News – 01-JUN-04

Parts Supply Discussions Continue

CCIF’s focus on recycled parts follows up a concerted and successful effort to work with aftermarket parts providers, and OEMs may be next.

One sign that would indicate as much was the attendance at the CCIF meeting in Hamilton, Ont., by an OEM representative.

OEM representatives should heed the comments made by CCIF chair Glenn Hickey in his address to delegates. Hickey pointed out that total losses have doubled in the last five years, a number easily attributable to the perspective by insurers that it would cost more to replace the parts than to replace the automobile.

“For collision repairers, it makes the most sense to use OEM [parts],” Hickey said, referring to the higher priced parts. “But herein lies one of the last few elements that could reduce costs.”

Collision Repair Road Show Hammers Out Issues

Parts supply noted as key to improving cycle time

The Canadian Collision Industry Forum (CCIF) which has grown from a one-off function to become a series of key events, has begun focusing on the need to improve shop floor functions.

The Cycle Time Committee was unveiled at the April 3 Calgary CCIF meeting and is chaired by former CCIF chair Ken Friesen. “We’re going to identify cycle time concerns,” he told the 160 delegates in attendance. “And we’re going to research processes that can lead toward better efficiency and better profits.”

An introductory panel discussion featured insights from AXA Insurance auto physical damage manager Roy Boyle, Akzo Nobel’s Bob Dubreil, Kirmac Collision Solutions’ Ian MacIntosh, and Oaktown Collision’s Tony Canade.

“There is no better way to affect the customer experience than through cycle time,” intoned MacIntosh, who believes that cycle time — and not average severity — should be the top priority of both shops and insurers.

He noted that productivity and cycle time come down to more than just technician efficiency. Four major factors, he said, adversely affect cycle time: poor initial damage analysis that forces repairers to return to the estimate stage; micro-management by insurers, which adds further bureaucracy to the process; parts supply, or rather, the time wasted as repairers await the procurement of parts; and current collision repair methods that utilize a repair-stall strategy instead of an assembly-line approach.

MacIntosh believes that the days of one technician for one vehicle are behind us. “No car manufacturers make vehicles by hand anymore. All manufacturers utilize an assembly line,” he noted. “The production shop is the new model for collision repairers.”

But first and foremost, as Canade noted, shops need to slow down and take measure of the processes that need to be sped up. “You’ve got to slow down so that you can speed up,” he said. In order to refine productivity, he explained, shops must conduct business in a quick enough manner to make money, but in a slow enough manner to ensure that everything gets done right the first time.

From the insurers’ perspective, Boyle says that reduced cycle time would have substantial effects on both customer retention and bottom line profitability. “If cycle time was to improve so that all of our repairs took one less day,” he noted, “it would represent a $200,000 savings [for AXA] on rental cars in one year alone.”

Labour Crisis Coming

Victor Marciano, the executive director of the Alberta Service and Repair Association, echoed the sentiment of many eastern collision repair facilities when he predicted a looming labour crisis.

Marciano noted that ASRA numbers indicate a net loss of 20 collision repair technicians each year, which just adds to the estimated current shortage of 300 technicians in Alberta.

“At the rate our labour situation is going, we have a huge problem coming,” Marciano said.

“We need our insurance partners to come up with a bold innovative solution for our labour troubles,” he cautioned. “We need to think about building a mechanism to have our partners help attract new people to the industry.”

Marciano believes that if the industry does not take steps to remedy the labour crisis — and fast — the price for collision repair labour will eventually skyrocket beyond insurer or shop control.

“If we don’t get ahead of this problem, there are going to be a lot less shops in business,” he said. Demand for collision repair work will spike. And so while collision repair technicians may be at the low end of the payscale, he noted, “with a little time, it may be very easy for this pendulum to swing the other way.”