ABRN: What do you see as the biggest challenge facing your shops today?
DB: From California to Texas, from Maine to Florida, and everything in between, the concerns shop owners share with us are the same across the nation: profitability, consolidation and talent.
Regarding profitability, shop owners continue to see their profit margins driven downward primarily by DRP programs and lowered insurance compensation rates. In addition, we are starting to hear that national chain consolidators are affecting market practices and prices. Independents need to adjust to compete and remain relevant and profitable. Quest Automotive Products (QAP), with the Prospray and Matrix brands, has seen increased success in all market segments, including smaller MSOs, over the last couple years because we are the largest non-OE paint manufacturer and our brands not only deliver excellent results but our shops significantly increase their profitability.
In every market, finding and retaining qualified, trained, experienced talent is a challenge. QAP is passionate about this industry and has partnered with the Collision Repair Education Foundation (CREF) to help attract and train upcoming generations to our industry. This year alone, QAP will have donated over $300,000 to CREF through monetary donations, product in-kind donations and fundraisers, like Artists 4 Education.
ABRN: Aluminum and other alternative metals are taking more of a front seat in vehicle construction. What impact, if any, does this have on the paint process? What do shops need to know?
DB: The use of lighter and alternative substrates is not new. QAP’s Prospray brand, originates from the UK where Jaguar, Land Rover and Aston Martin have been using aluminum for decades. And our products have been used to restore those vehicles to pre-collision condition. Because of increasingly stringent government standards and regulations, more domestic OEMs, like Ford, are turning to these metals and substrates to meet the requirements. At Quest, our focus is on providing training to the shops and jobbers to help them understand each substrate, how they act and how they should be repaired. For example, aluminum alloys, while they provide a similar strength profile to steel, are more prone to metal fatigue and should be treated with care. Aluminum also requires good mechanical grip and is susceptible to corrosion – shops will need to properly weld, prep, prime and topcoat. Some vehicles are constructed with multiple substrates therefore, shops need to understand the repair process for each and repair them accordingly. QAP is increasing the scope and frequency of our training at our facilities, at the field tech level and via online strategies. Our global research centers are not only testing current systems for compatibility but also developing new, advanced systems.
ABRN: Paint manufacturers are very skilled at helping their shop customers achieve efficiency and profitability. What do you see as some of the key areas of focus for shops looking to streamline and improve their bottom line?
DB: When our shops succeed, we succeed. As a paint manufacturer, we exist to service the collision repair shops and their technicians. If collision shops manage their paint and material spend as a percent of sales, they can see immediate increases in profitability. We help our customers succeed by getting paint costs in the 4-6% range, then helping them improve process efficiency and repair consistency, through lean management, lean process training, estimate writing for profit, and other business mentoring. The impact is visible the first time they write their monthly check for their paint bill.
ABRN: Consolidation is a very hot topic in the collision repair industry today. Do you think this trend will trickle down to the manufacturer level? If so, how will this change the industry landscape going forward?
DB: Private equity and Wall Street are changing the face of our industry, not only at the shop level, but also to some extent the manufacturer and distribution level. We are a perfect example of this. Quest Automotive Products (QAP), a division of Quest Specialty Chemicals, acquired US Chemical and Prospray in June 2013. For QAP, it created a leaner, more efficient company. We are now the largest non-OEM paint company in the U.S. and we manufacture and/or provide more product categories than any other paint manufacturer. That has benefitted our customers with enhanced services, training, certifications, products, color capabilities, talent and technology. We plan to grow organically and via other manufacturer acquisitions. As we grow, we bring more value to our shops and distributors. Shops of the future want premium products at a fair price – we bring that to the market. In an industry that is concerned with profitability, our brands are entering their prime.
ABRN: What does QAP anticipate the collision repair industry will look like in 5 years? How is the company working to meet the future needs of this workforce?
DB: I think that in the next five years our industry will continue to experience rapid change driven primarily by market consolidation, substrate technology and profitability.
Consolidation will continue at all levels – manufacturer, distribution and shop. Shop consolidators and large national chains will further reinforce their position as the main player in all major and secondary markets – this will affect rates, consumer expectations and PB&E distribution. Import and domestic manufacturers will continue to use alternative substrates to meet stricter standards. This will impact shop processes, equipment, products and training.
When it comes to profitability, collision shop owners will continue to see their bottom line squeezed by compensation rates and increased expenses. That’s why Quest’s Matrix, USC and Prospray brands are more relevant than ever. We are the leading non-OE manufacturer and our value proposition, time after time, has had a huge impact on increasing profitability. We hear these stories every day – stories of how our paint lines add back $5,000 or more to the bottom line every month. When you combine our value proposition with our distribution relationships and unparalleled service at the street level, it’s a win-win.
It’s our job to make sure our customers understand these changes and the evolution they must make to remain relevant as well as to provide them with the products and knowledge to compete and triumph. We will anticipate their needs and be at the forefront.
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