Executive Interview with Guy Bargnes, Director of Marketing, North American Operations for BASF Corp. Refinish Group - aftermarketNews

Executive Interview with Guy Bargnes, Director of Marketing, North American Operations for BASF Corp. Refinish Group

Guy Bargnes has spent his entire life in the collision repair industry. He was born and raised in Buffalo, NY, where his father ran a family business, V. H. Bargnes Co., Inc., which distributed automotive paints, supplies and equipment to area collision shops. In 1992 Bargnes joined BASF full-time, and he is now director of marketing, North American Operations, for the Refinish Group. Bargnes recently sat down to a phone interview with aftermarketNews and shared with us some of the insights from his lifelong career in the industry. Join us as Bargnes talks about BASF's four leading principles, trends in the refinish business and the return of paint companies to industry trade shows.

FLORHAM PARK, NJ —

Guy Bargnes has spent his entire life in the collision repair industry. He was born and raised in Buffalo, NY, where his father ran a family business, V. H. Bargnes Co., Inc., which distributed automotive paints, supplies and equipment to area collision shops.

As a teenager, Bargnes worked in local collision shops, sweeping the floors and spraying cars. Later he drove a delivery truck for the family business. Bargnes eventually took over the business after the untimely death of his father in 1973. The family sold the business in the early 1990s, and Bargnes went into consulting. One of his clients was BASF Automotive Refinish, then based in Dearborn, Mich.

In 1992 Bargnes joined BASF full-time, and he is now director of marketing, North American Operations, for the Refinish Group. His responsibilities are broad, from overseeing product and brand management to supervising an e-business development group, a communications department and a variety of customer value-added service programs.

Bargnes is active in numerous trade organizations and currently serves as president of the National Auto Body Council (NABC).

Bargnes recently sat down to a phone interview with aftermarketNews and shared with us some of the insights from his lifelong career in the industry. Join us as Bargnes talks about BASF’s four leading principles, trends in the refinish business and the return of paint companies to industry trade shows.

BASF is a very large company, spanning a number of different industries. Can you tell us about the basic structure of BASF and how the automotive refinish business fits in?

BASF Corp. is the North American arm of BASF AG, a global, German-based company that is actually the largest chemical company in the world. BASF Corp. is headquartered in Florham Park, NJ, and covers all of North America – Canada, the U.S. and Mexico.

Within BASF Corp. there are a number of regional business units (RBUs) — for example, the Coatings RBU — and within RBUs, there are strategic business units (SBUs), like the refinish group. There are two things that make it ‘strategic.’ One: It’s global in scope; in other words, we participate in the refinish business, throughout the world. In virtually all of the countries BASF does business in, Refinish is an element of the global strategy. Secondly, it’s strategic in that it fits into a hierarchy of BASF businesses that are integrated to one another. Many of the products that we use for manufacturing within BASF Refinish, resin for example (a key component in making paint), are made by another division of BASF. So there’s a lot of intra-company integration, which also makes it strategic.

My responsibility is to determine how we go to market within the NAFTA region – U.S., Canada, Mexico, Central America and the Caribbean. I manage and direct the marketing efforts for the automotive refinish business, which is one of three BASF coatings business. The other two are the automotive OEM coatings business and the industrial coatings business.

From what we understand, many of the major coatings and refinish companies, such as BASF, stayed away from the major trade shows in the past few years and are now starting to come back. Why did this happen?

Trade shows are an important element of marketing, for a couple of reasons. Primarily, they are a way to communicate a message across a very wide audience. So from a marketing perspective, participation in trade shows is typically a pretty exciting opportunity. The major trade show in automotive collision repair is, of course, the NACE show. Historically, the NACE show alternated among several cities- Atlanta, Dallas, New Orleans, Las Vegas and Orlando. What we noticed, in terms of participation and in terms of demographics, was that many of these venues were not attracting, and were not attractive to, decision-makers — people with whom we were interested in having an audience.

Over time, we had a dialogue with the primary trade associations that organized NACE, and we helped convince them that a more permanent site, in a city that could accommodate the crowds and was a better convention draw, made sense simply from an investment standpoint. However, we also indicated our preference for participating in NACE every other year.

A major corporation, whether it’s a paint company, an information provider or an equipment company, can’t attend a trade show in a small way. You have to be there with a fixed number of square feet, a fixed number of people. So if you can leverage better attendance, it’s a better deal. That is why we, BASF, stayed away for a couple of years, because, quite frankly, a couple of proposed cities were not good venues.

Is the new date and venue change of NACE taking place in conjunction with the Automotive Aftermarket Industry Week a better fit for your company?

Certainly, Automotive Week, with the SEMA and the AAPEX Show, has a much larger potential audience. Now, the question becomes: Is it the right audience?

I think it’s going to take some research and some time to really understand that. But Las Vegas is certainly a better draw than New Orleans, Dallas, Orlando or Atlanta, and that in itself warrants consideration and analysis. A lot people equate NACE participation with support for the industry, but it’s important to point out that BASF is very supportive in other ways, such as association membership, tools that help businesses be more successful, and so on. So we shouldn’t confuse NACE participation with industry support overall.

What is the right audience for BASF?

In the case of NACE, we go to market through a series of channels, and typically, NACE attracts both our distributors partners — jobbers and distributors — as well as the end-user – the collision repair facilities. So the right audience is a combination of the decision-makers who represent those two market segments.

What are some of the key marketing initiatives you are focusing on now?

In order to answer this question, I’d like to take a step back if I may.

At the core of BASF Group — the global BASF organization — are four key strategies that apply across all business groups, all regions and all strategic businesses. They are:

1) Help our customers be more successful;
2) Ensure a sustainable environment;
3) Build the best team in the industry; and
4) Earn a premium on capital costs.

So, from the highest level in our organization, if we take one of those four pillars—such as helping customers be more successful – our marketing thrust and our marketing initiatives are really built around that single idea. We look to develop programs, products and initiatives that in some way make our customers more successful in their businesses.

In the case of a distributor, we may be helping him be more efficient, by providing product lines that have fewer SKUs, so his inventory investment is small. In the case of a collision repair facility, it might be providing a service tool that helps the owner benchmark himself or measure his efficiencies so as to be able to drive constant improvement at the shop level.

Along those same lines can you tell us about some of the products and services that the BASF automotive refinish business offers?

We offer a broad range of products. BASF was the first to offer three different brands to meet different market needs. Glasurit represents the highest quality of refinish coatings in the world. It sets a standard of innovative technology and efficiency.

R-M is our mid-range brand. It’s perhaps the most versatile and user-friendly system on the market, and it’s unmatched in its class in price and quality.

Limco is positioned at the lower end market where price is critical. It offers multiple technologies within one paint system, providing flexibility and an economical solution for some shops and do-it-yourselfers.

As an umbrella of value-added services over those three brands is a group of service products that we call VisionPLUS. Our VisionPLUS offerings range from training, both at the business and technical level, to online e-business analysis tools, to customer warranties, and a variety of other programs designed to help a shop or distributor measure production efficiencies.

Do most of your customers utilize your technological or online services?

That’s a really good question. It’s very difficult to measure that because the tools we offer go into a tremendous amount of detail. The key performance indicators we use to track usage suggest that a lot of our shops use them, or browse them, if you will, but it’s yet to be proven that they are using the full range of tools.

As an example, most of us use Excel. You probably use it to create spreadsheets and build formulas that add, subtract and multiply, but you probably don’t use Excel’s statistical analysis capabilities. You probably don’t use it to formulate standard deviation analysis–but those capabilities are in there. So, we’ve got this very powerful tool and most of us use only 10 or 20 percent of it. The rest of it is very specialized for a very particular application. That’s kind of the way our program is designed: There is something for everyone, and the level of usage really depends on your interest and comfort with the technology.

You mentioned training. Can you tell us about the various training programs available to customers?

We offer training in two broad categories. Category one is training targeted toward technicians to give them comfort, familiarity and confidence in the use of our products – for matching color, OEM certification or for some special use of a product–for example, the repair of plastic bumpers. We can go down to the very fine level of how to repair a particular part. We offer about 15-18 training modules, on a branded basis, to address many different needs.

Then, we have another broad category of training called business training, and it’s comprised of several different types of offerings. We use outside training services in the form of seminars and workshops that can be anywhere from four hours to two or three days long. These are very focused on driving productivity at the business level and are directed toward an owner, general manager or production manager.

On the business side we also offer a very unique program, which we call distance or remote learning. We’ve created an interactive CD-ROM focusing on very specific business needs within the industry. When I say specific, I mean they may talk in terms of general business principles, but using the terminology in our industry, so that a jobber or shop owner understands the terminology and is able to apply it accordingly.

Let’s talk about color for a moment. It seems as though the color offerings for vehicles today are getting more sophisticated and exotic. Is this a trend, something that occurs on a cyclical basis or does this signify real change and advancement in the automotive coatings industry?

There are a couple of things happening. First of all, stylists are constantly trying to develop new looks and colors. I mentioned earlier that we are a strategic business unit, and one of our sister companies is focused on style and new pigments that are presented on a regular basis to the OEMs. We have an annual Color Trends Show at BASF. We invite designer teams from all the major car manufacturers. The OEMs will come in for a day or half a day and they will look at all the new colors that our design teams are coming up with. Car manufacturers have done research that shows color is the single biggest determining factor when making a decision on a car. Once you decide you want a Ford, right after that comes the decision about the color. The ability of OEMs to differentiate themselves using an exotic color palette is critical for their marketing strategy. The colors that they looked at this year wouldn’t even be considered for availability until 2007 or 2008.

Simultaneously, BASF’s OEM and refinish technicians are working more closely to develop a perfect coating for end-user and car owner. Think about it: who can better understand how to refinish a car than the company that developed the car’s original paint. An OEM can’t produce a car with an exotic finish unless the collision shop can repair the car if damaged. Our OEM and refinish divisions work together to understand application and pigment requirements, because when your car gets scratched, you don’t want to hear, “Sorry we can’t match that color”.

Historically, refinish and OEM products were quite different in performance and durability. The OEM finish is applied robotically and baked at extremely high temperatures, but in a body shop the paint is hand-applied and baked or air dried at much lower temperatures. In the past there was a notable difference in the quality and durability of refinish coatings compared to the OEM finish, but today’s aftermarket coating is as durable and consistent as the original one. There are several examples in the industry today where refinish paint is used as the original finish on new vehicle models.

Now, enter this new technology called water-borne. We believe nearly 70 percent of domestic vehicles produced today have water-borne coatings as the original finish. This has led to lower VOC emissions for the OEM’s. Refinish manufacturers such as BASF have developed waterborne coatings to also reduce emissions in the collision shops. Besides lower emissions, waterborne systems provide outstanding appearance and quality, with brilliant and vibrant colors. A waterborne refinish paint will consistently match the car’s original finish, including difficult to match OE colors. This is a huge step forward. It will make a big difference in the next three to five years.

What do you foresee for the future of the automotive refinish market?

I think the trends are going to be driven by two sets of situations. Situation one is the continued and on-going drive to put fewer pollutants into the atmosphere. So the development work being done now is focused on creating products that will pollute less, and that ties back to one of BASF’s core pillars: to ensure a sustainable environment. That will be a key driver, and as compliance issues develop we can expect that the paint is going to have to conform to these requirements.

The other key driver has to do with speed and productivity. The vast majority of automotive aftermarket paint goes on vehicles that have been damaged in collisions, and the vast majority of collision repairs are paid for by the insurance community. Consequently, the insurance community is a driver for efficiencies. They measure everything. The need for shops to be more efficient and more productive is ongoing. That’s a big driver in terms of product development.

In terms of technologies at the OEM level becoming similar to the refinish level, we talked earlier about how paint dries, what cures it. It takes outside energy such as heat, chemical reaction or light. Ultraviolet light can be a catalyst as well. It can cure paint without the heat and also without emissions. It is a technology that is under very strong consideration at the OEM level and it is a technology in which BASF, from an OEM and refinish standpoint, is really at the forefront. We’ve already got ultraviolet-curing primers in the marketplace and we will be releasing ultraviolet-curing clears later this year.

It’s an amazing thing. You spray the paint on and very quickly pass a light over it and the paint is dry. It’s amazing. I’ve been in the paint business all my life and I’ve never seen anything like it. When I mentioned earlier the drivers for the future of the industry – the environment, speed and productivity – it addresses all of these issues. There are some constraints in terms of equipment and capital investment, but those things are just part of the business.

Another advantage to UV curing technology is cycle-time, the speed with which you can finish a repair. The less time you spend drying and curing, the more time you have to do more jobs and the more productive you are. Speed has always been a driver, and UV curing, as it becomes more popular in the aftermarket, we think, will become a significant contributor.

Any last comments?

I have just one little commercial I’d like to do, and it’s not so much for BASF as it is for the whole industry. Topics like technological issues, training and customer service begin to bring up questions and concerns about the image of the industry. Image is going to be critical for this industry. We must develop that image in a more positive way so that we can attract technicians and people with investment capabilities into the industry. This is not a bunch of grease monkeys in this industry. It’s a cadre of very sophisticated technicians, who are usually very highly trained, using expensive equipment and working on vehicles that we put our wives and children in every day. Any time we get the opportunity to remind people of this, we should.

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