The chal­lenge lies ahead

Motor Equipment News - - DIESEL INDUSTRY NEWS -

I fol­low a num­ber of blogs and re­ceive news­let­ters on a va­ri­ety of top­ics, one of which is an Aus­tralian pub­li­ca­tion about in­sur­ance and risk writ­ten for in­dus­try pro­fes­sion­als. In Au­gust they fea­tured a story pre­dict­ing a down­turn for gen­eral in­sur­ance in the Aus­tralian mar­ket.

Given the state of the Aussie econ­omy, this pre­dic­tion of tough times for In­sur­ance com­pa­nies and bro­kers for the next three or so years is not un­sur­pris­ing. They sug­gested rea­sons were falls in in­sur­ance premi­ums on houses and ve­hi­cles due to stronger com­pe­ti­tion in a low growth en­vi­ron­ment.

Our mar­ket to­day is owned by Aus­tralian in­sur­ance com­pa­nies. It was men­tioned in one of my pre­vi­ous ar­ti­cles the big Amer­i­can owned Berk­shire Hath­away In­sur­ance Com­pany was to open here in Auck­land. At the time it was an­nounced, the back story was they had re­cently bought a 3.7 per­cent stake in IAG for US$500m to form a strate­gic part­ner­ship so they could ex­pand oper­a­tions in the Asia Pa­cific re­gion. So much for new com­pe­ti­tion!

You might now be won­der­ing what this means for the col­li­sion re­pair in­dus­try in New Zealand. The an­swer lies in the fea­ture story that sug­gests “in­sur­ers start fo­cussing on cus­tomers, claims costs and ex­penses”. It then ex­pands on this by adding the chal­lenge lies in re­duc­ing claims costs with­out alien­at­ing the cus­tomer.

So it’s pretty safe to as­sume that due to tougher times in Aus­tralia; branch oper­a­tions in NZ – par­tic­u­larly where it comes to claims, are go­ing to be squeezed just a lit­tle more. Hav­ing just come through a pe­riod of in­tense changes it would be fair to say it’s just go­ing to be more busi­ness as usual – un­less you’ve been think­ing out­side the square.

With­out putting too fine a point on it, di­vide and con­quer is a great strat­egy, but isn’t it about time the op­po­site strat­egy was put into ef­fect. In­dus­try as­so­ci­a­tions are great but have lim­ited power; so how about we take a quick look at what’s work­ing in the USA?

As an ex­am­ple, you might like to visit www.ser­vicek­ing.com – a com­mer­cially suc­cess­ful en­ter­prise de­scribed as one of the fastest grow­ing pre­ferred multi-state op­er­a­tors in the col­li­sion re­pair in­dus­try with 251 lo­ca­tions in 22 states. They have In­sur­ance part­ners and dealer part­ners; and a na­tional online book­ing and job sta­tus sys­tem so a client can sim­ply log on to learn about the progress of re­pairs.

Ser­vice King also sup­ports char­i­ties with state-wide golf tour­na­ments, and do­nates money to wor­thy causes. The com­pany has a two word brand prom­ise and it’s thename. It’s “not just about the car it’s about the care”. They even have their own writ­ten war­ranty.

My ques­tion is sim­ple – can it be done here? It has been said many times that herd­ing cats might be eas­ier than or­gan­is­ing a group of panel beat­ers. But, I sus­pect that given the choice of eco­nomic ruin, or fig­ur­ing out how to es­tab­lish in the col­li­sion re­pair in­dus­try the equiv­a­lent level of team­work the All Blacks have, sense might one day pre­vail.

An al­ter­na­tive might be a spe­cialised in­sur­ance com­pany set up by the col­li­sion re­pair in­dus­try to pro­vide a greater de­gree of com­ple­tion. It’s might have merit, but in prac­ti­cal terms it would be way too dif­fi­cult to es­tab­lish with out some se­ri­ous in­vest­ment. Last month I men­tioned that any­one want­ing “to see some real ex­am­ples of hu­mour; then look across the Tas­man, choose any auc­tion house and see what gets treated as a statu­tory to­tal loss. Then think about the sys­tems in place that cre­ated so many ex­am­ples of waste; what it does to re­duce the cost of re­place­ment parts, and makes it un­eco­nom­i­cal to spend any­more than two or three hours on labour. And these are the same sys­tems be­ing pushed into the NZ mar­ket.”

Re­cently I was tasked with an as­sess­ment on a ve­hi­cle in­sured by another in­surer be­cause my client had con­cerns over the way the job was writ­ten up. Clearly the re­pairer’s es­ti­mate had ticked all the In­surer’s boxes as the parts pric­ing had been sourced over the In­ter­net. So the in­sur­ance com­pany’s asses­sor had sim­ply taken a cur­sory hack at the labour and paint al­lowances. The ve­hi­cle was a six-year-old higher mileage Toy­ota, and a bulk price on parts sup­ply was all that had been pro­vided.

Ex­cuse me for sound­ing “old school”, but de­ci­sions over re­pair or re­place­ment of in­di­vid­ual items can only be made if you know their cost; then un­less you are su­per busy it makes eco­nomic sense to sell more labour than buy parts. The dif­fer­ence be­tween “the Aussie way” and “old school Kiwi” was over $1,000 incl. GST more.

Be­fore you jump in and say this is a mas­sive re­duc­tion at the ex­pense of the re­pairer, you might like to con­sider this par­tic­u­lar shop was not that busy, and the profit of the more ex­pen­sive job would have been lower than if they had sold more labour. A higher job cost does not nec­es­sar­ily equate to higher prof­itabil­ity.

In larger shops es­ti­ma­tors are writ­ing dozens of es­ti­mates ev­ery week. Any­one can fit a re­place­ment part to a ve­hi­cle, so all an in­surer needs to do is tilt the deck to re­duce parts prices and this re­duces the need for skilled labour with the ma­jor­ity of re­pairs.

With more se­vere dam­age it works to an In­surer’s ad­van­tage to sim­ply write the ve­hi­cle off so as to re­plen­ish the stock of used parts, or even bet­ter

– flood the mar­ket so com­pe­ti­tion to sup­ply drives down the price. There are panel shops around the coun­try that have dif­fi­culty get­ting good staff to use chas­sis and align­ment sys­tems. As a re­sult they have made de­ci­sions to sell off this equip­ment to fo­cus on the smaller jobs that can be turned over more quickly. My point al­ways has been that you make money when you write the es­ti­mate, and lose it when you do the job. Good gear in the hands of a skilled op­er­a­tor is good sus­tain­able busi­ness.

At this point I’ll re­fer back to the cul­ture ex­pressed in the www. ser­vicek­ing.com web – they are not just co-work­ers they are fam­ily. They have an im­pres­sive range of ben­e­fits that in­cludes med­i­cal, den­tal, life in­sur­ance and vi­sion care. They have been ranked “Best place to work” in sev­eral states, and videos on the web­site fea­ture staff who speak en­thu­si­as­ti­cally and with pride about their role in the or­gan­i­sa­tion. This com­bined with so­cial and com­mu­nity ac­tiv­ity makes it look like a great en­vi­ron­ment to work in.

Per­haps you might like to look at the web­site of the or­gan­i­sa­tion you op­er­ate or work for. Given that vir­tu­ally all pur­chas­ing and em­ploy­ment is started with a web search you might just be shoot­ing your­self in the foot if you don’t give this some se­ri­ous at­ten­tion. When I hear sto­ries that it’s al­most im­pos­si­ble to get even a few peo­ple ap­ply­ing for a role it’s a pretty safe bet their web­site is sadly lack­ing.

Train­ing is of­ten the other miss­ing in­gre­di­ent. It’s not al­ways about the pro­duc­tive time lost to learn about the latest steer­ing and sus­pen­sion or ABS sys­tems that you would al­ways out­work to spe­cial­ists. Your team needs to be en­cour­aged to learn new meth­ods and be for­ever cu­ri­ous about what oth­ers are do­ing to up-skill. The al­ter­na­tive is day-in, day-out same old dusty and smelly en­vi­ron­ment. If you are in man­age­ment chal­lenge your staff to learn more… and if you are on the floor, then look over­seas to dis­cover new tools or so­lu­tions for ef­fi­ciency. It’s bro­ken. To re­main rel­e­vant busi­ness lead­ers need to emerge that chal­lenge the sta­tus quo and cre­ate a more sus­tain­able fu­ture. It’s not about revo­lu­tion, it’s about an evo­lu­tion of mar­ket forces.

There are many good ex­am­ples avail­able online of what is al­ready here or can be found over­seas and adapted to our con­di­tions be­fore we loose ex­per­tise in favour of ex­pe­di­ency driven ide­ol­ogy im­ported from off­shore.

“Old school Kiwi” as a style can and should be at the core of what we do as it fos­ters pride and achieve­ment in a job well done. Or you can just go with the flow and be squeezed like any other com­mod­ity. The chal­lenge is yours, and it lies ahead.

By Peter Adams, group CEO, Cor­po­rate & Pres­tige.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.