Hammer & Dolly April 2022

Bridging the Gap Between Education and Employers

April 2022 Volume 15, No. 4 $5.95

Does the Consumer Know What You’re Worth?

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CONTENTS April 2022

26 COVER STORY

BY CHASIDY RAE SISK

FORGET ABOUT THE PRICE TAG AND FOCUS ON PROPER BILLING

How can shops recover inflated P&M expenses?

PRESIDENT’S MESSAGE 4 TECH SHORTAGE, RISING MATERIAL COSTS: WHAT GIVES?!

BY STEVE KRIEPS

LOCAL FEATURE 8 CLEARING HURDLES AND BRIDGING THE GAP BETWEEN EDUCATION AND EMPLOYERS: AN INSTRUCTOR ROUNDTABLE

BY CHASIDY RAE SISK Schools need shops’ support.

Does the Consumer Know What You’re Worth?

NATIONAL FEATURE 16 DOES THE CONSUMER KNOW WHAT YOU’RE WORTH?

BY ALANA QUARTUCCIO BONILLO & CHASIDY RAE SISK Find out what customers know about auto body shops.

INDUSTRY ADVICE: ASK MIKE

32 HOW CAN SHOPS AND CONSUMERS BETTER HANDLE TOTAL LOSSES? – PART 1

DEPARTMENTS 6

Executive Director’s Message

7

WMABA Member Application

17 WMABA Sponsors 31 WMABA Board 34 Advertisers’ Index

Tips for addressing disagreement with a total loss determination.

April 2022

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PRESIDENT’S

Steven Krieps (304) 755-1146 skrieps@live.com

MESSAGE TECH SHORTAGE,RISING MATERIAL COSTS: WHAT GIVES?!

As always, there is a lot going on in the collision repair industry, which is great for content generation…but what does it mean to your shop? Ever sit down and focus on one item? I know it’s very hard given the fact that, in this business, it can feel like you are running around with a fire hose all day, every day. I figured I would point out a few things I have been thinking about recently. We all know costs are rising, and paint materials is a huge one. Limited supplies reduced supply chain efforts, and now inflation is driving prices upward. Yet, in 2021, only 19.2 percent of shops (down from 27.5 percent in 2020) utilized a paint materials invoicing system. How you choose to bill is a business decision, but consider this: If you utilize the multiplier-based billing method, when was the last time the multiplier was adjusted? One report showed an average increase in paint material of 11 percent in the fourth quarter of 2020 with more double-digit increases coming in 2022. Sit down with your advisors, and look at your numbers.

As if that was not enough, how are you on technicians? We have a generation retiring, but who is coming in to replace them?

The days of bringing in a mechanically-inclined kid and teaching him in house are over for the most part. You can still accomplish that to a degree, but today’s cars are so advanced in construction and technology that outside training, such as programs offered by the manufacturers, are a necessity, and they’re expensive.

We can’t afford not to train our people as we are trusted to know WMABA OFFICERS

PRESIDENT Steve Krieps

steve@gregclineauto.com 304-755-1146 VICE PRESIDENT Rodney Bolton

boltonconsulting61@gmail.com 443-386-0086 TREASURER Kris Burton

kris@rosslynautobody.com 703-820-1800 SECRETARY Phil Rice

phil@ricewoods.com 540-846-6617 IMMEDIATE PAST PRESIDENT Torchy Chandler

Torchy Chandler torchy.chandler@gmail.com 410-309-2242

BOARD OF DIRECTORS

Don Beaver (donbeaver3551@gmail.com) 443-235-6668

Bill Hawkins (hawkinswilliamjr@gmail.com) 510-915-2283

Barry Dorn (bdorn@dornsbodyandpaint.com) 804-746-3928

John Shoemaker (john.a.shoemaker@basf.com) 248-763-4375

ADMINISTRATION

EXECUTIVE DIRECTOR Jordan Hendler (jordanhendler@wmaba.com) 804-789-9649 WMABA CORPORATE OFFICE P.O. Box 3157 • Mechanicsville, VA 23116

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April 2022

what we are doing. But again, it’s an added expense. With Target offering up to $24 per hour, how will your shop attract people?

For some, is that 50 percent of their labor? What about benefits, what about retirement, healthcare, short- and long-term disability!? I cannot stress the importance of offering technicians at least shortterm disability. Organizations like SCRS have been working to put together group plans that may be able to help. But the employment market is very tough for the collision industry. How will you bring in the next generation and ensure your sustainability?

I may leave you with more questions than answers, but that’s kind of the point. You need to question, network, discuss and share, but get involved. One person will not have all the answers, but no one knows this industry better than those in it. H&D

STAFF PUBLISHER

Thomas Greco thomas@grecopublishing.com

SALES DIRECTOR

Alicia Figurelli alicia@grecopublishing.com

EDITORIAL/CREATIVE COORDINATOR

Alana Quartuccio Bonillo alana@grecopublishing.com

MANAGING EDITOR

Chasidy Rae Sisk chasidy@grecopublishing.com

OFFICE MANAGER

Donna Greco donna@grecopublishing.com

PRODUCTION COORDINATOR

Joe Greco .joe@grecopublishing.com

PUBLISHED BY TGP, Inc. 244 Chestnut St., Suite 202 Nutley, NJ 07110 973-667-6922 FAX 973-235-1963

Reproduction of any portions of this publication is specifically prohibited without written permission from the publisher. The opinions and ideas appearing in this magazine are not necessarily rep­re­sen­ta­tions of TGP Inc. or of the Washington Metropolitan Auto Body Association (WMABA). Copyright © 2022 Thomas Greco Publishing, Inc.­­ Stock Images courtesy of istockphoto.com.

April 2022

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EXECUTIVE DIRECTOR’S

Register today at wmaba.com!

MESSAGE

THE REAL COST OF SELF-RELIANCE WMABA has a community - albeit small compared to the whole market - of dedicated shops who work together to bring about awareness, representation and change. What we struggle with the most is the lack of repairers who take time to get involved, even though they are affected by these same issues personally, and daily.

To extreme levels, one could say.

This edition of H&D is packed from front to back with editorial about the current climate of our industry and nation. Consumer education, proper billing, tech shortages and more fill this magazine, and not a single one of these issues has to be tackled alone. Nor could it be.

I’ve heard all the stories as to why someone is skeptical of going to the meetings. Stories about shops poaching another shops’ employee and it caused a rift that never settled. So and so won’t go to the same place as so and so because they had a feud over a person or a car. Shop “X” took the OEM certification I had, or they’re on this program with me and they undercut our prices every chance they get.

You just can’t trust anyone. All valid stories, yet all are self-limiting and deprecatory.

The problem with doing this “life” alone is way bigger than just our industry. We are not designed to carry all the burden on ourselves, but are rather called to share each other’s burdens. Life used to be all about the village. You know that one-liner about raising kids, “It takes a village”? It’s not just about raising kids, you know.

Think about how small communities would help each other farm, make goods, trade wares, and raise kids.

It is convenient for me to make the case for spiritual or religious endeavors, as the obvious thought here as the modern-age village.

Even as an easy correlation, I further implore you logically to consider why those communities have a proven high factor of coping with depression, stress and other worldly issues. It’s because they come together, they care for one another, and they believe in same morals and standards of life. All pulling in the same direction, regardless of differences or setbacks.

We as an industry can learn from this, even if we are not collectively spiritual or religious. It would be then logical as a

community to agree on principles for ourselves, such as customer relations, vehicle repair procedures, pricing models, standards for employee pay or benefits, what’s best for our industry legislatively, how we advocate for change, and much more.

In a religious environment there are principles. Rules from God, for instance, given in written form, to serve as a guide and boundary for conducting your every day life. How we treat God, ourselves and all others is (I believe) the highest pursuit. In my belief of Christianity, for example, there is – always and without exception - grace for others. We are to be known for how we Love one another. That DOES NOT mean you allow for others to abuse you. It’s all outlaid in the Bible in print, right there for me to reference.

With all that forbearing in mind, I know if you’ve gotten this far you already identified what it is that keeps you from pursuing this community for yourself. It may seem harder to take time away to join in on discussions, meetings and issue endeavors than it is to stay the course in your own business. I caution you are trading it for much more than saving time.

What I believe is the hardest endeavor of all is the endeavor to navigate the waters of this industry alone. It’s just not needed, nor is it required.

The work will always be hard, but sharing the burdens of others makes the yoke light(er).

Jordan Hendler

(804) 789-9649 jordanhendler@wmaba.com

Check the WMABA website and newsletters for regular updates and reports from the Executive Director’s perspective.

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April 2022

April 2022

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LOCAL

FEATURE

CLEARING HURDLES AND BRIDGING THE GAP BETWEEN EDUCATION: AN INSTRUCTOR ROUNDTABLE SURVEY

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Looking for technicians? Search the student ranks!

BY CHASIDY RAE SISK

Attracting new technicians is a path filled with stumbling blocks, hazard signs and other hurdles as shops around the country struggle to find and retain qualified help amidst the ongoing technician shortage.

While many factors contribute to the lack of workers, it’s difficult to envision a resolution to this dilemma without involving the schools and instructors who are preparing the next generation of repairers with the skills and training needed to become an asset to their future employers.

Curious about their thoughts on the topic, Hammer & Dolly talked to three local collision repair instructors: Brian Casey (Washington County Technical School; Hagerstown, MD), Craig Canard (Faquier High School; Warrenton, VA) and Kenny Brown (Chantilly Governor’s STEM Academy; Chantilly, VA).

Hammer & Dolly: How do the current number of enrolled students compare to past numbers? Why aren’t more students interested in a collision repair career?

Brian Casey: Our class is capped at 20, and enrollment generally runs around 15-20 students. Right now, we’re at 15 due to COVID, but it’s pretty much the same. There’s definitely not a lack of interest in our school! But I believe some students get steered away from an automotive career. Bright students who are good with their hands often go in a different direction because they don’t realize what opportunities are available for them in this field. A lot of guidance counselors seem to take the stance of, “If someone isn’t smart enough to be an accountant, maybe they can be an auto tech.” On top of that, you may have 15 students in class, but only two actually enter the field and go to work in a body shop because they know they won’t make much to begin with. It’s hard to get them to understand that they’ll make a good living in a couple years - they just have to invest in themselves first!

Craig Canard: My enrollment is the highest it’s ever been in my 26 years of teaching collision! The increase is mostly due to the pandemic causing students to wait to take the class until we returned to hands-on training. Before the pandemic, we had low enrollment like a lot of other schools - we even had to cut from four classes down to three - so it may level back off once some of these kids filter through. Students are definitely less interested in the collision program than they used to be, largely because parents are pushing kids to go to college; kids no longer get the message that they can make a good living in a blue collar career. Some students are allowed to take the class as a hobby under the condition that they still go to college. An even more pressing concern is the fact that students can go to work at Walmart for $20 an hour, while entry level in body shops pays $11-$12 and requires them to buy their own tools.

CONTINUED ON PG. 12 April 2022

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LOCAL FEATURE CONTINUED FROM PG. 9

Kenny Brown: I definitely have fewer students than in past years. I think part of the reason is because I still hold my students to a standard which they do not like. The majority of students today want instant gratification, and that’s not something they get from auto collision.

H&D: Why do you think that so many schools have cut their collision technology programs?

BC: We use a lot of consumables, so I’m sure it’s a pretty expensive program. In our school, we’ve lost programs like masonry and electricity because not enough kids sign up for them. It may be a cultural thing; not as many students are interested in working hands-on as they used to be. Or it may be related to guidance counselors and the system pushing kids to go to college so they can get a “fun job” where they sit behind a desk all day.

CC: The biggest reason I see for schools cutting collision programs is a lack of instructors. It’s hard to leave a job where they’re making a decent salary to become a teacher, plus most schools make new teachers take several college courses - if they don’t require a college degree, which few auto technicians have. A lot of collision programs are being taught by people who aren’t really qualified to be collision instructors as a result; they were merely hired because no one else applied, and that leads to student disengagement. If we want to attract and retain quality students who will join the workforce, it’s imperative that the class be taught by a good, qualified teacher with the knowledge and skills to impart on the students.

KB: Collision programs are very expensive to operate as the products used for training are consumables. My program manager once told me that collision was one of the most expensive programs in the county to operate based on shop square footage and number of students served. Then in Virginia, when you add on mandatory NATEF accreditation and all the tools needed to attain that status, some school districts found it easier to just close the program.

H&D: What type of hurdles are you facing as an instructor?

BC: The cost of supplies have tripled in the 13 years I’ve been here, so that’s probably the biggest thing. Equipment isn’t as much of an issue since it’s provided through federal money, but instructional money comes from the state, and it costs a lot more to operate than it used to. Fortunately, the school allows

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Bright students who are good with their hands often go in a different direction because they don’t realize what opportunities are available for them in this field. us to do live work to raise funds for our materials budget, and that’s also a great way for the students to get more experience.

CC: Resources are the biggest problem. We need stuff for the kids to work on to learn this trade, and as instructors, we have to find all of it ourselves…so we’re knocking on doors and making calls to ask shops for help in addition to teaching. Material prices are terrible; our expenses doubled this year. Fortunately, the Collision Repair Education Foundation (CREF) has helped out over the past four or five years by supplying tools through their annual grants. We also receive body filler, sandpaper, tape and other consumables from 3M through the Foundation. Their support saves me a lot of money and has been a tremendous help.

But a larger hurdle is finding cars for the students to learn on. We have a local State Farm agent who helps us get a couple donated cars each year, but when we have three cars for over 100 students, there’s only so many times a part can be removed and replaced, especially when it comes to bolts and clips. We rely on those donations, but often, the vehicles are models from the 1990s, and it’s hard to teach new technology on old cars that they’re unlikely to see in the shop.

KB: My biggest hurdle is having to operate a business to purchase the products we use in the shop for training. CREF has been a huge help for a number of years by providing grant monies and donations from companies like 3M. My school district is usually pretty good about equipment.

H&D: How can body shops get involved with schools and students? Why should they?

BC: Anytime local shops can get involved, it really helps. Our local shops’ involvement with our advisory committee has helped us earn our ASE certification and benefited us in other

ways. Internships are also a great tool, and we hope to send students out to shops for job shadowing soon, giving them a chance to spend a day in a live shop to watch what’s going on and maybe even help an experienced technician. But it’s only effective if the shop makes it a real learning experience; they often want to work people but not train people.

CC: I’ve asked local shops to let me come visit to learn new technology when it’s released, but they’re so busy that it doesn’t always happen. But we need their help to educate us as instructors and to help us educate guidance counselors and administration about the industry so they realize it’s no longer a greasy tech in the backyard situation…People have no clue how complex collision repair has become. We can always use leftover paint, materials and parts for the students to use, and insurance companies could do a better job of donating cars for the kids to practice on.

Although those things are vital, it’s even more important that local shops visit the schools to talk to the kids or host them in their facility as guests. After graduating, most students are terrified to go to interviews, but when shops are involved with our program, it alleviates some of their fear because you’ve built a relationship with them already through the school. This generation is more delicate and unable to handle criticism as well as past generations did, so employers cannot treat them like some random person off the street; they want to be treated like an important member of your team.

KB: Really good shop tours describing all the potential positions in the shop and demonstrations in the school shop by a local shop’s technician really got students involved in the past.

There’s also a lot of value when we can provide shadowing opportunities for students under the age of 18 with a technician that is not burned out and disparaging to the trade. Body shops being involved with their local collision programs allows them to have their name in that student’s head when that student thinks of a shop to try and join.

H&D: The million-dollar question…How do we fix it? How do we solve the tech shortage dilemma?

BC: We need more local shops to get involved with the schools, and the shops also need to offer more competitive wages and incentives. The bigger shops in particular need to ante up a bit.

Another important task is educating guidance counselors about what we do. It’s hard to break the stereotype of the greasy shop guy, but we have to work to increase awareness of what our industry has to offer and encourage school counselors to direct more high-quality students to our programs.

CC: To begin with, let’s acknowledge that there’s no quick fix for this situation because the lack of employees is everywhere, affecting every industry. You can’t walk into a business without it being plastered with help wanted signs. On top of that, our industry’s biggest hurdle is the fact that the insurance industry drives everything - just look at current rates compared to 20 years ago and then compare that to mechanical rates. Kids can make more doing mechanical work, and while collision techs can make good money, it takes a long time to get them to that point, possibly five or six years. There’s a huge disconnect when it comes to wages. At the same time that they’re working for little more than minimum wage, these young techs are being asked to invest in tools to use on the job. I’ve talked to several shops about establishing a tool program where they provide a new technician with a starter toolbox which will belong to the tech after two years of working for the shop. If we can help them in that way and pay them a livable wage, I think the collision repair industry will have a lot more success attracting and retaining younger technicians.

KB: First, shops need to raise entry-level pay to make themselves competitive with all the other employment opportunities out there for young people. They have to get out of the mindset that minimum wage is good enough (especially when minimum wage was $7.20 and fast food started at $10$13 an hour with more available hours). Next, set up some sort of training program or progress check for entry-level techs to advance. Stop expecting a high school to produce an A-level tech who can repair a total loss, and stop leaving it up to the senior technician to decide when a raise is due. This creates a conflict as the senior tech prefers to keep the pay low for as long as possible which usually leads to the apprentice leaving the business. Shops need to share the wealth down through the technician ranks to keep morale strong, which by itself would create recruiters for the business/trade. I’ve had more students leave the business in recent years than when I started teaching due to low technician morale in the shop they were working in as well as other technicians encouraging them to find alternate employment outside of the collision field.

How are you investing in the industry’s future by getting involved with local collision school programs and their students? Email chasidy@grecopublishing.com to share your suggestions! H&D

Executive Director’s Thoughts Our association has been talking about the issues of tech shortages and education for years, and since the start of the pandemic the worsening condition has continued. As they all said, we cannot compete with other industries on starting wages, or appeal to the trade, when the insurer-driven pricing structure has been largely unchanged for 20-plus years. We are certainly nearing a precipice. -Jordan Hendler

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NATIONAL

FEATURE

Trying our hand at consumer education.

BY ALANA QUARTUCCIO BONILLO & CHASIDY RAE SISK

Does the Consumer Know What You’re Worth?

Do customers know how much time, energy and money you invest in the training, tools and equipment that go into each repair?

Do they “get” it? Do they even care?

Auto body shops don’t have it easy.

Keeping up with changing technology, trying to get through the volume of work with limited staff and contending with insurers consume most days, but those challenges are worth it for many repairers who take pride in what they do: Protect consumers by safely and properly restoring their vehicles to pre-accident condition.

Your customers appreciate what you do, especially when you take the time to educate them, but do they really understand all that’s involved with repairing a vehicle and running a shop? Do they know how heavily shops invest their time, energy and funds into training, tools and equipment?

Are they capable of “getting it?” Do they even care?

Hammer & Dolly decided to try our hand at “educating the consumer” to find out if they actually know what you’re worth.

Our 10 consumers are residents of Maryland, Virginia, West Virginia and Washington, DC. They represent various age groups and careers, and all were unaffiliated and

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unfamiliar with the collision repair industry; most indicated that their knowledge was limited to one or two interactions they’d previously had with body shops after collisions.

We began by assessing their current knowledge on three topics: the length of time needed to learn the trade, the amount shops invest in tools, equipment and training and the all-important question of Labor Rate. After obtaining that feedback, we provided a two-minute lesson on the industry and asked them to re-evaluate their responses. Let’s find out what they had to say!

Many told us right off the bat “I don’t have a clue,” especially when it came to how much body shops spend annually in training, tools and equipment to fix the vehicles they depend on daily.

“I have no idea what that stuff costs,” confessed a sales coordinator from Beckley, WV. A teacher from Mullens, WV considered, “It would have to be thousands, but I don’t know.”

CONTINUED ON PG. 20

WMABA THANKS

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WMABA thanks their generous supporters of the

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We encourage YOUR SUPPORT of those who SUPPORT US! For more information about the sponsorship program, please contact Executive Director Jordan Hendler at (804) 789-9649 or email jordanhendler@ wmaba.com

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NATIONAL FEATURE CONTINUED FROM PG. 16

A doctor from Newport News, VA hesitantly guessed $10,000, while another medical professional - a Cambridge, MD based LPN who works in a psych facility - aimed a bit higher, guessing annual costs would range between $20,000-$50,000.

It was pretty clear that the average consumer has no idea what it takes to run a body shop operation and is not of the mindset that facilities need specialized equipment to repair specific makes and models.

For instance, an instructional designer from Laurel, MD believes equipment and tools have a lasting shelf life.

“I feel like once tools and equipment are purchased, you probably don’t have to buy it again unless you need a new one, so I’ll guess really high - $120,000,” he assumed, not assuming high enough.

Aiming much higher was a scheduling coordinator from Beckley, WV who estimated $350,000 for training, equipment and tools, while a personal fitness coach from Crofton, MD suggested only $85,000.

A data analyst from DC guessed tools would likely cost around $10,000. She admitted to not having an idea what items like frames would cost and then assumed training and equipment would amount to roughly $40,000-$50,000. A hairdresser from Elkton, MD aimed lower, assuming these essential items would run a shop around $10,000-$15,000.

Possibly the most jaw-dropping answer of all came from a retired small business owner from Wyco, WV who stated, “They should have tools to start, so they won’t need to buy those again. So, maybe $500 a year.”

“The average shop probably spends $30,000-$50,000 a month on tools and equipment and training,” observed an assistant branch administrator from Elkton, MD. “Depending on how many people are in the company, I‘d say they would need to spend at least $50,000,” conveyed a quality control team leader from Northeast, MD. Now, when it comes to the amount of training that collision repair professionals need in order to reputably repair vehicles, most shared the belief that schooling would entail roughly 18 months to two years.

The Virginia-based doctor assumed one year of trade school was sufficient while the Maryland-based assistant branch administrator proposed, “It takes two years of schooling to learn the basics, multiple years and testing to be advanced.”

“I’d say at least four years to be proficient,” suggested the data analyst.

“For someone to actually do a good job, it probably takes a couple of years of schooling,” indicated the personal fitness coach from Maryland. “I’d like to think they’d need to spend a

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few thousand hours learning the trade.”

Uncertain of his answer, the instructional designer first implied somewhere between two to four years but then landed on “leaning toward two years.”

But it was the retired small business owner who once again had the most compelling answer. She guessed that it would take a whopping two days to learn how to repair a vehicle!

Questions about the Labor Rate that shops charge offered a wide range of responses with guesses ranging as low as $35 to as high as $225, but the most common answer among the 10 consumers interviewed was $40-50 per hour.

“I have no clue,” admitted the fitness coach. “It’s funny because I really know nothing about car accidents. I’ll say $225 per hour. I’m just trying to think about the materials they are using and what it would take to run a business, employ technicians and create an outcome. I charge more than that per hour to help people with health and well-being problems.”

“At least $50. You need your damn car!” exclaimed the quality control team leader.

“No idea. I don’t know. I guess it depends on what they are doing,” stated the West Virginia-based teacher who then suggested a range of $50-70.

Assuming shop techs make roughly $20 an hour, the sales coordinator from West Virginia suggested, “I think they should double up on what they have to pay the technician, so I’d say it’d be about $40 per hour.”

Despite the many who low-balled what they believe shops should charge hourly for the work they do - some being right in line with the historical area Labor Rates - others acknowledged that it must be pretty expensive to run a collision repair shop.

The instructional designer from Maryland thinks $150200 per hour is fair. In close proximity was the hairdresser from Maryland who guessed $120 per hour, while the DC data analyst took into consideration that the shop’s employee would have to make at least $25 “so with labor and parts, I can’t imagine them charging less than $100.”

“I’d say $50-150 an hour depending on make and model,” believed the assistant branch administrator.

After consumers provided their initial responses, they were given a short “training session” on collision repair: Vehicles are typically the second largest investment people make, and these days, cars are essentially supercomputers on wheels that can kill the driver, occupants and others on the road if repaired improperly. In addition to at least two years of formal education, technicians participate in ongoing training to keep up with advancing technology and manufacturer requirements, CONTINUED ON PG. 24

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NATIONAL FEATURE CONTINUED FROM PG. 20

and they provide their own personal tools which can easily accumulate in excess of $100,000. Changing technology also requires shops to constantly invest in tools and equipment, plus shops that participate in various OEM-certification programs may be required to purchase specific items to repair that manufacturer’s vehicles.

Typical startup costs for a small shop run around half a million dollars, and when we talk about Labor Rate, it’s important to remember that this is a business with overhead expenses such as rent, utilities, insurance, taxes…in addition to employee wages and benefits. As a point of comparison, the national average for lawn mower repair is $90/hour, and auto repair rates on the mechanical side typically range from $85-130.

How did that “education” influence consumers’ initial thoughts?

“I think they should double up on what they have to pay the technician, so I’d say it’d be about $40 per hour.”

“It’s crazy body shops don’t make as much as mechanical when they’re doing just as much work!” exclaimed the quality control team leader who admitted to being aware that many body shops are shutting down as they are unable to handle the upkeep required and it’s known that many are recommended to seek out body shop repair at dealerships instead.

The LPN agreed collision repair professionals should earn within the same ballpark as mechanical repairers. “It’s understandable that they need more per hour and should make money similar to an auto repair shop. It’s more about the car’s appearance and who doesn’t want their car to look nice.”

After originally suggesting a range of $40-$50 per hour was likely the Labor Rate for collision repair, the scheduling coordinator confessed, “I was a little low. I was really just thinking about what one technician would get. The experiences I’ve had have all been fair. Considering the knowledge that they have and the computer systems involved, it sounds like they are completely underpaid. They have to take the cars apart and put them back together. It’s amazing how they do all that.”

Similarly, the sales coordinator admitted: “I guessed about $40, so I way underestimated. Dealership body shops always overcharge such as $658 for four hours to replace a sunroof.”

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April 2022

“Initially, I wanted to say $150 an hour, but I was conservative with it by saying $100,” disclosed the data analyst.

“I hadn’t even considered the computer aspect and the highend technology the technicians have to deal with. Then it totally becomes at least $100-$200.”

Upon realizing the issues with the trade, the teacher from West Virginia pointed to the fact that the low paying rates are discouraging young people from pursuing the field of collision repair: “Kids are interested in cars, but they are go to work in the coal mines instead because they can’t afford to go into this business.”

Learning that body shop professionals should be making well more than what insurers pay them in the $50-something range, the doctor suggested “I think I went into the wrong industry.”

Although she had initially suggested a rate of $120, the hairdresser believed shops deserve even more after learning more about the trade: “Maybe they should get a little more, like $150? I make $60-$65 when I do hair for my personal clients!”

After suggesting that tools, training and equipment would roughly cost $500 and that collision repairers would likely need only two days of schooling, it may not be a big surprise to learn that the retired business owner suggested $35 as the hourly rate body shops should charge; however, once she learned more about the trade, she quickly changed her tune.

“Well, I have had auto body work two to three times and thought it was bad they charged $60 per hour, but I wasn’t thinking about it as a business and all the overhead costs.

Goodness gracious! I’d say they should get about $75-80 per hour when they have to put out for so much.”

Although it’s quite clear that some truly do recognize the value of what body shops do, few can put an appropriate figure next to it. Speaking to consumers of various professions played a role in our research as many used some of their own knowledge of their professions in comparison, yet most didn’t even come close to recognizing the amount of training and equipment needed let alone just exactly how much cost is involved.

So, what does this mean for repairers? There is certainly a lot of work to do in and out of the shop to educate the consumer.

One way to accomplish this is to get involved with WMABA. The local association works hard to improve the industry and help educate the consumers of the Mid-Atlantic.

Education really is key. The more collision repairers educate their consumers, the better they can understand what is happening when they take their vehicle in for repairs so they can fight their insurers for proper compensation. Helping them “get it” can help you collect proper compensation.

Like the teacher from West Virginia stated, “They should get paid more than what I said earlier for sure. They are providing a service, and they have to have people pay them for that service.”

Proof that an educated consumer does “get it.” H&D

Executive Director’s Thoughts The average consumer will be paying more to fix a lawn mower or a broken pipe than they’ll pay someone to fix their car. In all the conversations I have with shops, the most compelling customer experiences come from shops who discuss the process up front, along with educating them about potential hurdles of claims handling, and what their car needs to get back to pre-accident (safe) condition. The more they know, the more they’re willing to do when a roadblock comes about. -Jordan Hendler

April 2022

25

COVER STORY

“It’s basic business economics, not rocket science.

Shops weren’t profitable before the increases, but they’re even less profitable now.’’

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April 2022

Don’t take a loss on rising costs.

BY CHASIDY RAE SISK

FORGET ABOUT THE PRICE TAG AND FOCUS ON

PROPER BILLING Unless you’ve been living under a rock (and growing your own food), it’s impossible to ignore the rising costs in every area of life - from groceries to gas and everything in between.

With inflation hitting a 40-year record high of 7.5 percent, everyone is feeling the impact, especially shop owners who are contending with rising costs from every angle, including paint and materials, for which they aren’t being properly reimbursed.

“Raw materials is the main issue,” according to John Shoemaker (BASF). “On top of that, a limited number of items are able to enter and leave the ports, making transportation costs higher than they’ve ever been.”

“We’ve seen increases of up to 24 percent on raw materials in a lot of cases,” added Tom Brown (PPG). “But the cost of manufacturing products has also increased due to natural gas and transportation prices. We haven’t really passed those expenses on to the end user which is creating challenges. Hopefully, it will start to normalize in 2023, but there are no guarantees.”

Truer words have never been spoken as proven by the war on the other side of the world, an event that will exacerbate the situation even more.

“No one could have predicted that Russia was going to bomb Ukraine,” Tim Ronak (AkzoNobel) noted. “We see cost increases as a response. All our products are based on the petroleum industry, and now we’ve got record highs of $100 for a barrel of fuel. We have restricted supply. Russia was a net exporter of oil, and now that it’s no longer politically correct to source oil from that marketplace, we’re going to see a supply shock where the supply curve shifts right and prices go up.”

Liquid suppliers have raised prices by around 20 percent since November 2020, but paint isn’t the only elevated cost shops are facing.

“Paint is only 60 percent of the material shops typically purchase,” Ronak pointed out. “Other items that contain petroleum products include seam sealers, adhesives and even masking tape, so we’re going to see significant increases across the board. This isn’t just a paint company thing; it spans the entire spectrum.

“The paint industry typically gets singled out because that’s often the largest single check that a shop writes,” he added. “They may spend more on parts, but because it’s divided up amongst a bunch of vendors, it doesn’t get the same attention as that single check being sent to a paint supplier.”

“EVERYTHING has gone up,” Shoemaker said. “The price of fenders has gone up even more than paint over the past five years, but shops get the invoice and bill it out. Why don’t they do the same with paint? If you bill for it like you would for parts, it doesn’t matter how much it goes up because your invoice is based on the documented cost of goods sold (COGS). When you run your business based on your costs, your prices increase proportionately.”

“Paint needs to be charged like a part,” Brown echoed. “Parts prices change all the time in the fluid world we live in, but most shops haven’t seen an increase in paint reimbursement in over five years.

Material reimbursement rates were calculated 20 years ago and no longer apply; materials for modern cars cost more than they did in the past, and shops should be able to be properly reimbursed for the materials used.”

Adequate reimbursement can be a challenge for shops, but it’s imperative to start thinking about how to recover increasing expenses since the situation isn’t expected to right itself anytime soon. While overall inflation is at 7.5 percent, that amount reflects a cumulative average increase and doesn’t account for differences in certain product categories. Gas has risen by 40 percent, and electricity is up by nearly 11 percent.

“We’re not feeling the full impact yet; more increases are coming,” Ronak warned. “When people see a 7.5 percent inflation, they think they need to raise their prices by the same amount, but that’s not accurate because there’s a multiplier effect that includes transportation and labor in addition to manufacturing costs. The Consumer Price Index (CPI) shows that the cost of auto repair has gone up 10.8 percent in the past year. Now, that is strictly what’s been passed along for parts and maybe some materials; it doesn’t account for labor increases, so if parts are only 40 percent of a shop’s total ticket and CONTINUED ON PG. 30 April 2022

27

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April 2022

29

COVER STORY CONTINUED FROM PG. 27

they went up by 10 percent, their cost has likely increased by closer to 22 percent.”

Shops cannot afford to take such a loss, but what can they do?

“Run your business like a business,” Shoemaker recommended.

“Base your sales off the COGS - parts, materials and labor. It’s costing shops more and more to keep a technician employed, but we don’t bill for labor as a cost either. Labor keeps the lights on, yet shops are losing money every day on labor which should have a 60-65 percent profit margin. If you send an individual to school and maybe have OEM certifications that require additional training, all that needs to be factored into your Labor Rate or you’re at a loss from day one.

“Unfortunately, many shops have allowed outside entities to run their businesses for so long that they’ve forgotten simple business economics,” he continued. “All questions relate back to the cost of goods. Your sale price should be calculated using the COGS multiplied by your expected gross profit. That’s how Harris Teeter sells bread, and that’s how this industry should be selling their goods and services. Know how much you pay and what your profit should be, and then calculate your sales price.”

“Shops can use the tools provided by their paint manufacturers to document their expenses and also to learn how to collect adequate reimbursement for properly repairing the car,” Brown contributed. “The lack of workforce mandates higher pay to get help, so the Labor Rate really needs to be increased for shops to competitively attract and hire those people. The ‘prevailing rate’ isn’t accurate, and rates should be set at different levels based on the tools, equipment, training and skills a shop brings to the table. Labor Rates should be evaluated and adjusted yearly.”

When adjusting prices due to rising costs, shops need to make sure they understand how those costs increase.

“When multiple increases occur in an individual year or even over time, it’s easy to forget that they are cumulative, so that second increase compounds off the first,” Ronak explained, providing an example of a situation where a five percent increase is applied in June and again in December. “That’s not a 10 percent increase; you can’t just add them up. If you start with $100 and add a five percent increase, you’re at $105. That next five percent increase applies to the $105 so you end up at $110.25 which is a 10.25 percent increase.”

Ronak expanded on that concept: “Small businesses typically live within their four walls; they wait for a cost to impact them painfully before trying to recover. Small businesses typically get stuck doing things the same way and fail to adjust prices in advance, only increasing them when they’ve felt the pain and reached a horrible situation. Big businesses operate very differently by negotiating contracts in advance and setting future prices accordingly to maintain the same level of capital so they can maintain their business.

“Consolidators are already positioning themselves to effect a pretty significant increase,” Ronak continued. “And if those large

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April 2022

businesses suddenly start capturing higher rates, small businesses become more vulnerable to losing employees who are offered more money to go to the big shop down the street. Faced with losing a highly valued employee, many shops end up paying more than their financials justify as a way to survive. I worry that small businesses will wait too long to adjust their pricing in this massive inflationary environment.”

“It’s basic business economics, not rocket science,” Shoemaker insisted. “If you don’t base your business on the COGS, your opportunity for profit is very, very limited. Shops weren’t profitable before the increases, but they’re even less profitable now. Every paint measuring system has a way to invoice, and paint is a part. Monitor what’s consumed on the job, print out that invoice (including an appropriate gross profit), and you’ll get back to the profitability side.”

“Most insurance contracts include a stipulation that they’ll pay all the demonstrated costs of a repair,” Ronak indicated. “It’s not limited to what the insurer decides they want to pay for. If you can provide documented proof of the amount used, that documentation allows you to substantiate a bill that you’re going to submit for reimbursement.

Now, remember the insurer doesn’t pay the bill; they reimburse the consumer, and it’s incumbent on the shop to provide adequate documentation for the consumer to support getting fully reimbursed for the materials that were used on a job.”

Tragically, many shops forget that their customer is the consumer, not the insurer.

“A lot of shops insist, ‘The insurance company will only pay me what’s on their estimate,’ and maybe that used to be true, but it’s really an old wives’ tale,” Shoemaker stressed. “Properly create invoices based on consumption, and you’ll get paid, but it’s up to you to run your business. Insurers don’t really want you to be profitable. They want you to repair the car and help them satisfy their customer’s loss.

Somehow, we’ve become a mediator between the insurance company and the consumer, but the insurer is not your partner. They’re contracted to the vehicle owner, and you’re contracted to the vehicle owner. That’s it.”

Ronak agreed: “Our industry only faces many of these challenges because we insert ourselves into the conversation with the insurer. By and large, the ones having the hardest times are the ones who signed contracts, but with rising costs, those agreements are no longer mutually beneficial. They’ve become one-sided, so they may need to be revisited and equalized a bit. There are a lot of strategies shops can implement to capture returns on their costs, but a $2 increase just isn’t going to cut it anymore.” H&D

Executive Director’s Thoughts This article needs the cutout scissor line in the margin, just so shops realize to tear it out and read it over again. If you roll it up, you can hit someone over the head with it, too! This, my industry friends, is the wake-up call issue. Doing things the same way you always have, just because you always have, is a horrible excuse that will ruin your business. Times have changed, and they’re only going to change more! -Jordan Hendler

An association fostering the exchange of ideas and providing a voice and support for the collision repair professional.

Position Your Business as a Leader!

OFFICERS

PRESIDENT: Steven Krieps srkrieps@live.com 304-755-1146

VICE PRESIDENT: Rodney Bolton rbolton@aacps.org 443-386-0066

TREASURER: Kris Burton kris@Rosslynautobody.com 703-820-1800

SECRETARY: Phil Rice phil@ricewoods.com 540-846-6617

PAST PRESIDENT: Torchy Chandler torchy.chandler@gmail.com 410-309-2242

BOARD OF DIRECTORS

Don Beaver don.beaver3551@gmail.com 443-235-6668

Barry Dorn bdorn@dornsbodyandpaint.com 804-746-3928

Just like equipment and training, WMABA membership is not only a commitment to excellence, but also a valuable investment.

WMABA is recognized both regionally and nationally as the key forum for the exchange of ideas concerning the D.C., MD, VA and WV collision repair industry. It is the venue to discuss, learn about and impact evolving standards and policies in the technical, administrative and legislative fronts of our industry.

Shops and industry supporters can best develop themselves and their employees by actively engaging in the association and its activities.

Automotive collision repair facilities in Maryland, Virginia, West Virginia and Washington, D.C. who are willing to adopt WMABA’s Standards of Membership and offer a guarantee to their consumers are encouraged to engage their business as an active member of the association. For over 40 years, the WMABA membership of professional collision repair businesses and affiliates have committed to operating at a higher standard on behalf of their industry and their consumers. Over the years, WMABA has proudly represented the collision repair industry at hearings on Capitol Hill, in Annapolis, MD, and Richmond, VA as well as almost every national collision repair event. While WMABA has a rich history of dedicated men and women serving the local collision repair community, WMABA also boasts numerous past and current accomplished Board members who represent our membership at the national level.

WMABA offers current and dynamic discussion forums on topics facing collision repairers, technical information and educational seminars, opportunities to network and discuss pressing topics with leaders of the collision repair industry, an arbitration program that works with consumers to help resolve issues they might have, apprenticeship programs, legislative representation and the ability to receive and contribute to one of the nation’s leading collision repair magazines, Hammer & Dolly.

EXECUTIVE DIRECTOR: Jordan Hendler jordanhendler@wmaba.com 804-789-9649

Bill Hawkins hawkinswilliamjr@gmail.com 510-915-2283

John Shoemaker’ john.a.shoemaker@basf.com 248-763-4375

“

Contact Executive Director Jordan Hendler to find out how WMABA can amplify YOUR voice in the collision repair industry.

April 2022

31

INDUSTRY

ADVICE

ASK MIKE:

How Can Shops and Consumers Better Handle Total Losses? – Part 1 This month, we “ASK MIKE” to share his thoughts in a two-part conversation on how shops and consumers can better handle total losses. In this first part, Mike offers his perspectives on what shops could consider in terms of labor and billing for total loss vehicles. We at Hammer & Dolly hope you find the following exchange useful, and we encourage you to reach out to us if you have a question for Mike on this or any industry-related matter that he can answer in a future issue.

Hammer & Dolly: For the first part of this discussion, let’s talk about total loss valuations from a shop perspective.

Obviously, a shop may not always agree with an insurer declaring a vehicle a total loss. But when things go that way, what are the billing opportunities that exist for shops in terms of disassembly, storage and other factors related to a total loss? What are some of the first steps a shop should take if they want to receive proper compensation for the work involved in a total and/or have a customer who disagrees with the insurer’s valuation of that vehicle?

Mike Anderson: If a vehicle is a total loss and the customer really wants to repair that vehicle, the shop can help that consumer validate or verify the amount the insurance company has indicated the car is worth. Robert McDorman of Auto Claim Specialists and John Walczuk of ZB Negotiations are just two people in the industry who can assist consumers in getting their vehicles valued at a substantial amount more than what the insurance company has valued them at. There are others out there who work in that capacity as well. Shops can find a third party like that in their market area who can help the consumer in that way.

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April 2022

A lot of times, total loss valuations are done off base models; insurers don’t take into account all the specific features on a vehicle. A consumer could need help determining all the features that are in their car. Just because it’s a Honda Accord EX doesn’t mean that all EXs have the same features. Researching the VIN would help determine all the accessories and features on Consthe vehicle. There could be a lot of variables between vehicles.

If the vehicle is a total loss, your charges are going to vary based on whether you’re a DRP or not. If you’re a DRP, you probably have an agreement with the insurer that you won’t bill for certain operations. If you’re not a DRP, there are several things you can look at. For example, what are your disassembly fees?

What are your storage fees? Some shops have a different rate for outside storage versus inside storage. Are the parts you purchased returnable? Is there a return fee or a stocking fee? In some cases, vendors may not allow you to return parts. So, now you may have to charge for the parts. You may have a fee to write the estimate, and you may have an OEM information research fee. Maybe you did a scan or a pre-diagnostic alignment on the vehicle. All of those types of things have to be taken into consideration.

Another thing I’ve seen shops look at in total loss situations is clearing all the consumer’s personal data. Most consumers today have their phones – where their contact information is – stored in their vehicles. They may have their navigation system with their home address stored in there as well. They may even have their garage door codes stored in there. So, the shop may have to ask the consumer, ‘Hey, do you want your personal data erased from the vehicle’s memory?’ Generally, the owner’s manual or the service manual will tell you how to do that. So, that’s another consideration.

In some cases, the insurer may want you to reassemble the vehicle because that may bring in a higher salvage bid. That might be a consideration in addition to the labor to dissemble that vehicle.

Total loss considerations for shops to keep in mind.

H&D: As you’ve mentioned, DRP facilities may have pre-existing agreements that prevent them from charging carriers for certain things in total loss situations.

Since you’ve observed and consulted with non-DRP shops that bill insurers for most – if not all – of the items you just discussed, what have you seen out there as far as successes, obstacles or learning opportunities between both parties?

MA: You may have some insurers state that they’re only going to pay storage for the time the vehicle is declared a total loss until it is picked up. That’s why it’s important that you make sure your customer authorization form outlines all of those situations as to when storage will start and how it will accrue. You can outline that during your conversation with the vehicle owner.

Look for Part Two of this discussion, which will explore how the consumer can get involved if they disagree with their insurer’s total loss valuation of their vehicle, in an upcoming issue of Hammer & Dolly.

H&D Mike Anderson is an Accredited Automotive Manager (AAM) and the former owner of Wagonwork Collision Centers, two highly acclaimed shops located in Alexandria, VA. He has served as a member of many industry organizations throughout his career, including the WMABA Board of Directors, the Mitchell Advisory Board, the MOTOR Advisory Board, the ASE Test Review Committee, the National Auto Body Council, the Collision Industry Conference and the Society of Collision Repair Specialists. Additionally, he is a past Virginia SkillsUSA chairman, serves as a facilitator for Axalta Coating Systems’ highly recognized Business Council 20 Groups in both the US and Canada and facilitates numerous courses for Axalta Coating Systems’ Educational Series. He currently offers expert industry consulting via his latest venture, Collision Advice (collisionadvice.com).

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