Shop Strategies: CA Body Shop’s Business Model Focuses on Heavier Collision Repair Work
Written by Stacey Phillips, Autobody News
Published June 13, 2018
Earlier this year, industry veteran David Caulfield opened Fix Auto Anaheim North in Anaheim, CA, using an innovative business model.
Caulfield has been in the collision repair industry since 1975, working every aspect of the trade from the bottom-up.
In 1988, he opened his first body shop in Orange County, CA—East Hills Auto Collision—which eventually grew to include three locations and became part of the Fix Auto franchise. Last year, Caulfield sold his interest in the business and opened Fix Auto Anaheim North, a 23,500-square-foot facility that focuses on heavier collision repair work.
Caulfield recently shared information with Autobody News about the processes he uses at Fix Auto Anaheim North---his specialized collision services facility---and his advice to collision repairers looking to set themselves apart and be more profitable.
Q: What prompted you to open Fix Auto Anaheim North and how have you differentiated your business?
A: After working in the industry for nearly 43 years, I really wanted to focus on things that I felt needed assistance in the industry where there were some trouble spots. I decided to open Fix Auto Anaheim North to focus on reducing the risk and liability associated with heavier collision claims. I feel it will help reduce severity costs through parts price discounts and creative estimating and offer a more objective way to look at how a vehicle is repaired today versus the way our predecessors may have written an estimate on a car.
For example, a lot of metallic-colored panels are estimated with the assumption a blend is required to match the color. The practice of blending panels increases severity, cycle time and the unwarranted removal of parts, yet to set yourself up for an additional buffing process. This is costly to the shop, the insurer and unnecessarily invasive to the vehicle. Using technology correctly and spending a few more minutes to match the colors, we’re finding that eight out of 10 of those that used to be blended in the past are reduced to two.
Another example is PDR (paintless dent repair). It has always been viewed that if the dent is small enough, we’ll PDR it. However, when we have a five- to six-hour dent where the paint isn’t damaged, we’ll PDR those as well. This saves the insurance company and consumer a lot of money.
Q: Can you tell us about the specialized process you use at the shop and the benefits?
A: Our system is different than a traditional body shop. Typically, when a vehicle comes into the shop, a technician is responsible for the car key-to-key including a teardown, disassembly, reassembly, framework, mechanical, body, etc.
In our model, we have a technician assigned to each one of those skill sets. When a vehicle comes into our facility, a team will disassemble the car, then it will go to the next phase on the assembly line to the next technician and on through completion. Using this process, which is now part of our SOPs (Standard Operating Procedures), we’ve been able to reduce cycle times by as much as 65--70 percent. That’s pretty significant. Our record right now on an average claim of $3,900 is 3.8 days.
We’re not saying that we’re better than other shops as far as somebody fixing a dent or welding. Our equipment is brand new and we’re using the latest technology in order to stay compliant with the manufacturers’ recommendations like other companies would have. What sets us apart is the way we do it and the order we do it in.
We don’t burden one technician with being responsible for the entire repair. Instead, we’ve invested in specific skills for each of our technicians. For example, we have disassembly, reassembly, mechanical, structural and frame, cutting, fitting and welding and metalsmithing departments.
In most shops, when someone fixes a dent, they call that person a body man, but the person who fixes a dent or works the metal in our shop has a department called metalsmithing. That way, he or she takes an objective view of the vehicle and makes decisions based on what the task is. If there is a large dent, it isn’t attacked with a grinder. The tech is really studying it to make sure that it can be kept as small as possible and make the best moves as possible to get that car out and correct in the shortest period of time with the least invasive repair.
Q: How has your background helped you institute the model used in the shop?
A: My background gave me the ability to understand what the next move needed to be. During part of my career, I worked in production shops where there were more disciplined practices and the assembly line was in use. Cars would move pretty seamlessly through a shop, resulting in a one- or two-day repair.
I decided to implement that methodology into the collision repair system and found it has been working out pretty well.
Q: What did it entail to build a shop that focuses on heavier collision?
A: It took many years of experience and a lot of planning as far as the layout of the facility and to set up a consistent production line. With our model, a vehicle has no choice but to drive straight into the shop. Then it goes on to a track system and the car slides into its proper stalls. It helps you stay disciplined on the order of things.
We also built a team that understands the importance of perfecting one skill instead of multiple skills in order to meet the goals of the company. If you are a frame person, you are a specialist and expert in structural and frame. If you are in the welding department, you are an expert in cutting, fitting and welding and that’s your job; you don’t need to worry about any of the other skill sets in the facility. We just require you just do that job correctly and pass it off to the next person, so they have success.
We also have removed many of the traditional burdens a technician faces that cause loss of focus on the repair. Typically, body shop technicians are paid on commission. We are salary-based and pay hourly. Whether our employees fix a car or not, they are paid. Our model relies on having technicians available in real time for any vehicle that comes their way. That’s the investment we made.
Q: What has your experience been like with Fix Auto?
A: Each Fix Auto is independently owned and operated. I’ve found that Fix Auto is a supporter of innovation. They are always encouraging the individual franchisees to raise the bar on whatever they do.
I regularly attend Fix Auto meetings. I think that anytime shops can get together, the owners can collaborate on what’s working for them and what’s not. Something new always seems to come out of that.
Q: What is your advice to shops preparing for the future and being innovative?
A: If you’re tired of sitting at the table, wondering how you can best cure diminishing profits, increased cycle times and the increased risks associated with today’s vehicles, you really need to know the make-up of what you are bringing into your facility.
After studying this for many years, I believe that 15 out of 100 vehicles will require structural work, welding or heavy mechanical. Once those cars are identified, they will eventually end up in a specialized shop like ours and there’s an enormous amount of profitability available and more seamless throughput.
Although we receive a variety of vehicles, the shop was designed and built to repair vehicles that were those 15 out of 100 cars that average about $5,500 a claim and have structural and/or welding and/or mechanical work needed related to the collision.
About 90 percent of our work is DRP-related. We opened February 5 of this year and we brought in $90,000 our first month and $151,000 our second. Our goal is to repair about six of these heavier collision claims per day.
When you separate the heavier collision out of the mix of both heavy and light repairs, there is a very prosperous business model to be had for both types. The larger repairs can be done in five to seven days compared to the 20 or more that it currently takes the industry today, and the lighter hits in zero to three days; deeper discounts can be offered to both the insurer and consumer.