Amberson Outlines Challenges, Opportunities
Wednesday, Oct. 31, 2007
By Bruce Adams, ABRN Correspondent
This is a challenging time for the collision repair industry, but opportunities exist for companies that want to grow their business despite the many obstacles they face today, says Darrell Amberson, president of Lehman’s Garage in Bloomington, Minn., and chairman of this year’s International Autobody Congress & Exposition (NACE).
“It’s challenging because we have an overcapacity issue – there are too many body shops that need more work – so repairers are in a weak position and insurers are in a strong position,” says Amberson. “Some insurers have taken advantage of repairers due to this situation, but all insurers do not behave alike.
“On the positive side, we are a large population, the number of drivers continues to increase and there is a need for repairs,” he says. “There are opportunities to grow your business, but there also are more challenges to grow and you have to look at things differently.”
Amberson recommends developing a niche, working hard at marketing and developing better processes.
NACE 2007 Chairman
Darrell Amberson, a 36-year veteran of the collision industry, is president of Lehman’s Garage in Bloomington, Minn., and chairman of this year’s International Autobody Congress & Exposition (NACE). He also serves on the Automotive Service Association’s (ASA) 2007 board of directors as Collision Division director and is chairman of the Collision Division Operations Committee.
Amberson, who has been involved with ASA since 1990, participates in the CIC Database Task force, the URG Advisory Committee and the CCC/Motor Industry Forum Group. He is chairman of the Hennipen Technical Colleges advisory board and is a member of a local AASP workforce task group and legislative committee. He was awarded the inaugural Russ Verona Memorial IBIS Scholarship at NACE 2006.
He earned his Accredited Automotive Manager (AAM) designation from the Automotive Management Institute in 1998, and has been a member of the Collision Division Operations Committee for more than five years. He has attended NACE every year since 1998, and has attended every ASA annual convention since 2002.
“Opportunities do exist for improvement and growth,” he says. “Some businesses won’t react to those opportunities by changing and they will fall by the wayside and create more opportunities for those that do change.”
When looking at the industry’s big picture, improving communications is one way to make strides.
“I’d like to see insurers and trade associations do more in this area,” he says. “It is a positive step that some insurers are embracing the industry advisory council. We need to talk about issues and work positively to improve communications. I-CAR accomplished that to a large degree. The industry was more adversarial with insurers before I-Car improved relationships through training and bringing insurers and repairers together to work on the same goals.
“But some of the ground that was gained has deteriorated. There is more of an imbalance of power now due to our overcapacity and a declining number of claims. Some insurers are being very aggressive in compensating for repairs. The behavior of bad insurers is more widespread and felt in the industry now more than before.”
Some of the key challenges the industry needs to overcome are estimating and labor rates.
“We pay so much attention to negotiating estimates up and down. We have to understand the estimating systems and what is included and what is not. We need to focus on a better system. Too much attention is paid to estimating systems and there is too much anxiety about them.”
Since State Farm Insurance has de-emphasized its labor rate survey, repairers have suffered and insurance companies have benefited, he said. State Farm used to perform an annual labor rate survey with shops that would help set rates for the upcoming year. In following months other insurers would adopt the increases. That process has been moved to an online survey and it seems to have de-emphasized its importance, he said.
“The online survey is not driving rates to be adjusted,” he says. “Other insurers are enjoying that position and are not adjusting their labor rates even when they are asked to move them. The rates are not moving with the increased costs of operations.”
For example, the cost of paint increased 34 percent in three years, but the paint and material rate increased only 7 percent during the same time, said Amberson. Some states, such as Rhode Island, have passed legislation relative to labor rates, and others, such as California, are considering it.
“I hate to see legislative solutions for labor rates, but I understand the necessity of it,” Amberson says. “It is not the right way to do it. Regulation is not necessarily the best solution because it forces everybody into the same bag. It may be necessary in some situations, though.”
Education and training continue to be important issues, and Amberson said shops that are struggling tend to cut those areas.
“If a shop’s financial picture declines but it still needs to keep a positive bottom line, they will cut education, training, the appearance of the facility and equipment,” he says. “It’s tragic to see that happen because when those areas suffer it comes back to hurt the business.”
Amberson said he is looking forward to the 25-year anniversary of NACE this year.
“My first NACE was in 1998. I always enjoy the education and training, and I learn a lot in the trade show,” he says. “I enjoy the classes, training and interacting with other repairers. I’m always impressed that so many people spend so much time and money to go and make yourself better.”