What If NAGS No Longer Existed?

Who in the auto glass industry hasn't pondered the following question: what if there was no NAGS? James Patterson, director of product management for NAGS, and James "Bud" Oliver, director of operations for NAGS, took the time to study that very question during the Independent Glass Association's annual Independents' Days conference earlier this May.

Patterson and Oliver undertook three possible situations that could occur if NAGS no longer existed.
In the first, they explored what might happen if there was no benchmark in the industry-nothing whatsoever on which to base pricing.

They noted that if this were to happen, likely each shop would have to determine the pricing part by part, and in contract negotiations, a buyer would have to obtain price lists from each potential vendor and comparison shop. In addition, Oliver and Patterson speculated that independent shops would not be able to survive "because large buyers … cannot realistically negotiate with thousands of potential sellers without a benchmark or similar mechanism."
Finally, they noted that if there was no benchmark in the industry, "reasonable and customary" pricing would no longer be based on a benchmark, so buyers would likely use the lowest published sales price from shops participating in negotiations.

Secondly, Patterson and Oliver took a look at the downfalls of what could occur if a new benchmark was created-but this time by a for-profit industry participant.

Under this scenario, which they noted would be the most likely to occur without NAGS, at least one or more industry participants with a stake in the outcome would publish price lists. Strong buyers would adopt the most attractive price list and would utilize it like they do NAGS, or might even combine two or more lists to make the list best suited to them. In the end, independent shops likely would be forced to use a competitor's price list but would have no input on the pricing. Some in the audience pointed out that this was very similar to what has happened in Canada.

Finally, Patterson and Oliver discussed what might occur if a new benchmark was created by a new not-for-profit organization or committee. They suggested that if this were to happen, funding would need to be provided by the industry and there would be no guarantee that there would be a positive outcome. Likewise, if a committee were to take on pricing, Patterson and Oliver said it would be difficult for participants, who would likely be industry members, to take direct action or responsibility.

Such a benchmark also would be beholden to special interests in that organization.

For more information, visit www.nags.com and click on "2007 IDG Presentation."