The AGRR industry had a mixed reaction to news that State Farm is changing its “offer” on September 19. “We’re bracing ourselves,” says Dennis Farrar, president of Oesterle Auto Glass & Paint in Parkersburg, W.Va.
“I’m not sure what to think about the changes,” he says. “They’re getting a deeper discount. Either you take it or you don’t and go out of network. It wouldn’t be good for our business to go out of network. But from a relative perspective, State Farm isn’t seeking as much of a discount as some of the others. It could be a lot worse.”
The labor increase should have gone up to $45 per hour instead of $38, says Jason Polzin, owner of Polzin Glass in Faribault, Minn. The previous labor rate was $35 for State Farm.
“You’re supposed to be training your technicians and ensuring you are doing the job right. The labor rate should be quite a bit higher,” Polzin says. “We’re in Zone 2, so we’re losing 9 percent.”
Polzin’s company works with State Farm on an individual contract basis.
David Warren, president of Apple Glass Company in Houston, says he is pleased by the labor rate increase.
“That will help us a bit,” he points out. “Otherwise, we really won’t see much of a difference.”
Patrick McKernan, president of American Mobile Glass of N.J., doesn’t expect the price change to impact his business much either.
“We currently offer customized pricing to State Farm, so our discounts are higher than the new rates are anyway,” he explains. “As far as labor goes, it is $3 per hour higher, which I don’t think will be making or breaking anyone. What they’ve done is taken more of a discount off the NAGS list price, and tried to supplement somewhat in the cost per hour labor. Unfortunately, it still decreases the overall pricing for many glass companies nationwide, which will ultimately continue to put pressure on our industry.”
Everyone wants a safe and proper installation, but unfortunately no one wants to pay for it, he says. “Sooner or later consumers are going to have to realize that there is value in quality installations and not just base it on the price, particularly as windshields become more feature enhanced,” McKernan says. “Just like our industry though, the insurance industry is consumer-driven, and when the customers’ main priority is price, that gets passed down to vehicle repair facilities such as ourselves, so we understand State Farm’s position in having to alternate the pricing.”
To learn more about State Farm’s changes to its offer and acceptance program, click here.
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