Former NAGS Executive Weighs in on Rebalancing
For What It's Worth: FUD for Good Reason

by Catherine Howard

I must confess that I am enjoying watching the game from the sidelines; no blood, no sweat, no tears. I have no axe to grind. It's no skin off my nose. I have no dog in this fight. No, nada, nothing. No one asked me to write about this. Perhaps no one even cares what I think anyway. But I still have a few friends left in this industry, and I am concerned about what I see taking shape around the NAGS® Rebalancing that is scheduled to launch on February 28th.

Don't get me wrong … been there, done that … I understand what is happening now; the need for change, the justification for it and the various perspectives. But I see a considerable difference between this rebalancing and the one in 1999. I also see many similarities. We could hope to learn from history so we won't be doomed to repeat it.

The primary difference that I see is the industry's reaction. Last time, people understood the fundamental problem. Discount percentages in the 80s and 90s just made us all look like idiots. Labor was extremely low, mostly flat, or non-existent. Same with kits. Once everyone accepted the fact that revaluation of the NAGS list was going to happen, they were very anxious to find out all they could about it so they could try to prepare for the change. Distributors put information packets together and held seminars to help their customers understand the impact of the change on their businesses.

I don't see that happening this time. Do a Google® search on NAGS Rebalancing, and the only distributor's site that shows up has a protest letter against the plan. A software provider offers some tools as does the NAGS website. Then there are a few trade publications with press releases, and that's about it. The only industry buzz out there seems to be a lot of FUD (Fear, Uncertainty and Doubt): fear that what little profit margin remains in this industry will disappear forever. Uncertainty about how the carriers will react with their O&A's. Doubt that hourly labor charges will ever come to pass.

FUD for good reason. All indications point to an increase in the number of net priced parts. That's right. There will no longer be 'r' parts as defined by NAGS, but make no mistake, there will be even more net priced parts on the distributors' addenda. And if the insurers don't support an equitable hourly labor rate, red ink will be oozing from every poor glass shop out there.
Is it likely that reasonable hourly labor charges will happen? It didn't in 1999. What will force the issue in 2005? It's true, pricing is being dictated by the customers or their representatives. The service providers have no power to price their own products. This industry is so weak it doesn't even have the negotiating leverage of a mediocre trade union.

So if the NAGS Rebalancing isn't the answer, what is? The Chicago Group? I'm afraid not. We would all like to think there is an answer out there, but maybe the answer is this industry has outgrown its crutches. A benchmark of any kind may no longer work for glass.

For decades, NAGS has been trying to represent multiple manufacturers with single, simple pricing. Well, pricing isn't so simple anymore. Maybe it's time for this industry to operate like every other consumer product and service industry out there where each Manufacturer establishes a Suggested Retail Price (MSRP) for the products that carry their brand. It works for consumer electronics, jewelry and watches, sports equipment and firearms, furniture and lighting fixtures, plumbing products and services, automobile accessories and repair (except glass) and even automobiles. What is so special about the auto glass industry that will not allow this simple concept to work for them?

But that's another issue. The issue at hand is what to do about the NAGS Rebalancing. If the entire industry is uncomfortable and not accepting the new pricing levels, wouldn't it be better to wait and re-evaluate the possible alternatives? It may be difficult for NAGS to retract the publication already distributed, but it is not unprecedented. In 1994, Mike Howard (then president of NAGS) announced that NAGS would republished the then-current Calculator because the industry did not feel it would serve their needs. Perhaps it is time for history to repeat itself after all.

Catherine Howard is the former vice president and general manager of NAGS. She currently serves as an industry consultant. Opinions expressed here are those of the author and do not reflect the thoughts or opinions of AGRR magazine/GlassBYTES.

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