San Diego--Marc Brungger said he believes the nation’s economic downturn will only accelerate a trend he’d been seeing: the collision repair industry becoming “hour-glass-shaped.”
“Shops tend to be getting bigger or smaller,” said Brungger, executive vice president of Mitchell International’s auto physical damage division. “If you’re caught in the middle, you are clearly the most exposed.”
In an interview at Mitchell’s headquarters this spring, Brungger, who joined the leadership team at Mitchell two decades ago, spoke on a wide range of topics, from customer satisfaction tracking to the Mitchell’s aborted merger plans with CCC Information Services.
“I want to make sure the perception in the market is not that Mitchell was standing still” waiting for the CCC merger, Brungger said, adding that he was proud of the company’s transparency and communication efforts during the process and thankful for the patience of the company’s employees and customers.
“Our initiatives continued through that entire process,” he said. “We will have a series of really big advancements coming out in the next few months and throughout this year that are the result of what we did last year.”
One such advancement, Brungger said, is the roll-out this spring of version 7.0 of Mitchell’s UltraMate estimating system. Users will quickly notice changes to the “look and feel” of the program, he said, with Mitchell’s in-house “usability group” updating the program to make it easier to read and to find the information you need, and to navigate with fewer “clicks” in order to boost estimator efficiency.
UltraMate 7.0 also includes more automatic entry of P-page and related operations, Brungger said. Enter “remove and replace” of the right front door mirror, for example, and the time to remove and reinstall the door trim panel, if required, is automatically added to the estimate.
(Brungger cautions that the first users of UltraMate 7.0 won’t immediately see that new feature because it can’t be turned on until all users have migrated to version 7.0. That process usually takes four to six months, he said, so should be completed by late this fall.)
Mitchell has also released a “hosted” version of its Advanced Business System (ABS) shop management system, which allows shops that don’t want the expense of installing an in-shop computer network to use ABS across multiple computers, Brungger said.
The company is also seeing rapid acceptance by the industry of its Mitchell Information Center released at NACE last November, Brungger said. That product brings automaker repair information to estimators or technicians in standardized formats, he said. It includes vehicle dimensions, airbag and restraint system information, OEM bulletins and more.
“We know the cars are becoming more and more complex--more airbags, different construction, different materials and so forth,” he said.
“We also believe it’s harder and harder for shops to get experienced technicians. So providing more information from the car manufacturers in an easy-to-access system will make the shops more efficient, will reduce wasted time of logging on to different (sources) to get that information, and ultimately also will reduce the cycle time, which is a benefit to the insurance carriers as well.”
The system is designed to give technicians access to that information at the point of repair, Brungger said. Alternatively, estimators can find what the technician will need and provide it with the work order, either in a printed form or in an “electronic folder” the technician can quickly access.
The Mitchell Information Center is a good example of a service even some Mitchell customers may be purchasing elsewhere if they aren’t aware of Mitchell’s depth of offerings, Brungger said.
Adding RV, motorcycle, heavy equipment or boat repair to your shop’s services? Mitchell has estimating products for all those, he said. The Mitchell Information Center also includes much of the OEM information needed for mechanical repair work.
“People right now may be going to four different sources to get everything they could be getting bundled from Mitchell, and from an ease-of-use, support and financial perspective, it’s more attractive to get it from one source,” he said.
Next up for Mitchell is an effort to bring much of its offerings for shops and insurers together into one platform. The shop workspace (being called “The Repair Center”) on this new platform will include many of the different computerized tools shops are using today, Brungger said.
“It will be a single environment for collision repair facilities to conduct their everyday business from receiving assignments to (getting automaker information on) how to repair a car, to customer satisfaction indexing reporting,” he said. “It is all happening in this unified workspace.”
The insurer side of the platform will similarly bring together the various tools they are using, he said. While each side can maintain its proprietary data, the system is designed with the option of sharing whatever information each decides to share.
A shop could use the system to make the status of vehicles under repair visible to others who want that information, he said: the insurer, car rental company, and vehicle owner, for example.
Brungger said that while the estimating system currently serves as the “pipe” electronically linking shops and insurers, the Repair Center will serve as the shop’s link not only to insurers but to tow companies, parts vendors, and other trading partners. “We are very, very excited about that,” he said.
The company is currently previewing the new platform some clients and at its “road show” events that include June 9 in Denver, July 15 in St. Louis, and July 21 in San Diego (for more dates and details, visit www.mitchell.com).
But Brungger said the key piece of advice he’d offer to shop owners–particularly those who feel squeezed in the middle of that “hour-glass” and realizing they may be losing market share to larger players--is this: Act now.
“Whatever you do, don’t wait,” he said. While the nation’s economy will bounce back, he said, it won’t happen quickly, and customer habits and industry trends are working against those that stand still.
“If times are good, you don’t have to be a great business person,” he said. “If times are bad, you need to understand your cost structure and where your sales are coming from.
“You need to understand: Is walk-in business more profitable than direct repair business? Do I want to move toward one or the other? Do I want to shave some of my advertising dollars into insurance relationships?”
Shop owners often think they know the answers to those questions, Brungger said.
“But there’s a big, big difference between thinking you know and actually knowing,” he said.
Without measurements in place, a shop can’t know, for example, if its marketing is effective, if it needs to work on its closing ratio, or if cycle time or its parts or materials profit is its “weak link” that need attention.
Medium-sized shops–and shop owners who realize their strengths are more related to repairing cars than business savvy–now more than ever need tools to measure their performance in order to make good decisions, Brungger said.
“The fact is, whatever was good enough the past 10 years is not going to be good enough in the future 10 years,” he said. “The shop of tomorrow is too complex, too fast-moving. Without a sophisticated work-flow tool helping you manage that process, it just becomes more and more complex and difficult.”
Shrinking numbers of shops
Marc Brungger of Mitchell International said a downward trend in the number of collision repair shops across the country can be seen as good or bad news, depending on your perspective.
“We have seen an increased number of shops going out of business,” Brungger said, “and also a reduction in new people coming into the market. In the past, we saw people going out of business, but as soon as a shop closed, two people from that shop left and opened up another shop or even took over the existing shop.
“For the first time, we are now seeing that there is a misbalance between shops going out of business and the influx of new people entering the market.”
The net result is a drop in the overall number of shops, Brungger said.
“That is a very painful process, but as we come out on the other side, I think the industry will be healthier,” he said. “Weeding out some of the weaker players benefits the entire industry at the end.”
Here’s why. Brungger said he doesn’t believe labor rates over the years have kept pace with the added administrative and other tasks shops have taken on. Part of the downward pressure on rates is overcapacity in the industry: too many shops chasing too little work, and keeping rates low in an attempt to attract that work, he said. In a market with too much capacity, he said, shops don’t have much negotiating strength.
As the recession takes its toll on shop numbers, Brungger said, “the balance may shift,” which in the longer term is good news for those who make it through this “painful period.”
