Paint & Panel has been following a dialogue between New Zealand's Collision Repair Association through its magazine PanelTalk and IAG. Editor Rex Crowther questions the need for so many Repairhubs being set up in New Zealand arguing that there are plenty of quality repairers who have worked for IAG for many years capable of undertaking the network repairs.
Is IAG’s Repairhub a well thought out initiative? By Rex Crowther
Throughout my career in the collision repair industry, I have always tried to understand everyone’s point of view, especially insurance companies as they have such an influence on our industry.
I may not always agree with them, but I understand the rationale behind the decision making.
However, for the life of me I can not understand the IAG board and senior management signing off on the Repairhub programme in New Zealand. This has to be driven out of Australia (despite assurances given to me that it is an IAG New Zealand initiative) as the collision repair industry in Australia is a vastly different beast than here in New Zealand.
The so called trial site in Auckland’s East Tamaki is impressive looking yet seems to have been poorly planned. It is designed as a rapid repair facility but both the prep bays and the spraybooths are drive in and reverse out, and there are simply too many vehicle movements for a rapid repair operation.
On top of that they changed their paint system within the first year, something that I would think would be unheard of if the planning was right in the first place. This just further suggests to me that it is an Australian directive.
They also claim a customer satisfaction level of 9.3, which to be frank is nothing startling, but they do not measure the customer satisfaction level of those that are directed to Repairhub only to be sent elsewhere as their damage does not meet the Repairhub criteria. Surely this inconvenience to customers would have a negative impact on this rating?
The second site that was recently announced is in Sockburn, Christchurch. This is an area well serviced by quality repairers who are part of the IAG repairer network. One of those shops recently carried out a large expansion of its premises, presents really well to the public and won the award for the 2020 CRA Best Business of the Year.
There is no shortage of repair capacity there, and certainly no lack of customer service, so why would IAG see fit to decimate the businesses that have served them so well for so long? Hardly the partnership that IAG have spent the last two decades cultivating.
The same applies for the next Auckland shop, which is going into Neilson Street, Onehunga. Again an area well serviced by quality businesses that have been part of the IAG network since it was formed as part of the rebuilding of the State Insurance brand in the very early 2000s. If what has happened in East Tamaki happens here, then these businesses will also be severely impacted.
There are areas in New Zealand that lack repair capacity, but IAG is nowhere to be seen in these areas as yet. If they are thinking about customer service then someone in that organisation is missing the boat and should be held accountable.
The plan is for IAG to open ten Repairhub facilities as part of this programme, all staffed by people mostly trained by facilities that are part of IAG’s extensive repairer network. They claim to each repair 80 cars a week, which means that approximately 3200 cars a month are removed from the IAG repairer network.
But it is actually worse than that, as they only take the cream, leaving the heavier, structural hits for their network. Every repairer knows that the least profitable jobs are the heavy hits, which are controlled by an out of date schedule in both R & R and cut and weld times. These have normally been subsidised by the smaller light hits that are more profitable, but this will no longer be the case, so the pressure will be on to increase the rates for the heavier hits.
Unfortunately, the upshot of all of this is that it will lead to fewer people being trained as repairers take an increasingly glum view of the future in the collision repair industry. The heavy investment that has been part of the industry for the last decade is already starting to dry up for the very same reason. All of this points to fewer repairers doing the work, longer wait times for clients to have their cars repaired, and a general dumbing down of the industry.
I find this situation not only puzzling, but extremely frustrating as I have seen IAG go from one of the worst, if not the worst as far as State Insurance went, to being a company that really tried to look after its clients. Up until now, most repairers have enjoyed their relationship with IAG and while it is far from perfect, IAG have endeavoured to form relationships and improve communication with repairers.
I believe that that through the efforts of a number of IAG personal, the company has it good, with a dedicated group of quality repairers, looking after IAG’s clients well, while having their repair costs kept at the lowest level. By IAG’s sheer size, they control the market and so have received the service that they deserve, what more could they want?
To this outsider, this all seems classic short term corporate play. The credited driver of Capital Smart at Suncorp was Mark Milliner, who then went to become IAG CEO Australia, and was reported by Australia Group Chief Executive Nick Hawkins to be the driver of Repairhub.
In the recent restructure at IAG, Mark Milliner departed the company so it will be interesting to see what happens with Repairhub going forward.
It is to be hoped that IAG senior management and directors in New Zealand start asking the hard questions before too long, as their investment is considerable, and the risk of alienating their loyal repairer network is very real. Importantly, they must realise that this network is and will continue to be the closest contact that their insured clients will come to in terms of interacting with IAG.
Perhaps the question the board should ask is “just how smart are these facilities?” and how many independent repairers could achieve as good or better results if they could operate without the current roadblocks that they face.
They should also note the dangers involved with these ventures by considering the fallacy of the efficiency of corporate repairers, with Capital Smart having helped its new owners lose $50 million in its first year. Meanwhile Nationwide, the UK’s largest body shop group, went into administration in Sept 2020 after a full year 2019 turnover of $571 million led to a loss of $38 million.
If nothing is done here in New Zealand, my view is that the greater collision repair industry will suffer from a lack of investment in equipment, and most importantly training, and all the good work done by so many people in both the collision repair industry and the insurance industry to make New Zealand a world leader in safe vehicle repairs, will be for nothing.
Here is the IAG repsonse.
By Dean MacGregor, IAG New Zealand Executive General Manager - Claims
Since IAG NZ’s ‘test and learn’ Repairhub facility opened in East Auckland in November 2019, our team has learnt a lot about how it will complement our existing repair network, create exciting career opportunities and – importantly – deliver great outcomes for our customers.
We’ve continued to keep our repairer network up to date with our progress and plans, including sharing the encouraging customer satisfaction scores and announcing our intention to bring more Repairhub facilities to Auckland, Wellington, Christchurch and Hamilton.
It is fair to say that since its inception, Repairhub has sparked a lot of discussion across the industry. And while we welcome this engagement, it is important that the facts are clear when it comes to asserting what Repairhub is and what it is setting out to achieve.
With that in mind, I wish to thank Rex Crowther for the opportunity to share some updates on Repairhub and respond to points raised in the January 2021 edition of his ‘It’s Just My Opinion…’ column.
A solution made for Kiwis, by Kiwis
Over recent years we have listened to our customers who have told us they want three things from their claims experience. They want repairs to be done well, to be completed quickly and to receive excellent communication throughout the process.
We have considered this feedback along with the growing international trend of specialised, process-driven vehicle repair methods. Globally, we have observed how facilities adopting these methods are getting customers back on the road faster.
In developing our East Tamaki ‘test and learn’ Repairhub site, we considered the global trends but designed the facility to suit the unique needs of the Auckland market. For example, Repairhub is committed to the highest New Zealand-based workplace health and safety standards, as well as the very best in supply chain quality. This approach ensures our customers can have full confidence in the repair work we carry out.
To this end, it is important to be clear that Repairhub is not being “driven out” of IAG Australia. Rather, we considered the service innovations that would benefit the local market here and have designed our Repairhub facility accordingly.
Our repairer network remains critical to our success
From the very start IAG NZ has been open and transparent about our expansion plans. This includes confirming that the repair network model will remain a critical part of our national operation.
In his January editorial, Rex challenged why Repairhub facilities were even necessary when there is no shortage of repair facilities in the main metropolitan centres. We dispute this view because in recent years constraints have impacted our ability to process repairs in a timely manner.
We know COVID-19 has had an impact on many industries, and collision repairs is no exception. With Repairhub we are planning for the long term. We are focusing on the major metropolitan areas because we know this is where most of our customers reside and where population growth is set to continue.
Our end goal is for Repairhub to operate alongside repairers. Together, we can continue to deliver a great customer experience and support demand from high growth areas for many years to come.
Testing and learning at our East Tamaki site
In his opinion piece, Rex said our East Tamaki Repairhub site was “poorly planned” and pointed to painting system changes as an example of this. I refute this and can attest to the extensive planning that went into the project by Gary Geeves and the team. Furthermore, Repairhub East Tamaki is a ‘test and learn’ pilot site and any necessary system or process adjustments made along the way will simply ensure better outcomes for customers in the long term.
We have been pleased with the outcomes of the pilot site to date and will continue our strong emphasis on continuous improvement.
Investing in the repairers of the future
The Repairhub team are specialists in motor vehicle repairs. They have access to enhanced international technologies, improved systems, high-quality equipment, and high-quality parts to ensure that the expectations of our customers are met.
In his article, Rex stated that Repairhub will lead to fewer people being trained and a general “dumbing down” of the industry. We disagree with this, and instead see Repairhub as making a positive contribution to developing talented repairers. In fact, our people tell us that Repairhub is a great place to work.
Since the launch of the East Auckland site, we have been delighted by the amount of interest we have received from young people looking to start their careers with us. We are committed to giving our people opportunities to advance their career and will soon commence an apprenticeship programme focused on bringing even more new talent into the industry. This focus complements IAG NZ’s proud record of supporting trainees in the industry through our Trades Scholarship programme.
Sharing what we know
Most people who have been through our East Auckland Repairhub facility to date have been impressed with the site, the advanced processes and the significant investment being made in our people, equipment, and technology. As we continue with our Repairhub plans, we will continue to share our learnings with repairers who are interested in learning more. If that sounds like you, please reach out to myself or Gary Geeves to arrange a tour of the East Auckland site.