| The commentary box |
February 2007 |
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 Welcome the February edition of Commentary Box and, sadly I have to start with an apology as David Laing, of Lechler Coatings , who was to have been my guest this month, has had to "cry off" due to pressure of business. Hopefully David will be able to join us next month but, in the meantime, I'm sure the coverage given to Lechler, on our website, will be of interest.So now, and without a guest, please allow me to churn over a few points that I hope will prove topical and, dare I say, just a little controversial? Let me start with an item that has already received considerable debate in our industry, the new BSI Thatcham Kitemark scheme for bodyshops. But, before launching into this, let me make three things clear. 1) The Bodyshop Fellowship fully endorses the introduction, and maintenance, of any standards that will help bodyshops, especially their profitability yet we remain implacably opposed to anything that involves the expenditure of bodyshop money for little or no return. 2) If bodyshops are being required to obtain and maintain imposed standards they must have a financial reward, and not simply be faced with an added cost. 3) As I have not yet had sight of the full package, I'd ask that my comments here be seen as reacting to available information rather than being judgemental. So, and with thanks to Bodyshop Magazine, I notice that the first year's price will be £2,450, while subsequent annual fees will be £2,500. Okay, it's not cheap but it does arrive with the best of intentions. Yet, and I'm only guessing, but many bodyshops will probably end paying more as extra equipment, systems and training may well be needed to meet the standards. Financially, with many bodyshops lucky to retain a net worth profit of £30 per repair, I'll leave you to do the sums. Were I a bodyshop owner, I'd want some convincing answers to the following four questions before going down this particular route. 1) Will having the Kitemark guarantee me more work? 2) Will having the Kitemark allow me to charge higher labour rates 3) Do I consistently face complaints over poor workmanship? 4) Must I now get the Kitemark to retain the work that I already have? Being cynical, I'm guessing that I'd probably receive three "NO's" and one "it may well be that way"; and in that order. In fact; one could argue that as our industry has managed to survive without a regimented set of standards for all this time, why the urgency now? Has the country suddenly become awash with badly repaired vehicles? With limited bodyshop money available to fund the exercise I, for one, find the prospect of bodyshops being overrun by legions of fully expensed "form fillers" very worrying indeed. Might it not be more practical to have a low cost, "on line," self certification system that's open to random checks? If such a system is good enough for the Income Tax people and the Vat man, I'm sure it can work here. Therefore, and based upon the information I have seen so far, I believe that making the standards mandatory represents the best way forward, providing that it fully unites work providers, bodyshops and policy holders to make this a success. For example, without total unification, work providers could be seen to be getting a "free ride" with this one because, while higher standards in their networks would make their policies more attractive to motorists, they would not have to pay higher rates to the repairers. Then again, because most bodyshops have several work providers, it's easy to understand why no one provider would act independently and "break ranks" by offering higher rates to any bodyshop having the kitemark. Would all work providers, for example, agree that work was only sent to bodyshops meeting the new standards? In fairness, it must be all of them or none of them. Then, on the other hand, while no one can questions the right of Insurers to offer competitive policy pricing, is the current "feeding frenzy" of cut-price insurances really in the best interests of the industry? Such throat cutting is of no interest to the repairers, as this cannot be the launch pad needed to create better rates for the bodyshops. Doubtless policy holders enjoy running their "state of the art" vehicles, but they must be educated into paying the higher premiums needed to reward the repairers. Without quality bodyshops to carry out repairs, what price your premium? I believe that most bodyshops would be willingly secure the kitemark, given that it had complete work provider backing. By this I mean that it forms the basis of a working partnership, one offering better guarantees of work supply allied to a more competitive package. Yes, of course labour rates are important but, if such a partnership is to work, the bodyshops must be given far more freedom to make the realistic profits needed to stay in business and invest then to in the future. So, if we are going to have the standards introduced on a mandatory basis, everyone must play their part. Policy holders should expect to pay more, work providers must improve their bodyshop contract terms, and agree not to send any repairs to unqualified bodyshops. In return, I'm sure that bodyshops will welcome "raising the bar of standards" were this to be seen as a guarantee of their future. Based upon what I have read so far, I cannot see it working in any other way because, let it become a "cherry pickers charter" and it will go exactly the same way as some other well-meaning ideas on standardisation. So, lets wait and see which way this one goes and, while it's great to have the work, having the right staff to do it is just as important. Then, and having got the right staff, many bodyshops can find that retaining them can be a nightmare. With margins pared to the bone and the work forces at full stretch, how many owners and managers live in daily fear of the "I leaving" letter? While this can be an occupational hazard, might I suggest looking at it from another angle? For example try adding up your annual cost of recruitment. Look at the cost of newspaper adverts, agency fees, lost production due to sudden departures, non performing new staff, management costs involved with interviewing, cv checking and letter writing and you come to quite a tidy sum. Also, never overlook the hidden cost that disruption and disillusionment, caused by a continually rotating work force, will have upon the business. On the other hand, try offsetting this against the cost of providing your employees with a good quality, private health care package that can take on existing medical conditions and can embrace family members as well. Healthier staff are happier staff and, with private treatment, it's quite possible that even poorly or injured staff may well be back working far sooner. Talk to the specialists; you may be very pleasantly surprised and it could well put a stop to those unwelcome envelopes that drop onto your desk from time to time! UPSELLING: A neighbour of mine, having had his car damaged in the recent gales, was put in contact with his local bodyshop by the insurer. My neighbour, knowing of my involvement with bodyshops has taken great delight in keeping me informed of events. Very quickly the bodyshop sold my neighbour £22 worth of collision damage waiver, and then went on to sell him a full valet for just £15. I loved it, professionalism at work. Why spend money chasing extra work when, for a little effort and imagination, one can bring in an extra £37 per job? Oh, and he gets daily phone or text messages keeping him fully updated with progress. As you can imagine, he's well impressed and is wasting no time in telling all his friends how well he's been treated. In fact he's happy spending the extra money because he was treated properly and was "sold to" very nicely. NB Being unfamiliar with the Financial Services Act, I'd advise taking professional advice before setting out to sell Collision Damage Waivers as, in all likelihood, this may well come under their terms of reference.
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