Blast from the Past: What the Publisher of AGRR and USGlass Wrote About Networks Before

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.

Don't Blink!
by Deb Levy

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 emerged.

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:

1. Find 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."

2. Listen 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.
Through all my discussions with independents and networks alike, it has always amazed me how convinced each side is that the other side was the cause of the price wars. The old line, "we have met the enemy and he is us," sure rings true in this case.

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."

9. Anticipate 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.
This is just one example of how our industry needs to become proactive in order to control more of its own destiny.

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 insurance companies?"
His answer has stayed with me for many years. "It's simple," he said. "The insurance companies tried to squeeze the body shop, but they all joined together and it didn't work. They tried to squeeze the mechanical and engine repair shops but that didn't work. Finally, they tired to squeeze the auto glass industry, and it was the first industry that blinked. Now they keep squeezing and you keep blinking."
Memo to the flat glass industry, networks and independents alike: This time, don't blink.



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