Talking to both the current CEO of AMA Group Carl Bizon and the former CEO Andy Hopkins last week set me thinking about AMA’s journey and the enormous impact it has had on the Australian collision repair industry. That set me reading all of the stories we've published over the years... and that set me writing - rather a lot. As this is such a detailed and long article we will serialise it over the coming weeks.
When I took the editor’s chair – pretty much fresh off the boat from the UK 10 years ago - Capital SMART was the new kid on the block (and a very unpopular one), the joint venture with Suncorp had been announced in July 2010. Gemini ARC had been set up from the ashes of AUSARC in 2009 with 14 sites. Sheen Panel Group was well established in Victoria. Martin Reisley had six shops in Melbourne and there really weren’t many sizeable MSOs - a few like the Woods Group and Smash Care had relatively dainty footprints. I’m told - as this was before my time and I’m unable to find anything on the internet, that AUSARC was set up by John Hembrow in 2004 starting with his own three shops. It was backed by Platinum who had already had success in the automotive sphere growing Ultra Tune into a national network and also consolidating in the vet markets with the Greencross vet chain. Between 2004 and 2009 AUSARC grew to 16 sites on the Gold Coast, Sydney and Perth but ultimately ended up in receivership after Hembrow left.
Clearly the reduction in accident rates thanks to better in-car safety systems and the prospect of economies of scale and buying power meant that the collision repair industry was ripe for the consolidation which had already taken place in most major international markets.
Back in 2005 Andy Hopkins and his brother Tim had sold the Gemini Group in the UK (11 sites) to Nationwide the major market consolidator there. Andy Hopkins headed out to Australia where AUSARC had faltered, demonstrating that running a multi-site operation in the collision arena was a lot more difficult than it looked. Hopkins had tons of experience and deep pockets. He had another few aces up his sleeve too - one was employing Joe Walsh as general manager who had experience of the consolidating market in the UK and his wife Caroline. Despite the skills shortage another ace up the sleeve was no problems enticing former technicians and managers who had worked for them in the UK outfit to swap the gloomy British climate for a new life in the sun.
While Gemini won over insurance companies with its mission statement of saving them money and a quicker than average repair turnaround, a gentleman named Jim Vais was quietly going about revolutionising the industry. Gemini had its striking green livery and well presented customer areas but they were fairly standard panel shops.
Capital SMART meanwhile under the leadership of Vais and a collaborative approach with PPG took a new look at how rapid repair facilities could be run. Not only were the repair methods and workshop flow innovative, but so was the treatment of the staff (free lunches, internal awards etc). Vais created a culture where people took pride in their work and their work environment - I’m not saying this didn’t happen at independents but it was impressive on such a large scale. Staff genuinely bought into the company’s values. SMART offered a career pathway that independents couldn’t and dramatically raised the professional status of the collision industry. The ‘Green Team’ also rallied behind the Hopkins flag and again the group offered employees many benefits that independents couldn’t.
The growth of both Gemini and SMART was a huge concern to the vast majority of the independent repair industry who couldn’t compete on price (at least not profitably) as they didn’t have the buying power or economies of scale. They also struggled to match the attractive salaries the MSOs offer.
It made the smart independents take a good look at their business, decide not to compete with the big players but instead to specialise in some way either by type of repair, private work, diversification or by securing an OEM badge. Some welcomed the ‘factory’ style repairer into their back yard as, inevitably, with that amount of volume there was reported to be a fair amount of rectification work.
Those who threw their hands up complaining that it wasn’t fair for an insurance company to do its own repairs, or for so much work to be given to Gemini either closed down, retired or held on by their fingernails.
Flying under my radar then was Ray Malone, who had owned two highly regarded prestige shops called Mr Gloss in Victoria. AMA had actually bought Mr Gloss in 2006 and kept Malone on to head its panel division. Malone, a true and talented entrepreneur saw the business was failing and became CEO of AMA in 2009. Malone described the company as ‘barely having a pulse’ when he bought it, it was debt ridden and in just four years he said he had turned it around.
It was when when he joins forces with multi shop owner Phil Munday, who ran three rapid shops in Melbourne in June 2014 that collision repair market consolidation switched from protein bars to steroids.
From left: Phil Munday, Ray MaloneIn July 2014 Gemini buys Peter Bubeck’s three shops in Victoria and made Bubeck joint managing director alongside Andy Hopkins. By this time Gemini had 34 sites and has spread out to New Zealand. Capital SMART also sets up in New Zealand in 2014 and by the beginning of 2015 has 24 sites.
2015 MSOs grow
As 2015 unfolds Malone had raised an impressive amount of venture capital ($45m) and went on a massive buying spree in both the prestige and ‘mum and dad’ space. AMA snapped up prestige shops Blackburn Motor Body and Browns Motors in Thornbury and then the ailing Woods Group which had 14 sites - all of these in Melbourne - bringing its tally to 28 shops.
In May 2015 there’s an interesting article in The Australian called Australia’s four great panel beating families by Alan Kohler. The article talks about Gemini, AMA, Capital S.M.A.R.T and Smashcare and says that these four consolidators are "are dragging one of the last family-dominated cottage industries into the 21st century.” It’s well worth a read as it makes some astute observations on how the two big insurers have influenced the repair market.
We'll pick up next week with the AMA/Gemini merger.