It's Not Over 'Til the Big Guy Talks

The big event of the National Auto Glass Conference opened the meeting in Orlando this morning. A panel of industry executives, which moderator Wes Topping, chairman of the board of Belron Inc., called distinguished and put together before the Belron/Safelite acquisition, discussed the current state of the industry and its future.

On the panel were Rich Harrison, chief executive officer, Belron, Dan Wilson, president, Safelite, Mark Dawson, president, Glass Doctor, and Dave Taylor, chief operating officer and secretary/treasurer, Cindy Rowe Auto Glass.

Each speaker was assigned a topic to speak about and then the floor was open to questions.

Taylor spoke first about how to create a brand and specifically how Cindy Rowe did this.

He explained that Cindy Rowe started in 1980 by purchasing a small full-service business that was going broke. Today, Cindy Rowe has a 42 percent brand recognition in its market according to a study while its largest competitor has 2 percent. He credited this success to two things: It emphasized windshield repair, which was new, and the business was given a human face-Cindy Rowe.

Taylor said, "We also advertise all the time. We are in front of our customers all the time either on radio, television or in the paper. We don't tell a complicated story. And whatever story you tell, it has to be believable," he told attendees. "Every company has a story to tell. What you have to do is get it out there." He added that getting publicity is not free but it is an important part of developing a brand.

In a discussion on the subject of branding, Dan Wilson said that there will always be room for a well-run business in our industry. "What Cindy Rowe has done scares me," he said speaking of branding.

Wilson said that he would like to see increased profit in the industry, particularly in repair. Taylor said that if his company didn't do repair its profitability would be significantly lower.

"Once you build a strong brand, it's hard for someone to come in and fight that," Topping said.

"Branding makes the phone ring," Rich Harrison added.

"Your customers form an opinion of you from the time they start looking for someone to do the job until it is done," said Mark Dawson. "You're always branding."

Rich Harrison spoke about industry consolidation.

He pointed out that the manufacturers have struggled and there has been migration to production offshore. At the wholesale level, there has been a slow but steady consolidation to get market share.

At the retail level, which Harrison said he felt most comfortable speaking about, he emphasized that there is still fragmentation and room for consolidation. What is driving consolidation, he asked. "We've seen general price pressure which has put pressure on profitability," he stated. "This has made business owners more willing to sell and buyers more willing to buy."

Looking ahead, he said there will be more consolidation in the wholesale segment and the retail segment will remain fragmented. "We may see a slowdown in the pace of consolidation," he stated. "That is because of depressed profit levels which will make some consolidations less attractive." He seconded the importance of branding and said there would be a change in service levels-longer hours on weekends and in the evenings. "Consolidation could lead to improved industry conditions," he stated.

He said with consolidation there will be more discipline in the market in terms of how pricing is established and managed. "Companies that are larger will be able to invest in training so technical levels will increase," he said. "There is no magic pill for our industry. The trends in the industry today will continue for the next two or three years before we start to see improvement, I'm afraid." As we all know, he ended, "change will be the only constant."

In response to a question, he said that wholesale is less fragmented than retail.

Wilson's discussion topic was technology. He explained how the technology platform is leveraged to enable the business process at Safelite.

He said its claims operation services 4.5 to 4.8 million customers a year-insurance companies and Internet clients. "We upgraded our web pages about a year and a half ago," he explained.

He said the technology had enabled the company to go to a more mobile operation. A third of our operation comes out of our Internet and a third out of our mobile, he said. He said that email has become the method for collecting customer comment and that currently an email address is being obtained for about 65 percent of customers. "This is the new way of communicating," he said.

Most recently, he said that the company has been utilizing wireless technology. A pilot program has been underway for over a year where techs use a Blackberry for in-field transactions. "It has taken much longer than I had thought, but we are getting very close to rolling it out," he said. "One day I think we will take the order on the Internet and go all the way to getting the information to the tech without any paper or human intervention," he predicted. "We don't want to put something out there that we can't seen a pretty quick return," he added.

The IT shop has an annual operating cost of $25 million, Wilson said.

"The Internet is an untapped source for efficiencies in our industry," said Harrison in a discussion of the topic. He suggested moving claim verification to the Internet as an example. Managing costs is a huge challenge, said Harrison. "Our labor costs are going up."

Dawson said that Glass Doctor continues to see a shift to the Internet from the yellow pages.

For his presentation, Dawson talked about challenges and opportunities in the industry. "The change to cash transactions is going to continue," he stated. He pointed out that the labor pool is shrinking.

To protect our industry, Dawson said, we have to get legislation. To get proper installations and ensure consumer safety, we need ways to ensure that technicians are capable, he explained. "It is time for the associations to put aside individual differences and unite to get legislation passed for our industry," he said to applause.

He said that because consumers are looking to save money and taking higher deductibles, "By 2010, 70 percent of our market will be cash. That's huge. Glass Doctor has focused on building our brand nationwide," he said. "Those who focus on their customer and brand building will be rewarded."

Talking about cash versus insurance pricing, Wilson said that he listens to cash calls every day. "There is some very ugly pricing in the market and the insurance companies know that. I encourage everyone to be responsible. We're trying to be responsible," he told attendees.

"I think this panel has told everyone how to get success for their business," Topping said.