Joe Marconi

Determining the labor rate for a particular shop, whether it’s a body shop or mechanical is an exercise that every shop owner should perform. If you look at average labor rates across the country you will see a wide range. I know shop owners in some parts of the country that charge $55.00 per hour and other shop owners that charge $120 per hour. I think it’s important to know what your Cost of Doing Business (CODB) is, determine your breakeven, and calculate your return on your investment. Every shop is different. For example, If I own a six bay shop with a million dollar mortgage, new tow trucks and a new alignment machine to pay off, my CODB is a lot higher that a similar 6-bay shop with no mortgage and no other debt. But, with that said, there are some costs that are constant: payroll, utilities, training, upkeep, etc. So, although we cannot take a “cookie cutter” approach, we can make an assumption that is based on what a modern body shop needs to earn. In my opinion, a labor rate of $42.00 is too little. At that labor rate, what do you pay your workers? Assuming a shop runs at 100% efficient (which most times it does not), at $42.00 per hour, you will not have enough labor GP to pay techs a decent wage, unless the shop supplements income with other profit streams. Sorry for the long-winded reply, but I am not for setting labor rates, nor am I telling any shop what to charge. I think each shop owner needs to do the math and determine how to remain profitable. What I can tell you is that I speak to many body shop owners and mechanical shop owners around the country, and the game they need to play with the insurance company when it comes to labor charges does not help the industry.

Well Gonzo, you did it again. Great article! I remember back in the mid-nineties I was a member of the CARQUEST advisory council. It was an honor and a great opportunity to meet the cream of the crop in our industry and discuss issues with people from CARQUEST. I feel we got a lot accomplished and I have to tip my hat to CARQUEST for having the awareness to bring shop owners from around the country together to help raise the bar of the auto industry. It was from these meetings that TECH NET was born, among other great ideas and promotions. It helped me also see that a shop owner can rise up and not just settle for being average. However, as you so eloquently explained, when I first went to these meeting I was amazed at how polished some of the shop owners were as well as many of the reps from CARQUEST. I clearly remember looking at their hands and then looking down at my beat up hands. I would sit during the meetings hiding my hands under my arm pits. I don’t know if I was embarrassed or what. But thinking back now, it was foolish on my part. These people were not judging me by the look of my hands. We all respected each other because of what we brought to the table. You are right, we should be proud of what we do. There are so many shop owners that started as mechanics. Many have remained a mechanic. Besides, what better way to keep the Johnson and Johnson Company in business!

It's really hard. We do alignments, check engine lights and other small repairs for a body shop in my area, and he told me the other day that the insurance companies pay $46.00 per hour in our area. He hates it and to be honest, it leads to a lot of "creative" writing. You know what I mean?

I just added two new downloads; How to Hold an Effective Meeting and Time Management. I have been behind with my goal to add new content, but back on track and will periodically added new subject matter which I feel shop owners can use to help their businesses. Thanks, Joe Marconi

Here's a bit of good news from Florida. Gunder's Auto Center, Inc., has announced that some insurers are now willingly paying its increased labor rate, which went from $42 per hour to $48 per hour in June 2012. It's not much of an increase, and in my opinion, way below what's needed to run a quality Body Shop, not mention paying the staff a decent wage. But I guess it's a start. Here's a link to the entire article. http://www.bodyshopbusiness.com/Article/103651/florida_body_shop_seeing_insurers_pay_increased_labor_rate.aspx

Below is a link to an article in USA Today, about the tech shortage. I would recommend reading it, this affects us all. http://www.usatoday.com/money/autos/story/2012-08-28/shortage-of-auto-mechanics-looms/57414464/1

Years back I used to take vehicle photos for insurance companies. Back then I did everything (actually too much) and eventually gave it up, mostly because it only paid $4.00 per photo and I had my hands fill running the shop, doing most of the repairs. I had to fill out a form, take photos of the vehicle and maintain a file. I know today it has to be different with technology. Does anyone do these car photos for insurance companies and do you use it as a marketing tool?

In a recent report by the Automotive Aftermarket Industry Association (AAIA), there were 45,341 collision repair shops in 2006. In 2011 that number dropped to 40,279, a decline of more than 5,000 shops. Independent collision shops are in the majority, with a total of 34,438. Is this a sign and indicator for the future of collision repair shops?

The Car Care Council will host the largest ever consumer vehicle check-up event at the 49th Annual Northwood Auto Show on October 7, in Midland Michigan. The event will offer free vehicle inspections to consumers performed by volunteer technicians. Students enrolled in the Northwood’s Automotive Aftermarket Management program will help plan and operate the event. If you have never held a car care event, I urge you to consider it. It’s a great community event and a great public service. You will reap the rewards, that's for sure. For more information on hold to hold a car care event go to: http://www.carcareindustry.com/

I will probably be needed to replace one to two of my lifts soon. I am a fan of Rotary and have been reading about the new Shockwave Rotary Lift. According to what I have read, it's uses a 110 outlet which recharges two DC car batteries, it has a laser to properly center the car and it is super fast, up and down, saving productivity time. I am wondering if anyone has any first-hand information on the lift? Any info would be greatly appreciated. Thanks in advance.

NASTF; A Valuable Resource The National Automotive Service Task Force (NASTF) is a valuable resource for information of OE websites, equipment and tool information, training information and more. It is also where we can log anytime we cannot find the necessary information we need to perform a repair, service or diagnosis. It’s a great source of information. For more information; http://www.nastf.org

AutoShopOwner.com has a goal to have 1000 members by the end of this year. 2012. We are well on our way with new members signing up daily. We all know the strength of AutoShopOwner is its membership and the more members, the better the forums. Please help us achieve this goal, spread the word about AutoShopOwner to friends and colleagues in the industry. Thank you, Joe Marconi

The Governor of Massachusetts signed the Right to Repair Act on August 7, bill No. 4362. The bill is only seven pages long and can be read in its entirety at http://www.malegislature.gov/Bills/187/House/H04362

I just love the way you create the future. I really like the sentance, "With the economy just now getting back on it's feet". Is that a statement for how things are today? Napolean Hill said, "What ever the mind can concieve it can acheive". I guess this is what separates us from the rest of the animal kingdom, we truly have a impact on our future, good or bad.

I will sure to look it up and read it, Thanks! Joe

Wow Spence, great way to reply to post. I appreciate the detailed feeback!

Great! Good choice.

I really don't know for sure...but it can't be the same cap as the ones in the Stadium, but I really don't know.

‎9/11 will never be forgotten in the hearts and minds of the American people. Like so many other tragic events, all of us will remember what we were doing on that fateful day when terrorist attacked our great nation. Many died that day, but are not forgotten. Let us all take a moment to reflect back on this day, and maybe all of us can unite as we did when we all came together on the day after 9/11.

Last Saturday, my wife and I had tickets to the 1:00 Yankee game. The weather was perfect. As usual I was running late and couldn’t find my Yankee’s cap. My wife said; “just buy another one at the stadium”. After seeing the prices at the stadium, paying for parking and the small mortgage needed to buy food, I decided that a cap was not at the top of my wish list. The Yankee’s rallied back from 3 to zip, to win 4 to 3 against Baltimore. As we were walking out of the stadium I saw a few peddlers on the street selling Yankee caps for $10.00. I almost bought one, but I rarely buy from street peddlers and kept on walking. 30 feet from the first group of peddlers was another group selling the same hats for $5.00. I quickly reached for my wallet and bought a cap, along with a crowd of other people. Now, think about it. These peddlers were selling the same caps and probably all worked together. But what they did was brilliant. They used a sales strategy known as, “frame of reference”. First, these guys knew what the hats cost at the stadium. Second, the first group offered the hats for $10.00. If they sold some at that point, great, but here’s how they maximize sales: By first positioning the price at $10.00 and then offering the caps at $5.00, they made the hats irresistible and a great value. It’s all a mind set. They actually sell more hats by using a frame of price reference, thereby creating a market. The question now is: how can we use this strategy in our business?

I Can’t Afford it Today Recently, at one of our service advisor’s meeting, I questioned why a customer declined doing the timing belt. This customer was informed at her last visit that the timing belt was overdue and she also received a post card reminder from us. The customer’s response when the advisor mentioned the timing belt? “I know, I know, but it’s the start of the school year and I just can’t afford it today”. It was a busy day, and the advisor simply informed her that we will set up a reminder for the next visit. Good customer service? Of course not! This customer is already overdue for the timing belt and if it breaks and does internal damage, who will she be looking at and blaming? You bet; US! I constantly reminder my service advisors that we are not peddlers at a county fair trying to sell our products and need to convince people that our product is in their best interest. We are selling services and products that the customer absolutely needs in order to maintain a safe and reliable vehicle. And equally important, what we recommend will save the customer money down the road by decreasing the odds of a costly mechanical breakdown. When a customer states to you that they can’t afford what you are recommending, it may be true from their perspective. But do they really know what the cost of the repair will be if they choose no? Does the customer know that if the timing belt breaks, without warning, it may do internal damage which will lead to a repair that may be 4 to 5 times higher than replacing the T belt? When communicating with customers, ask the right questions; Is this a car you plan on keeping? Do you use this car to commute to work each day? Is this also a family car you use on weekends? If you get a series of, yes, yes, yes, you are making the customer understand that what you are suggesting is in their best interest. Lastly, let the customer understand the down side of not performing the service or repair today. If you have done your job correctly, the customer will be saying, “Well, I really can’t afford Not to do it”.

They say experience is the best teacher, but that doesn’t mean you can’t learn from someone else’s experience. Sometimes when I look at entry level techs, I ask myself, “Was I ever that young”? Lord knows I made my share of blunders. I remember years back I hired a young tech straight out of a tech school. One of his first jobs was to perform a brake inspection. The customer was complaining of a vibration when applying the brakes. I road tested the car with the newbie. After a few stops he turns to me and says, “The left front caliper is hanging up, causing the rotor to warp”. I stared at him and said, “You can tell that from a road test”? Maybe he was trying to impress me; maybe he really believed he nailed the diagnosis. I just told him to go through the brake inspection process, JUST to be sure. It turned out only needed front brakes and rotors. By not making a big deal, he learned his lesson. PS: Good looking dog!