By Scott Long

Most individuals in the collision repair industry would not hesitate to stress the importance of education and training. Without thorough education and training, how can technicians be expected to repair modern vehicles properly—especially when vehicle construction and technology continues to change at such a rapid pace?

So why is I-CAR, a leading provider of education and training to the collision repair industry, doing so poorly?

At I-CAR’s annual meeting in July in Orlando, Fla., it was announced that the organization taught fewer students in its latest fiscal year than it has in at least 13 years. The resulting loss of about $1.1 million constitutes I-CAR’s worst financial performance since 1999 when it lost $900,000.

At the annual meeting, I-CAR’s CEO, Tom McGee, said the organization taught 100,756 student units in North America in fiscal 2007—down about 12 percent from the previous year and only two-thirds the number it was teaching in peak years of 1997, 1998, and 2002.

According to I-CAR’s annual reports, this is the third straight year that the organization has had a negative net (after investment income) operating balance. For fiscal 2007, the negative operating balance was ($792,645); for fiscal 2006, it was ($215,111); for fiscal 2005, it was ($715,498).

The industry is full of opinions concerning I-CAR’s performance. One shop owner believes that collision repairers are asking themselves why they should bother with I-CAR training when insurance companies don’t pay for repair procedures that are taught in I-CAR classes.

“Are shops starting to kick back and say, ‘Why should I train if I don’t get paid?’ There’s no return on the investment,” he said, adding that he thinks insurers are interested in maintaining I-CAR’s credibility in order to pass on their liability.

“I think it’s used strictly as a tool [by insurance companies] to say, ‘These shops are certified by I-CAR...Therefore, how could we be liable? We made them utilize the best training known to this industry. We’re off the hook,” he said.

Another shop owner sees I-CAR’s training as being too generic and is instead turning to Alldata of Elk Grove, Calif., which compiles OEM repair information.

“With Alldata, I can go on-line and get all the repair information I need,” said the shop owner. “It is a wonderful program. It is vehicle specific. With a touch of a keyboard, I have the information within a-half hour. [My technicians] don’t have to travel [to classes], and I don’t have to listen to them complain about traveling.”

“I hate to say it, but I-CAR isn’t going to make it,” added the shop owner.

A former I-CAR executive compared the non-profit to a pie. “The pie is divided up into pieces, such as salary, rent, course development, the tech center, and whatever a non-profit is allowed to make as a non-profit, which is a percentage of its income,” said the former executive.

“As long as the money is accounted for and shows up in the pie, the tax man is happy. Numbers can move within the pie. When I-CAR was making too much money for a non-profit, it had to bake another pie. Thus it founded the I-CAR Education Foundation in 1991. Now, I-CAR has run out of pie dough,” said the former executive.

The CRASH Network in Washington, D.C., contacted McGee to get the CEO’s perspective. “What we experienced was primarily in January, February, March, and for part of April, the average class size dropped significantly,” said McGee. “Overall, we averaged 2.5 people fewer [per class] in fiscal ’07 than we did in fiscal ’06. And that decrease in the average class size constituted the financial impact that we had.”

McGee chalked up the smaller class sizes to the cyclical nature of the collision repair business, as well as the implementation of the new Gold Class Professionals and Platinum Individual program requirements. “Some businesses that were existing Gold Class businesses were grandfathered into the program and were renewing under the previous plan. So there wasn’t a training requirement,” he said.

The organization has also been dealing with complying with IRS regulations by converting its instructors who were independent contractors over to staff employees. “That increased some of the operating expenses as far as workers compensation, unemployment, payroll processing—those types of things,” said McGee.

McGee additionally mentioned the litigation that I-CAR was involved in with Clemson University, which wanted to use the acronym ICAR for its International Center for Automotive Research. Though the case was ultimately decided in I-CAR’s favor in 2006, McGee said the cost was “the hardest hit” to the organization.

Some in the industry have criticized I-CAR and its training relationships with OEMs such as Audi and Jaguar—classes that are not necessarily aimed at the whole collision repair industry.

McGee defended these training relationships. “We’re going to have to continue to do that based on the changes in the technology,” he said. He quoted Peter Roberts, the chief executive of the Motor Insurance Repair Research Centre (commonly called “Thatcham”) in the U.K., who said at I-CAR’s recent annual meeting that general repair procedures are no longer sufficient in today’s climate.

“Most of the students attending these programs for the Audi and the Jaguar are independent collision repair businesses, not dealers,” said McGee, who said I-CAR has often been able to help shop owners connect with OEM representatives and become part of their repair programs.

“The positive is that you look at the financials and say, okay, there was a shortfall, primarily due to the average class size decreases. But at the same time, we have been able to diversify our revenue stream a little bit more through some of these [training relationships] so that the impact was not as bad as it could have been,” said McGee.

As for turning I-CAR around, McGee emphasized a back-to-basics attitude. “We’re focusing on scheduling our classes and changing our marketing approaches,” he said. “We are not going to go and reinvent the organization and create a whole bunch of new products.”

Former I-CAR chair Rod Enlow added, “We’re looking at everything—content, relevancy.” He said I-CAR is continuing to look more closely at on-line training in order to make courses available for people whenever it is most convenient for them.

“Shop owners say that their margins are shrinking,” said Enlow. “The first thing to go in a tight-budget year is training. And it’s the last thing to come back. People say training is expensive.”

Texas collision repair shop owner Ted Prohaska agrees that the cost of training is high. He told CRASH that he spoke with former I-CAR president and CEO Tom Mack several years ago and suggested that I-CAR reduce the amount that it charges for its classes and make the students pay instead of their employers.

“An education is never appreciated when someone else is paying for it,” said Prohaska, adding that I-CAR might even consider financing student loans to help technicians pay for courses.

Enlow said Prohaska’s idea has “some merit,” particularly with the advent of I-CAR’s Platinum Individual program. “This could be very germane. The Platinum status is a résumé builder. This is worth something to an individual,” said Enlow. “Is it relevant to have a technician pay his own way? Sure.”

At the very least, Enlow said, technicians might share in the cost of I-CAR training. “Both the shop and the technician benefit from it. It’s a thought,” he said.

© 2007 Sheila’s Information Network Inc.

Scott Long has written about the auto collision repair industry for 17 years.