Small body repair shops face competition, insurance issues

Like Wal-Mart and other giant retailers, auto body shops appear to be moving from the small mom-and-pop shops to the bigger players.

That's a problem for Linda M. Buckingham and owners of several other smaller body shops in Billings who say they are being cut out of the bidding process on many repairs.

She had her going-out-of-business auction a week ago at Showroom Auto Body & Detail at 1415 First Ave. N., and then locked the doors.

When she started her business eight years ago, Buckingham employed 16 people. She was down to six when she decided there wasn't enough work to keep going.

"When we still had winters and hail in the summer, there was plenty of work for everybody," she said.

The trend toward insurance companies picking "direct repair facilities," where they give customers a list of preferred body shops, has been getting worse from her standpoint.

"It leaves out the small-business person totally," she said. "The small businesses don't have a chance against these megabucks."

Two years ago, a statewide organization called the Montana Collision Repair Specialists got the Montana Legislature to pass a law saying it is up to owners to choose who they want to repair their cars or trucks, she said.

"But there still are plenty of agents who steer the work to preferred shops. They're stretching the law," she said.

Buckingham said she isn't sure what she will do now that her Showroom Auto Body has closed, a move she called one of the hardest things she'd ever done.

"I made sure all my customers were taken care of and my employees had a place to go when I closed and that there was a roof over my family's head," she said. "Then it was time to go."

State of Montana Compliance Specialist Barbara van der Mars said state law prohibits an insurance company from sending customers to one place.

"They may not instruct a person to go to one shop in particular, but they can provide a list," she said. "But the complaints do come in."

Van der Mars works as a liaison between consumers and insurance companies at the Policyholder Services Division of the State Auditor's Office.

Brian Stein, who owns Track Side Auto Body at 2012 First Ave. N., has been fixing vehicles for nearly 25 years.

The practice of insurance companies directing clients has cut into business, he said, and so has the trend toward larger body shops.

In his experience, State Farm will take bids from smaller companies like his if their methods meet the company's criteria. But he said three insurance companies are like country clubs where it is very difficult for small shops to get the work.

"I probably do work for 80 to 90 percent of the people who walk through the door with State Farm," he said, and about 10 percent with the other three companies.

Still, he's not worried about going out of business.

"It's been tried before. It's kind of like going to McDonald's and going to The Rex," he said. "They may be able to do your car in three days, but we take four days. We take our time and do it right."

He also said he insists on using factory-made equipment, not cheaper after-market parts favored by insurance companies.

"They try to tell you the quality is there, but it isn't," Stein said.

However, his biggest competition isn't from the big dealers, but garage guys.

"It's all the backyard shops that are working illegally in this town that hurt my business," he said. "I think the city needs to do more to crack down on these jobs."

Tom Crawford, a Farmers Insurance agent in Billings Heights, said his company recommends half a dozen body shops, which he claims is more efficient and better for the customer.

He said the insurer approves body shops that agree to buy the same computer software that Farmers uses.

"That allows them to write estimates on vehicles the same as we would write them," he said.

Steve Zabawa, co-owner of Rimrock Auto Group, which is building a large auto body shop on the West End of Billings, said he wants to sign agreements with large insurance companies to get their business.

This will shift work around, he agreed. "The little guys are getting squeezed out," he said.

He said insurance companies can dictate the use of after-market parts because that's all they will pay for, but clients can go back to insurance companies and demand factory parts.

Zabawa said Rimrock's repair business is growing because of quality work.

"We want to use factory parts all the time, that's our goal," he said. "Everything we do at our place is first-class."

600450 Small body repair shops face competition, insurance issues
Date: 8 October 2004

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