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Thread: The definition and consequences of BIG

  1. Join Date
    Jan 2009
    Posts
    220

    The definition and consequences of BIG

    I am a big fan of "60 Minutes" as well as other programs of similar ilk along the lines of Bill Moyers, a good old east Texas boy.....last night they went along with the FDIC people taking over an Illinois regional bank that unlike many smaller banks that avoided the toxic method of lending to people they shouldn't, did.

    In the course of interviews they visited with the head of the FDIC and during her conversation BIG came up. Of course I have for decades been worried of the consequences of consolidation of core services and products whose health is essential to the entire economy...like banking and pharmaceutical manufacturers since that was my former career. In the crash in Texas in the late 80's all our great banks and lending institutions were bought by out of state interests, the most notable NCNB, now Bank of America whose stock is nigh onto worthless, so now the cycle to BIG is complete and we are beginning to see the consequences over the 20 odd year duration.

    They also interviewed the banker that took over the chain. He seemed to be a pretty cool guy and his comments were, the small banks that were smart enough to stay out will prosper and he is absolutely right.

    Her critical comments, being very careful, were that something is going to have to be done to keep these key industry segments from getting too BIG to manage. Frankly, regardless of the reason corporate America is failing for the very same reason. They have focused on BIG and lost the ability to manage.

    The free market system failed to this point but the market works over long and short terms. Unfortunately at least to me, President Obama will cause more damage. My fear is those efforts will perpetuate a cycle leading to propping up an unnatural-to-freemarket-economic forces and lead to further socialization never-ending. Of course I am hoping Obama, being the man he professes to be will begin to see the problems and change course to prevent such a catastrophe.

    But the point. This all applies to collision repair. BIG in this industry, the DRP players and the consolidation of what I consider conspirators, represent the unnatural results of insurers fooling around in an industry where they have no right, at least the way they have gone about it, and if the regulators would stay out and stop giving insurers a license to do the wrong thing (which I think we will see), then economic forces will become prevalent.

    So those that have stayed out of the fray, your opportunity will come along;just hang tight. And those that can wean themselves successfully they too will have a better chance of surviving.

  2. Join Date
    Jan 2009
    Posts
    823

    Speaking of "BIG"

    Do any of you realize just how many BIG "players" have closed down some of their multiple shops? There are more than you can imagine. Yet you don't hear a word about it from any of our trade publications, or from these owner/industry leaders themselves.

    During our annual AASPI meeting, one shop owner stopped to speak to us, actually inviting us to attend one of their area meetings soon. He made the decision long ago to remain small and continue to have greater control over his repair business, while watching many others listen to industry pundits proclaiming that the future will dictate insurers will only do business with MSOs.

    I know of far too many MSOs who have been forced to close down one, or more of their facilities. So much for that theory.
    "Better to die a hero, than live a coward."
    Charles Woods, father of slain SEAL Ty Woods

  3. Join Date
    Jan 2009
    Location
    Southaven, Mississippi
    Posts
    808

    Balance of Power

    Corporate greed in the case of insurers has brought our industry to its knees, just as greed and corruption involving not only corporate executives representing many other industries, but our politicians as well, has brought our country to the precipice.
    This collusion for the sake of personal gain with a complete and total disregard as to consequences can be found throughout the business spectrum and much of the blame can be placed squarely at the feet of our lawmakers. They are the ones who establish the rules that we must all play by. Insurers have been allowed to meddle in our business because it has beeen profitable not only for them, but because it has been profitable for politicians at all levels. Politicians, therefore turn a blind eye to what is going on because many times it is financially in their best interests to do so.
    I don't know about the rest of the country, but in my market area the collision repair industry is being decimated by this little blip on the economic screen, with most shops struggling for their very survival and many that won't make it. Those who bought into the "Do more for less; you'll make it up in volume." scam seem to be suffering the most. How do you make it up in volume when trafffic is down 40%? You are still stuck with single digit profit margins and can't scrape up the volume to prop up gross sales.
    To help perpetuate this "volume" proposition, many insurance companies are culling the herd of the DRP "partners" to try to funnel more work into fewer shops using repair cost, not quality, as the determining factor. The net outcome is to further restrict the profitability in our trade so that the rate of shop failures is guaranteed to increase. Those of us who never signed up for this volume myth are subject to it by default.
    I made a promise to State Fraud when I jumped from their DRP ship to survive this crisis. My purpose is to enjoy the shift in the balance of power when they and others of their ilk succeed in wiping out a large number of us and create the limited choice to put their customers' cars in the shop of their preference, waiting in a long line for mediocre to substandard repairs, or having to deal with me. When they are forced into dealing with me, it will be absolutely on my terms and it won't be pretty.
    We don't have that luxury yet because there aren't few enough choices in shops, thanks to the whores in this industry that subscribe to their insurance "partners'" ideas and have pandered in a wholesale way to insuring their own demise. I intend to survive, if for no other reason, to be a pain in the insurance industry's ass and derive immense pleasure in bullying the bullies.
    The bigger picture is up to our new President and his political party, who now have unbridled control of this country's future. All this angst in our industry may be for naught if this country plunges off the cliff and we find ourselves squarely in the throws of another Depression. Time will tell very shortly.

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