By Jeff Sanford
Toronto, Ontario -- January 11, 2018 - A US brokerage released a report this week noting that, “2017-2018 winter severity is off to an above-average start.” The report was written by a US firm, William Blair. It focused on the prospects for the major US used parts distributor, LKQ. But the report referred to something called the Midwestern Regional Climate Center's (MRCC) Accumulated Winter Season Severity Index (AWSSI) to quantify just how bad the winter has been so far. The index is compiled by university researchers who measure the, “intensity and persistence of cold weather, the frequency and amount of snow, and the amount and persistence of snow on the ground.” According to the brokerage report, “... the 2017-2018 winter snow severity is more extreme than last year (so far).” Which will be little surprise to most in North America. A map from the MRCC shows ‘extreme’ or ‘severe’ weather across much of the eastern part of the continent. As the analyst notes, the accumulation of snow is, “... correlated with collision claims growth… This could provide a much-needed tailwind to LKQ's North American parts and services organic growth rate following two consecutive mild winters.” Oddly, one area that might see less business in the collision repair area is Boston. According to the report, “The extreme snow in Boston is likely a slight negative as fewer people will be driving for a short period. [But overall], we see upside to our North American organic growth assumption of 4.6% in 2018.” http://bit.ly/2D1zH8T
-The front runner for the award for most expensive collision in Canada in 2018 has to be the wing bender between two jets at Pearson airport last week. According to a report in the Toronto Star a WestJet plane was stationary when it was clipped by a Sunwing aircraft, which was being towed by the airline's ground crew. One person sustained injuries following the collision. Flames could be seen coming from one of the planes in a video. The passengers aboard a WestJet flight from Cancun, Mexico had to evacuate from the aircraft via emergency slides. That is going to one heck of an insurance claim. http://bit.ly/2AMRRFx
-Another industrial-sized collision repair job involves Germany's last operating sub, the Deutsche Marine's vessel, U-35. It recently struck a rock at sea. That knocked out one of its steering fins. The damage required the submarine to be towed back to a shipyard for repairs. The job is hampered by an all-too-familiar twist: There is a short of spare-parts for the vessel. According to a newspaper report, “... to save money, the service stopped stockpiling spares for the complex systems of its subs, relying instead on either purchasing parts on demand or cannibalizing subs that were out of service.” Oops. http://bit.ly/2BHT6rQ
-India is finally cracking down on auto safety and bringing its vehicle fleet up to western standards. As it is, more than 150,000 people are killed each year in traffic accidents each year in the country. That is a massive number of accidents. According to a report that works out to about 400 fatalities a day, far higher than developed auto markets like the US, which in 2016 logged about 40,000 accidents. But now the government is attempting to curb the high number of traffic deaths. A bill introduced in August 2016 proposes harsher penalties for traffic offenses and requires automakers to add such basic safety features such as airbags. As it is, the country allows cars to be sold with few safety features. According to a news report, “Indian consumers are famously price sensitive when it comes to car purchases.” As a result super low-cost and no-frills compact cars have long been sold by companies like Tata Motors, Renault and Hyundai. In 2015, Renault sold a car in India without a frontal airbag or anti-lock braking system, earning the model a ‘zero star rating’ from a U.K.-based non-profit organization that studies the quality of vehicles. That rating means there could be life threatening injuries in a crash at 40 miles-per-hour. Interestingly, the report mentions a statistic from the World Health Organization, which estimates that traffic crashes cost most countries about three percent of their gross domestic product.
-Telephone conversations intercepted as part of a federal corruption investigation offer insight into corrupt towing in Detroit. A story in the Detroit Free Press notes that a FBI Special Agent last year recorded phone conversations between a towing magnate in the city, Gasper Fiore. Taps on his phone uncovered deals with local officials involving individuals on the Detroit Police Department, Detroit City Council, Highland Park Police Department and the Michigan State Police. The FBI monitored his phone for 30 days and watched an O'Reilly Auto Parts store where Fiore was doing repairs on a state trooper's personal vehicle. According to the story, “Fiore, a 57-year-old Grosse Pointe Shores multimillionaire, built an empire by securing lucrative towing and other contracts with local, state and federal governments. In a May 5, 2016, conversation between Fiore and a Detroit cop about a stolen car that needed to be towed, the officer ‘joked about following the rules and referring a tow to Nationwide (Towing), a competitor who handles the precinct where the car was found.’ … When the officer told Fiore he had to give the job to Nationwide because the recovered vehicle was in that company's jurisdiction, Fiore apparently became angry. "You out of your (expletive) mind? … They ain't touching this car ... you and (the owner of Nationwide) will both be setting (sic) in (expletive) jail.’ When Fiore warned the cop he'd end up behind bars, the officer replied: ‘Oh, man ... you'd be right there (in jail) with me’." http://on.freep.com/2D4hYwO
-A story in the New York Times relates the plight of neighbourhoods that are grappling with unexpected local gridlock as a result of new smartphone apps like Waze. The apps uses crowd sourcing to update information about local traffic conditions. Users can check their route. If heavy traffic is reported on that journey the app gives the driver suggestions for alternative routes. The problem now is that some neighbourhoods near expressway off-ramps find they are being flooded with drivers following the directions on these apps. For some residents in these neighbourhoods the local traffic jams have become so bad that drastic measures are now being taken. According to the story in the Times, "Some people -- frustrated at the influx of outside traffic -- have taken to fabricating reports of traffic accidents in their communities to try to deter the app from sending motorists their way.” Other neighbourhoods are considering banning traffic other than locals. According to the story, “Leonia, N.J., … has decided to fight back against congestion that its leaders say has reached crisis proportions… In mid-January, the borough's police force will close 60 streets to all drivers aside from residents and people employed in the borough during the morning and afternoon rush periods, effectively taking most of the town out of circulation for the popular traffic apps -- and for everyone else, for that matter." The reporter quotes Leonia's police chief as saying, "In the morning, if I sign onto my Waze account, I find there are 250,000 'Wazers' in the area. When the primary roads become congested, it directs vehicles into Leonia and pushes them onto secondary and tertiary roads. We have had days when people can't get out of their driveways." The article ends with a quote from Samuel I. Schwartz, the former traffic engineer for New York City known as Gridlock Sam, "It's a slippery slope. Waze and other services are upsetting the apple cart in a lot of communities. But these are public streets, so where do you draw the line?" http://bit.ly/2CwzuK6
-Everyone knows there is a high demand for good labour in the collision repair industry. The lack of employees extends to other areas of the auto industry as well. Consider the trucking industry. A report in an industry trade magazine notes that a recent survey found there is just one truck available for every 12 loads that needed to be shipped at the start of 2018. This is the lowest ratio since 2005. According to the chief economist of the American Trucking Association, "In addition to the sheer lack of drivers, fleets are also suffering from a lack of qualified drivers, which amplifies the effects of the shortage on carriers.”This means that even as the shortage numbers fluctuate, it remains a serious concern for our industry, for the supply chain and for the economy at large." The report goes on to note that demographic trends are driving the shortage. According to the US Bureau of Labor the average age of a commercial truck driver in the US is 55 years. According to the ATA economist, “Demographics are working against the industry. The trucking industry average age is about 10 years older than the average age across other comparable industries like manufacturing and construction. So as those retirements are taking place, we're just not seeing the same level of new entrants into the industry."
-A media report from Europe notes that over the past decade auto industry regulators have made pedestrian safety a priority. “In 2010 the European Union introduced new auto safety standards designed to reduce pedestrian fatalities and injuries. To reduce the risk of head trauma the EU rules call for features like higher hoods to reduce the severity of impact in the event a driver strikes someone outside the car. Mandates to improve ‘survivability’ for pedestrians have prompted some vehicle makers to incorporate external airbags. Vehicles must also be subjected to crash tests evaluating front-end impacts with pedestrians. The tests measure the impact on an adult's head, a child's head, and an adult's legs,” according to the story. This has not been the case in the US, however. There pedestrian deaths are rising, with some 6,000 lives lost in vehicle and pedestrian collisions. The story goes on to say that, “... the difference between the American and European approaches to the regulation of car design stands out strongly… American regulators considered adopting similar pedestrian safety goals years ago, they have resisted them. The Insurance Institute for Highway Safety reports that the National Highway Safety Traffic Administration studied pedestrian safety regulations from the 1970s through the 1990s, but never acted…” A source in the story is quoted as saying that NHTSA has been reluctant to regulate it because it so closely relates to styling. “In other words, features that save lives might affect the way cars look, and car companies don't want to mess with appearances,” according to the report. http://bit.ly/2AkCyb