From the Desk of Mike Anderson: Calculating the ROI in ‘Growing’ Your Own New Body Techs
Written by Mike Anderson, Autobody News
Published May 9, 2023
More collision repair shops are recognizing they’ll never be able to find all the experienced body technicians they will need, and they instead will need to develop one---or more---themselves. So they are hiring an apprentice, and either training them in-house or sending them to training while they work part-time in the shop.
It’s that model of schooling coupled with work experience that makes me a huge supporter of the Collision Engineering Program. Now in place at seven post-secondary schools---and growing---around the country, the Collision Engineering Program puts students through a two-year training regimen in which they rotate eight weeks at school, then eight weeks working within a shop.
I see many of my client shops doing the math and realizing they can receive a good return on their investment in helping a student complete a training program at a school that’s part of the Collision Engineering Program, or at one of the other quality collision repair training programs around the country.
In some cases, these shops are telling these prospective apprentices: If you successfully complete the program, in addition to your other pay and benefits, we’ll pay your monthly student loan payments as long as you’re working within our business.
So how does that pencil out? Obviously, the cost of a student’s training can vary based on the school’s tuition, and on whether the student is attending a local school or needing room and board to attend a program elsewhere. But just for the purpose of this article, let’s say the cost the shop is committing to is $40,000. In this example, that covers two years of tuition and room and board while the student is spending each eight-week period at the school. The student also finishes the program with a starter tool box and I-CAR credits.
How long will it take the shop to recoup its investment in that student and start generating a return? Let’s work through the math.
Prior to the pandemic, we were seeing the average body technician generating about $53,000 to $63,000 a month in gross sales. That number has risen in the last few years as the average number of parts per job---as well as ADAS-related steps---have increased overall repair costs. And I’ve seen technicians at shops with great estimators, particularly if they are working on higher-end vehicles in markets with higher labor rates, producing as much as $75,000 or $80,000 per month in sales.
But again, for purposes of this exercise, let’s say the body technician you’re investing in is able to produce $60,000 a month in gross sales.
Now, say your shop is making a 43% gross profit. That’s unloaded without taking employee benefits into account. I know some shops making less than that, and some making more. But let’s stick with 43%.
If you calculate 43% of $60,000, that technician is generating $25,800 in gross profit per month for that shop. For technicians reading this article, understand that is gross profit. That’s not net profit for the shop owner. Out of that gross profit, the shop has to pay its rent and utilities, pay its taxes and pay for its administrative staff, pay for training and the estimating system costs, etc.
So now let’s divide that $25,800 by the 180 clock hours the technician in this example works in a month (four weeks of 45 hours each). That technician is producing $143.33 in gross profit per hour. Again, this is just for the purposes of this article; some technicians produce more, others less.
Let’s just say your apprentice is able to produce $100 an hour in gross profit. It will take 10 weeks, at 40 hours per week, for that technician to generate gross profit equal to the $40,000 you invested in their education.
Again, that doesn’t take into account a lot of things, like the cost of health insurance you provide, uniforms, vacation pay, workers’ compensation insurance premiums, etc. But even if you calculate it will take twice that long, 20 weeks, that’s still not a particularly long period for your investment to start providing a return.
Aside from that, think of the loyalty you’re building in that technician who knows his or her student debt is being paid by the business as long as they work there.
I know with most shops being extremely busy these days, owners often hate the idea of sending technicians to OEM or other ongoing training. But if that training improves their productivity or efficiency, the exercise we just walked through can show you the potential return on that investment.