Presidents Town Hall Meeting Report

Posted on January 11, 2012 by Eloy No Comments

PSOC would like to thank the repair professionals for participating in the recently conducted town hall meetings which were held in Fresno, Garden Grove, San Diego, and Sacramento from September thru October 2011. A special thanks goes out to our sponsors, which despite the economy helped us to make this possible.

As you know the Professional Servicers Organization of California (PSOC) conducted these meetings because both major appliances and electronics repair is faced with serious issues that have a direct impact on our existence. These issues were identified thanks to the open sharing of member concerns with us.

It is the goal of this organization to take immediate action and bring about correction.

We feel that it is imperative to find resolutions for the protection of the American consumer as well as the wellbeing of our entire industry.

PSOC officers are working on formulating a campaign to resolve the problems which have been identified that effect on our ability to provide our customers with the best possible service experience.

A real concern was expressed about the timely procurement of repair parts. Under California’s Song-Beverly Act, manufacturers are required to make repair parts, schematics and service information available for seven years after the last date of production.

For some brands of digital televisions, especially those made in the People’s Republic of China, parts are almost nonexistent. For some appliance and electronics brands, parts are in short supply and can remain on backorder for weeks. Customers don’t like waiting for repairs. When parts don’t arrive in a timely manner, service dealers lose jobs and these customer’s future business.

Worrisome is the fact that we now have parts which have been harvested from used or recycled products, and end up in customer’s unit without their knowledge or authorization!

The bottom line is that the American consumer is being damaged by these actions.

Inadequate compensation from third-party service contract administrators is been a topic that no longer can be ignored by the industry. Some contract sellers ignore facts of what our costs of doing business (CODB); cost to provide professional repair work in the field really is. They have chosen arbitrary rates pulled out of the air without substance, they offer these to service dealers on a take-it-or-leave-it basis thereby pressuring servicers to work below their base line, below their minimum sustainability, below their CODB.

The Song-Beverly Act places the starting point for any rate negotiations at the servicers regular COD rate. The presumption of the law is that your COD rate is in fact your warranty rate! It became evident in our meetings that this is not the case at all. The question: how much longer servicers can provide service and stay in business with these rates was answered with shrugs and a deafening silence.

To understanding your CODB and to negotiating rates in good faith is critical for the survival of any business. We teach these and many more important business classes in our annual conventions.

Some third party administrators (TPA’s) are forcing servicers to accept as much as a 50 to 60 percent lower than the average COD rate in order to get business from them. Without exception every servicers present in our meetings had a serious issue with this practice. Many chose to refuse to do business with those particular TPA’s that clearly don’t care about the survival of professional servicer.  

Note: A manufacture or contract company does not have to do business with a servicers, but if they choose to do business with them, then they must negotiate with them based on the Song-Beverly Act!

With the change in doing business came along the “simplification” and “cost reduction” of parts ordering. The truth of the matter is that parts ordering is just as hands on as it has been before they came up with the idea of “helping us” by taking away our ability to buy good parts from good sources and have eliminated our markup. It is not ok to have zero profit on parts considering all the work of part research and parts ordering and parts handling that servicers still have to do. This discussion led to the suggestion that servicers should include a 25% increase on labor rates to at least recoup the amount of time/labor spent on the parts processing with each job which requires parts.

Furthermore for any Parts received defective, rebuilt, new defective, or used which result in multiple trip repairs and which shipped from an administrator or a manufacturer should be billed for a second, third, fourth trip or as many trips as it takes to complete the call.

Discussed were background checks which manufacturers and service contract administrators require before servicers can be authorized to support warranties and/or contract repairs to be conducted on all their employees. PSOC members and non-members understand the need for background checks. The only objection is the expense for those checks by multiple agencies. There are currently two large companies performing background checks and several smaller ones. Individual manufacturers and contractors typically specify which firm they want for verification, thus requiring repair professionals to submit to checks from several firms. This puts an unfair financial burden on small local independent repair firms. It is recommend that manufacturers, contractors and repair professionals agree on one background check standard. It is necessary to come up with one standard criterion which would allow the repair professional to hire any background agency to perform their employee checks. This process should include all associations and background check agencies interested in creating a standard.  If they insist on different standards than they should be prepared to reimburse the repair professional for the expense.   Note: A committee has been formed to create the standards and PSOC is participating.

Maintaining a professional image for the repair industry is not an option but a must. In their quest to secure support for their warranties or service contracts at the lowest possible rates, several manufacturers and service administrators have chosen repair providers that fall short in basic standards of service experiences thereby damaging the image of the entire repair industry.

When consumers purchase a new product or contract they are buying peace of mind or are they? An overwhelming request was made by servicers, that the consumer be educated. On our part effort needs to be put into practice to make the consumer aware before they make a purchase. We have a unique opportunity to advise and inform consumers if a manufacturer or TPA supports a product with timely service, if good parts or good customer service is provided by them or not. Consumers are becoming increasingly frustrated with the hours spent calling customer service and then not being able to communicate with the person answering the phone.

A greater emphasis should be used when choosing repair firms who maintain professionalism in appearance and service skills. Customers place higher value on quality of work performed than on the cost. Many customers are willing to pay more to get it.

Going forward the PSOC Board of Directors will be sending questionnaires to the companies mentioned in the meetings. Questionnaires will also go out to companies known not to support the product they sell. We support companies that are pro consumer and offer total support for the product they sell and denounce these that don’t. This stand across our Industry would eliminate the majority of the problems we are facing today.

It is the PSOC’s intention to make all of our findings public.

On behalf of the PSOC membership and Board of Directors I want to take this opportunity to wish you and yours a Happy New Year.

To the betterment of our Industry,

Eloy Fierro

President

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