There may have been a time when, in the eyes of a body shop owner, paint companies were nothing more than mere suppliers of paint. Now, in addition to supplying their product, paint manufacturers supply much more to their customer shops. In some ways, paint companies and body shops are indeed partners.

"The relationship between supplier and shops has changed significantly during the past 10 years," according to Bill Troyer, MVP (maximum velocity performance) analyst for PPG Industries Inc. "We have gone from simply supplying products and technical services to understanding our customer's larger needs and focusing on solving their problems."

"Most shops are looking for a true business partner that provides more than just paint and related supplies," according to Coleman Foley, vice president, wholesale markets, for NAPA, who distributes the Martin-Senour brand of paint products through its AutoCare Collision Center program.

LaBree Truesdale, national sales manager for Valspar Refinish, said that over the past 30 years, paint manufacturers have changed from being solely coatings suppliers to today's role as suppliers of both coatings and information. Likewise, he added, body shops have changed in levels of sophistication in equipment, personnel training and management systems.

"Paint companies began simply as suppliers of paint and then as the industry began to progress technologically, paint companies became suppliers of technology," said Hugh Schwartz, executive vice president of Spies Hecker. "As a result, paint companies are now suppliers of know-how."

Along the same lines, Thomas Verghese, ICI Autocolor's North American marketing director, said, "Over time, changes in paint technology drove the use of increasing amounts of technology within the body shop, and with the tightening of environmental legislation and cost pressures during the 1990s, the relationship between paint companies and body shops has become a much closer one."

"We have always felt a responsibility to provide more than just paint," said Doug Kelly, marketing manager for DuPont Automotive Finishes. "In recent years, as the pace of technological change has increased, we have upgraded our training programs and our information systems to stay ahead of the curve."

Because of the rapid changes taking place in this industry, Jacqueline Connolly, marketing manager for Spies Hecker, said, "Spies Hecker wants to help our customers not only be prepared for these changes but become successful businesses as well."

According to Truesdale, in addition to supplying refinish materials, paint manufacturers also need to instruct shops in the proper usage of those materials. "The complexities of the paint systems themselves with the change from single stage topcoats to two and three stage finishes create a need for continuous education of the craftsmen in collision repair. Higher solids coatings, HVLP equipment and the numerous safety issues also create a need for education in the shop."

"BASF recognizes the rapid and significant changes affecting the refinish industry, with a corresponding need for body shops to adapt to the changes: technology, increasing competition, consolidation, customer demand, insurance practices, improved manufacturing processes and materials, safety and environmental regulation," said Andy Ladak, manager, marketing communications, for BASF.

"In an environment of consolidation where the number of shops is declining, it is clear that our market share will be dependent on the success of the shops that use our products," said Bruce Cooley, director of industry relations for Sherwin-Williams Automotive Finishes Corporation. "That being the case, we are going to do everything we can to help the shops manage their businesses to the optimum. In effect, they are extensions of our own business and we will treat them as such."

The industry is making more demands on the collision repair facility to have an expert in every area, according to Keith Smith, manager, marketing communications, for American Standox Inc. Even the large, "A" class body shop may have a difficult time accomplishing this successfully, he said.

Services and programs
More than simply suppliers of their products, paint companies now offer various services and programs to shops that use their paint. Some of these services include technical training; training in business operations, management, finance, sales and marketing; computer management systems; technical services/hotlines; consulting services; shop/employee certification; a comparative analysis of the shop versus competing shops; customer satisfaction index (CSI) tracking; body shop layout services; color-matching tools; special financial packages; and lifetime warranties on the paint used.

"Paint is a small percentage of the costs of a body shop but it has a significant impact on body shop efficiencies and hence on profitability," said ICI's Verghese. Value-added programs, he said, "are designed to improve body shop profitability by improving body shop development, efficiency and control."

"The most popular [service] with our customers has been the product training and the MVP program," said PPG's Troyer. "Both provide the essential training, resources, information and knowledge to assure their continued success."

Kelly said that DuPont's seminars offer some of the most effective training for shop mangers and owners, and that the Assurance of Quality (AOQ) program helps shops market their services and maximize their profits. "Our Assurance of Quality program is a comprehensive offering that helps good shops realize their full potential."

"BASF sees the need to provide its end users [shops] with the marketing, management and information tools to help them thrive in the new environment, because an excellent product and state-of-the-art color tools - still the core of our business - are no longer enough to sustain them," said Ladak.

It's important for shops to be able to correctly match colors - it's a major concern for shops today, according to Valspar's Truesdale. "The vehicles manufactured today are manufactured and coated in plants throughout the world and painted with different paint systems, with different application equipment and with different environmental conditions more so than at any other time in history," he said. "This generates more colors that vary from vehicle to vehicle than at any other time as well."

"The changing nature of the collision repair industry now requires that collision repair facility owners and managers be experts in everything from general business practices and management to computers and information systems," said Standox's Smith. "Most body shops cannot bring the resources required to develop this kind of comprehensive expertise to the table."

Because of the difficulty of a single shop to procure all necessary information resources on its own, partnering with a paint company could provide some of the benefits of consolidation without actually consolidating. Some of the paint companies set up information networks of the shops that participate in their programs.

"Many paint companies know that their success is dependent on how well their customer base deals with the demands that are being placed on them by the various influence groups within the industry," said Smith. "As a result, many of them have realized that they can serve their customer base as a genuine business partner by facilitating the 'consolidation' of progressive body shops that buy from them into partnership organizations."

Which programs are the most effective? Sherwin-Williams' Cooley said the assistance a shop needs at any given time is relative and dependent upon the needs of the individual shop. Therefore, any one program or service should not be singled out as the best program available, he said.

NAPA's Foley echoed this thought, saying, "Some shops are focused on marketing their business to attract more customers while others are concerned about production issues and delivering vehicles in a more timely fashion."

Why the evolution?
There are several explanations why the relationship between body shops and paint companies has changed dramatically over the years.

"Increased competition and rapid change at all levels of the industry are the key factors that are driving the interest in developing long-term partner relationships," said Troyer of PPG.

Today's shop owners must be top-notch business people to ensure their ability to compete and survive in this industry, according to Foley. "Given today's pressure on collision shop margins, the emphasis must be on business skills rather than just sheer technical expertise."

"With increasing competition and a declining market, sophisticated body shops are turning to the paint companies for help in growing their business to the next level," said Spies Hecker's Schwartz. "It is to our benefit that our customer base achieves success and flourishes in this ever-changing industry."

Foley also noted the paint companies' dependence on their shops' success, saying, "By continuing to build and strengthen our customer base, we help ensure our own future in this industry. The stronger their financial health, the greater their ability to survive the change and consolidation within this industry."

"In the last few years, the rate of change in the industry, in terms of not just products, but legislation and technology, has increased dramatically," said DuPont's Kelly. He alleges that VOCs, DRPs, computerization, consolidation, education and recruitment have all had a major impact on the industry. "Our role is to inform and support business owners and help them fill their needs."

Consolidation of shops and a new level of sophistication to run the remaining shops are two main factors driving the trend of body shops and paint manufacturers becoming more like partners, according to Cooley of Sherwin-Williams. "On the sophistication issue, body shop owners of yesteryear didn't particularly have to be good business people. They were required to excel on the technical side, but because there was a great deal of business, they weren't required to have keen business skills. Today, the reverse is true. Without keen business skills, body shops will find it difficult to survive let alone make a profit."

Shop owners are faced with increasing challenges both internally and externally, according to ICI's Verghese. "There is the continuous pressure on margins from insurance companies which are seeking to provide returns to their shareholders; there is pressure from today's quality-conscious consumers who need their cars back quickly; there is constant pressure from competitors; there is the challenge of recruiting and retaining skilled personnel; and there is the challenge of keeping up-to-date with the latest technological developments," he said. "The average body shop does not have the resources to tackle each of these areas and this provides an opportunity for paint companies to provide support to help the body shop grow and prosper."

Valspar's Truesdale said shops are faced with constant difficult tasks, including refinishing cars that are variant in color, competing in an increasingly competitive collision repair marketplace with overall collision repair volume decreasing, dealing with sophisticated paint systems and adjusting to rate caps and DRP programs from the insurance industry. "The assistance of the paint manufacturers in technology, safety and training is an integral part of the success of most shops today," he said.

"Thirty years ago, there was plenty of business for everybody, so anybody who wanted to be in the business could be and could make a decent living," according to Cooley. "With 120,000 shops and a seemingly unlimited number of consumers, including a large and diverse fleet market, paint companies were in nirvana. What the shops needed were supplies and technical advice, which could be had from any number of jobbers. So, the paint companies' customer was the jobber and the intent was to create shelf space at this level of distribution. Simply, the more product you had on the shelf, the more market share you owned. Therefore, the critical relationship was between the paint company and the jobber. Of course, the jobber is still important today as a partner creating demand, but he is no longer the consumer all by himself. In either case, we recognize the need to support both distribution and body shop customers to help strengthen their sales and profitability."

Of all influences on the collision repair facility causing the trend toward partnership, according to Standox's Smith, "First among these may be environmental regulations. These affect the paint company directly, and it is in the paint companies' best interest to make sure that the shops are aware of the right products to use and that they are being used correctly."

The future
"The shop was more in control of its own destiny in the past," according to Smith. "It [the shop] dealt with fewer pressure groups, so it was able to maintain the expertise to deal with each of them. As a result, there was no demand for resources from other sources like the paint companies."

He continued, "Over the last couple of years, the partnership precedent between the paint companies and body shops has been set. The paint companies are going to be successful in the future by helping their customers to be successful in a shrinking industry; and at least for the near future, the paint companies are going to have the best chance of creating an information and expertise network to help the individual shop continue to prosper in the face of increasing influence group demands."

The future paint company/body shop relationship will focus on creating greater efficiencies within the industry through value-added programs, according to PPG's Troyer.

"It is likely that the relationship between paint companies and body shops will get closer and successful body shops will forge strong business partnerships with paint companies," said ICI's Verghese.

"Relationships with body shops will be of even greater importance in the future due to the advent of the corporate consolidators," says Schwartz of Spies Hecker. "It will be advantageous to both the paint companies and body shops to be prepared for changes by continuous communication and support for everyone's survival."

"We feel that as consolidation continues, it will be imperative for shops to align themselves with key suppliers who offer a full range of business building tools and services," said NAPA's Foley. "Our program is built with input from collision shop owners from across the country to ensure the components are meaningful to their business, and tailored to meet today's needs."

Although most body shops are still independent businesses, they are not necessarily alone in their business endeavors should they choose to utilize available industry resources, including the services offered by paint manufacturers.

Technical changes in the product
In addition to changes in the role of paint companies in the automotive aftermarket service industry, the paints themselves have evolved into different products.

"The trend [in paints] is toward higher technology products, which are demanding in their usage but offer more rewarding results," said BASF's Ladak. He added that continuing pressure from the original equipment manufacturers in pursuit of environmentally-sensitive products - in terms of toxicity - is a factor driving trends in the development of new paint products.

The current emphasis is on low VOC products, according to PPG's Troyer. "The future technologies will be directed toward the higher productivity products and paint systems that meet local and national VOC regulations. OEM-approved paint brand systems will also play an important role in future body shop business."

"Polyurethane paints now dominate the collision repair industry and basecoat/clearcoat finishes are the finish of choice on most new cars," said ICI's Verghese. He added that the most dramatic changes in paint technology over the recent past years have been driven by environmental legislation, and these have seen the demise of lacquer-based paints and the adoption of very high solids paint systems to reduce VOC emissions. As the National Rule is implemented in the United States, he said, the influence of high solids technologies will continue to grow.

Paint technology trends that are currently having the largest impact on the industry, according to Connolly of Spies Hecker, are medium solid technology to high solid technology; conventional topcoats and clear coats to waterborne topcoats and clear coats; and a conventional base coat to waterborne base boat.

"In the next 5-10 years," said Verghese, "waterborne paints will have a significant impact on the collision repair industry."

"We expect that higher solids coatings and compliant solvent borne coatings will continue to dominate North American refinishing," said Valspar's Truesdale. "The approval by the EPA of certain exempt solvents should preclude the necessity of waterborne technology to meet the stringent rule requirements in environmentally sensitive areas."

Standox is concentrating on High Solid (HS), Very High Solid (VHS) and waterborne technologies now and into the near future. "These systems are already in place with many of our progressive customers, and we expect to see a dramatic increase in usage in the next 5-10 years," said Smith.

"In recent history, two forces have impacted paint technology," said Sherwin-Williams' Cooley. "First is basecoat/clearcoat, which was originally driven by an OE durability and appearance trend. Second is the wave of technology brought on by VOC regulations." On the issue of new VOC regulations, he said, "I'm not expecting a second generation regulatory stage anytime in the near future."

"In the foreseeable future," he added, "current technology will be optimized in two areas: meeting the OE standards and specifications for quality and durability at the aftermarket level; and continuing to make products that shops can apply with the highest degree of productivity and application efficiencies for the shop operator."

"The greatest impact from a technological point of view on today's collision repair industry is higher solids, lower VOC coatings and the equipment to use them successfully," said Truesdale. "From the inception of the first air quality regulations, the paint manufacturers have been mandated to develop and supply environmentally friendly coatings and to apply these coatings with new types of more efficient equipment."

A tremendous number of products at various VOC levels are now on the market due mainly as a result of rules in California's many air quality districts and in other states, he said. Therefore, paint manufacturers must instruct shops on the successful usage of various products for particular areas and shops must closely track environmental rules in their areas to be fully compliant.

"The necessity of following the rules while refinishing a vehicle to world class standards is the target for both the collision repair industry and the paint manufacturers today," said Truesdale.

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