A Dream Come true?
By Lyle R. Hill
Part Five of a Five Part Series.
As we now conclude this series, I feel it is necessary to remind the reader that the opinions and reflections herein are solely mine and are based on my 50-plus years in the industry. I had the great fortune of working for 19 years at Globe Glass/Tyler & Hippach Glass in Chicago. I started on the first Monday in September in 1970, and my time and experiences there allowed me to learn and observe so much. This series has been based on those observations and the opinions formed from them.
Man with an Auto Glass Dream
Joe Kellman, the founder and owner of Globe Glass in Chicago, had a dream and he met with a small group of his key employees, at the American Management Association training center in Hamilton, N.Y. to share it with them. Kellman had just spent time in England with a gentleman named Nel Vachon who had put together a national flat glass replacement network. It provided standard pricing and service levels to chain store operators. Some of Vachon’s first customers were Woolworths, Montgomery Wards, Sears and Radio Shack. Vachon had a glass background and was, in my opinion, one of the best salespeople the industry ever produced. From a small office over a drug store in Woonsocket, R.I., Vachon built a solid business that still exists more than 50 years after it began. He was the first of what are now several networks servicing the country with storefront glass replacements, door and frame re-pairs and board-ups. Kellman–himself a very good salesperson–liked what he saw and heard while with Vachon and thought the time was right for a national auto glass re-placement network.
A National Network is Born
While a few such networks al-ready existed, none were truly national in scope and none were being operated with much success. Kellman had a talented team around him and wanted to aggressively pursue the opportunity he felt was just waiting for him. He was also convinced that it was just a matter of time before such a program was developed and he was highly motivated to make sure he was first. Kellman knew there would be resistance and criticism from within and outside of his organization and the industry. He didn’t care. His company’s headquarters were on the near Northside of Chicago, just a few minutes east of the Kennedy expressway. The nation’s two largest auto insurance companies also had their headquarters in Illinois and were in easy driving distance. Both were also good customers of Kellman’s, plus there was no question that, at the time, Globe was the largest provider of auto glass replacements for both. He and his sales team approached both of these companies about putting a national program in place for them that would provide consistent discounted pricing, national warranties and a rebate based on the volume of work generated. One of those giant insurance companies signed on and a national auto glass network was born.
Kellman knew it would take a few years to, in his words, “perfect the program” but he had the financial wherewithal and determination to see it through. It didn’t take long for other insurance companies to see the financial and operational benefits of a network type arrangement and so a number of new “arrangements” were started. The rules of engagement for auto glass replacement shops around the country changed … dramatically as well as quickly.
It was an incredible challenge to do what Kellman and his team did, but they were successful. The dream had come true and an industry was transformed seemingly overnight. Kellman, whose employees often referred to him as JK, the Big Guy or the Coach, then owned and operated the largest and most dominant auto glass company in the nation. It offered service in every nook and cranny of the country. During this time, Kellman opened new shops in strategic areas nationally and also acquired several regional operators. It was a time of consolidation within the industry.
More Small Shops are Born
At the same time, however, several small shops also were opening up as the fallout from the consolidation led the former employees of acquired businesses to try to make a go of it on their own. A steady rise in the number of non-insurance related auto glass replacements helped drive this. At one time perhaps as much as 75% or more of auto glass replacements were processed and funded by insurance companies, this number has been in decline for several years. Current estimates suggest the ratio of insurance to non-insurance replacements is at about 50-50. This has come about for a number of reasons, not the least of which is the higher deductible in many insurance policies coupled with flat or lower replacement costs for auto glass. The in-dependently-owned well managed shop of today is not going away. But as the industry changes, it will have to adapt and change as well.
The Kellman Empire was sold in the mid-90s and headquarters was relocated to Columbus, Ohio. While a handful of strong regional players still exist, they are often partnered with body shop repair firms. There are hundreds of local shops and/or “independent” contract installers as well. The Columbus company dominates the insurance side of the industry. They have perfected the art of providing their customers what they want. In reality, perhaps they are the fulfillment of Joe Kellman’s dream.
As industry-wide consolidation continues at multiple levels, the small local shops feel the pinch even more than ever. Their futures are not nearly as promising as they were 50 years ago. The auto glass replacement industry relies on bad weather, road debris and bad driving practices for its business. While these things are not likely to change in the immediate future, the size, shape and make-up of the glass used in vehicles, particularly wind-shields, most likely will. So while the history of the industry is some-what easy to see, the future is not. A saying that quickly comes to mind is credited to a fellow by the name of Alan Kay who at one time was the chief economist at Apple Computer. Kay once said, “The best way to predict the future is to invent it.” Joe Kellman and others in various industries invented the future. Who will be tomorrow’s inventor … who is today’s dreamer?
LYLE HILL has 50 years of experience in and around the auto glass industry. At one time he operated 71 auto glass retail shops and a wholesale auto glass distribution business. He is currently the managing director of Glass.com®, an information portal and job generation company for auto glass businesses.
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