Price Fixers

Price fixers.

Got your attention, didn’t I? That’s good because you are not going to like me after this post. I am going to say some things you don’t want to hear.

That’s because there’s been a lot of comments flying lately about those insurance companies and how they fix prices. You know, the dastards and the way they say they will only pay a certain amount and, worse yet, won’t pay more than that even when we send a bill. They don’t pay us what we deserve or rightfully charge, so they must be fixing prices, right?

Wrong. They are just smart businesspeople—like my wife. My wife is the smartest person I know. She tells me so everyday.

When I was younger, my spouse used to drag me around to garage sales. Man, I hated that.

Every Saturday, we’d go from place to place and buy more junk we didn’t need. You know the drill. Anyway, wifey would see something she liked and saddle on up to the garage sale meister with her usual question, “how much is that?” The “proprietor” would check the price tag on the back and tell her. “Oh, I don’t want to pay that much,” wife-o-mine would swoon. Then she’d counter by naming an amount that was almost always exactly 60 percent of the price on the tag.

Sometimes, when we’d be at one of those gigantic flea markets on Sunday afternoons (hated those things too), she could flit from table to table until she found another spot with exactly the same merchandise and with a proprietor willing to sell it to her at the price she wanted to pay.

Is my wife the price fixer? Did she set the price? She couldn’t, because she was buying. If no one agreed to sell at the price she wanted, she’d have nothing to buy. So, in reality, she was a good opportunist, but no price fixer.In the end, each garage sale holder or flea market exhibitor sets their own prices. They’ve had to make choices. If they didn’t want to come down to my wife’s 60 percent off, they didn’t have to, but they’d lose her business. That’s their choice.

What I’m saying is something you should already know: The reason that insurance companies offer the prices they do is because they can get people to do the work for those prices. And just because you can’t do it for that price, there are others out there who can and do. Some of those guys don’t know their costs and will be out of business hopefully before they take the rest of us with them. Others may buy better or pay less for workers or do something that allows them to have lower expenses. But each makes a conscious decision to accept the amount offered.

Now wait, you say, “Not me. I don’t accept it. When the insurance companies call me with an outrageous offer, I tell them that’s below my rates, or maybe I have to charge for something that they don’t like to pay for (like rust removal), but I don’t accept those rates.”

Here’s where life gets unfair. Most of the courts have held thus far that if you know what someone will pay, and you know they won’t pay more, and you do the work anyway, you have agreed to that price. That’s why the TPAs send you over their forms lickety-split. The only choices you have are to accept the work at their rate or not do the work. That is your only choice but it is YOUR choice nonetheless. And the only way they will change their pricing is when they get to the point where they can’t find anyone to do their work at the price they want to pay.

The reason that those insurers can “set the price” is because the auto glass industry lets them. We sell our profit soul to the devil in exchange for volume.

The way it works isn’t fair. But it is the way it works. If life were fair, we wouldn’t be treated like thieves for charging what we need to. If life were fair, courts wouldn’t say “you knew what they’d pay and you still did the job.” If life were fair, I wouldn’t be scribbling this on a piece of paper waiting for my wife to finish her “shopping” in somebody’s garage.

Penny-Wise Still Means Pound Foolish

When I was a hot shot youth careening around my neighborhood on my groovy dark-blue bike with the wicked cool banana-seat, one of my favorite stops was the Penny Shop on Main Avenue. All of the 800-square-foot storefront was full of bins of various candies and other sweet delights, every single one homemade by the proprietors, Wolfgang and Helga Schmidtt. The Schmidtts had brought their incredible candy-making abilities to my hometown from Colon, Germany, many years before and ran a modest business on the town’s main street.

My absolute favorite activity was to get home from school, hop on the bike and pedal over to buy 25 cents worth of red quarters, which were dropped ever so gingerly into a tiny brown paper bag by Helga as I waited in rapt anticipation. Red quarters are a heavenly rewarding licorice that I could hold under my tongue as they melted, sending my mouth into a sweet euphoric stupor.

Eventually, my praises of the Penny Shop traveled so far and wide that all my friends became frequent visitors. Even my mom became a disciple and would buy large boxes of the divine confections for special occasions like Father’s Day and Thanksgiving.

One Christmas Eve when we were having a particularly large group of guests over, my mom actually bought two of the Schmidtts’ largest confection boxes. Well, she tried to, anyway. The two boxes were just a little more money than Mom had left in her wallet so she pulled out her checkbook to write a check.

“No checks, just cash,” said Mr. Schmidtt, in a deep baritone voice.

“Oh Mr. Schmidtt, I don’t have enough cash with me. Could I just give you a check just this time?” Mom asked softly.

“Oh, so sorry,” he replied, “no checks, just cash.”

Mom made a few other attempts at a compromise with Mr. Schmidtt. She reminded him, in that nice way that only mothers can, that she and her family had been long and good customers and that Mr. Schmidtt knew where we lived.

“Yes, yes,” he agreed, “you are wonderful customer—great, best customer. Thank you for business. So sorry. No checks, just cash.”

Of course, the Penny Shop did not accept credit cards and debit cards hadn’t been born yet. So Mom asked Mr. Schmidtt if she could use what cash she had and give him the rest in a check.

“No,” said Mr. Schmidtt, “no checks, just cash. Buy one box now, come back for the other.”

If we wanted the rest of the candy—by now a Christmas staple and tradition for my family—we were going to have to go and get the cash and come back. Normally this would have been a mild inconvenience, but on Christmas Eve, with lots of small errands and last-minute shopping to do, it was really going to hurt us time-wise.

So we did a few of those errands, stopped at the bank and headed back to the Penny Shop. I was ticked, but my Mom took it more in stride.
”Mom, aren’t you a little annoyed with the Schmidtts?” I asked her on the ride back. “I mean, couldn’t they have let us give them a check?”

“No, I’m not really,” she answered. She stopped to ponder this for a minute as I noticed the reindeer pin sparkling on her coat. Then she continued. “The Penny Shop has to have rules and the Schmidtts are the proprietors. They get to make the rules. They have the right to decide what kind of customers they want and what type of payment they will accept. I wish they had made an exception so we didn’t have to go all the way back, but it’s their shop and they get to decide how they get paid. That’s a rule of business,” said my mother, triumphant that she was teaching her little boy a business lesson.

My Christmas visit to the Penny Shop of 44 years ago came flooding back to me last week, when I read that Safelite Solutions was now going to deduct a 1-percent tariff from any non-electronic payments it makes to glass shops. If you remember a number of years ago they tried to do something similar and then backed off when their legal counsel warned them against it.

And I find it interesting that the fee is one percent of the invoice—I guess it costs them more money to process a manual check for $200 than $199. Yeah, right.

It’s amazing how the rules of business have changed—or maybe they are just different in the auto glass industry. Here, the customers get to decide how they pay you, when they pay you and what they want to pay you. Can you imagine any other industry where a customer can say “Hey, I am going to pay you electronically, and if you want me to pay you another way, I’m going to deduct a fee for it?”

Can you imagine any other industry where your customer chooses you and you have to call a competitor to get authorization to do the job? And that competitor says “Uh. Oh … by calling me you are agreeing to my pricing and terms?” I guess my Mom’s business lesson was way off because in the auto glass industry it’s the CUSTOMER who decides those business terms, not the proprietors.

If you have an agreement with a network, you are at their mercy. You signed it and you live by it. But if you do not have such an agreement, I wonder why more of our businesses don’t just follow the Schmidtts’ example and say “It’s my business and I get to decide, not my customer.”

I would have liked to see the Schmidtts own an auto glass company. I have a feeling they would have gotten their payments the way they wanted them, without any deductions by their customers.

Now that would have been sweet.

Insurance Company Rules

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The History Channel

If you watch the Gary Lubner interviews on glassBYTEs.com, you see one sharp, very focused businessman. Mr. Lubner has impeccable educational and business credentials and is one of the sharpest guys the auto glass industry has ever seen. I also give him a lot of credit for doing the interviews. They gave many people a chance to hear his views firsthand and I would suspect that, like me, many were impressed with what they heard even if they feared what he was saying at the same time. Those who compete with him now have a better idea of what they’re up against.

If Mr. Lubner lacks anything in his ability to tackle the U.S. market it is this: he lacks historical perspective. It’s not something he would be expected to have, given his relatively recent entry into the United States, but it is something I would have thought his stateside staff would provide him.

Nowhere was that more obvious than in his comments around trade associations. He contends that the auto glass industry should have only one. If he had had such historical perspective, he would have known that years ago the auto glass industry did have one trade association. But that association, for various reasons, did not represent the interests of all auto glass companies.

Because that association no longer met their needs, other groups were formed. The National Windshield Repair Association and the Independent Glass Association are two such groups. Each developed around a common set of interests and problems. The AGRSS Standard came along because the industry had no standards and needed some. Recognizing that such standards would need to belong to the industry as a whole, and not to any one particular group or organization, the AGRSS Council formed.

Without the benefit of such historical hindsight, Mr. Lubner commented that each group maintains its separation because of egos and such. In reality, that’s not the case. They are separate because they have separate needs, not because of someone’s conceit. He’d have no way of knowing this, of course, because he doesn’t have the history.

A Week in Thought

I’ve been hiding from Deb Levy all week, because she has been calling and e-mailing me about this blog. She’s trying to tell me what I already know: it’s a little late, a tad delayed, perhaps? No, she is going to tell me it’s way overdue. I want her—and you—to know why it’s delayed, though. It’s because I hadn’t quite figured out how to say what I want to say about the Belron-Diamond deal.

For the first few days, I knew there was something that bothered me about the whole thing, but I couldn’t put my finger on it. It wasn’t the usual reasons you might expect. Yeah, the new “Belmond” (Belron mated with Diamond) is going to be gargantuan, but there is no crime in size.

And there’s so much talk about steering and anti-steering that it’s hard to know what’s real and what’s myth. To me, the definition of steering is almost the same as the one the Supreme Court used to defined pornography many years ago. They said “we don’t know how to define it, but we sure know it when we see it.” So every time one of my customers gets steered away from me, I see it and know what it is.

I wasn’t particularly unhappy to see Tom Feeney put in charge because he tends to tell you where he stands, even if it’s unpopular, and I can respect that.

So after a week of deep thought—and you know how hard it is for us guys to get in touch with our feelings—I can now articulate the two main things that are bothering me about the deal.
First, I feel sad for a bunch of people. I feel bad for companies that have to compete against Belmond in major markets. They’ve just consolidated and strengthened their presence even more. I feel bad for the quality suppliers that supplied Diamond but will now be cast adrift a replaced with Belron suppliers in their stead. I feel bad for the Diamond employees who have their jobs in limbo as of today. I even feel sorry for the insurers because they are too stupid to realize their role in reducing competition. The fewer competitors out there, the more adroitly Belron will be able to get the prices it wants from the insurance companies. We just saw this happen with repair rates. Just give them a year or two to clear out the market of a lot of competitors, then see what you’ll be paying for replacement glass. Go ask anyone in Canada.
But most of all, I feel cheated. Most industries have one, two, three companies that are market leaders. They set the agenda for their industry and they help develop best practices on an industry-wide basis. They define and participate in industry debate. They are part of the industry team.

But not in the auto glass industry. Belron seeks to differentiate itself by not playing on the same team. Its stance on AGRSS—our industry’s best hope for a sustainable future—is unbelievable. The company doesn’t even understand what AGRSS registration is and attempts to frame it as a certification program before their insurance customers. Belron says its Saftech program is better than AGRSS registration. They are two entirely different things. Belron has its own self-certification, its own auto glass competiton and its own programs. It’s one thing to be a market leader and help raise a whole industry up. By doing so you fulfill a role as an accomplished leader—and you can still leave everyone in the dust.

Dear Mr. Feeney:

Thank you very much for your presentation at the IGA Conference in Las Vegas last month. It was incredibly generous of you to speak before a group that you yourself acknowledged was “unfriendly.” That took a lot of guts and was a very courageous thing to do. I especially like the part where you talked about how Safelite and independent glass shops have more in common than they have differences. That’s very true. It takes a lot of fortitude to place yourself in the crosshairs when you don’t have to do it. And you didn’t have to. What you did will be remembered as a landmark moment in the auto glass industry.

Now I know you’ve gotten beat up a lot on the Web recently, and I’m not going to do that here. Like I said, you didn’t have to make that speech. I’m not going to ask you about the AGRSS thing or who the customer is or any of those “gotcha” questions a couple of people in the audience asked (though most of the questions were pretty straight-forward). I’m not even going to argue with you about the contention that all you guys do is “answer the phones” and that shouldn’t constitute steering. I’m pretty sure that the claims administration you do involves more than just answering phones.

But there are two questions I have got to ask, because they go to the heart of one of those differences between Safelite and the independents. You mentioned that you believe there should be a standard requiring drug testing and background checks for technicians. You said you don’t believe the AGRSS Standard goes far enough and should require this (never mind AGRSS is not a technician standard or certification, I could tell by your comments you didn’t get that and had been poorly briefed). It was also clear from your comments that this drug testing and background check idea is extremely important to your company. You mentioned that your techs are drug-tested. I expect there are background checks too.

So, Mr. Feeney, here’s my first question: If drug testing and background checks are so important to you, then why don’t you require them of the companies on your network? Why don’t you suggest to your insurance partner that they require them as part of the criteria they use? Why don’t you apply the same standards to the companies that you subcontract work to as you say you apply internally?

I gotta tell you, Mr. Feeney, I haven’t seen a whole lot of concern from Safelite about the companies that join your network. I have seen a ton of concern over making sure those companies accept the price you want to pay, but not much concern over the quality of that company or the technicians they have. If these background checks and drug testing are important, why don’t you require them? Please believe me, I am not asking this to be contrary. I would really like to know the answer because the only answer I can think of can’t possibly be the right one.

The only reason I can think of is that doing so would decrease the number of shops that could do your work. It would mean higher costs for Belron and higher prices for its customers. And I know that can’t be the reason because, as you said, safety and quality are more important than price.

And let’s talk about safety for a minute. You mentioned that you believe your own internal “certification” program is better than AGRSS. You emphasized how important quality is to you. So here’s my second question: If safety and quality are so important, then why don’t you require certification for those companies on your network? Heck, you could require any kind of certification you wanted—even your own—from the companies that do work for you.

If I didn’t know better, I’d think you were trying to keep the industry uneducated. It’s a lot easier—and a lot cheaper—to compete against guys when you can tell your insurance company you’re better than they are. You guys must laugh your heads off when the insurance companies buy it.

Or maybe you don’t require it because you know that a ton of people doing your work wouldn’t be able to any more and then you’d have some supply and demand issues, if you know what I mean; you’d have lots of jobs and no one to do them. That could be a threat to the whole network model.

The ability to use uneducated, “inferior” people for economic gain while refusing to educate them has long been the sign of an oppressor and the methods he uses to keep the oppressed in line. Surely you guys are better than this.

Belron is the biggest AG installer in the word. Say the word and thy will be done.

There’s a disconnect when you talk about the need for these things, yet you dole out a lot of work without any such requirements. Sorta like Congress exempting itself from following the laws it makes. It’s a pretty neat trick.

But that is just what it is: a trick.

Thank you again for your time. I look forward to hearing from you.

A+ for IGA

Yup, I was there.

I saw you.

Did you see me?

At the IGA Conference, I mean.

Let me tell you, I went grudgingly because a friend was going and we thought we’d hang out by the pool and enjoy a few of the “attractions” in Vegas—a little recreation on the company’s dime, if you know what I mean.

We figured we’d cruise on in and get our badges, show up at the cocktail party and not much more. It was a great plan. Except it never happened.

We got sucked into the seminars the first day and ended up going to almost every one of them. I had so many notes I filled up eight pages in that spiffy notebook they gave us. Let me say, the educational program was excellent. The first day was devoted to legal issues, the second to steering and the third was more technical.

Now if you know me, you know I’ve been critical of IGA in the past, and about 24 to 30 months ago, I wouldn’t have placed a bet on their future. But, make no mistake; these guys have their act together. It’s obvious they care about their members. You could see and feel it. Their board is an active bunch, the staff is young and energetic and they are starting to have some progress.
The comic book—and yes, okay, I was laughing at the idea for months before—the comic book is actually pretty darn good. I’ll eat crow on that one.

I saw a couple of new things at the show too. In all, it was time and money well spent and there are not many things you can say that about these days. I especially liked Scott Orth’s presentation about the Internet. The way it’s being used to drive auto glass work can sober you up—even in Vegas.

The insurance panel was interesting not only for its content, but also for the posturing by some of the participants.

And the Feeney presentation? Well, not since Joe Kellman gave a speech at one of the conferences in the 1980s has their been such a landmark. (More on that next post.)

Some suggestions for next time: First, allot more time for each seminar. The NAGS presentation could have gone another hour and many others left me begging for more, too.

Second, try to find a place in a hotel so we don’t have to take a bus, although one of the board members told me that everything will be one hotel next year. That’s a good move.

Three, bring back Corey Hemperly. What an outstanding presentation he gave. He is just a regular guy out of some Western state but he went through what he does to fight steering in an organized, detailed way. Awesome.

I’ll continue to take IGA, or anyone else, to task when it’s warranted. But not this time. IGA gets an A+.

Diamond in the Rough

What’s that old saying? “Fool me once, shame on you, fool me twice, shame on me?”

Well, shame on me. In fact, shame on all of us, shame on the whole entire auto glass aftermarket industry.

I didn’t quite get it the first time round in 2000, but I see it crystal-clearly now. In fact, let me raise my can of Bud in honor of Diamond Auto Glass. They have put forth, and will profit by, an amazing strategy, similar to the one Safelite used eight years ago.

Now, to most of the world, it seems like both companies laden with debt like a teenager with acne, had decided to shed it through a process known as Chapter 11. It’s a brilliant strategy and it goes like this:

Keep your prices artificially low. Charge too little or pay too much for product. When the rest of the industry screams out that “you can’t do it for that,” smirk and say “yes, we can and we are.” Imply liberally that those other companies are just not run by savvy businessmen, or just aren’t as good at business as you, the big national corporate boy.

And don’t forget to pound into the heads of your insurance customers that the rest of the industry is woefully inefficient, just small mom-and-pops hanging on to a business model that has long since ceased to work. Pretend you feel sorry for them.

Hang on to your secret, the one that Diamond (and Safelite before it) don’t ever mention: that it turns out those screaming independents were right. They couldn’t do it for that—and neither could you. You were losing money at the prices you charged. And, despite being able to one of the largest volume buyers in this country presumably having some of the lowest material costs, you were too. Diamond was barely profitable EBITDA and wasn’t profitable after.

But none of that matters really, because Diamond is a big company and filed for Chapter 11. It will shed all that debt and will be bought eventually. Even Safelite’s owner Belron has expressed interest, probably just to keep it out of the hands of anyone else.

But here’s why I’ve been fooled again. I have to ask: how many smaller companies went out of business during Diamond’s reign? How many mid-sized ones had to sell out because they couldn’t compete? How many of them get a second chance Diamond does? How come they get to take others down while they can rise again?Maybe Diamond’s strategy (and Safelite’s before it) had little to do with making money and more to do with eliminating competition. If so, it’s brilliant. It just shouldn’t be legal.

Where's the Beef?

Come with me on a ride. Let’s head out early one Sunday morning for a trip down I-95 from Dillon, South Carolina to Orlando, Florida. That should be about nine hours or so of driving. It’s going to be a long day on the road, but we will make a few rest stops and break for an hour or so for lunch.

I-95 has pretty good signage (except in Connecticut, but that’s another story) and at every exit it tells us what food, gas and lodging is available.

It’s 1:15 in the afternoon and now we are hungry. We could go for some really good All-American hamburgers for lunch. So we start reading exit signs. One exit near Jacksonville has Taco Bell, a McDonalds, a Pizza Hut and a Joe’s Beef and Burgers. Great, we think, two choices of hamburgers.

So which should we choose? We know McDonald’s; heck, we see them advertised every day. We don’t know anything about Joe’s but the word “burger” is in his name. Is Joe’s a really good local place or one of those just-get-a-sign-on-95-and-it-doesn’t-matter-how-the-food-tastes place? Would Joe’s be a great burger experience (and we fancy ourselves connoisseurs of great burgers) or a salmonella shack?

We hem and haw, but we really just don’t know, so we end up choosing McDonald’s. The food may not be great, but it’s never really bad and we know that the staff there is trained and retrained on sanitation and safety. So in we go and each have a burger and fries that could be defined as, well, adequate. In fact the whole experience is just satisfactory. Joe’s may have been great, but we’ll never know. We chose mediocrity over the potential for greatness because we knew what we’d be getting and it wouldn’t be great, but it wouldn’t be bad.

I’ve used a hamburger analogy before, but it’s never been more timely than now as Safelite has just hired a new executive who comes from … you guessed … the hamburger business (CLICK HERE for related story). Matthew Johnson is the company’s new media director and he comes from Wendy’s International. He also has worked for Lenscrafters and a number of companies with a strong national presence. Couple this with Safelite’s announcement last week it is going to use a number of its employees in upcoming advertising and you can see where this is going.

I’d expect to see a series of commercials, both print and radio, in the company’s associates’ words about how much they care, how important quality is and how calling Safelite is like calling the neighbor down the block. I’d expect these advertisements to be the rollout effort in building a national brand.

So are those who compete against Safelite doomed? Hardly. A number of Safelite’s senior executives have been quoted saying how difficult it is for the company to compete against local companies that have a strong brand and presence in that location.

Let’s go back to our I-95 journey again. Suppose that I’ve stayed in Jacksonville before and seen “Joe’s Beef and Burger” in local advertising and sponsoring community activity. Suppose I hear them on the radio as I pass through. Suppose I have a friend who lives in Jacksonville who has eaten at Joe’s for years and mentions the restaurant to me. Do you suppose I’d try Joe’s then? Of course, I would.

So the goal for companies that compete with Safelite is to create a pond that you can dominate. This is easier for a small company than a regional player. Choose a market size that you can dominate, and then get to work doing just that. Even if it’s a small part of just one town, make it yours. Create an experience for the customer that is so superior to what a national chain can provide that you will build loyalty that lasts for generations. Right now, I’d be preparing some advertising talking about how locally grown my company is, how much I care about safety and what a superior installation job I can provide. I’d explain carefully that my company is not a big conglomerate or chain, nor is it really a British or South African one. If I was AGRSS-registered, I’d mention that. “I’m your hometown, homegrown auto safety guy,” I’d be telling potential customers.

And, whether I’m selling burgers or windshields, they’d be great, safe All-American ones.Pass the ketchup.

My Own Dr. Phil

Dr. Phil is a friend of mine. No, not that Dr. Phil. Dr. Phil Cristin (not his real last name) has been one of my closest friends since we played T-ball together after school in second grade. I always thought I was the smarter one, but I grew up into the glass industry and Phil became a doctor. Go figure. Today, he runs one of those local make-an-appointment or walk-in places right in the center of town. Whenever I need a doc, I go to Phil. When he needs a new windshield, he calls me.

The flu hit me pretty badly a few weeks ago and I went to see Dr. Phil in his professional capacity. The receptionist told me I hadn’t been there as a patient for nearly four years. (I was proud of being so healthy.) She told me to have a seat and the good Doc would be with me as soon as possible.

While sitting in the waiting room, I noticed a lot had changed in four years. First was the sign-in sheet. It was numbered and you had to sign in with your name and the time you had arrived. The nurse filled in the column with a time when you were discharged.

I noticed that almost everything in that office revolved around the sign-in sheet. Phil himself came out to look at it a few times while I waited, as did several of the nurses and other staff. The receptionist kept filling in and recording numbers.

The second thing I noticed was the change in procedures. I used to go into an examining room and have my blood pressure taken by the nurse, then Phil would come in and I’d describe my symptoms and he fix me up, give me a prescription or whatever and I’d be on my way. One time, I had an ear infection and he had to do something called “lavage” it and that took him almost an hour, but otherwise, I’d generally have Phil’s attention for about 30 minutes or so.

Not anymore. This time one lady in white took my vitals and another wrote down what was bothering me. She asked a few questions and put them on a sheet, and then a third escorted me into an examining room where I waited for nearly 15 minutes before Phil arrived. While I had spent more than 30 minutes in the exam area, he ended up spending no more than five minutes with me. I got my script and left.

Last week we got to catch up a bit at our kids’ basketball game. One good thing about Phil is that he always let’s me give it to him. “Phil,” I said, “what’s the deal with that sign-in sheet in your office? Why are you all so obsessed with it? And how come I only rated four minutes of your time?”

Phil got a real sad look on his face, like I hadn’t seen since Mary Agnes Ilaterria broke up with him in high school. “Oh,” he said, “a lot has changed. We get paid so little by insurance companies for patient visits that I have see at least 110 patients a day just to cover my overhead. That doesn’t include the time I have to spend on the phone fighting with them to cover procedures or medicine my patients need.”

I did some quick math. “Phil, that’s like a patient every four minutes.” ”Exactly,” he said. “It’s all different. I used to do blood work in the office, but I had such a hard time getting reimbursed for it, we stopped doing it. Practicing medicine today is not as much about patient care as it should be. Did you know a doctor’s average income has been going down every year for the past ten? Dentists now have a higher average income per patient than doctors, because the insurance industry is not nearly as insinuated into dentistry as they are in medicine. It’s depressing and demoralizing and it’s killing patient care.”

Phil told me he was thinking of getting out of medicine all together. “I want to do something where I control destiny and don’t have to fight with insurance companies all day. Maybe I’ll come work for you in the glass business,” he said. I didn’t have the heart to tell him.

Watching Washington

I don’t live in Washington State, but I have sure been watching the fight going on there in the legislature the past few weeks (CLICK HERE for related story from glassBYTEs.com™). It’s been quite an education.

From watching the hearings, it’s easy to see that the insurance lobby is big and powerful and full of lobbyists with fancy suits. Heck, the chairman of the committee was even calling the lobbyist by his first name. They looked pretty chummy. Probably play a lot of golf together too. On the surface, you might think that there’s no chance for the auto glass lobby to be victorious. Well, your wrong. The Independents have already won. Here’s why:

1 - The insurance lobby had to spend big bucks fighting this thing. They had to use valuable resources, time, energy, people and bucks to work to squash an attempt by the legislature to do the right thing. Even Safelite sent a hired gun out there to fight the bill.

2 - There’s an old saying in politics: when you’ve thrown everything you got and nothing sticks, confuse the issue. Well, that’s what these insurance fat cats have had to do in this case. In the end, they tried to confuse the issue by saying passing a bill to allow consumer choice would result in steering, which is bad for the consumer. Funny, Mister Insurance-miester, I guess steering is only okay as long as you are the one doing the steering.

3- The independents have grouped together around the cause quickly and effectively. Using grassroots work locally, they created quite a campaign in a short amount of time.

Insurers like to paint this as a “big chain vs. mom-and-pop” issue. What they, and their legislators, never get is that it is a quality issue. If you have the appropriate insurance and meet their criteria, any network will put you on their list. They have no idea how well you install glass, they don’t know if you are an escaped felon, they don’t know if you are doing drugs or other acts, they don’t know much about you. Mostly all they know is that you’ll do it for their price. The independents have been screaming for years that you get what you pay for. Who installs your windshield is as much a safety issue as who takes out your gall bladder. How’d you like your insurance company to send you a doctor they don’t know much about (except that they’d do the surgery for what the insurance company will pay)? More on this next time.

P.S. By the way, a few of you have asked if I worked for a urethane manufacturer. The answer is no. Never have. Never will. When the editors asked me to come up with a name, I thought it’d be a good one, but no, I’m not one of them. I’m one of you.

Memories

If I could, I’d send everyone in the auto glass industry a box of blueberries. Why? Because blueberries are supposed to be good for the memory, and our industry seems to have the lowest ability to remember anything of any industry I have ever seen. Our auto glass shop owners make the guy from the movie Momentum look like a recall genius.

I figure that’s got to be what’s wrong with us. We have no memory. Or maybe it’s getting zapped the way Will Smith zapped Tommy Lee Jones’ memories in Men in Black (yeah, I watch a lot of movies). That must be it.

How else can you explain an amazing phenomena? In 2005, NAGS “revalued” its pricing system. At that time, they told us they were moving from a NAGS price that had included parts, labor and the kitchen sink and moving to a model that was akin to that used by the collision and mechanical repair industries. There would be a part price (i.e., the cost of the glass) and a labor charge. While NAGS could not tell us what to charge, they did remind us that those same collision and mechanical repair shops had an hourly rate for labor and did, in fact, charge by the man hour. While NAGS could not tell us what to charge, we knew that most body shops did not discount their parts all that much.

The intent, I believe, was to morph NAGS pricing into a “part + labor” equation. Articles were written, lectures given and the same caution went out over and over again: this new NAGS system will work, if people truly looked at their costs. They wouldn’t discount parts too much as the part prices were pretty accurate, and they would charge a fair labor rate per hour.

Miraculously, most insurers went along. Only one stayed with a flat labor rate, the rest went to hourly ones. Most insurers “offered” four and five percent off NAGS prices. There was great hope in the industry—for a while.Three years later, I am sure nobody remembers this. How else could we explain the fact that insurers are offering 45 percent off, and people are accepting it? It must be memory loss, because why else would anyone who had been paid an hourly rate for labor now accept a flat rate? Why would an industry go backwards?Now, here’s the part in the story where everyone blames NAGS. It must be their fault, they say, for putting out pricing so out of line that people take 45 percent off. Well, I’m not going to argue that, because I don’t think the problem is NAGS. The problem is us. Every time someone does work at a certain percentage off, the argument that work can’t be done for that price is shown to be untrue. NAGS has nothing to do with it.

The problem is us. We must not—collectively or individually—have any memory left. Because the alternate reason—the one that says we choose to let this happen—shows me that rather than not having any memory, we just may not have any brains.

They’re Coming for You

Like I said, in last post, I know a lot of people. This is why I am not going to use the real name of my friend Mike in Southwest Florida. If I did, Mike would be able to figure out who I was. So his name as been changed to protect me.But Mike’s a real guy running an independent shop just inside the Tampa area and he was mighty worried when Safelite unleashed its onslaught of advertising in Buccaneer Bay during the last few weeks. “This is it,” he commented woefully one day. “This is the ‘branding’ thing they were talking about and I’m doomed.”

Safelite had hit the area with a major advertising blitz hyping windshield repair. They’d bought a lot of airtime so Mike was beside himself.

He called me when the dust had cleared and the ads had quieted. I wasn’t sure what to expect when he called me but I knew it wouldn’t be good.

Well, Mike was beside himself all right— beside himself with happiness. A funny thing had happened. The ads by Safelite had increased the amount of repairs being done in Tampa Bay—for Safelite and for Mike.

“This is great,” he said, so I could hear the smirk in his voice. “They paid for the ads and my work increased. Is this a great country or what?” he chuckled.

I didn’t want to burst his bubble that day so I’ll do it now with a simple analogy. Suppose you were McDonald’s and you had just opened your first location in a new country. While some people had heard about hamburgers and a few had even tasted one, the concept was relatively new to most people. What message would you advertise?

FIRST, you would advertise to get the people to eat hamburgers.

THEN, once you had them hooked on burgers, you would advertise to get them to eat them at McDonalds.This is what Safelite is doing. FIRST, they are attempting to increasing the amount of repairs being done and increasing awareness of repairs. THEN, they will link quality repairs with Safelite. That’s the real branding thing.

So Mike, buddy, I love ya, but don’t sit there smiling. Because they’re still a’ coming and they’re a ‘comin for you.

Next time: what you can do about it.

P.S.: Just for the record, my name’s not Mike either.

Allow Me to Introduce Myself

I know what you’re thinking: who is this guy and why should I read this? Is Uri Thane his real name? If not, why not? What’s this blog about? When should I check this page? Okay, I’ll take ’em in order.

Who is this guy?
Chances are, you know me. We’ve met at a supplier meeting or conference, or maybe I’ve been in your shop to sell you something. I’ve been around for quite a long time, so chances are we are old friends.

Why should I read this?
Maybe you shouldn’t. I am going to be pretty frank. It’s for you to decide if reading this is worthwhile to you. I’m going to give you my opinions and it’s up to you to decide.

Is Uri Thane my real name?
No. Now that would have been quite a coincidence if it was.

If not, why not?
Hey, with some of the things I plan on saying here, I want to be completely candid. We all know how this industry works. I want to be able to speak the truth without regard for whether or not it’s going to cost me business or customers. The editors know who I am. That’s enough for now.

What’s this blog about?
It’s about the absurdities of the AGRR industry. Sometimes, it will be about the players and sometimes about the little victories. I have promised those same editors only that I will call ‘em as I see ‘em. It’ll be about topics you want to talk about too. Uri Thane is here for you.

When should I check this page?
I’ll be writing every other week or so … unless I get agitated about something, then I gotta let off some steam.