The Hon. Mike Farnworth, Minister of Public Safety and Solicitor General, and MLA Andrew Mercier, recently met with the ARA to discuss ICBC’s terms of service and skilled trades certification.
On March 31, 2022, ARA President and CEO Adrian Scovell, and ARA executives Rick Hatswell and Ron Tremblay, attended a meeting with Minister Farnworth and MLA Andrew Mercier on the subject of implementing a process that would allow for the continued growth of the automotive industry in B.C.
The meeting with Minister Farnworth was timed to follow ICBC’s post-implementation business review of the towing, collision, and glass industries, to which the ARA contributed data. There was also the unexpected advantage of ICBC’s March 25, 2022, announcement that B.C. drivers would receive a one-time $110 rebate to relieve high gas prices, given the corporation had achieved $1.9 billion in net revenues in the past fiscal year.
Background
When Minister Eby inherited ICBC in 2017, which he labelled “a dumpster fire,” he asked the ARA to work with the B.C. government and ICBC to help the corporation achieve a stable financial position. The Minister and ICBC assured the ARA that rates for services would then be adjusted to reflect the realities and demands placed on service providers when ICBC was “back in the black.”
Now that ICBC is showing a profit, the ARA believes it is time that business owners see fair rates that allow for continued investment and the support of thousands of employees whose livelihood depends on a healthy industry. ARA members have borne the brunt of the pain due to ICBC’s financial challenges and as such, ICBC’s survival cannot continue to come at the expense of business owners and their workers. Industry will not be left to choke on the fumes of ICBC’s dumpster fire.
Industry does not work for free and is entitled to fair compensation.
Discussion
Leading up to the meeting, the ARA provided the Minister’s office with a brief outlining the issues.
The automotive service sector provides essential services, and it is facing unprecedented challenges. Towing, collision repair, glass repair and replacement, and recycling part supply, are controlled by ICBC’s terms of service and compensation. Currently, these service providers are facing the worst financial constraints and the lowest profit levels of any of our industry’s market segments, with some facing losses for the first time.
In the past, ICBC has not been willing to make any concerted effort to address the reality facing our business owners and their workers. ICBC’s service demands and compensation are at subsistence levels. Automotive service providers cannot build the financial reserves sufficient to make the necessary investments to keep up with changing technology, skilled trades training, labour attraction, and retention. Current compensation does not allow industry to remain competitive with other skilled trades or give it the ability to pay its workforce fairly.
The ARA has continued to work with ICBC over the past year by sharing information to help determine fair rates and service requirements. Industry has not received regular rate reviews to keep pace with increased costs and demands. Rates should reflect the cost of total operations and investment requirements.
It was also brought to the Minister’s attention that the collision industry in B.C. is the lowest paid of the three western provinces under crown-owned insurance (including Manitoba and Saskatchewan), despite having the highest cost of operations. For instance, 2019 EBITA as a percentage of total revenue in B.C. was 6.8 percent compared to Saskatchewan’s 12.2 percent. In fact, B.C. has the lowest profit percentage in the entire country.
The ARA has requested the following from the B.C. government:
- Apply an immediate temporary-relief to industry until a permanent service and fee structure can be put in place (towing – $20/tow; collision – $100/claim: glass – $25/claim).
- Order an audit of ICBC and its operations by the Ministry of Finance’s Internal Audit & Advisory Service.
- Engage with a independent third-party body, in conjunction with government, ICBC, and the ARA, to develop a transparent annual process to review rates and services and set fair compensation and performance requirements.
Results
While the ARA awaits word from the Minister’s office, Scovell, Hatswell, and Tremblay feel that the ARA’s message was heard and well received.
“The Minister seemed really receptive and wanted to understand the situation,” said Tremblay, ARA board chairman and president of The Garage in Vancouver. “Adrian [Scovell] laid it out that as an industry, we are essentially regulated by ICBC and have no opportunities to pass-on costs. We laid out the skilled labour shortage, briefly discussed the issues with the ICBC QA system, and ended on profitability.”
“Based on that meeting, I feel we are well placed to see results,” said Scovell. “We had the data, and we stuck to issues that we knew would resonate. Part of our strategy was to tie skilled trade certification to ICBC’s terms of service. Without fair compensation, industry cannot support an apprenticeship program nor compete for students entering skilled trades.”
“The message we consistently heard was ‘We know,’ and ‘We are on it,’” said Tremblay. “No one can tell us what they are going to do, but we got that they are going to do something, and they completely understand that our industry has been oppressed by ICBC, which has become a regulator over the automotive aftermarket. They agree that this cannot continue. Many parts of the government are on the side of the ARA and our industry.”
Scovell noted that it was great to have Rick Hatswell (CEO of operations, Craftsman Group), present to offer a real-life perspective. “We are doing everything possible and cannot make money, and we are in fact at a loss now,” Rick said. “I let him know that my dad has been in business with Craftsman Collision for 45 years and has never lost money overall until this last quarter. It is unsustainable.”
Ron wrapped-up the meeting with an analogy that the Minister seemed to really appreciate: “We are in a warrior canoe with 30 warriors trying to row,” said Ron. “Most of them are dead now and the ones that are alive are being hired by ICBC.”
Wrap-up
Following the meeting, Scovell, Tremblay, and Hatswell met with Andrew Mercier, the Parliamentary Secretary for Skilled Trade Certification (STC). Mercier understands that without fair compensation, STC will not succeed. He said STC needs government, ITA, and a trusted entity to represent industry, and he would like the ARA to be that entity. STC is a strategic turning point for the ARA, as it will help give the association the ability to create an environment where entrepreneurs can invest with confidence and thrive.
As Tremblay stated after the meeting, “We have opened channels to continue to work together on this situation. They are not running from it; they are stepping into it to remedy it.” Stay tuned for updates.