Industry will never go back to the good old days

 

Nathan Richard Nathan welcomes the comments made on www.paintandpanel.com.au about  the industry and offeres some comments of his own in response.

Nathan Comments

I have been slow to respond as I have been away for a couple of weeks. Great to see the interest and comments.
Firstly, apologies to WA for including you in my general statement, I appreciate the current situation of excess work and the decision to stay with FTFM at this time.

Unfortunately the rest of Australia and indeed most of the world is experiencing a continuing down turn in work, (and profit). We know that the causes are less accidents, more write offs, etc. etc.

As we recognise that the average job is smaller with obviously less repair we are relying on RR’s and paint (smallermargins) this means lower average returns.

Insurance companies see the decline in work and the intense competition this creates and to exploit this is their business.

It may be a two quote system, tendering (or auction as some like to call it) or closed shops. The industry will never go back to the so called “good old days”.

THE FUTURE:

More of the same? If repairers continue to support two quote and auction systems, why would the insurance companies change? Who is to blame?

There are many issues that will affect business in the future. One thing is for sure, it is tough and will get tougher for most of us!

It is understandable, the frustration and anger that many feel as work and profits decline.

RESPONSE TO KEITH DEAN:

It is with regret that I have to waste time responding to what appears to be a pathetic attempt to denigrate a system supported by well over 1000 repairers to promote (as a paid representative), a foreign times manual.

This manual could require additional software, set up fees, monthly payments, annual payments, payment for every image sent down, payment for every quote (including additionals) etc…

The manual would have no industry input on any items requiring change.

As is known, the manual is used by some repairers overseas but with shop rates as high as $180.

Repairers, what hourly rate could we expect the Australian insurers to pay if they got to use Keith Dean’s manual, $30?

Keith, you also made comment on the Productivity Commissions findings on the RTRM times manuals and RTRM but conveniently left out the facts: a regrettable disregard for the truth, further loss of credibility and selling the industry short, again!

So why RTRM?

Some people conveniently forget, some never bothered to find out why the industry went down the path it did.

About 12 years ago NRMA Insurance attempted to introduce tendering with the opening of a facility in Wollongong. The industry rebelled and eventually it was closed.

The hourly rate was a static $31 with no paint increase

Over the following years several schemes were introduced , like competitive partnering and preferred repairer schemes were introduced.

No rate increase

After 12 years, NRMA attempts, again, to re introduce tendering which resulted in industry dispute (lasting up to 18 months) and chaos for insurance company’s and repairers, and was still no rate increase.

After years with no rate increase or material allowances as well as numerous disputes IAG and the MTA agreed to meet. IAG asked: “What do we have to do to get the industry back to work and rebuild our image?”.

MTA advised IAG that tendering was not acceptable and pointed out that no increase in rates for 12-plus years was unacceptable.

MTA put to IAG that under FTFM to catch up with the rate it would have to be around $48 plus appropriate material inclusions.

IAG,  and other Insurers, responded by stating they could not accept a nearly doubling of the rate. A statement was made that “it would add another $500 million to our costs”.

Insurance companies wanted repairers to return to work while repairers wanted an increase and guarantee that costs could be passed on (as we had negotiated and enjoyed for many years prior to Wollongong).

The solution

It was agreed that even though repairers had not had an increase for years they managed to survive, somehow, although many had gone out of business.

The fact was that repairers had managed to turn $31 somehow into a bottom line. This generally was achieved by over-quoting on repair hours and other areas.

It was recognised that as jobs got smaller, repairs were considerably less and could not be padded. The average repair costs continued to fall dramatically.

The industry was changing. It was recognised that it was impossible to continue under the current system.

Formula for change

A proposal was put forward that a shop charge out rate be established for individual shops and a new realistic times manual be created as the Productivity Commission had proposed

It was agreed that neither the MTA or NRMA manual’s were accurate, so how to address the nearly a half million line items in the NRMA Manual?

NRMA/IAG’s original proposal was for an increase of 50 to 60 per cent.

MTA pointed out that, as the manual was never right in the first place, this would not work.
So Keith, that was not what happened.

It was agreed that hardware items initially be reduced by 40 per cent as a starting point.  All welded panels would be calculated by a Thatcham style weld formula and paint by a decimeter count plus actual timing of jobs national times committee.

A national times committee was formed and continues to work closely to rectify issues submitted by field reports

It is appreciated that there are still many times requiring attention and the committee is dedicated to fix these. But, take note in two years there has been over 400,600 adjustments made.

A special note must be made here to thank Jon Nicolls from Stelvio, who was instrumental in the creation of the E-MTA Manual for MTA and the software providers who performed significant work to introduce E-MTA and NTAR.

It was proposed for all intents and purposes the E-MTA times would be the same as IAG, however it has more content, and it would be hoped the manuals would remain the same unless serious issues arise.

FIELD REPORTS

If a time is considered to be incorrect, a field report can be submitted, both to MTA and IAG, irrespective if you are a member of MTA or not.

A good idea if you believe a time is incorrect is to actually do and time the operation prior to submitting.

RTRM

There are well over a thousand repairers working with RTRM in the eastern states. I have not heard of one who has said “I am going back to FTFM plus $30 forever!”.

WHAT HAS THE MTA DONE FOR ME?

In response to those who comment; “What has the MTA done for the industry?”, here are a few points on what has been achieved:
•    Original MTA Times Manual to keep balance with NRMA

•    Ongoing rate increases for 30 years (until Wollongong dispute) plus IAG management changes

•    Paint materials allowance plus ongoing increases

•    Sealers and proofkotes

•    Jig allowance

•    Booth and bake allowance

•    Mix and match allowance

•    Towing increases

•    Productivity Commission

•    Code of Conduct

•    Environmental levy

•    Formula for change (RTRM)

•    Stopped tendering (twice)

•    Stopped repairable write off’s

•    E-MTA Times Manual

None of the above were offered by the insurance industry. Everyone of the above and many more were fought and negotiated by MTA for the benefit of all the industry.

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