With 260 locations throughout the United States and 140 in Canada, CARSTAR has proven itself as a leader in the collision repair industry. The company has continued to add additional locations, members of CARSTAR’s executive team have taken the reins of industry organizations, and CARSTAR has developed cutting-edge software to lead the company into the future.
FenderBender’s Andrew Johnson sat down with Dan Bailey, who recently announced plans to step down as president and chief operating officer of CARSTAR after more than a decade with the company, to discuss industry trends from involving more women in the industry, to shop consolidation, to software integration.
What does CARSTAR do to support the involvement of women within the company, and the industry at large?
We have many women involved with the CARSTAR team. In the U.S., the CARSTAR corporate team has 48 employees and 32 percent of them are women. We have a good number of female shop owners as well. Those women bring great leadership skills and strong work ethics to the entire CARSTAR organization.
It’s highly important for CARSTAR to allow our female employees to get involved in various segments of the collision industry. We make sure to give them opportunities to professionally grow, and we strongly support every woman who desires to be more involved in the industry or with associations that will help improve our industry as a whole.
What tips do you have on how all repair shops, large and small, can help develop more opportunities for women in the industry?
We have to find a way to get females exposed to our industry. We have to work at not just promoting the fact that women can be customer service representatives, but that they can become estimators, technicians or work in any other area of shops.
We have a handful of stores that have women working in the paint department, for example. They mix and match all the shop’s paint because they tend to see color a lot better than men do. There are definitely a lot of places out there for women to work in the industry.
It’s about getting out in your community to let people know about the opportunities that exist. Every shop out there can help.
Do you have any specific suggestions for shop operators to help expose women to the collision repair industry?
• Meet with the Girl Scout troops in your market to expose them to the collision industry.
• Develop relationships with teachers in your local schools. Go to their classrooms and speak to their students about the collision repair industry.
• Encourage women in your businesses to mentor other young women. If you visit a school, for example, bring a female employee with you to talk to the students. You get to see female students’ eyes light up when they see a female technician talk about her experiences, and the amount of money she’s able to make in that position.
• Attend industry competitions. You can find some highly skilled young female body technicians and painters at the SkillsUSA competition.
• Participate in local career fairs. Most career days don’t usually expose young women to the collision repair industry.
Let’s shift gears and talk about other industry trends. There was a lot of consolidation in 2010, and that’s continuing in 2011. What’s causing it?
Today, nearly 80 percent of collision work goes to only 20 percent of the stores. That will continue; In the future, perhaps only 15 percent of the stores will get 80 percent of the business.
The biggest reason is the overall health of the industry. The bigger stores are getting bigger, and the smaller stores are either getting smaller or going away altogether. That’s happening due to a combination of the economic conditions and the rising cost of doing business.
There’s been a shrinkage of available collision repair dollars because of the continued increase of total losses and fewer accidents overall. Combining decreased sales with increased overhead costs leads to a bad financial picture for most organizations.
The industry currently hovers right around 40,000 shops. I see that decreasing toward 20,000. We’re going to lose 2,000 to 3,000 stores every year for the next five to seven years.
CARSTAR has certainly been a player in industry consolidation. What has the company’s growth looked like recently?
We added 20 new stores in 2010. We plan to open 35 more stores throughout 2011 in some areas that we’ve targeted. We’re targeting four specific areas of the country; it’s more of a rifle effect than a shotgun effect, so to speak. Most of the growth we’re looking to obtain falls within the areas where we currently operate.
If you believe consolidation will continue to be a trend, what can the smaller shops do to survive in this industry?
Right now is a good time for franchising, especially for those stores that are in the middle of the pack—the stores with $1 million to $1.6 million in annual revenue. That’s because those shop operators aren’t sure what to do; they want to be part of something bigger, but they don’t want to sell their store.
Franchising is a good solution for them because those shop operators still own their business. Franchises like CARSTAR just give them systems and processes to make their business better and offer more chances of being successful. We give them the technology they need to measure their key performance indicators (KPIs) so they’re able to have a competitive advantage. Those shops need to be part of something a lot bigger than what they are today. They need to be part of something that gives them insurance relations, marketing tools and purchasing power.
Software integration with management programs has been another industry trend recently. What developments has CARSTAR made in this area?
We developed proprietary software called the CARSTAR Solution. We’ve taken Mitchell RepairCenter and adapted the software to CARSTAR standards. It’s a customized, turbo-charged version that acquires all the data a regular management system measures, plus all the things CARSTAR felt was important to its customers, stores and CARSTAR corporate. It’s like RepairCenter on steroids.
We’ll be able to look at labor gross profit, paint material gross profit, parts gross profit, technician efficiency, cycle time, touch time, closing ratio, production area and customer satisfaction scores for every store, everyday. When the program is completely rolled out, we’ll be able to divide this up by individual states, business groups and regions to assess the data.
Will CARSTAR Solution help solidify the company’s relations with insurers?
Insurance companies, for good reason, are measuring the KPIs of the shops they work with. Work is getting sent to the stores that are operating at the highest level regarding the metrics that insurers are measuring.
Insurance companies want data. This program will give us the ability to have live data, everyday, from every store. Our insurance department will take this data to the insurance companies and show them the performance of our 260 U.S. stores. We’ll use that information to try and negotiate more work for our stores.
In what ways do you see technology like this changing the collision industry?
We’re going to look a lot different a year from now than we do today because of technology. CARSTAR Solution will allow us to dispatch our own claims to our highest performing stores, which is what insurance companies are currently doing. We could take it off the insurers’ hands and do that for them because dispatching is also built into our system.
Self-management on behalf of shops would take a huge cost away from the insurers. It would take a lot of friction out of the claims process if we could self-manage through KPIs, and report our performance back to the insurers.
In the future, shops will have to be able to self-manage their performance. Whether that’s done through one of the current software providers or somebody else, self-management will soon become the norm. I think there will be technology popping up that will help shops do that.
