By Jeff Sanford
Madison, Indiana -- October 1, 2015 -- In the 19th century the Ohio river dividing Indiana and Kentucky was the interstate of its day. Steam boats tended the factories along the river. Towns like historic Madison, nestled in the Ohio River valley, were populated with factories tended by the boats that were the heavy trucks of their day.
Today tug boats still push barges hauling basic commodities like sand and coal up and down the river. But now downtown Madison is home to block-after-block of wonderfully preserved, designated-historic buildings that attract tourists who come to gawk at the 100-year old architecture. Mainstream commerce occurs along the asphalt interstates that exist up and out of the valley. Now the economic lifeblood of the region flow through companies like Chief Automotive, a major supplier to the collision repair industry that is headquartered in the historic city.
The economy never stops evolving, of course, and nimble companies like Chief know the key to success is to offer the ever-evolving line of products demanded by the industry. In this day and age, in this industry, that means tools to work with advanced, lightweight metals like aluminum.
As a way of helping collision repair shops keep up with the trend toward aluminum, Chief has announced it is offering a suite of new products, including welders and rivet guns, designed to make working with aluminium even easier than working with steel. To show off the new product line Chief recently hosted a clutch of collision repair trade reporters to their headquarters in lovely Madison to show off the new products. The trip was a great chance to enjoy the remarkable ambience of downtown Madison, but it was also a chance to get up-to-date on the new products being offered by Chief. Over the course of the coming week we’ll get into the details of all these new products. But as way of introduction, it’s worth going over some of the information passed along by Chief executives in an introductory session at the company’s headquarters.
Today Chief is part of a vast corporate entity under the auspices of parent company, Dover Corporation an $8 billion entity it’s made up of 32 different companies. Chief is part of the Vehicle Service Group, a group formed out of a company, Rotary Lift, that itself came to be in 1925.
Back then cars didn't work very well. It wasn’t always easy to get vehicles to go into reverse. The founder of Rotary had a vision: Apply the basic principal underling the ubiquitous barbershop chair to the car industry. The modern rotary vehicle lift followed. The company has been manufacturing and distributing car lifts for dealers, garages and collision repair shops ever since.
Today, the diversified conglomerate that is Dover is doing well. With oil at $20 a barrel, the business in the upstream oil sector aren’t doing as well they were. But this is where diversification pays off. The downstream business—offering gasoline station infrastructure—are doing really well as the low price of oil has sparked a new boom in driving.
The Vehicle Service Group has also diversified globally. Today, there is a German unit made up of a company that has been supplying BMW since the 19th century. More recently, to reflect the evolution of the global auto industry, VSG acquired a Chinese company in 2007. The Chinese division is located in a “small village of one million people” one hour north of Shanghai. One can see the potential for growth there is substantial.
One estimate passed along by the Chief executives is that there are 100,000 collision repair shops in the country. This number includes everything from the smallest shop doing bike repairs up to sophisticated high-end shops in Beijing. These shops service a population that is just now taking up a car-based economic system. A population that had been relying on bikes is driving and the old habits are hard to give up. The many new drivers in China sometimes pilot their cars more like a bike (that is, weaving in and out of traffic) and so the Chinese accident rate is a mighty 75 percent, compared to just 15 percent in north America. So the opportunity in China is massive.
“We have to be there. It's going to be one of the biggest markets in the world,” said Richard Perry, OEM & Strategy Account Manager, to the gathered trade journalists.
Here in North America Chief has a strategy of providing “the high-end product” to the market. Company execs joke that one of their biggest competitors is used Chief product, so durable and respected is the brand.
But to stay at the front of the industry the company understands it needs to provide quality aluminum-based products. According to Bob Holland, Director of Collision Sales, North & South America, one of the biggest trends driving the business is, “the new CAFE standards mandate a minimum standard of 54.5 mpg by 2025. That's a steep curve, we're only at 28 mpg in 2016. There are penalties are out there for not hitting that. Everyone has agreed to get to that. So we have to get there.”
The problem is, how? For years now automakers have been concentrating on advances in the drive train and engine components to drive efficiencies. But the thinking now is that the big gains to be made in that area of design are largely done. The only other area now is to reduce weight through the use of light materials on the body of cars. Hence the move to aluminum.
“Aluminium is here to stay. You've got to get to 54.5. How do you do that?,” asks Holland. You use aluminum. The introduction of aluminum to the best-selling F-150 is just the start. The new Cadillac—an advance body of which was on display at Chief—is another step. The 2016 version of that vehicle will be much more aluminum-heavy. A new era of auto design is upon us. Providing the tools to navigate this new age is one of the current mission’s at Chief. Over the next week we’ll get into the details of these new products. Stay tuned.