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By Joe Marconi in Joe's Blog0 commentsAuto shop owners are always looking for ways to improve production levels. They focus their attention on their technicians and require certain expectations of performance in billable labor hours. While technicians must know what is expected of them, they have a limited amount of control over production levels. When all factors are considered, the only thing a well-trained technician has control over is his or her actual efficiency.
As a review, technician efficiency is the amount of labor time it takes a technician to complete a job compared to the labor time being billed to the customer. Productivity is the time the technician is billing labor hours compared to the time the technician is physically at the shop. The reality is that a technician can be very efficient, but not productive if the technician has a lot of downtime waiting for parts, waiting too long between jobs, or poor workflow systems.
But let’s go deeper into what affects production in the typical auto repair shop. As a business coach, one of the biggest reasons for low shop production is not charging the correct labor time. Labor for extensive jobs is often not being billed accurately. Rust, seized bolts, and wrong published labor times are just a few reasons for lost labor dollars.
Another common problem is not understanding how to bill for jobs that require extensive diagnostic testing, and complicated procedures to arrive at the root cause for an onboard computer problem, electrical issue, or drivability issue. These jobs usually take time to analyze, using sophisticated tools, and by the shop’s top technician. Typically, these jobs are billed at a standard menu labor charge, instead of at a higher labor rate. This results in less billed labor hours than the actual labor time spent. The amount of lost labor hours here can cripple a shop’s overall profit.
Many shop owners do a great job at calculating their labor rate but may not understand what their true effective labor is, which is their labor sales divided by the total labor hours sold. In many cases, I have seen a shop that has a shop labor rate of over $150.00 per hour, but the actual effective labor rate is around $100. Not good.
Lastly, technician production can suffer when the service advisors are too busy or not motivated to build relationships with customers, which results in a low sales closing ratio. And let’s not forget that to be productive, a shop needs to have the right systems, the right tools and equipment, an extensive information system, and of course, great leadership.
The bottom line is this; many factors need to be considered when looking to increase production levels. While it does start with the technician, it doesn’t end there. Consider all the factors above when looking for ways to improve your shop’s labor production.
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By carmcapriotto
My guest is Jill Trotta. She is the Vice President for Industry Advocacy and Sales at RepairPal. We talked about the 2019 RepairPal survey that pointed out which metro cities are best for car repair. This is based on factors like average repair order, road quality, average labor rate among others.
The survey talked about the statistics and information about car repair. You will learn the best and the worst cities for repairs according to the survey. The survey also pointed out which cities are most affected by the technician shortage. Listen to Jill’s previous episodes HERE.
Best metro cities survey for car repair Average repair order Road quality Average labor rate Ratio registered cars to the number of mechanics 55% of the score is the number of repair shop workers per car and labor rate Are labor rates too low? Lowest average repair bill- Dayton, Ohio If a business wants to have the lowest labor rate it doesn’t help industry- have to charge for work and quality you’re offering 30% labor rate 30% repair invoice totals Best city- Jacksonville, FL 5 cities in the Carolina’s in the survey- average repair order low Worst cities- 6 California cities in the top 10 Bad roads, high labor rate Technician shortage- northern areas more affected Link to the RepairPal 2019 Survey HERE
Talk soon,
Resources:
Thanks to Jill Trotta for her contribution to the aftermarket’s premier podcast. Link to the ‘BOOKS‘ page highlighting all books discussed in the podcast library HERE. Leaders are readers. Link to RepairPal website HERE. Leave me an honest review on iTunes. Your ratings and reviews really help and I read each one of them.
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Subscribe to a mobile listening app HERE.
As a member of the NAPA family, AutoCare Center owners can take advantage of the NAPA National Health Program from the NAPA Insurance Center. This “NAPA only” program gives you and your employees access to national “large group” rates on medical insurance with premiums discounted up to 30 percent. These rates are based on the collective purchasing potential of 22,500 NAPA locations including both NAPA AUTO PARTS stores and NAPA AutoCare Centers.
The NAPA Insurance Center can help you with a variety of other insurance benefits too. For more information about The NAPA National Health Benefits program as well as all of the insurance benefits available to your AutoCare Center and your employees, visit the NAPA Benefits Center, at www.napabenefitscenter.com or call the NAPA Benefits Center at 844-627-2123.
Click to go to the Podcast on Remarkable Results Radio
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