Church Brothers Collision Repair Summary of a Waterborne Conversion at a 6 location MSO.

Church Brothers Church Brothers Collision RepairCollision Repair

Summary of a Waterborne Conversion at a 6 location MSO

Who is Church Brothers Collision Who is Church Brothers Collision

Repair? Repair? Family Owned Collision Repair Company since 1929

(founded by brothers Noel and Clem Church)

Repair and Paint approximately 8,000 Cars and Light Trucks Annually

6 Indianapolis area locations

145 Employees

What process did we modify to What process did we modify to reduce pollution emissions?reduce pollution emissions?

Converted Solvent Basecoat System to a Waterborne Basecoat System for all vehicle refinishing processes.

Between Dec. 2007 and Nov. of 2008 Church Brothers converted all 6 locations.

◦ Solvent Refinishing Systems exist in 99% of all Collision Repair shops today, with the exception of special containment areas on the South Coast of California, where a mandate took effect in 2009 .

Contractual Arrangement with Dupont (Spies Hecker) had ended.

◦ Decision to change based on following:

Wanted to be 1st MSO in Indiana to convert to waterborne

Right thing for environment and employees

Marketing Benefits

Anticipated we would get more technical assistance if we were significantly ahead of any mandate

Improved color match as OEM’s moved to water

Using less material has many benefits

◦ Improved Productivity ?◦ Lower cost total cost ?

Why Change to Waterborne?Why Change to Waterborne?

SolventBasecoat

WaterborneBasecoat

15% Pigment, metallic and pearlescent particles

10% Organic Solvents

Water vs. Solvent What’s in the Can

20% Pigment, metallic and pearlescent particles

70 %Water

85 %OrganicSolvents

Average 6+ VOC’s per pound Average 3.5 VOC’s per pound

AnnualAnnual Environmental Environmental

Impact Impact

Church Brothers Waterborne Transition

28% Less VOC Emissions Equals

15,000 Fewer VOC’s Emitted Each Year

Legislation Mandating the Change Legislation Mandating the Change to Waterborne?to Waterborne?Regions & Air Districts Impacted Regions & Air Districts Impacted North America ViewNorth America View

2010 Timing

California

2012 – 2015 Est. TimingOzone Transportation Commission (OTC):

CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI, VT, VA

2009 – 2011 Est. Timing

Canada

Lake Michigan Air Directors Consortium(LADCO): IL, MI, IN, WI

2012 – 2015 Est. Timing

Est. ~50% of the US market on WBC in 6-7 years

99%+ U. S. Repair Shops still use a Solvent Basecoat Refinishing System

OEM Adoption of Waterborne Basecoat

40% of OEMs in U.S. use Water60% of OEMs in Europe use Water

In General:

Cars made in Germany, Scandinavia , Spain use WaterCars made in France, Italy use SolventCars made in Japan use solventAsian transplants in North America use WaterEuropean transplants in North America use Water

OEM Adoption of Waterborne OEM Adoption of Waterborne BasecoatBasecoat

0% 100%50%

Waterborne Conversion Waterborne Conversion ScheduleSchedule

Church Brothers’ 6 Conversions in 12 months:

◦ CB Castleton 1st store in Dec. 2007

◦ 1 store a quarter in 2008 with CB Greenwood and Shadeland locations converted by Nov. 2008

◦ 30 Day Transition at each location

What Did We Have to Change?What Did We Have to Change?Conversion to Waterborne Basecoat created following changes: Establish Paint Distribution

New Paint Process SOP’s

Spray Test Panels

Finer Grit Abrasives

Material Handling

Installed Enhanced Air Moving Equipment in Paint Booths*

New Training: Product Training/Tinting Class at Spies Training center in Michigan

Added Waste Stream/Gun Cleaner

◦ 1 Solvent/1 Waterborne (non-hazardous)

New Paint Guns/Hoses /Materials

Waterborne Drying Process – Waterborne Drying Process – Influential FactorsInfluential Factors

Relative Humidity

Air Flow

Temperature

Film Thickness

Substrate

Vapor Barrier

Air Flow

Paint Film

Benefits of staying in the same Benefits of staying in the same product familyproduct family

Transitioned from Spies Hecker Solvent to Spies Hecker Permahyd (Waterborne Basecoat):

◦Easiest Transition/ Less to learn:

Only had to learn new techniques and attributes of new color coat. Clear coat and primer/ sealers stayed same.

Familiar with support and people.

Product Tried and Tested in Europe for last 10+ years.

What Did Equipment Cost to What Did Equipment Cost to Change?Change? Church Brothers did 100% of what was

recommended to insure success:

◦ Air Handling Systems- Garmat - $9,000 per Booth◦ Jun-Air Quads- $13,000 per Booth

◦ Gun Cleaner- Dual Gun Cleaner $2,500

◦ Paint Guns- $1,200

◦ Hoses/ Water Heater/ Fittings/Driers- $1,000

◦ Total cost of approximately $25,000- $35,000 per store depending on type of equipment we chose to install at the location.

◦ Assistance from IDEM’s P2 Pollution Prevention Grant: Cost Share Program

Ongoing Costs of the Waterborne Ongoing Costs of the Waterborne Change.Change.

Initially cost increase of $. 70 per paint hour, but currently increase down to $.40 over baseline costs.

◦ Paint toners cost more, but use should use less

◦ Spray test panels for every job

◦ Use more straining filters

◦ Recommended use of Paint Gun Cup Liner and Filter System (3M PPS cups )

◦ Gun Cleaning Materials- 2 waste streams

Benefits of Waterborne Use…Benefits of Waterborne Use…Pros:

Less Pollution- 28% reduction in VOC Emissions

Generate less hazardous liquid waste

Safer for Employees- No brain numbing solvent smell

Improved Productivity- less booth time because fewer coats of paint are required to cover. 5 minute dry time.

Color Match to Waterborne is better

10 out of 10 CB Painters prefer waterborne to solvent

◦ Product is very consistent

Customer Satisfaction Paint Scores are higher with waterborne.

CSI Complete Paint Scores - 98.4% Satisfaction since Waterborne Conversion vs. 97.7% Satisfaction with Solvent

◦ Colors are brilliant and clean

Negatives of Waterborne Use…Negatives of Waterborne Use…Cons:

Color is extremely sensitive to technique- A painter can change a color 10 shades with air pressure/ distance and gun control. Must do a spray out on every new color. Person Spraying should do the spray out.

Product is temperature sensitive- Must keep color in temperature controlled environment.

Need additional 6 inches of panel to blend from 12-18 Inches.

2 Tone Vehicles = Paint 2 times/3 Stage take longer to dry base.

Toners are dirty and need to be strained to a greater degree.

More Tinting-Database of variances is not complete. Some solvent colors have 7 variances and in water there might be 1 or 2.

Increased Liquid Costs- Originally costs increased $.70 per paint hour, but started to decline as painters get better acclimated to product.

Management Commitment, Management Commitment, Preparation and Continuous Preparation and Continuous

Communication Were Key to Our Communication Were Key to Our Success!Success!

Overall….. Satisfied with Change to Waterborne.

Timing was right for us to realize some Marketing benefit.

Product is different but performs very well.

Productivity is improved.

Materials costs are gradually working closer to neutral, and we are still hopeful profitability will continue to improve with waterborne.

Thank You……Thank You……