a pioneering and dominant force in auto glass, has in the past few years lost its way since being set adrift by economic circumstances and currently has ownership seems to me to be more interested in short-term division than long term existence.

 It’s been a few years since the red-headed stepchild of PPG’s auto glass division found a home of sorts.  Once the decision was made to separate and sell the AG division, all sorts of speculation arose throughout the industry how the final disposition would take place.

After all, any business school freshman could see that PPG’s assets were divided into four separate areas: manufacturing, distribution and sale of auto glass on the wholesale level, some retail sales under a franchise system and also an insurance claims administration arm.  The sum of the parts was far greater than the whole and that formula was the basis of many a Wall Street acquisition and subsequent disposition.

Let me share with you what the CEO of PGW Jim Wiggins, says on his company’s web page about the “new and improved” spin-off.  “PGW improved its cost structure and enhanced its flexibility to serve customers through a streamlined organization based on Lean value streams, transformation of our manufacturing footprint from nine plants to six, and through aggressive implementation of lean/six sigma throughout operations.”

In corporate speak that means: “We’ve gone cheap.”  Indeed Jim, and it looks and feels like you have to me.

Never in my 30 years of being in the auto glass business has my opinion of this company and its products been so low.  It is like watching a thoroughbred horse transform itself over time into a candidate for the glue factory.

 I have been a long-time PPG customer.  It was a brand I respected and preferred to buy. I cannot say that anymore. I have been burned too many times with an inferior product that has brought too many complaints from my customers or from my own experience as a technician trying to install and warranting a part that may not fit or stay installed.

 Let’s talk about product quality first.  When does “lean Sigma six” mean mirror brackets or bonded hardware that fall off upon installation? How many of us have had issues in these areas?  

What about fit and finish of a product? I have had far too many negative incidents since the name change

  Does “lean Sigma six” mean closing your Canadian plants, those who made some of the very best product in your inventory, in exchange for DOT 904 or 563 origination? To me, there is no comparison in quality. Obviously a bean counter instead of a Q/C person had a hand in that decision.

 In that factoid alone was the germination of this week’s column. I have made it a quest to find  PPG Canadian made FW2437 and 2182 windshields for Acura MDXs.  It becomes an easy sale over anything else even dealer purchased glass since PPG was the sole OE vendor. I have just exhausted my regional sources for that product and now had the opportunity to use the new DOT 904 .  I sold my customer on using a  PGW Soundmaster glass over buying OE for her Acura .  First of all, I found the glass and molding came separate (which it never did before). Second, one had to trim the excess laminate so that the molding would fit securely.  A third reason, after setting perhaps 500 of the old ones, this windshield seemed lighter or perhaps I was just feeling my oats that morning. However what has finished me off as a fan and perhaps a customer of PGW is after a long day of work I had to drive back 45 miles to re-bond a mirror bracket when my very distressed customer came out of work and found the rear view mirror dangling inside her MDX’s cabin, the bracket firmly attached to the mirror.

I’ve had to cut out several broken DOT 904 and 563 windshields and have had the experience of having cold knives come through the glass while cutting them out.  The windshields seem to splinter and spall far easier than ever before.  I am not a scientist or reformer but one wonders if production corners are being cut  to unintentionally create such an effect.

 If the decline of quality hasn’t phased many retailers, perhaps the rise in wholesale prices will. Something has taken place where for many parts, the pricing is simply not remotely competitive anymore.  I am not talking about a few dollars difference, I am talking factors of double or triple. Yes, there is an acknowledged glass shortage; however, the disparity simply does not seem warranted.  The new pricing model seems to say, “we don’t want to sell.”   As a customer, I may very well take that to heart.

 Finally, the new owners of PGW have gutted the company of its most important asset- its people.  From sales to support to production, getting lean has meant cutting staffing and the aforementioned closing whole factories.  There are waits in everything.  Call centers are merged.  Support staffs have been cut to the bone.  Salesmen have been let go, creating large territories that the remaining survivors can’t adequately cover.  In fact, that has been a mantra overall.  The morale of the people I have contact with seem to possess the tired shell shocked attitude of those who suffered through the London Blitz of WWII.  They seemed to be overworked and I’d guess underpaid for what they are expected to produce under circumstances that they know could end or be altered at any time.

 I have supported an American based auto glass industry since starting this column.  However at least up to now, for me, PGW has done absolutely nothing to enhance its current reputation or past legacy in this industry to me.  To this commentator, PGW has chosen the low road at every step since its inception as a stand alone company. I can’t determine if their management thinks they are being successful ala “The Emperor’s new Clothes” or they are just waiting to find suitable recipients to sell off various divisions.  Whatever the outcome, it is very painful to watch this comatose company survive under present conditions.

Some of the biggest news of the auto glass industry this past month is the combined short supply of some replacement parts and the subsequent overall price increases that have been announced by both manufacturers and distributors. What we are seeing, or so we are told, is the application of the most basic economic law of supply and demand. The less there is of something, the higher the price it commands.

We have to look eastward to first find reasons. The two largest Chinese glass manufacturers, FYG and XYG, have diverted their attention to filling OEM contracts and also addressing their booming and presumably more profitable local replacement markets rather than focusing on the international one. They have reached their production limits, which delays manufacturing times and fill rates for new orders. After suffering through a glass glut the past few years, most likely of their own making, these companies are unlikely to increase capacity. With so many worldwide accounts competing for product, it does not take an MBA to question the economic decision to raise prices instead. Xinyi’s decision to increase pricing also may be influenced a wee bit due to the outcome and the amount of judgment they are currently liable for in the lawsuit they lost to Saint-Gobain.

One could hear the squeals of dismay from retailers as these hikes have been announced since it will be only a matter of time until distributors are passing on their higher acquisition costs.

I am reminded of the urban maxim of addiction whereby a drug pusher oftentimes lures new clients with free or low-cost introductory products to get them dependent and, once addicted, raises prices. It is no different than what this industry has experienced with replacement glass parts.

As Isaac Newton’s second law of physics states, “For every action, there is an equal and opposite reaction.” That scientific law may very well become applicable to our American manufacturers as these wholesale prices rise. Once a robust and profitable sector, American producers nearly have become extinct by trying to contend with the flood of cheap imports along with the drop or loss of domestic auto production. Hopefully brands such as Carlite and Guardian may become more price-competitive as these Chinese imports trim supply and raise prices.

The wreckage of the domestic manufacturing sector can be directly attributable to the realities of the flat world economies. Low labor costs plus less regulation, particularly in the environmental and worker safety areas, have made Asian countries a far more attractive place to operate facilities than here in this country. As prices increase, I wonder if the American producers can find respite, even growth as the wide gap in acquisition costs narrow.

It is my humble opinion that as companies have closed and jobs have faded from the American and Canadian scene as imports have flooded our market, overall parts quality has dropped as well. Retailers have for the most part have been accessories to this crime against consumers. We have demanded and come to expect low wholesale prices while continuing to look the other way or just meekly accept the numerous quality issues that are rampant in the aftermarket AGR sector. Last week I had the distinct displeasure of trying to remove a previously replaced FW2267. The laminate apparently was so thin and inferior that the entire windshield began to fold inward as I cut around the perimeter. As a last resort, I was very surprised that I was able to tear—not cut—away much of the glass from its heavily urethaned bottom. I had no intention of doing this, especially due to the mess it caused. The glass was not that badly damaged in the first place to warrant such an action to occur and being able to tear, not cut, the laminate seemed to verify to me that this Chinese-made import if tested could not or should not have passed our existing minimal DOT standards.

It might sound like sheer heresy to write that I would welcome a price increase if it meant a corresponding rise in quality. However, given the direction of this industry, we have a better chance of seeing pigs fly than experiencing an overall improvement of our primary product. What is wrong in demanding better fitting glass? Why has it become a “buyer beware” situation for the consumer rather than having a reasonable expectation of quality? The sad fact is that many of the retailers and their installers are the most aware of the inferior products being foisted on the public.

Wholesale distributors have been at the ground-zero canaries of our industry. The margins they operate on are razor-thin and the demands and expectations that are heaped upon them by retailers usually are unreasonable and give them very little wiggle room. Fifteen years ago, glass sources were limited and there was a certain order and structure under which wholesalers operated. None of that exists today in the current Wild West mentality that is all too prevalent. Auto glass is imported from every corner of this planet, which earlier caused a huge supply glut. The number of independent distributors has grown as has the need for customers.

Today, most sell product to anyone possessing a re-sale license at the same factor a long time customer receives. In many cases, volume and perhaps immediate cash are the only determining components of wholesale prices. They are most to blame for the “easy entry” explosion of unqualified installation concerns that have sprouted up in every burg of this country. Yet, how can anyone hold them responsible for being the arbiters of technical quality of this industry? It is simply not their job.

 I’ve talked to two of my distributors this week. With my large independent one, I asked if they could carry more OEE brands such as AP Tech, Carlex and Pilkington. The reply I got was that his customer base wanted cheap and that meant Chinese. The inference was: why tie up warehouse space to please a minority number of customers?

My second vendor has raised prices in a most unusual manner. In the case of the 100 top movers, it appears that their publicized percentage increase was within that parameter. However, if I wanted to purchase a part that perhaps was not on that list, I found them totally uncompetitive, sometimes double or even triple the price of their competition. For the declining quality of the parts they manufacture and distribute, they sure seem to be on a path that only their bean-counting amateur managers feel they can afford. In my case, I have lost significant confidence in the quality of the product they build and distribute.

However, the newest twist that small independents face will be the upcoming shortage and unavailability of certain glass parts. First, it is the opening salvo within our industry that the United States is slipping in size and importance as a market. The domestic AGR market in China will continue to explode as their economy matures and more natives acquire cars to drive. Fill ratios of glass orders from American aftermarket customers will slide downward as Asian manufacturers work to capacity and feel little need to expand as the shadow of a world recession still lingers.

Is greed good? Greed has caused too many of us to throw our domestic glass industry under the bus so that we can buy inexpensive product for resale. What has that accomplished? A dependency on cheap foreign produced replacement parts that we will regret. The shortages and price hikes are the first signs of who actually is in control of our market. One may think of themselves as independents, but as far as what we materially install, we are hardly that.

This opinion piece is not meant to be a diatribe specifically against the Chinese auto glass manufacturers. Their attitude has always been: make it cheap, sell it cheaper than the competition. We as businessmen have become mesmerized by that concept and foolishly have accepted substandard product in return. Also, there should also be a hue and cry against those American firms who basically have set up overseas alliances or have chosen to cut costs with a corresponding loss in quality. It is like they have chosen to jump in the mud to wrestle pigs. It is a short-sighted approach that results in the pig winning and there is little visual distinction between the two combatants.

However, there is always hope that ol’ Porky will sprout wings and perform a few barrel rolls within my sight.