Turning things around
Who knows where this will end, but I suspect a day of reckoning is coming. More and more shop owners tell me they are fed up with the current state of affairs. We all want things to change but don’t know how to go about it. Raising our rates labels us as difficult to work with and we risk the chance of being blackballed. So what do we do?

Start by taking a long look at your bottom line. Immediately stop any unreasonable concessions. If you’re discounting your labor rate and losing money, quit. Raise the price of your paint materials if you need to.

Paint has gone up over 30% in the last year and is going up again. The bottom line is that our industry needs about a 40% increase across the board. This seems high but I’ve done the math and this is how far off we are. We have been subdued for much too long, and if we don’t find another 40%, we won’t be profitable.

I’m in business to make a profit and the insurers understand this because I explain it to them in a professional way. I’m concerned with helping reduce their costs but not to the point where I lose money doing it. I don’t care if the insurers average 48% to 58% net profit. I do care that I used to average 27% profit in 1979 and now I’m operating at a 2% to a 3% profit in 2007.

Do the math. Open your eyes. Quit being afraid of the insurance companies. What more can they do to us? Do you really think they can hurt our industry more than they already have?

Insurers have had a record year – one of the best in almost 88 years. While underwriting growth is at a stand still, the property and casualty divisions have produced a profit of approximately 25 billion dollars. Insurers may cry broke, but they are making billions.

If you gave your wife one million dollars and told her to go spend 100,000 dollars per day she would return in 10 days. Now if you did the same thing and gave her one billion dollars and told her to spend 100,000 per day she wouldn’t be back for 28 years. So 25 billion dollars profit is a lot of money.

When I read reports that earnings are down with some insurance companies I want to emphasize that there is a big difference between earnings being down and having a loss. We only profited 5 billion dollars instead of 10 billion. Either way they still made a huge profit. They could afford to pay the rate increases we need nationwide without changing their bottom line profits -- a measly 3%.

Make 2008 the year that you expect a profit and make the necessary price adjustments that guarantee a high quality repair and a profit margin you can be proud of.

By the way I’m starting to look at sailboats again.

In business for over 26 years, Lee Amaradio, Jr. is the president and owner of “Faith” Quality Auto Body Inc. in Murrieta, California. With 65 employees, he attributes his success to surrounding himself with good help, with some of the best office staff and techs in our industry. Amaradio has been in this industry long enough to see the handwriting on the wall. He feels that now is the time for us to unite as an industry before it’s to late. He can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it