Canadian Collision Industry Forum
Hilton Montreal Airport, Montreal, QC
Saturday, October 18, 2008
Next stop - CCIF Toronto. January 24, 2009
Register Now at www.ccif.net
The principal reason that CCIF moves from city to city is to provide local collision repairers the opportunity to attend a national meeting. Determined to maximise the opportunity, the Quebec based agenda planning committee succeeded admirably in promoting CCIF locally and attracting a large contingent of Quebecois collision repairers among the nearly 300 CCIF participants.
Their attendance was rewarded with a full day of presentations on topics of value and relevance. After CCIF Chairman, Tony Canadé's opening comments CCIF was welcomed by City of Montreal executive committee member and Mayor of Saint-Laurent, Alan DeSousa. Mr DeSousa congratulated the collision repair industry on its progress in the use of environmentally products and processes. After outlining the steps that the City of Montreal is taking on sustainable development, he encouraged the industry in its efforts to support recycling of auto parts and to reduce waste.
Remy Rousseau described how the collision repair industry in Quebec serves a population of 7.7million people with about 1500 shops. Over 600 of those shops are affiliated with the networks, CarrXpert, Fix Auto, ProColor Prestige, Autopro Collision, Color Plus and Carstar. Although these networks account for about 40% of the shops in Quebec, they represent about 65% of the sales volume. The challenges faced by Quebec collision repairers were similar to those in other provinces with a mix of urban concentration and widely spread rural communities. The Quebec industry benefits from being well supported by all major suppliers as well as CPCPA, the provincial parity committee responsible for protecting the rights of automotive service industry employees, CSMOSA, the sector council automotive service training, Auto Prevention (Health & Safety) and Recyc-Quebec (Environmental).
The future of I-CAR in Canada is under review and I-CAR's president, John Edelen, outlined the options which are being studied by a task force. These included the establishment of I-CAR Canada as an independent organization operating under licence and choosing its own way to deliver the training needed by Canadian collision repairers. John emphasised that I-CAR is determined to find the right business model for providing accessible, relevant training that is wanted and needed by Canadians. The increasing complexity of vehicles and the speed of technology changes make training an essential service, but I-CAR recognises the need to understand what role the market needs it to fill.
Successfully transferring the family firm is an issue soon to be faced by many aging baby boomers, began Patrice Vachon of Fasken Martineau. He then cited a recent survey showing that only about half of small business owners had a clear succession plan for their company. While 84% planned to exit their business "quite soon", they should be aware that only 5% of those before them have managed to plan and execute it successfully. The first important point to note is that for many business owners in their 50s, it is already late to start planning, so immediate action is called for. It is essential to seek the help of experts in order to understand all options, their implications and their likely chance of success. It is important to not only identify potential successors, but make an objective assessment of their capability and commitment to taking on the business. With 2/3 of family businesses not reaching the second generation, it cannot be assumed that a business will automatically be taken over by a family member. If not, who will buy the business? How is the value assessed? What are the tax implications? These are just a few of the basic questions that have to be faced.
There has been a steady decline in the retirement age to 62, said Patrice. However, the 45% of people who are retiring before 60 are mainly employees, not business owners, who without an exit strategy, just keep putting off retirement, making excuses and claims about still being young and active, not wanting to just play golf every day, etc. The harsh truth is that in the next ten years it will become harder than ever to replace retiring employees and there will be fewer potential buyers, particularly outside the largest cities. Apart from delaying the planning process, the options are usually, 1. passing the business to the children, 2. transferring it to key employees, 3. selling to a third party and 4. liquidation. Patrice urged business owners to seek professional advice, not only from their regular support team of banker, accountant and lawyer, but from specialists able to provide expert help on planning and executing a strategy that will enable them to enjoy the fruits of their lifetime's hard work.
Program director, Leanne Blackborow, reported on the progress being made in using local, provincial and national Skills Competitions to raise awareness of collision repair as a career choice for young people. Having achieved the program's first goal to establish a 2008 national car painting champion to represent Canada at WorldSkills Calgary in 2009, Leanne outlined the plan to create interest and excitement at next year's national competition in Charlottetown, PEI. She called for volunteers to help with judging, setting up of the display area, greeting visitors and more. Volunteers would also be needed at the provincial Skills Competitions, helping to ensure that collision repair stood out from the other 40+ trades on display. Initial sponsor funding had enabled the CCIF Skills Program to get started, but sustained support is required to achieve the program's goals through 2009 and beyond. Leanne thanked the many companies that had already committed to financial support, equipment, materials and their time, asking others to add their contributions and spread the cost far and wide across the industry.
Further information on how to support this initiative can be obtained from Leanne at firstname.lastname@example.org
There are plenty of training opportunities in Quebec for young people interested in collision repair. Gaston Amiot of the Saint-Jerome Centre for Vocational Studies explained that there are 13 training centres in the province, where students are offered a choice of apprenticeship programs that lead to achievement of the Diploma of Vocational Studies in just 14 months. With the educational system playing its role in preparing young people for entry into collision repair, how can potential employers attract and keep the best, asked Gaston. As well as providing a clean and pleasant working environment, employers need to understand the Y generation, the 16-30 year olds who have grown up in a very different world from their parents. They expect instant gratification, they are technology savvy, they have grown up being protected and rewarded. So if they seem so demanding, why hire them? Treated with respect and attention, they are ready to become valuable employees, bringing creativity and innovation to the business. They are open to change, willing to take on new challenges and they make strong team players, wanting to be involved in decision making, not just blindly accepting someone else's decisions.
In order to attract and keep the best students, a proactive approach is needed; visit the training centres, make presentations, explain your vision and values and invite them to your shop. Talk to them about your staff and explain how you coach new employees. In order to keep them, listen to them, be responsive to their needs and their personal situation. Acknowledge their successes, design flexible work schedules, provide individual mentoring and create opportunities to have fun in the business. "They're there," concluded Gaston. "Give them some good reasons to choose you."
The use of Key Performance Indicators (KPIs) is essential to the management control of a collision repair shop in providing an analysis of data and helping to stay on target. But Christopher Lussier of BASF Canada warned that monitoring and measuring too much data can be overwhelming and defeat the whole purpose of performance measurement. Only when the business strategy and goals are clear, should just a few KPIs be selected for regular monitoring. They must be the ones that most directly impact the results the business is aiming to achieve. For example, if a business is focusing on growing sales volume, the most important KPIs to monitor may not be the same as those where the focus is on growing profitability.
Having aligned KPI's with business goals, it is then essential to communicate and get buy-in from key staff. Only then will it be possible to get the level of co-operation and teamwork needed to improve the KPIs and business performance. Team members will have to agree how often KPIs will be measured and reported, by whom and to whom. Most importantly, how will necessary actions be identified and acted on. As strategies and goals change, so may the KPI's that need to be measured, added Christopher, but make sure that your dashboard is simple and clear enough to be understood, so that you can keep your eyes on the road and reach your chosen destination.
Competition and the pursuit of excellence are factors that drive technical innovation among auto manufacturers. BMW is no exception, as it continues to penetrate the Canadian market with vehicles bearing their fair share of leading edge technology. Success in selling increasing volumes of such vehicles also brings with it the responsibility of facilitating repair through the availability of parts, equipment and technician competency. BMW takes this responsibility seriously, said Eric Leport of BMW Canada. He explained how BMW works closely with its dealers and selected independent repairers to ensure their capability in carrying out safe repairs. He stressed the importance of recognising the need for special repair techniques when repairing vehicles with aluminum and high strength steel parts and where new adhesives and bonding techniques are necessary. These techniques are not instinctive, said Eric. Repairers must be aware of the materials and techniques used in building the vehicle and accept the fact that there is only one right way to carry out the repair. In order to increase awareness of the materials and techniques by BMW, Eric then showed details for each model line.
Guy Bessette of Fix Auto provided a glimpse of several collision repair markets in Europe, sharing some statistics and commenting on each market's dynamics. It is important to understand what is happening in the world around us, said Guy, because in the global economy, there is always the possibility that external methods and trends might find their way to Canada. For example, technology changes such as the conversion from acrylic enamel paints to 2 pack acrylic urethanes and basecoat/clear finishes came from Europe. Now we are again following the European example with the next wave of paint technology change, as we switch to the waterborne paints and low VOC systems that are used by all European repairers in order to comply with VOC legislation.
Despite dramatic reductions in the number of collision repairers in countries such as the UK, where just 4000 shops serve a population of nearly 60 million, the industry there still struggles to be profitable. The cost of increasingly sophisticated materials and equipment, insurance company practices and the difficulty in attracting quality young people, are all issues that have to be faced to remain in business. One particular trend that is beginning to take hold in North America is insurer parts and service procurement, a practice already well developed in parts of Europe.. There are various models in use across Europe, all designed to drive down the cost of parts and services by leveraging insurers' buying power, so it may pay to keep informed and develop an understanding of what it might mean to your business, in case it becomes an issue that more and more Canadian repairers have to face.
Guylaine Lauzon of 3M Canada started with some simple home truths about the nature of collision repair industry, before looking at the trends affecting business viability. These include the continuing erosion of margins, the drive for higher quality repairs and the flexibility required to meet the increasing demands of different DRP programs. Current trends include the drive to improve and simplify the claims process, more parts replacement instead of repair and the increase in total losses. As new changes and challenges confront the collision repairer every day, it is important to remember how profit is generated and how it can be grown, said Guylaine. It comes from increasing sales, reducing overhead and direct costs, and maximising productivity. Sales can be increased by impressing vehicle owners and insurers with the quality of the facility, customer service and repair quality. A tour of the shop, a simple explanation of the repair process and some personal attention at a time of stress, will impress vehicle owners and cause them to tell a positive story to others who may be potential customers. Growth can also come from recognizing that all employees are part of the sales team and helping them understand the role that they can play in increasing sales, including offering additional profitable services.
The ability to reduce costs without affecting quality or productivity comes from measuring and monitoring them and understanding their impact on different types of job. Job size, accurate estimating and work scheduling affect costs, as does providing the right tools and equipment to facilitate high productivity and quality work with no come-backs. Labour represents about half of sales and provides the greatest gross margin opportunity, so investments in training, equipment and process management can lead to increases in profit. To look at it another way, concluded Guylaine, consider the negative impact of high staff turnover, untrained staff, cheap, low quality materials and poor estimating. Why would anyone choose to run their business like that?
Although the new forthcoming VOC regulations have been well broadcast throughout the Canadian collision repair industry, it is estimated that only about 1000 of the country's 8,000 shops have converted to the low VOC products and processes. Patrice Marcil of DuPont Performance Coatings went on to emphasize that no significant changes are expected to be made in the soon-to-be published Gazette 2, particularly with regard to the "stop sale" date of January 1, 2010. The Canadian Paint and Coatings Association will continue to lobby the government for financial assistance in the conversion process, but that does nothing to change the fact that there are still approximately 7,000 shops to be converted, a seemingly impossible task in the time frame available. Collision repairers must understand that this is like no other technology change, said Patrice. There is nothing optional about this one. Paint suppliers will be prohibited from selling non-compliant products on January 1, 2010 and will probably run out of fast moving items some time before that. It is interesting to consider what seems likely to happen at that time; unconverted shops may find it difficult to use the new materials and processes without training and new equipment. They may have to close or interrupt their business operation, thereby providing an opportunity for their competitors to take business from them. At the current rate of conversion, there could be up to 2500 shops in that situation, concluded Patrice.
Raymond Girard of GRG Consultants shared his insight on trends in the insurance industry and how this may impact collision repairers in the years to come. In the last 15 years the top 10 insurers in Canada have increased their market share from 53% to 69% and as this trend continues, they will adopt a culture shift towards procurement, they will build stronger teams and put an emphasis on innovation. Insurers will be driven by the increase in catastrophe potential, the impact of the financial crisis on their investments, a new cycle showing higher loss ratios and the cost of competing to grow market share. The collision repair industry needs to constantly be aware of what drives its major customer, the insurer, added Raymond. As insurers adapt to their industry's market conditions, so must their suppliers and business partners.
Tony Canadé concluded the meeting by thanking presenters and commenting on the wealth of information that had been shared. It was also clear that many had made the most of CCIF as networking opportunity and a chance to practice their English or French. Tony encouraged all participants to attend the next CCIF in Toronto on January 24, 2009.
CCIF thanks the following sponsors for their support in making CCIF and this meeting possible. Sponsor contributions also enable meeting fees to be kept at a level that makes CCIF accessible to all.
AkzoNobel Coatings Ltd.
ARPAC Inc. and ARPAC.COMM
BASF Automotive Refinish
Canavans Central Appraisal Limited
CARSTAR Automotive Canada
C.K. Collision Centres Inc.
Co-Auto Co-Operative Inc.
Cross Canada Auto Body Supply Ltd.
Discount Car & Truck Rentals Ltd.
DuPont Performance Coatings
Impact Auto Auctions Ltd.
Keystone Automotive Industries
Monidex Distribution International
Ontario Automotive Recyclers Association
PPG Canada Inc.
Pro Color Prestige
Publications Rousseau & Associés
Sherwin-Williams Automotive Finishes
3M Canada Company
Canadian Collision Industry Forum (CCIF)
128 Cranberry Lane
Aurora, ON L4G 5Z3
Tel: 905 726 9027
Fax: 905 726 9038