MSO Profile: H&V Collision Center

That growth is only going to accelerate, according to company vice president Vartan Jerian, Jr. H&V plans to continue expanding through a combination of new stores and acquisitions, and by 2020 Jerian thinks they could grow to more than 35 locations, provided they find the right opportunities.

Vartan Jerian, Sr., founded H&V in 1973 as a two-man operation in a 1,500-square-foot building in Troy. Jerian's sons Vartan Jr. , James, and John joined the company in the 1990s. The company added a second location in Queensbury in 2008, and a third in Colonie in 2010. A fourth shop in Saratoga opened in 2012, followed by another location in Kingston in 2014. With the addition of the Collision Experts shops in Clifton Park and Schenectady, the company now has seven locations in upstate New York and more than 200 employees. The original Troy facility, which still serves as the company headquarters, has expanded by nearly 10,000 feet.

"Our vision to grow the business was basically to expand our footprint in the marketplace and gain more market share," Jerian says. "We want to be a leader in the market, both statewide and nationally if we can grow to that point."

Lean operations spur growth
That growth has been fueled by the company's own dedication to service. The company maintains a customer satisfaction rating of 98 percent, and has established what Jerian characterizes as solid relationships with the major insurance carriers.

H&V offers on-site rental car services and has its own fleet of loaner vehicles, and offers a free lifetime warranty. The company has also stayed on top of technology trends in the industry, and is preparing for more aluminum work. "We have aluminum pulling equipment at four faculties, along with welding capabilities," Jerian says. "We are also working on our audit for the Ford F150 program. We want to stay current and we do a lot of training, whether that's I-Car or through independent consultants."

According to Jerian, the shops have standardized on the same equipment. H&V uses Spies Hecker waterborne paint and Saico zero-emission downdraft spray booths. Most of the shops are also equipped with Hunter alignment machines, and Car-O-Liner frame machines, measuring systems, and resistance welders.

"With the exception of the two new shops, we use the same equipment at each location," Jerian says. "We also have standard processes."

In fact, the company's growth was spurred in part art on the adoption of Lean operating practices in the early 2000s. The company already knew the value of having standard and reliable processes in place, which it was able to port over easily to its new facilities once the expansion started. "We got involved in Lean and the theory of constraints, and that helped us form a new vision to build more standardized processes and procedures in the facility, from blueprinting and doing more accurate repair plans and estimating," Jerian says. "We established a quality control process throughout."

Communication across the company is also important, and H&V maintains a structure that allows upper management to stay in close contact with the staff at the shops. Jerian and his team have regular meetings with the shop managers, for example. "I talk to every manager every day, apart from the staff meetings," Jerian says.

Well managed growth
The company has traditionally grown through building new shops or refurbishing other buildings. The Kingston shop, for example, was set up after converting an existing structure. Collision Experts was the first major acquisition, but there could be more to come.

"We look at the market and the competition in the market," Jerian says. "In Kingston, there wasn't anybody there that the fit the profile of a shop we'd want to buy, so we converted a building. We talked to a few shops about an acquisition, but we couldn't find the right fit."

With Collision Experts, Jerian says the owners were ready to either grow their own business or get out of the market entirely. "They built a good and reputable company," Jerian says. "We talked to them about our plans, and they decided it would be better to work with us rather than compete with us, and we struck a deal that was good for everybody."

In fact, owner Maryann Bowman originally had no intention to sell, and planned to hold on to the business until her son was old enough to take over. But it was Bowman's son, Ben Bowman, who convinced her that the time was right to sell. As part of the arrangement, the younger Bowman has joined H&V and will be mentored by Jerian in the business.

For the Collision Experts conversion, Jerian says the company initially kept things business-as-usual for the two shops, because the staff at the new Kingston location are still being trained. "Once that's completed, I'll be working on site at one of the Collision Experts locations and we'll work with the technicians and managers, and some other seasoned employees, to get them up to speed on our processes," Jerian says. "We've learned that you can't execute everything at once. We have to explain why we do things the way we do, and show them that it works. They everyone can be onboard. It's hard to get new technicians and good employees, so we don't want to lose a anyone in the transition by coming on too heavy handed."

H&V has a fairly centralized management structure, although that is evolving and expanding as the company grows. Currently, H&V has a manager at each location. Larger shops also have a production manager and some assistant managers, as well as parts managers and assistants. There is a central accounting department with five employees that handles accounting for all the locations, and a central human resources department.

There are also assistant vice presidents, a controller, and a regional operations manager that handles training and operations for all locations. "He works with me, and helps execute and implement the processes at the new locations. He can also fill in with the manager and perform the manager training and coaching that we need."

The company also has a full-time IT department. All of the shops use CCC One for the shop management platform.

Leveraging economies of scale
Jerian says that the biggest benefit of operating multiple locations has been leveraging the company's scale. For example, H&V has established relationships with its vendors at the corporate level to help get better rates on materials.

Jerian says that expanding has also improved the company's relationships with insurers. "We can better service their customers in more markets," Jerian says. "They are helping to foster some of our growth, as well. We know where they need more penetration. We're looking at demographics in the market, the number of other repairers there, and what our insurance partners need in those regions. We make our expansion decisions based on those factors, so that closer relationship with the insurers plays a role."

In addition to the financial benefits, scaling out operations also helped expand market share in the communities that H&V serves, and provided access to a larger knowledge pool via the employees at the new locations. "Were also increasing the technician pool within the company," Jerian says. "We've learned a lot through the recent acquisitions. The folks we bring have a lot of good processes and procedures that we can add to what we're already doing."

Incorporating those new employees has also been one of the primary challenges of the expansion.

"As far as acquisitions go, nobody likes change," Jerian says. "That's the number one challenge I've found as we're going through this process. We want to make this as easy as possible. Also, finding good leadership to assist with the growth has been hard. We want people at the top that have the passion and drive to want to grow with us. That's a huge thing, and we have some of that now, but we're looking for more help. We're looking for more management and upper management people that have that drive."

Growth will continue
As Jerian continues to evaluate opportunities to expand, he says the biggest challenge the collision repair market faces right now is the increase in total losses.

"The number of total losses we're seeing has increased significantly, and not just because we've acquired more shops," Jerian says. "It's going up per shop in relation to total sales. We're seeing a huge spike every hear. That costs money."

Training is another challenge. "We have to keep our people up to speed," Jerian says. "Our paint manager has become our in-house technician support person for the shops, and that has been a huge asset for us. He is training new painters, which is a huge help."

H&V is also evolving its corporate structure. The company is adding a central review process to help with estimate compliance. "If we mss something up front in the estimate, then the rest of the job becomes a nightmare," Jerian says. "

The company is also for more help at the top. "We need to add more excellent leaders," Jerian says. "This most recent acquisition is probably the last one I can completely spearhead myself. We have a finite group here to accomplish what we need to do. We're busy with our daily duties, and managing an acquisition becomes a real challenge when resources are limited, so I'll need more help with that moving forward."

The need for those additional management resources will likely come sooner than later. According to Jerian, the company is already eyeing its next acquisition. Another new H&V location could be in the fold within the next 12 months.