ONTARIO SHOP ASSOCIATIONS SHOW NEED FOR PAINT PRICE INCREASES

May 2000

With increased costs for refinish paint being passed on to autobody repair shops, coupled with tighter environmental controls on their use and disposal, three southern Ontario autobody associations have issued a release calling for a $24 per paint refinish hour rate for its member shops.

The Hamilton District Autobody Repair Association (HARA), the Peel Vehicle Repair Association (PVRA) and the Toronto Collision Repair Society (TCRS) say they have announced the $24 recommended rate, after unsuccessfully trying to get a Canadian materials estimating guide designed and printed for the country.

According to John Norris, executive director of HARA, "A (third-party produced) materials and paint pricing guide for this country, similar to those guides well used and respected in New York, California and elsewhere, would be one of the answers to properly invoicing customers and insurers.

"Despite requests to the data providers in Canada," he continues, "we have no certainty that the guide will be forthcoming, and the increasing costs that coatings firms are passing on to the shops is creating an unfair situation for shops and their customers."

Use and acceptance of low emission paint product in Canada, in concert with higher efficiency spray guns, has dramatically reduced paint sales volumes by refinishes manufacturers, says a news release from the three associations. "In 1985, 32 million litres of auto refinish paint were sold in Canada. By 1992, volume was down to 18 million litres and some estimates are that paint sales in Canada will plummet to below nine million litres this year. Coupled with consolidation of a number of paint manufacturers, increasing raw material costs, upward pressures on U.S. exchange rates, and (with) a diminishing marketplace, paint prices are going up significantly."

The release further states that paint companies, supplying over 92 per cent of the Ontario marketplace, have announced price increases of 4.5-7 per cent at some point this year.

Mitchell International, the release continues, has announced that from 1989 to 1996, the cost of paint materials has increased "by 62 per cent while payments for those materials increased by only 13 per cent.

"Other provinces in Canada have recognized the problem, with Manitoba's paint reimbursementcharge-out rate being raised to $24.02 per hour, Saskatchewan's at $24.45 and British Columbia raised their charge-out rate for this year to $24.73 per hour."

With all this in mind, the three associations recommended that paint charge-out rates by their member shops be raised to $24 per refinish hour on June 1st, "to allow information providers data systems and insurance company claims departments time to work with the new prices.

"Our fear is that shops, faced with losing money because some insurers would pay them less than the costs of their paint, will attempt to recover those losses improperly elsewhere in the invoicing--called cost shifting--or not properly handle their environmental responsibility for the application and disposal of paints in order to cut their losses," Norris explained. "We hope that these new prices will continue to encourage shops to operate legally and be environmentally friendly."

The associations made it clear that they are only recommending the rate increase, and that shops are under no obligation to charge these prices at their own particular facility.

HARA is also providing a free backgrounder package to shop members, as well as insurance, government agencies and the media. The backgrounder contains pricing comparisons, non-VOC controlled and VOC controlled jurisdiction paint pricing levels, and paint price increase data from 1988 to present, increase pricing announcement documents from paint companies, and sample descriptions of Material Estimating Guides. Copies of the national standards and guidelines for paint content and comparisons from other provinces and jurisdictions are also included.

For the free package, call HARA at (905) 662-9499 or 1-800-318-DENT.