Focus on quality helps fuel expansion

Nov. 4, 2014
Regional MSO Nu-Look Collision Centers in New York state recently announced three new locations over a span of five months, showing that private equity firms aren’t the only ones spurring industry growth.

Nu-Look Collision Centers

Rochester, N.Y.
Headquarters

13

Number of shop locations

1

Number of states reached

33
Years in business

130
Number of employees

PPG
Paint supplier

www.nulookcollision.com

A flood of private equity money has spurred massive buying sprees by large, national collision repair companies. Hardly a week goes by without another expansion announcement from the big industry players.

But they aren't the only ones growing. Earlier this year, a regional MSO in New York state announced three new locations over a span of five months. And according to Nu-Look Collision Centers president Todd Zigrossi, that growth is expected to continue as long as customers and insurance carriers keep coming back.

"The expansion has really been generated by feedback from customers," Zigrossi says. "That's probably the number-one driver. There's a need in certain areas that don't have the performance some of the insurance companies have come to expect. We fill that need."

Founded in 1981, the company now has 13 locations in the greater Rochester area and 130 employees. According to the company, its repair centers process nearly 11,000 cars per year. The company has grown through a combination of acquisitions and new stores, and Zigrossi says that the company is laser focused on staying ahead of new technology and trends in the industry. For example, Nu-Look already made the transition to waterborne refinishing paints (they work with PPG) at all locations, and the team is constantly evaluating new equipment and maintaining technician training.

Load leveling when it makes sense
Like many smaller MSOs, Nu-Look has a mix of centralized operations and functions that are shared by the management team at each store. Accounting and human resources are centralized, as are payables. Accounts receivable and outstanding parts credits are mostly managed at the store level.

Each location uses CCC and Audatex estimating software, along with the Synergy shop management solution. Zigrossi says equipment is fairly standard across the locations, and the company has deployed iPads in the shops so that technicians can provide vehicle status updates and make notes on supplements right on the shop floor. Each location also follows Nu-Look's standard operating procedures.

Nu-Look provides a central point of contact for insurance companies for all of the shops, which Zigrossi says makes it easier to communicate claims information with the shops, and also provides a more efficient way to manage DRP relationships. "We have that point of contact for both the insurance companies and the internal staff," Zigrossi says. "Whatever the insurance companies tell our contact, then we can bring everybody in the company together in the training room and communicate that message to everybody one time, and there aren't any discrepancies.

Because the company has so many locations in a defined area, managers can take advantage of load leveling when stores are either over- or under-booked. There are limits, however, to when and where cars can be transferred. "It has to be the right vehicle at the right time," Zigrossi says. "If you think you can load level every single car, it doesn't work out."

The use of load leveling depends on how busy each shop is, and requires communication between all of the locations. "At the MSO level, something that often gets lost is that everyone may think they have to watch out for themselves," Zigrossi says. "The managers have to be able to look at the situation, and determine what is best for the whole company and for the customer."

Each shop can use the management system to see what the other shops have in process, and whether or not those locations need more work. "We have all of the managers on a conference call every day, and we see who needs work and talk about what's happening that day," Zigrossi says. "We ask this question: What can we do today to make every shop better?"

Prepared for growth
As noted before, Nu-Look has grown through a combination of newly built shops and acquisitions. The most recent acquisition was ProFinish Collision and Painting, which not only marked Nu-Look's lucky 13th location, but also expanded the company into a new line of business: heavy trucks, fleet vehicles and boats. The Ontario, N.Y., shop, with 10,000 square feet of space, was the third acquisition for the company in 2014. Because the shop services heavy duty vehicles, customers can have their vehicles picked up and delivered by one of Nu-Look's Class 1 CDL certified drivers.

In the spring, the company acquired shops in Gates and LeRoy, N.Y. The former LeRoy Motors shop is located on the premises of Bob Johnson Chevrolet dealership. The Gates store is housed in a 21,000-square-foot facility purchased in April.

"Each of those options, either building or buying, has its own pros and cons," Zigrossi says. "Going forward for future growth, we will probably lean more toward acquisitions within a certain geographic radius. New shops are easy to do, too, because we can draw certain employees from existing stores and have the right culture out of the gate, which is a huge benefit."

When looking for potential acquisitions, location remains a top priority. "You have to look at the performance of existing collision shops in the area, the demographics, and how many other shops are in that area," Zigrossi says. "More importantly, are those shops delivering the performance they need to be? You also have to see if there's a decent pool of people for the workforce in the area, if it's outside of our core region."

A key advantage at Nu-Look is that the company is staffed to quickly transition new acquisitions or new shops. "That's a big advantage over someone that would like to grow, but then realizes that the shop they want to buy isn't staffed properly," Zigrossi says. "We can make decisions quickly, whether it's a shop for sale or a building for sale, because have the people to move from other shops to help with the transition."

In some ceases, technicians from other Nu-Look shops will work at a new facility along with existing staff to help make sure all the standard operating procedures are put into place. "Chances are if we are doing an acquisition, it's a fairly progressive shop to begin with," Zigrossi says. "We've walked away form a lot of deals, because there are shops that you look at and you can tell right away that you would have a difficult time changing the mindset of the employees. Culture is just as important as sales volume."

Unlike the large consolidators, which can rely on private equity to fuel their expansion, Nu-Look has to rely on its own financing. "That's never been a problem, because we have a long-standing track record with the banks we deal with," Zigrossi says. "We keep the banks up to date. That goes back to having the staff in place. We share financials with the banks on a quarterly basis, so if something comes available we don't have to start from ground zero in terms of getting all the data to them."

Planning for the future
Technology plays an important role in both maintaining and measuring shop performance. The shop management system monitors and reports KPIs across the company, which Zigrossi says has been critical for maintaining insurer relationships and meeting DRP requirements.

"You have to have that data available, and react to it on a daily basis," Zigrossi says. You can't wait a month to find out that something you need for an insurance company is lacking."

While there is competition in the New York market, Zigrossi says his team focuses internally on meeting customer and insurance company expectations. "If we continue to perform, measure and improve, that's what we concentrate on," he says. "You can't get caught up in what someone else is doing. As long as we take care of our own stores and our own people, we'll keep growing and making customers happy."

Flexibility is also important. "You can't be resistant to change," Zigrossi says. "The industry is changing. You have to be prepared to change and take a broader view of the industry. You have to prepare earlier for the new technologies coming out and be ready to roll."

That can include everything from new high-strength steels to new safety technology appearing on vehicles. "You have to pay attention all the time and educate yourselves about what's coming," Zigrossi says. "You need to stay ahead of the curve. You want to do these things ahead of your competition in the market, and be prepared to satisfy your insurance companies and customers."

In fact, Zigrossi sees these technological innovations as a big opportunity for growth. "Not everyone wants to get to that next level," Zigrossi says. "It takes a lot of training and expensive equipment. Some shops just aren't going to make that investment. It's another chapter in the industry."

The biggest challenge Zigrossi sees is continuing to develop his staff. "We're constantly training people, and we always want to be ready for new acquisitions," Zigrossi says. "You have to match your personnel with your growth. We've been very fortunate and have been able to somewhat predict our growth and our strategy, and we've matched our training to go along with that."

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With the right technology and right people in place, Zigrossi says Nu-Look will continue to grow both its market share and its network in the coming years.

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