View From The Trenches

As the economy continues to wallow, the pressure on independent glass shops to survive is fairly relentless. Every week, perhaps every day, there are signs and reminders of how weak and powerless most of us are to both external and internal forces that have little regard for the auto glass industry as a whole. The question becomes not how one survives but if a shop actually can.

Starting up an auto glass business has never been a daunting task, but at one time it took real capital. Prior to the 1960s, full-service glazing shops were the norm, and auto glass was just another side craft that was part of everyday glazing. Some body shops offered auto glass service as well as repair and paint. The one consistent feature was that they were brick and mortar stores with little (if any) mobile service.

Those with 15 years or more in the auto glass business can remember that insurance work once represented the majority of consumer work. Comprehensive deductibles were low and, in many states, often waived when it came to glass replacement. NAGS pricing was universally accepted in wholesale purchases (as well as any and all retail and insurance transactions). There was order, profit and, for the most part, unity. This era should be referred to as “The Good Old Days.”

For sure, those days are long gone. Like Eve after getting Adam to eat the Biblical forbidden apple, the Eden of Auto Glass has dissolved into a dark, chaotic morass. In one corner, we have an international Goliath who has constructed an “eye of a needle” gateway for insurance claimants. This gateway directs work internally in a act of self- subsidizing charity. There are other smaller, less effective (and exclusive) versions that use the same operational business model.

On the other side of the spectrum, we have the auto glass version of “Dewey, Cheatum and Howe.” The people claim knowledge and proficiency in auto glass installation but are merely posers and pretenders in the craft of auto glazing. Others simply use fraudulent means to operate and take advantage of consumers or insurers.

Caught in the middle is what should be referred to as the “Silent Majority” of independent shops and mobiles. There are thousands of legitimate auto glass replacement practitioners that are just not being squeezed into submission but many of which are heading into oblivion.

Analysts call this “economic Darwinism,” meaning that only the strong survive. That may be true in some cases but in many others unfair and unregulated competition create such an unbalanced field of competition that even the most experienced and creative shop owners can find themselves under the gun, looking to keep the proverbial wolf away from their doors.

It is my contention that if the American consumer thinks it is benefiting from lower retail prices or is being “protected” by insurers from unscrupulous providers, they are sadly mistaken. There has been a general decline in both product and workmanship overall in the past 15 years and little exists in the marketplace to aid consumers, other than price comparisons or somewhat misleading advertising campaigns.

Those in the auto glass industry are well aware of the seismic shift that has taken place over the past 15 years. Insurers have been pushing higher comprehensive deductibles in many eligible states to offset higher premiums and lower their exposure to small claims such as auto glass. There is a pervasive fear among consumers of angering insurers or even questioning their authoritative-sounding CSRs if a claim is opened. So two conditions have evolved; like lemmings, insureds are being directed (some say herded) to specific vendors where contractual pricing limits exist for the sole benefit of the insurance company.

The other option is the largest and fastest growing area of the replacement market in which the consumer is paying completely out-of-pocket. This shift has caused an immense bidding war among many retailers with no one reaping benefits. The consumer usually gets an inferior aftermarket product, installed either in haste or just incorrectly. Many providers are unregulated or poorly trained and exist by low pricing alone. While a purely mobile company can be blamed for fitting that description, there are high numbers of brick and mortar companies that degrade the overall reputation of our industry as well our profit margins.

Is there much hope for any sort of change? From my perspective, not much. Just take how the auto glass industry highlighted its largest convention by having State Farm attend Auto Glass Week™ in Memphis, where it unveiled changes in its auto glass program. At least they showed up this time since the swine flu excuse was passé. The company announced a new two-tiered system to which vendors could aspire. State Farm basically spelled out what a shop has to do to reach “tier-one” status. One of those tenets involves making and keeping a competitive O&A in place. All this does is to allow any glass shop the freedom to pursue more business by cutting its prices. What is abhorrent to me is the fact that State Farm will dictate to retailers what is acceptable to them instead of the reverse happening. The irony that it takes place at the largest annual gathering of our industry is revealing as well. It’s a bit impudent or brazen on State Farm’s part, some would say. Such is reality.

We have shops that are addicted to the “easy money” of referrals and have shaped their entire existence by sidling up to the insurance trough by discounting their services. Fairly or unfairly, these “providers” have given insurers the necessary wedge to drive glass prices down by playing shop against shop. This can be achieved on the corporate level from “Big Glass” or at the atomic one with single-point retailers or mobiles who hope to subsist through the crumbs dropped by TPAs achieved by low O&A bids.

What is the most forgotten fact is that as retailers, even as manufacturers and distributors, this industry is interconnected. What one does ultimately affects all others. A corporate Guaranteed Average Invoice (GAI) creates a ripple effect as well as some cyber shop cafe that is programmed to bid low. Every day there are “slammers” whose unprofessional and many times amateurish actions damage both their customers’ vehicles and our industry’s reputation.

It has been said from those who have fought addictions that no real change or cure will take place until a person hits rock-bottom and is motivated to change. I wonder when, if ever, that moment will take place in the auto glass replacement industry. There may have been “gold in them thar hills” when referring to the insurance market in times past, but thanks to exploitation and greed from all sides, that landscape has been forever altered. Like a strip mine, it starts with a single-slashed trough in the ground and only gets deeper and wider. Perhaps that is why we are seeing so much Chinese glass these days. Maybe we have gone too deep.