The following is excerpted from Deb Levy's column, The Issue at Hand, which was first published in the July 1994 issue of USGlass Magazine, when the flat glass networks first started taking shape.
This is one of those
columns most editors would shy away from writing. I nearly did. You'll
see why in a minute.
Our lead news story
for this month is about the emergence of so-called "flat glass
networks." Globe Glass & Mirror of Chicago, IL, has announced
it will pursue a variety of work nationally from both insurance and
non-insurance customers. The services offered are very similar to those
the auto glass networks provide: 800 numbers and referrals, consolidated
electronic billing, national pricing.
Let's hope our industry
uses the lessons from the first time around when auto glass networks
No issue has spurred more controversy and more emotion than the advancement of networks in the auto glass industry. But that development process also yielded a number of important lessons about what to do and what not to do. Here then are some suggestions to the flat glass industry based on auto glass companies' wisdom born of pain:
an effective mechanism for communication with each other. All the
companies that provide services to any particular network share common
concerns and similar challenges. They need a way to share those concerns
with the networks for whom they work.
Independent auto glass retailers have struggled during the past ten years to find an appropriate vehicle to use to leverage power and communicate with networks. For a variety of complicated reasons, no trade group or association, organization or legislative effort currently serves as that vehicle. As a result, communication is occasional, piecemeal and "network-driven."
to understand. We all know that what our customers say and what
they mean too often are different things. For years, property/casualty
insurers have been saying that they needed to reduce the costs of auto
glass claims. The independents heard them, or thought they did, and
translated the need for "cost reduction" as a need for "price
reduction" and began lowering prices. Some areas of the country,
such as Minnesota, still bear the scars of an internecine war in which
daily price cutting was common.
The networks, however,
really listened to the insurers. They learned that the actual cost of
the auto glass parts were secondary compared to the cost of processing
the claim. So they developed ways to reduce the cost of claims' processing
through electronic data interchange (EDI) and other avenues. This left
independents unable to compete on any level except price, leaving them
fighting the war with the wrong weapon.
3. Do not underestimate your power in any particular area. The networks have discovered what the independents have known all along: that local ties are the strongest. Neither side should underestimate or dispute the influence local glass shops have within the local economy. Networks should not underestimate the influence the local insurance agents and adjusters have on the insurance companies. Independents should not underestimate the influence networks have on insurers on a national level.
4. Remember the differences. Networks will need to recognize that all independent shops are not alike. Independents should remember that all networks are not alike. Networks must be sure to deal with quality companies that compete on many levels, not just price. Flat glass subcontractors will need to distinguish themselves for more than price. As one local agent told me: "In most smaller towns, there are a lot of companies that do quality auto glass installations but only a few companies that can do quality storefront work. Even fewer still can do complicated commercial work, and it's me, not some guy 1000 miles away, who knows who they are."
5. No company should work for less than its cost. This item needs no further discussion.
6. Recognize regional differences in cost-of-living. Even McDonald's charges different prices for its hamburgers in different parts of the country. I know of no other business beside the auto glass business that does not take into account regional differences in cost-of-living. Flat glass independents will have a greater challenge given the regional differences in labor and material costs if "flat rates" take hold nationally.
7. Educate. Networks
have a high level of credibility with insurance companies. That
credibility should be used to educate those companies about safety issues.
Both the Claims and Underwriting departments need to be educated about
the importance of using safety glass, the situations under which an
installer must bring a facility up to code, when modifications must
be made to meet the requirements of the Americans with Disabilities
Act (ADA), etc.
"We get rapped
all the time for not paying for mouldings, urethane or other items,"
said one auto glass network vice president. "In reality, we don't
get paid for those items from the insurance companies. We should be
paid for both safety and economic reasons. But we aren't because we
haven't done a good job yet of educating the right people. Claims people
care about one thing-lowering payouts. It's the underwriting people
who assess risk and need to be educated about the risks when the right
materials aren't used."
The networks should
begin to educate insurance Underwriting departments about the Federal
safety glazing laws and building codes, ADA, hurricane codes and different
types of glass available. Independent shops can provide the same education
for insurance agents on the local level.
Networks also must
develop a policy to use in those instances in which an insurance company
wants a material used that is not up to code or is illegal. We all know
this happens every day. "I don't need any of that tempered glass,"
says the customer, "if you won't put plate back in, I'll go down
the block and find someone who will."
Remember, the network
is, in effect, the subcontractor's customer and the network has pledged
to do all work according to code and law. So for the first time, independents
should not have a customer who will "take the job down the block,"
if an installation requires value-added work to bring it up to code.
But a great deal of education needs to happen so that insurance companies understand why this value-added work is necessary and to insure that neither network or independent bears the potential liability of doing work that is not up to code.
8. Get paid for
what you deliver. A recent court case awarded fees for three day's
storage to a shop that had held a car with a new windshield until the
urethane cured. The irony of this story was that the lawsuit winner
was not a glass shop-it was a body shop. (See USGAuto, June 1994, page
49). "I just looked at the urethane instructions and it said that
a certain humidity level was needed in order for the urethane to cure.
I kept the car until we had that level and the urethane cured,"
said the shop's manager. That body shop got paid for what it delivered
and for putting safety first. We all know what would have happened if
a glass shop had tired to do the same thing.
"The flat glass industry needs to think about what services it is delivering and make sure it receives compensation for all those services," said another glass network vice president. "Or they'll be waiting for some other industry to show them up."
and be proactive. If the flat glass industry can learn anything
from its auto glass brethren, it will learn to anticipate problems and
become proactive. For example, all insurance companies track their windshield
repair percentages and I would expect pressure to repair flat glass,
rather than replace it, will increase. A number of plate glass repair
systems are already in the marketplace.
If the flat glass
industry is smart, it will address one of the issues of the safety and
structural integrity of the repaired glass now, rather than later. The
auto glass industry is just now attempting to standardize when and where
windshield repair is used, after nearly 15 years of use in this country.
If a lite of safety
glass that has been repaired does not meet the ANSI Z97.1 test, it will
have one set of implications for the industry. If it does meet safety
glazing tests, then an entirely different set of implications will be
true. Either way, work should begin now, not later.
10. Don't blink.
I once asked the vice president of claims for a large insurer about
the problems of the auto glass industry. "Why is it that no other
part of the auto collision or repair industry has the problems the auto
glass companies have? Why is auto glass put under a microscope by the
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