Here is The Smoking Gun

September 12, 2006 by
Filed under: Collision Repair Industry 

I’ve already written about the data providers sorry excuse for their universal blend formula of 50% of base paint time. As obvious as it is that that formula is completely bogus, and that the talking heads in charge at Motor, CCC, ADP and Mitchell are playing a desperate game of Cover Your Ass to keep the collision repair industry sending in those monthly payments, the data providers have one thing on their side–time studies. Time studies are much like opinion polls, they can be manipulated to produce any desired result. But as the data providers’ response to my article about blend times shows, they still have those bogus time studies to point to and say, “See! It’s right here! Our time studies say that 50% time for blending is accurate!” We know that’s crap. Last night, though, it came to me. That other issue we’ve been complaining about for years, Thresholds and Caps, can not be defended with data and bogus time studies.

All three database providers (let’s combine Motor and CCC to make things less complicated) discuss their 2.5 hour clear coat threshold in their estimating guides and P-Pages. It’s interesting that they call this P-Page Logic because their is nothing remotely logical about a 2.5 hour clear coat threshold. Yes, we all know that bumpers, jambs and interior surfaces are not included in this threshold, so theoretically you can get paid for more than 2.5 hours of clear coat with the threshold in place. They all make the point that this threshold is for outside surfaces only. Again, all three providers use this exact magical figure of 2.5 hours. Where did it come from? What time study could possibly support this. It is not a fraction of another predefined labor time like the 50% blend time. It’s out there all by itself.

So let’s get this straight, if you are painting a hood, roof and trunk lid of a full size car, that threshold will probably be triggered. Now they expect you to paint two quarters and maybe a door or two without taking any more time? How can this happen? How can it take 2.5 hours to clear coat three panels and take no extra time to clear coat an additional three panels? How is that logical? How can anyone but a lawyer or politician explain that? There is absolutely no logical basis for this clear coat cap crap. Yes, all three data providers allow you to change these thresholds, but all three are sure to use the 2.5 hours as the magic number in their user guides. Why is there any threshold at all?

Clear coat caps are the less insane of the insanity we call thresholds. The one that truly is the smoking gun and proves insurance industry complicity is the Paint Materials Cap. We’ve all seen it on an estimate, and all three data providers accommodate three different thresholds. They use a separate threshold for single-stage (is anyone still painting single stage?), two-stage and three-stage finishes. Oh this is brilliant. It is so illogical that it is difficult to have a discussion about it. It defies understanding. It’s like two lay people trying to discuss the boundaries of the universe. It cannot be grasped by mortal minds. However, this mortal mind will try untangle it enough to get you pissed off enough to get off your asses and insist this practice becomes extinct.

Here’s their logic folks. Paint the entire side of a vehicle using $349 dollars worth of materials. Now paint the hood and another fender for $1.00 worth of materials. Whoops! The $350 materials cap has been reached. They expect your paint supplier to now sell you $175 worth of paint and clear for $1.00. Well aren’t they generous all of a sudden. Do you see how difficult it is to even have a conversation about this? You shake your head and slap yourself in the face to clear your vision and your thinking, and say to yourself, “What the hell is this idiot talking about?” It makes no sense.

As a business person, and more importantly, as a software developer, I can assure you that most business people and all software developers are very logical thinkers. Creating software like an estimating system requires writing tens of thousands of logical lines of computer programming code. Everything letter, word, line of code and written procedure must be correctly and logically written for the software to work properly. A software developer would never come up with a paint materials threshold on his own. Nor would the engineers and designers. In fact, those people who actually wrote all the code for CCC, ADP and Mitchell were probably questioning the sanity of the people who came up with the idea.

That being said, there is only one source for this moronic concept of thresholds. Anyone want to guess? Hmm…….? That’s right, it was some hot water bottle at an insurance company. Whether it was CCC, ADP or Mitchell who incorporated it into their estimating system first, I don’t know. But it was such a great selling tool when marketing their software to the insurance industry, everyone had to jump on the crazy train. After all who’s going to question it? The geniuses running the body shops won’t argue.

So here is your smoking gun. Here is hard evidence that the data providers sometimes do things that make no sense, things that are just plain wrong, to appease their largest customers, the insurance industry. We all felt it in our guts that we were being taken advantage of by the data providers. We had anecdotal evidence. I presented what I thought was pretty good empirical evidence in my article about blend times. Unfortunately, those in power at the data providers denied their statements and keep invoking those precious tme studies. When ADP lowered their paint times they were able to blame it on a database error. Plausible deniability. When Mitchell suddenly included reduced times for gluing on quarters despite manufacturers recommending against it, we got a “Whoops, sorry. My bad.”

How are they going to explain away thresholds? We already know the answer to that. They ignore us. Silence. They ignore us because there are only a few of us making noise. They don’t get phone calls and emails. They don’t lose large number of subscriptions. They do tell us that these are merely options that can be turned on an off by the user. Well that makes me feel warm and fuzzy all over. That’s like giving an Islamic terrorist the option of flying a plane.

They won’t explain thresholds because there are no possible explanations for them that wouldn’t make them look like puppets of the insurance industry. No time studies to blame and no software errors. Worse than that, all three providers use the same 2.5 hour cap on clear coat. Since there is no logical source for this cap, they either all got it from the same nefarious source, or they copied from one another. Either way, they look like fools. The same with materials caps. Without any facts to back up these thresholds where did they come from? How did they magically appear in the software packages of CCC, ADP and Mitchell?

If I thought I could make enough money to survive at my current lifestyle by developing my own estimating system using a new database, or by getting a coalition of collision repairers together to fund and develop it, I’d start today. But I have no faith in the collision repair industry to support such an effort. As soon as some insurance company told a repairer they would not accept estimates from this new system the repairer would buckle to the pressure not use it. Until shop owners become activists in their own industry they will suffer miserably at the hands of the insurers and data providers. And they will deserve their misery.

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Comments

9 Comments on Here is The Smoking Gun

  1. Mastertech on Tue, 12th Sep 2006 2:36 pm
  2. Arbitrary caps on anything involved in the process of auto repairs should be deamed illegal price fixing. Which it is. No paint line I have ever used including lacquer gets cheaper the more you make. Blend within panel is a new way to f%$# everyone that agrees to it. Try and explain all this to Joe customer or Ms.Joe customer and it is like teaching a three year old rocket science. You have to admit the insurance crooks are crafty. How about undervalueing total losses. They have a think tank sitting around figuring out how to screw us stupid shop owners. I for one john do not let them but there sure are a bunch that do. Watch and wait as the new SF deal takes ahold of there gohaneys!!

  3. MIKE KIME on Wed, 13th Sep 2006 8:50 am
  4. Good for you.
    nice piece,
    Now if you could just get the rest of the industry to wake up and listen it could be great.
    Good luck with that though.
    Thats like waking the dead.
    It will not happen.

  5. Wade Ebert on Wed, 13th Sep 2006 10:01 am
  6. I had a conversation with Mitchell this last year. It started as an inquiry about numbingly short labor on a VW Phaeton. After I had worked the phone through four or five folks who passed me over their heads, I eventually talked to the technical (database) editor (Gene Alexander as I remember). He told me that they had not only never taken one apart but that he had only ever seen one… at the dealer, and then only to have a look at the “W” motor. So… they… guessed. Nice. He did say that he appreciated the feedback. I innocuously turned the conversation to refinish issues an asked:

    “Since Mitchell has developed the labor “time” for these operations and has assembled both the included and not-included operations, what is the breakdown of those operations by percentage of the labor eventually assigned?

    I was told “Well Wade, we don’t have those figures.”

    Really? Hmmm. I then posed “But certain operations within the system are also figured by percentage…”

    He paused… then responded “Well, yes.”

    I went on “Well my point is… if you don’t have those breakdowns… how, how do you do the math?”

    No response. I asked “Let’s talk about a hood refinish operation, of the say… 2.6 that is listed for outside application of color… how much is actually ‘spray time’? What? Two tenths maybe?”

    He responded “Oh Wade, if you stand over the hood and pull the trigger for twelve minutes… the color will be running off onto the floor.”

    “Exactly. So perhaps between one tenth and two tenths?”

    “No. Actually I’d say one tenth would be sufficient to apply color to full coverage.”

    “Thank you” I said. “The point being the vast majority of the labor that must be performed to the entire panel in order to apply ANY color… is not spray time. So… blend within a repaired panel is never a savings labor wise at a portion of a tenth. And Blending for 50 percent of the full refinish… including clearcoat cannot be anywhere near accurate as the ‘savings’ at the most… is a portion of a tenth on most every panel. Correct?”

    “Yes,” he replied “I’d have to agree with you, the only savings could be for material.”

    I interjected “But material not applied would be even less significant as the rates in dollars are lower than the labor rates per unit.”

    Without pause he said, “Yes. We’ve been looking at that. Just another reason why paint material should not really be linked to estimating as a ‘dollars per unit’ formula. Can I help you with anything else today?”

    “So… your system, it is merely a guide… not a bible.”

    He ended with “It says so right in there.”

    Now… I didn’t need to have the king of technical editors at Mitchell to tell me this any more than I needed him to affirm for me that the world is indeed round. Facts are facts.

    The question of course is: why do the databases calculate and allow calculations that are patently folly? The answer is that the industry is silly enough to fall for it.

    The conversation depicted here is as accurate as my tiny brain allows, no matter the exact words, the facts and the simple math that establish those facts are not difficult to understand.

    You may use this however you like.

  7. TECH RON on Wed, 20th Sep 2006 7:57 am
  8. Great article! You verbalize many of my thoughts that I have not expressed. Ultimately, I believe the solutions to many of the collision industry’s problems lies in the hands of the shop owners, managers & estimators by becoming better negotiators, understanding who their customer really is, (the vehicle owner not the insurance company, right?)& learning the legal aspects of the insurance world. Then we must have the kahonees & take the time to actually take them to court. Otherwise, we will continue to live in the “box” that they have made for us.

  9. manhauserman on Wed, 4th Oct 2006 9:35 am
  10. Been over this subject for years , thought I found a solution, went to the sales tax people and explained about all of the money they were losing, wrong. Found that the body shop is responsible for the sales tax on the material he used even if he was never paid for it from the customer /insurer. Just another example of how each of us are 1 (one) call away from financial destruction, with no relief in sight.

  11. Gary on Tue, 20th Mar 2007 3:02 pm
  12. As an insurance adjuster, I have also questioned the legitimacy of arbitrary caps. However, you are being disingenuous to suggest that you’re being taken advantage of. First of all, many carriers will concede a supplement for materials upon documentation that said cap has been exceeded. Secondly, how many hours does it actually take to repair that little dent? I know a decent body man can repair the dent in 1 hour, but I understand the reality of estimating so I put 2.5 on the estimate.

    Adjusters are people entrusted with managing someone else’s money. We get tired of the unscrupoulous who try to rip us off every day. I get sick of shops that charge to R&I every piece they can dream up, only to find on reinspection that the part was taped off. I also get tired of shops wasting my time with .3 to R&I side molding, while at the same time forgetting to mention that they repaired a panel that I paid to replace. (This happened in an actual claim last week.) Funny how that worked out. The shop repaired the panel in less than 5 hours, but forgot to remind me to adjust the estimate for the 9.0 hours to replace the rocker panel and the $425+ part price.

    As an adjuster with 16 years experience, I can assure you I have caught abuses by body shops many, many, many times. More time that I can every remember. Don’t waste everyone’s time with the “don’t color me with that brush” arguement. If you deny participating in these excesses, you treat your readers as fools.

  13. Allen on Wed, 21st Mar 2007 6:01 pm
  14. In reply to “Gary”
    I get sick seeing on estimates .3 R&I mouldings but there is never anything about remove glue and retape. I’m not even a bodyman! Who works for actual time anyways? If it takes 1 hour to fix a dent you had better be writing it for at least 3 hours, at the least. I guess that would be a good topic for an article, do away with the “hour” system and start charging in “units”. Forget about the cap on the clear coat, how about all the overlap this and that!!! I painted a moulding today for .1, it was written for .3 and -.2 for overlap. What idiot thought that one up? Who is taking advantage of who?

    […] arbitrary paint and materials caps. If you would like to read the article to refresh your memory, it is here. And following is Gary’s […]

  15. Michael on Wed, 22nd May 2013 6:41 am
  16. I really wish that we could get a lobbyist on the body shop side to take this “price fixing” to our lawmakers. It makes no sense that the “big insurance companies” can dictate how much we charge or even more ridiculous is how they can arbitrarilly pull out some random number from space and tell us that we can only charge 2.5 hours for clearcoat and $350 for paint and materials.
    I think your article is perfectly written. As for the insurance adjuster’s comments, I, too am an adjuster and think that if you’ve never worked in a body shop or done collision repair, then your opinion is worthless when it comes to estimating repair times. A body technician that has experience, should be able to turn 3 hours for every 1 hour of actual labor. That’s because he is EXPERIENCED. He didn’t likely go to college or get a degree, but actual hands on experience is far more valuable than any degree that one can receive for simply “understanding” how to perform a task. The one’s that actually do the task “know” how to do it. The concept of a degree is fantastic but it’s not reality.
    I often say that the insurance big wigs live in a fantasy world and do not know one simple thing about the “real world” that body shops and adjusters have to deal with in day to day business. I hope and wish that the body shop’s around the country will stop letting the big insurance companies push us around and tell us how to run our business. However, when you are dealing with the new trend of “chain shops” i.e. Gerber, we have no chance unless the independents stick together.

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