4.18.22 - Shops constantly need to invest in tools, equipment and training - not to mention standard overhead and employee costs - but many facilities struggle financially…largely due to artificially suppressed Labor Rates.
Industry leaders tackled this touchy topic at the Alliance of Automotive Service Providers of New Jersey’s (AASP/NJ) flagship event - NORTHEAST® 2022 Automotive Services Show - this past March with a featured panel entitled “Labor Rate 2022 & Beyond: How to Get What You’re Worth.” Veteran industry journalist Joel Gausten moderated as panelists Jerry McNee (AASP/NJ), Lucky Papageorg (AASP/MA), Burl Richards (ABAT), Barrett Smith (Auto Damage Experts, Inc.) and Sam Valenzuela (National AutoBody Research) delved into the reasons for Labor Rate suppression and how shops can circumvent insurer interference in this respect.
“All shops are not created equally, yet we’re treated that way,” McNee pointed out. “The ‘prevailing rate’ isn’t what the insurers claim it is, yet we accept it. Nothing will ever change until we stop crying and do something about it - and it’s what you do in your own facility that will make the biggest impact. Do you even know your break-even point? We’re trading time for money, and I’m not here to make a deal; I’m here to run a business, so I’m going to charge my posted rates based on my costs.”
“Collision shops can’t continue playing insurers’ games by their rules. We have to start thinking in terms of market-based Labor Rates which is why it’s so important to have a posted rate based on business costs and what the customer will pay,” Valenzuela noted, referencing the value of shops participating in NABR’s LaborRateHero.com surveys as a way of creating “transparency which allows other shops to make better decisions. Shops need to use data to make those decisions; without data, you’re just guessing.”
Unfortunately, many shops don’t truly know how to properly establish their Labor Rates.
“Everything starts with education, but then you have to actually go out there and apply what you learn or nothing changes,” Richards emphasized, urging, “If you took time to come here and learn something from your industry peers, you need to do something about it when you get home.”
Smith recommended following OEM procedures and showing customers how their vehicle manufacturers intend their cars to be repaired.
“It’s a perfect opportunity to demonstrate your professionalism, earn trust and build that relationship. Shop owners often started their career as body men, but they need to become better businessmen. You’re the problem, but you’re also the solution.”
Plans are underway for NORTHEAST 2023, scheduled for March 17-19, 2023 at the Meadowlands Exposition Center in Secaucus, NJ. Visit aaspnjnortheast.com for updates on next year’s event as they become available, and check out the April issue of New Jersey Automotive for a full recap of NORTHEAST 2022, available at grecopublishing.com. For more information on AASP/NJ, visit aaspnj.org.