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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 Hands On
I keep getting a request now and then to go to someones house. I am starting to wonder, is it because they think it would be cheaper, or is it like in that show billions, where the guy has so much money, he can afford to pay chef ryan to come to his house to cook dinner.
How much would it take to get each of you to come to my house to work on my car? Honest answers, and you have to give an amount.
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By carmcapriotto
Raising labor rates is not just about increasing prices. It's about finding more value in the industry and positioning ourselves as professionals. Join our panel as they highlight the need for understanding the concept of effective labor rate, ensuring services are charged appropriately, viewing the business as a professional entity, providing a positive customer experience and addressing core business problems before raising labor rates. Our panelists encourage shop owners to take a comprehensive approach to their business strategy, considering all factors and not just focusing on raising labor rates. Aaron Woods, X-tra Mile Auto Care, Stillwater, OK. Institute for Automotive Business Excellence. Listen to Aaron’s previous episodes HERE Brent Fleischman, Yocum Automotive, Republic, MO. AutoFix Auto Shop Coaching. Listen to Brent's previous episodes HERE Jennifer Hulbert, Service Plus Automotive, Calcium, NY. Institute for Automotive Business Excellence. Listen to Jennifer's previous episodes HERE Show Notes:
Raising Labor Rates: Importance and Impact (00:00:01) Discussion on the reasons to raise labor rates, the impact it can have on a business, and the need for a long-term strategy. Factors to Consider Besides Labor Rate (00:04:14) Exploration of other factors that contribute to a business's success, such as overall business strategy and addressing pain points. Calculating Effective Labor Rate (00:07:34) Importance of understanding and calculating effective labor rate, including the need to charge appropriately for all services provided. The mindset shift and the need to raise labor rates (00:08:33) Discussion on the importance of raising labor rates and positioning the industry as valuable and professional. The impact of undervaluing the industry (00:09:52) The negative effects of undervaluing the automotive industry, including difficulty in attracting technicians and obtaining loans. The bottom line and approaching the business as a business (00:12:10) The importance of considering the bottom line and treating the automotive business as a professional enterprise rather than a hobby. The importance of customer experience (00:17:59) Discussion on how people buy feelings and the need to focus on providing a positive experience in the automotive industry. Sharing new labor rates with the team (00:18:39) Importance of communicating labor rate changes to the team and how it helps maintain profit structure and make investments. Effective labor rate and its impact (00:19:03) Exploration of effective labor rate, its calculation, and the need to consider menu jobs and their effect on gross profit dollars per hour. The importance of personnel and procedural issues (00:27:40) Discussion on identifying whether the problem lies with personnel or procedural issues in a shop and the need to align the shop's mission and vision statements with its culture. Addressing cultural issues and offering training (00:28:50) Exploration of the top-down approach in addressing cultural issues, identifying personalities, offering training, and monitoring staff to create long-term relationships with customers. Considerations before raising labor rates (00:30:07) Importance of analyzing gross profit percentages, solving core problems, and focusing on profitability and core processes before considering raising labor rates.
Thanks to our Partners Shop-Ware and Delphi Technologies Shop-Ware: More Time. More Profit. Shop-Ware Shop Management https://getshopware.com/ Delphi Technologies: Keeping current on the latest vehicle systems and how to repair them is a must for today’s technicians. http://DelphiAftermarket.com Connect with the Podcast -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
Click to go to the Podcast on Remarkable Results Radio
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By Changing The Industry
Episode 138 - Revolutionizing Industry Training With Paul & Kristin Danner At ASTE 2023
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By carmcapriotto
Recorded Live at AAPEX 2023, Carm is joined in studio with Aftermarket Radio Network hosts Brian Walker and Matt Fanslow for milestone episode 900. Carm discusses the process of creating the podcast, the journey to expand to the Aftermarket Radio Network and how his daughter Tracy became a crucial part of the team, starting as an editor and eventually working full-time with him. Carm also reflects on the challenges he faced when starting the podcast, the importance of consistency, quality, and good editing, and the shifts he had to make along the way. Aftermarket Radio Network Hunt Demarest, CPA, Paar Mellis and Associates, Business by the Numbers Podcast Matt Fanslow, Riverside Automotive, Red Wing, MN, Diagnosing the Aftermarket A to Z Podcast Kim and Brian Walker, Shop Marketing Pros, Auto Repair Marketing Podcast Chris Cotton, AutoFix Auto Shop Coaching, Chris Cotton Weekly Blitz Podcast Show Notes
RR 172: Giuliano Zuccato, Clay Sculptor – 1964 Mustang RR 243: Giuliano Zuccato – Chrysler Crossfire & Horse of Destiny Foundation The preparation process (00:01:51) The process of preparing for a podcast episode, including research, vetting ideas, and interviewing guests. Working with Tracy (00:06:38) Carmen shares how his daughter Tracy came to work with him on the podcast and the proposal he made to her to join the team. The success of the Aftermarket Radio Network (00:07:59) The preparation process for podcast episodes (00:08:29) Carmen discusses the things he had to learn and the podcast coach he hired before starting the podcast. The first interview (00:09:27) Carm talks about how he called Dave, a shop owner, to be his first interviewee for the podcast and how they connected. The evolution of the podcast (00:12:52) Carm reflects on the growth of the podcast, starting with the first episode and the decision to create additional shows like the Town Hall Academy and For the Record. The struggle of starting a business (00:18:22) Carm discusses the challenges he faced when starting his business, including finding sponsors and promoting his podcast. Becoming a better interviewer (00:22:09) Carm explains how he had to improve his interviewing skills, drawing inspiration from NPR and studying interviewers like Charlie Rose. Giuliano Zuccato (00:26:26) Carm tells the story of Giuliano, a guest on the podcast, who came from Italy and ended up working as a sculptor for auto manufacturers. Carm's visit to Giuliano's house and recording the episode on the crossfire (00:28:53) Carm visits Giuliano at his house in Detroit and records an emotional episode about Giuliano's work on the crossfire, despite his illness. Tractor envy and equipment (00:33:47) The future of the industry (00:35:27) Carm mentions that he is preparing an episode on the future of the industry and talks about the challenges and changes that may occur in the next five years. New shows on Aftermarket Radio Network (00:40:54) Carmen and Tracy are brainstorming ideas for new shows on Aftermarket Radio Network, aiming to grow the network and engage with the audience in new ways. Cherishing milestones (00:43:15) Carm discusses the importance of celebrating milestones, such as the 900th episode, as a way to improve personal and professional success in the automotive aftermarket. Thanks to our Partners, AAPEX and NAPA TRACS Set your sights on Las Vegas in 2024. Mark your calendar now … November 5th-7th, 2024. AAPEX - Now more than ever. And don’t miss the next free AAPEX webinar. Register now at http://AAPEXSHOW.COM/WEBINAR NAPA TRACS will move your shop into the SMS fast lane with onsite training and six days a week of support and local representation. Find NAPA TRACS on the Web at http://napatracs.com/ Connect with the Podcast: -Follow on Facebook: https://www.facebook.com/RemarkableResultsRadioPodcast/ -Follow on LinkedIn: https://www.linkedin.com/in/carmcapriotto/ -Follow on Instagram: https://www.instagram.com/remarkableresultsradiopodcast/ -Follow on Twitter: https://twitter.com/RResultsBiz -Visit the Website: https://remarkableresults.biz/ -Join our Insider List: https://remarkableresults.biz/insider -All books mentioned on our podcasts: https://remarkableresults.biz/books -Our Classroom page for personal or team learning: https://remarkableresults.biz/classroom -Buy Me a Coffee: https://www.buymeacoffee.com/carm -The Aftermarket Radio Network: https://aftermarketradionetwork.com -Special episode collections: https://remarkableresults.biz/collections
Click to go to the Podcast on Remarkable Results Radio
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