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John Yoswick

John YoswickJohn Yoswick is a freelance automotive writer based in Portland, Oregon, who has been writing about the collision industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).


He can be contacted at john@crashnetwork.com 

Thursday, 04 October 2018 16:25

Retro News: Stats From 20 Years Ago Indicate Shop Labor Rates Haven’t Kept Up With Inflation

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 20 Years Ago in the Collision Repair Industry (November 1998)

 

PPG has done a comprehensive study of over 2,000 collision repair facilities. Here is a snapshot of some of the statistics:

 

• The average labor rate: $34 an hour.


• Average gross profit per hour per technician: $45.63 (top 25 percent), $32.57 (middle 50 percent), $19.69 (bottom 25 percent).


• Labor efficiency (hours sold versus available hours): 154 percent (top 25 percent), 118 (middle 50 percent), 82 percent (bottom 25 percent)

 

PPG’s Rich Altieri said it is likely that repair opportunities will continue to decrease. His prediction: By 2006, 40 percent of today’s shops will cease to exist. If the collision industry is a $24 billion business, 24,000 shops doing $1 million a year in sales would take care of the market.

 

- As reported in Hammer & Dolly. The rise and fall in the number of body shops isn’t always clear. Some claim there were as many 80,000 shops in the 1970s. But using more than 40 years of data from the U.S. Census Bureau and the National Automobile Dealers Association (NADA), industry publication CRASH Network argues the total number of shops has fluctuated between 37,500 and 44,000 from 1972 on, growing by just over 300 shops to about 40,200 in 2016. The average labor rate nationally last year was $48.85 (according to CCC Information Services), up almost 44 percent compared to the average reported by PPG for 1998, but below the 54 percent cumulative rate of inflation during that period; to keep up with inflation, the national average last year would have had to have been about $53.

 

15 Years Ago in the Collision Repair Industry (November 2003)

 

The Collision Industry Conference (CIC) “Fraud Awareness Committee” is the first to admit its recent survey was not scientific. After all, it was completed by only about 100 people who happened to be attending the CIC meeting earlier this year.

 

But the results may be interesting for those wondering about some of those “gray areas” shops and insurers find themselves in at times, said David McCreight, a member of the committee who shared the survey results last month in Boston.


One scenario posed on the survey was a shop that installs a non-certified, non-OEM part because the certified part---which is what the insurer requires---was not readily available, and the shop didn’t want to harm its cycle time. About 92 percent of those surveyed found this “unacceptable.”

 

But if the shop disclosed to both the insurer and vehicle owner that a non-certified part was used because a certified part wasn’t available locally, 83 percent of those surveyed found it acceptable.

 

About 93 percent felt it was unacceptable for a shop to order a non-OEM part, return it and supplement for an OEM part claiming poor fit without first trying the non-OEM part. When the situation was changed to the shop returning a part without trying it, but installing the OEM part while absorbing the price difference, only 37 percent thought this was unacceptable.

 

A large majority said it was consumer deception and an unfair claims practice for an independent appraiser to leave needed items off of estimates at the request of the insurer because the customer may choose to not repair the vehicle. But what if the vehicle was repaired and the omitted items were added? More than half (57 percent) still felt this practice was problematic.

 

About one-third of those completing the survey were collision repairers and another 17 percent were insurers. The other half represented other segments of the industry, including the automakers and industry vendors.

 

– As reported in Collision Repair Industry INSIGHT.

 

10 Years Ago in the Collision Repair Industry (November 2008)

 

At the Collision Industry Conference (CIC) in Las Vegas, the “Business Management Committee” shared responses it received from several insurers about what the committee calls a “complete repair plan.”

 

Designed to reduce the need for supplements (the committee estimates that it costs about $700 for shops and insurers to create or process a single supplement), the plan essentially involves a shop disassembling a damaged vehicle to determine virtually all of the parts and procedures needed, allowing for one estimate and one parts order without the need, in most cases, for a supplement.


Some shops interested in using such a system have said they have met resistance from some insurers. The committee, however, received generally positive responses to the concept from the insurers it contacted.

 

“Allstate is in support of any process that encourages a thorough and complete tear-down at the time of the estimate,” Bill Daly of Allstate Insurance wrote.

 

Tim Constien of American Family Mutual Insurance Company was supportive of the idea under certain circumstances.

 

“We believe it has some potential limited benefits with our highest-performing direct repair program shops,” Constien said. “If the process is not done correctly or efficiently, it will increase the time a customer is without a car.”

 

Progressive Insurance was perhaps the most enthused with the idea.

 

“The benefits of a shop adopting this type of a more efficient repair strategy are clear to me,” Chris Andreoli, corporate property damage process manager for Progressive, said. “I’m sure you’ll begin to see an increase in the number of shops that adopt this methodology.”

 

– As reported in CRASH Network (www.CrashNetwork.com), Nov. 17, 2008. Over the past decade, more shops and insurers have shifted toward “blueprinting” or a complete tear-down of the vehicle to ensure all parts and procedures are included in an approved work order prior to the vehicle moving forward in production.

 

5 Years Ago in the Collision Repair Industry (November 2013)

 

During discussion at the Collision Industry Conference (CIC), California shop owner Randy Stabler said he’s “kind of perplexed” why the PartsTrader mandate has become “such a lightning rod” for an industry that has been accepting insurer mandates since the early days of computerized estimating.

 

“That was then. Today it’s parts. Tomorrow it’s paint materials. What happens the day after?” Oklahoma shop owner Gary Wano responded. “If we don’t stop the mandates at some point in time, what are we doing?”

 

Janet Chaney, who serves as the executive director of several state body shop associations, said it clearly comes down to the role parts play in a shop’s profit.

 

“How many times have we been told what to do and we’ve agreed to it and it’s turned on us,” she said, drawing applause.


Nick Bossinakis of Overall Parts Solutions, which offers an electronic parts ordering system, said one of the reasons this mandate is frustrating shops is that they may already be using one of the other electronic parts procurement systems that for them works better than PartsTrader.

 

“You have (shops or parts vendors) that are out there listening to digital music on their iPod, and instead you are now bringing them an 8-track tape,” Bossinakis offered as an analogy.

 

– As reported in CRASH Network (www.CrashNetwork.com), November 18, 2013.

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