Profitable If Done Right �������������������������������

Autobody News recently sat down with Jim Huard to talk about what’s important to him and the current state of the collision repair industry.

Jim and Kelly Huard are the co-owners of Painters Collision Centers with two locations in Queen Creek and Chandler, AZ. Their goal is 10 locations within the next two years through smart and strategic expansion.

Q: As a body shop owner, what are your top concerns?

A: Hiring and retaining skilled labor is our No. 1 concern.

Q: A shop owner told me one time the tug-of-war between body shops and insurance companies will never cease, although it will change and evolve. Do you agree, and how and why have your relationships with your insurers changed? Q: Are most of your DRPs profitable and are you satisfied with them?

A: I believe that all DRPs are profitable for all shops. How do you repair a car? And how do you write the estimate? Are you focused on the sales mix and writing a complete estimate? Are you complacent and write poor estimates and what does your throughput model look like?

Profitability is predicated on good quality estimates and throughput. This is a proven fact. A shop that produces 1.5 HPD will put 1.8% to the bottom line, give or take. A shop producing six HPD will put 18% to 20% to the bottom line or better.

Q: How has all of the new technology impacted your productivity? Customer service? Marketing? Online?

A: We have had to adapt several times over. We created processes to repair higher level technology vehicles effectively while positively impacting our CSI. We also work with a stellar marketing company, Stratosphere Studio, that is engaged, in tune and really knows the collision repair industry.

Q: Are you ever worried you’re too dependent on your DRPs?

A: I am not, because we are very strategic on how we operate. We do not put all of our eggs in one basket. One of our DRPs generates 37% of our revenue, and another one is at 21%, for example. I work with five partners in total and will not add any more. This is how we are able to provide top level KPIs with compliance and overall stellar performance for each partner.

Q: Do your insurance partners constantly ask you to incorporate more aftermarket and recycled/remanufactured parts into your repairs? Are some of these parts OK to use, or would you want to use OE parts on every repair if you could?

A: I will answer this carefully. In a perfect world, we would use all OE. This frankly would improve the carrier’s profit. We did a case study on this topic. What we discovered is that with the downtime of getting a used part, and the fact that most come damaged or not useable, we often have to return and wait for another. It’s incredibly time-consuming and costs the carriers thousands of dollars per day in rental costs.

This does apply to some aftermarket and reconditioned parts. The carriers put a ton of pressure on the rentals and cycle time. Most carriers spend $5 million per day on rental replacements while vehicles are being repaired.

I also believe that if a consumer purchases a policy that requires aftermarket parts, that is on the consumer. Most aftermarket parts today fit well and are crash tested. Depending on what it is, a reconditioned part is more than acceptable, in my opinion. But as I stated, in an all-OEM world, all parties involved will gain throughput and profit.

A: I respectfully disagree; I am different in how I view this. All repairers can work effectively with carriers if they know how to navigate through the process. It’s not always just about being right. But instead of having the facts, the correct documentation and the right attitude about the relationship is what is truly important.

Q: Another body shop owner told me the main problem in this industry is the simple fact the insurance companies, in general, don’t pay enough for repairs. Do you agree?

A: I again respectfully disagree, because from my experience, all insurers will pay to repair the vehicle correctly. I also believe it is a choice to repair a car correctly. Scans, calibrations and the like will be reimbursed as long as they are properly documented.

I am a DRP work flow guy. I am fanatical about quality repairs, and we are super picky about what we repair. The insurance companies are always watching the bottom line and there is nothing wrong with that. But I don’t think they ever want us to do sub-par repairs or compromise our quality to save money.

Jim Huard of Painters Collision Centers in Arizona is not afraid to share his ideas and opinions with body shop owners and the industry as a whole� Q: From your experience, is it better to pay techs salary/ hourly or flat rate?

A: I have many opinions here. But from my experience, hourly you will realize low profits, lack of productivity, poor cycle times and usually a sub-tribe of people who are not truly genuine in their efforts.

See Can Be Profitable, Page 22