Joe Marconi

I am hearing more and more about shops using a Labor Matrix to increase labor profit. 

I have been a long time proponent and have used different labor tiers. For example, we worked on passenger vehicles and heavy trucks. The labor rate was higher for an F500 Dump Truck than it was for a Honda Civic.

The labor matrix is a different, it allows your business system to factor in more hours for either longer jobs, vehicles over 20 years old, or any other criteria you decide. For example, if the labor for a job is 8 hours, that job may be billed with an additional 10%, making the job 8.8 hours, not 8.

I would like to hear from shop owners using this strategy and tell about the impact on their labor profit. 

18 hours ago, Obsidian Motors said:

There are three new and used tire businesses within a one mile radius of us. Two are directly across the street. We have an account with one of the tire shops but don't sell many tires. I do wonder if we would sell more if we pointed out any low tread during inspections, but we don't get many requests for tires at all.

You will absolutely sell more tires by taking photos and documenting tread depth during the vehicle inspection process. And also by training your staff to discuss tire safety with your customers. If you want to sell more tires, do a little research in the tools and equipment needed, staff training and speak to tire reps at different companies. 

In the 1980s I would send all my tire business away. In the 1990s, when I expanded my business, I added tires to my list of services.  I did not compete with the tire stores, that wasn't my goal.  It was a way to keep my customers in my shop and provide a service to my customers. 

14 hours ago, xrac said:

Employee vacations during peak seasons is tough.  However, when employees have children who are still in school or spouses who work places with mandatory summer shutdown it is not fair for them not to be able to take vacations with their families.  I do not like it but we let employees take vacations whenever they want as long as they clear it far enough ahead.  We just lived through being without one of our techs for two weeks since he is in the National Guard and they have two weeks camp every summer.  

You bring up excellent points, especially these days.  As shop owners, should we find ways to improve sales and profits throughout the year, rather than relying on past history to determine the good times of the year and the slow times? 

14 hours ago, Mike the Mechanic said:

My first boss was very Victorian in his employment practices. It was assholes and elbows at 8 am. It was the same at the end of the day. Last 15minutes you stopped and put your stuff away and grabbed a broom or mop.

That being said everyone in my operation is on time or early.......that is our culture. I have 3 employees that have different starting times as the have family needs to get kids to school. That time is scheduled and they are reliably there when they say the will be.

If someone is 2 hours late I am not worried about the $50 bucks he looses, I am cranked about the $400 lost opportunity. Most of my staff is flat rate and they are motivated and conscientious.

You affirm what I am trying to bring up. I don't think that it's too over the top when an employer insists on having all employees arrive on time. 

You worked it out in your shop and are flexible with your employees to meet their. particular needs.  I get that. Today's world is different that 40 years ago. 

I just don't want to see a slippery slope where they may be other "reasons" to come to work at a different time. 

12 hours ago, weighit said:

I had my shop in a smaller town outside of Detroit, and had 5 guys. I shut the shop for my vacation the last two weeks of Aug and first week of Sept. I paid the guys by check in the mail 40 hours pay every Friday while we shut. That was my vacation, they got 2 weeks vacation on their anniversary and could take it when they wanted. Or, just not take that time and get the pay. Since we shut for those 3 weeks in the summer most never took any other time off and collected the money. We were very busy all the time and if I didn't take the time I wanted we would be working all year. Thats how we worked time off.

You bring up a good point about being busy all year-round.  Do you think that shops that are more seasonal, with slow times, need to worry more about losing employees to vacations?

All great points, and I agree.  People deserve time off, I guess we need to factor that in and make sure we are productive all year round, and adjust our goals. 

And I know about Texas: 100 plus degrees is no fun. 

Many shops have increased their labor rates the past year or two. For too many shops, they have been too cheap for too long.  However, speaking to shop owners, their labor rates, even though higher, are still not where it needs to be.  

Have you raised your labor rates this past year or so? And do you think the raise was enough to keep pace with increased expenses, inflation and the increase in employee pay? 

As the automobile evolves and we see more and more EVs on the road, I believe that if at all possible, adding tires and related sales is a way to increase sales and profits and remain relevant in the future.  Some shops that have never sold tires may resist, but they should consider it. 

Are you adding tires to your list of services, or any other services to continue to grow your auto repair shop? 

In the northeast, the summer is typically the busiest time of the year for auto repair shops.  Many of  my fellow shop owners would not allow or limit vacation time during the summer months, stating they need to capitalize on the potential. Having employees on vacation when at their busiest hurts overall production.

How do you feel about this. Agree or not? 

 Wow, I knew the potential for EVs to catch fire, but didn't understand all the reasons why and the technology behind it.  Every shop must watch this podcast, from a safety aspect, liability and how to best care for EVs and their customers. 

11 hours ago, weighit said:

A body shop near my old shop was hit with lightning and burnt to the ground. The owner was sure he carried enough insurance, he didn't. Plus all the employees tools were not covered either. As I had a stripping blasting business, I had each employee bring the tools that were still identifiable for me to clean and make servicable again at no cost. A lot of shops started asking their insurance providers what was covered and what wasn't., Me included.

 

Wow, what a story.  I really believe that ALL shop owners contact their insurance company. Our techs pay through the nose for tools. Their tool boxes alone are a small fortune. 

9 hours ago, SW Car Care said:

This topic is on point, Joe.

After 32 years in business I can honestly say my crew has logged more tardy days in the last year than the previous 10.  It's aggravating to say the least.

I finally called a pow-wow last week and told the guys, "Look, when you're late, I or my brother (my business partner) are out in the shop picking up the slack because we've told customers that they can get their vehicles worked on and back at a certain time.  When you walk in late, you blow our schedule and our potential to maximize the bays and the days out of the water.....and no, we're not going to slow down for you or turn work away.  Therefore, any day that you walk in late and you hear an owner say, "You're late" instead of, "Good morning" just know without exception that we've logged the tardy in the payroll ledger.  That tardy will cost you $100 off your bonus (which we pay bi-anually).  Do that 10 times and see how you like the result.  Nobody is going to lose their job over being late because we like you all and we like your quality of work....but if we're going to turn the wrench, we're going to keep that money".  

Keep in mind, we are numbers guys and even our most junior mechanic knows our "value of a minute".

Good luck, your story is so common.  Do you think other shop owners just tolerate lateness?  The loss of productivity adds up, and impacts the bottom line. 

I don't want to make this all about profits, but it's suppose to be a team. Right?  Imagine the 2nd baseman on the Yankees arriving to the stadium 10 minutes late? 

After a recent conversation with a fellow shop owner, I felt this would make a good post.  This shop owner had a break-in and his tech's tools were stolen. Quite a sum of money gone.  He later finds that his liability insurance does not cover employee tools. 

Please check your garage keepers insurance policy, make sure you have the right insurance for your specific needs and that you tech's tools are covered too. 

It seems nearly every shop owner I speak to has some sort of issue with employees coming in late. I don't want to sound old, but this is a problem that should not exist. And it goes back to tolerating too much and not setting the right standards.  I can tell you that lateness was always an issue for some people, but not to the extent it is now.  I am not sure of all the reasons why. 

Below is how my father explained lateness to me to when I was 15 years old and got my first job: 

My father starts the conversation, "So, what time do you start work tomorrow? I replied,"9am". My father continues, "What time to plan on being there?" I said, "9am."  He then says to me, "So, you plan on being late your first day." 

That is the difference. My father was a smart man. 

This podcast opened my eyes to more than just counterfeit parts. There is a lot to consider these days regarding technology, programing, and the the future of the DIY market too.  A must-listen to podcast. 

52 minutes ago, Transmission Repair said:

I don't know if it's legal or not, but I put it in my waste oil tank.

It's a considerable amount. But, I do know many that do add small amounts with used oil. 

I have a fellow shop owner who would like to know of how to "legally" dispose of waste gas? Any suggestions or waste disposal companies would be appreciated. The shop is located in Connecticut. 

12 hours ago, Ulfar said:

It definitely is a team effort. It also requires a serious effort on the counter side. If you’re paying your technicians in ANY fashion that relies on an accounting of their time then they should get some amount of time every time they touch a vehicle. Even if the shop waives the diag or the bulb install or whatever. The tech should NEVER be on the short end of a deal made between the business and a client.

In addition I personally feel that almost all costs are the responsibility of the business, short of an employee’s gross negligence. Though even then the shop may cover the expense and either terminate or reprimand the employee dependent on the circumstances. 

Makes sense, and I agree. I always say, when you are looking at a production problem, you need to look at the entire process: Estimating, scheduling, shop layout, training, tools & equipment, in-house information systems, service advisor skills, enough staff and great management. 

12 hours ago, Ulfar said:

There are techs who thrive under the pressure of flat rate, but most either don’t (making too many mistakes) or they feel that the flat rate system has burned them too much.
 

Too often management uses flat rate as a way to control their labor expense (which is exactly the wrong way to look at technician time, they are a commodity not an expense) instead of trying to create ways to make the technicians more efficient. 
 

I personally think a hybrid pay system is best as it rewards both quality and speed. 
 

Sorry if I ramble a bit. 

I tend to agree with you. 

To add to your comments, I do think that there is also a responsibility of the shop owner or manager to ensure that estimates are written properly, and that the correct labor is applied to each job (as best as possible).  For example. how often are deals made with the customer to sell the job, and many times the labor to test a complicated driveability problem is waived?  Does the tech get the labor time, or does the tech suffer? There are many more examples.  Labor hours is not just techs responsibility. It takes a team effort. 

On 7/5/2023 at 3:28 PM, JamisonAutoGroup said:

Thank you for bringing this up, Joe!  I agree with both of you that it does seem to be an ongoing thing.  As the previous comment suggested, " Some shops are better run than others".  This is in my opinion, the leading factor in a business's success or demise.  Some shop owners are more geared toward marketing and branding (like me), others are geared more to the technical side of the diagnostics and repairs.  In any case, I feel it is critical to be well educated in these areas of the business, among others. The most important thing a business owner should be focused on though, is the KPIs.  This tells you the pulse of the business, and how to steer the business in the right direction.  An owner who doesn't know their numbers, does not know their business!

Great points about KPIs! Question, do you think team morale, culture and leadership also has a large effect? 

On 7/5/2023 at 5:56 PM, Ulfar said:

In my experience it depends on the tech more than anything else.

That is an interesting comment. Can you go into more detail?

Like so many from my generation, I was a technician-turned shop owner. I was a tech on a Friday at a Ford Dealer, and a Shop Owner the following Monday. While I was technically competent, I had no clue how to run a business.  I struggled for years until I understood my role as the business owner. This was a time when there was very little help to understand how to run an auto repair shop.

With all the available business training, online resources, consulting services, and coaching companies, is it easier today to start your own business? 

I would like to hear from those shop owners who recently opened up their businesses.  Is it an easy process? Hard? Overwhelming?  And what business help, if any, are you getting? 

Many shop owners believe that paying flat rate is the only way to achieve high labor production. Others say that flat rate promotes the wrong culture. Many technicians are on straight salary. And there are those that prefer a blend of paying hourly plus an incentive bonus if certain billed hours are produced.  

While there are many pay plans out there, is there one that has worked for you?  And produced the results you are looking for?