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Safelite puts halt on expansion plan

Post Time:Mar 23,2012Classify:Company NewsView:461

Safelite AutoGlass has halted an expansion of its large call center in Chandler because of proposed legislation that the company sees as a threat.


"We have all the blueprints and an agreement from the landlord to move forward. ... Everybody is in limbo," said Brian O'Mara, Safelite's vice president for national contact center operations.


"We're in a holding pattern until we give the green light that we're ready to go."


Install equipment for 400 more people at Chandler Boulevard and Dobson Road, and to hire in the range of 300 right away.


The capital investment would have been up to $4 million, O'Mara said.


"Right now there's just so much uncertainty with everything that's swirling around, it would be bad business to put good money into an environment where we may not necessarily be welcome," O'Mara said.


House Bill 2197 contains a striker (an amendment that replaces the original bill with an entirely new one) that could affect choices for consumers who need auto glass repaired or replaced.


The bill was prompted by competitors of Safelite, who say they lose out on business.


Currently, if motorists need auto-glass repair, they call their insurance companies and, depending on the insurer, may be referred to Safelite where a third-party administrator will send out an inspector. The vehicle owner then has a choice of shops to do the repair.


The Arizona bill would create a rotating list of repair shops, and the consumer would be given a choice of three providers to use. If the bill becomes law, Arizona would be the only state with a rotating list.


The bill's backers say the proposed law would level the playing field and increase competition.


Opponents, including Safelite and big insurers, say the bill is legislative meddling in the marketplace, would reduce consumer choice and could subject customers to shoddy work.


"This bill is not for consumer choice; this is an industry turf battle," Barbara Meaney, a lobbyist for Safelite, said March 7 when she testified before the Senate Government Reform Committee, which passed the bill 5-1.


The amendment was offered by Sen. Rick Murphy, R-Peoria.


Christine Mackay, Chandler's director of economic development, said she's concerned not only about Safelite's stalled expansion but about preserving the existing employees.


"As we work with companies, we know they are looking at certain locations to continue their growth, and companies that aren't growing tend to die," she said.


Safelite employs 900 people in Arizona, including more than 600 in Chandler.


Furthermore, Mackay is concerned about the message the bill sends to other companies considering a move into Arizona.


"I'm concerned about what it says to companies looking to grow or to relocate or expand in Arizona, that there could be potential legislation that affects them."


Safelite's business model has been challenged and upheld in courts. However, some competitors claim that Safelite snags customers for its own repair shops.


"There is steering going on," Rex Altree of New Image Auto Glass in Tempe told the committee at the March 7 hearing.


Meaney said Ohio-based Safelite holds 26 percent of the auto-glass after-market. There are more than 1,500 glass-repair shops in Arizona and more than 300 in the Safelite network, including 22 owned by Safelite.


"There's plenty of competition," she said.


For his part, Safelite's O'Mara would not speculate about how severely existing jobs in Chandler could be affected if the bill passes.


"It depends on where everything ends up," he said. "If the bill basically deems our operating model to be illegal within the state, then yes, we will have to take corrective measures relative to how we operate, and it will definitely affect the people."


Safelite employees are nervous about the threat, but O'Mara said the company is taking a wait-and-see attitude and maintaining optimism that everything will work out.


He said his greater concern is more far-reaching.


"If we're dealing with this kind of environment right now, who's to say it's the last step? There's just so much uncertainty. We never expected this to happen."


Safelite was recruited to Arizona.


"The welcome mat was put out for us; people embraced us," O'Mara said.


"We immediately got involved in the community as a good corporate citizen, and all of a sudden, the environment changed on us without any notice. Who's to say it won't happen again or even take a turn for the worse?"


A bill introduced earlier this legislative session was Senate Bill 1331, sponsored by Sen. John McComish, R.-District 20, of concerns over whether Safelite employees were faithfully following policies. He later withdrew the bill, partly, he said, because he realized that perhaps current law, passed last year, had not been in effect long enough. That law reinforces the firewall between Safelite departments.


Rep. Jeff Dial, a Republican who represents the Chandler district in which the Safelite center is located, said in an e-mail that he supports the striker on HB 2197.


"Currently, there are some structural elements in place in the auto-glass industry that make it difficult for independent operators to thrive, or even survive," Dial said.

Source: www.azcentral.comAuthor: shangyi

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