Ask 10 shop owners what their gross profit level is in their paint department, and chances are you will get 10 different – in some cases, wildly different – answers. You’d likely find this even if you surveyed 10 similarly-sized shops, with the same number of paint booths and similar annual sales.
What can you do if you find your paint department’s profits seem lagging behind other shops? Here are some paint company recommendations to help improve your paint department profitability.
Start with your estimators. The skill of the estimator in writing accurate estimates is essential to getting the appropriate hours on the job, which impacts profitability and productivity in the paint operation, says Jim Berkey, Director, PPG Refinish Alliance Programs.
"At PPG, we help collision centers analyze paint and material profitability and audit estimates if necessary to determine if the shop's estimating skills need strengthening."
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“The estimate is king, no question about it,” said Steve Feltovich, manager of business consulting for Sherwin-Williams Automotive Finishes. “It’s really the driver for all refinish labor and paint materials sales. The rule that I use is you have to have 10 percent paint materials sales when measured against your total sales. So 10 percent of the total dollar value on the estimate should be paint materials sales. That’s the minimum. If you’re at 11 or 12 percent, you’re performing above level, which is good. When I see it fall below that, to 8 or 9 percent, I know profitability will struggle as a result.”
What if your shop is below that 10 percent threshold? PPG, Sherwin-Williams and the other paint companies offer estimator training focused on writing and negotiating better estimates by ensuring all necessary paint labor is itemized on the sheet. A shop with multiple estimators also may want to make sure those estimators review with one another what they’re each itemizing on estimates.
“In a lot of cases, I see that it’s work being performed in the paint shop but not adequately billed out,” Feltovich said.
Purify the numbers. Steve Trapp, collision services development manager for Axalta Coating Systems, said other office-related practices can obscure paint department profits as well. Paint related sales and expenses need to be coded properly to make sure profit-and-loss statements are accurate, for example. And rather than sticking to established minimums and maximums for inventory, shops may stock up one month and then buy very little for two months, skewing profit numbers in all three months. Or shops comparing their paint materials profits with another shop may not account for all rebates and incentives they’ve received.
“Because some shops may take some upfront money and then won’t factor that in to their paint materials numbers later,” Trapp said. “They’ll hear their buddy is at x percent gross profit, and they’re at y percent which isn’t as good, but they aren’t factoring in that they took the money up front and that guy has a bigger discount applied to his materials purchases.”
Consider available technology. Once you’ve ensured the office isn’t contributing to poor paint profits, it’s time to move out into the shop. Infrared lighting and booth (or stand-alone) fans are among the equipment that can improve paint shop throughput.
Tim Ronak, senior services consultant with Akzo Nobel Coatings, said Akzo offers a “manual proportioning unit” that often reduces waste by 10 percent or more. A shop loads the unit with product – typically clearcoat and hardener – and it then dispenses the exact amount the user calls for, pre-mixed and ready to spray.
“Because it’s coming out already proportioned, you can mix very, very small quantities, rather than mixing to the next level on a stick or cup,” Ronak said. “We have guidelines to help you predetermine how much material you need for panel size.”
The unit reduces can-handling, mixing time, and overpours, Ronak said.
Color cameras are another time-saving technology available through many of the paint companies. Ronak said the cameras vary, with some being merely formula retrieval tools.
“You scan a car with the camera, and it pulls whatever the closest formula is within an existing database of pre-scanned colors,” Ronak said. “That’s really no different than looking at color chops on a board and leaving it up to the painter to manually adjust that color to get it closer. Ours does the same thing, but goes one step further. Once it pulls that color, it will then modify the color formula through toners to bring it as close as possible to the actual color reading the camera finds. It cuts down the color-creation process dramatically.”
Berkey says correctly identifying the appropriate paint code the first time ensures accurate hours on the job and avoids delays when the vehicle is ready for the booth. PPG has a spectrophotometer that can read the vehicle color right up front and determine the correct formula. It simplifies the color-matching workflow for all refinish repairs.
Maximize booth cycles. Shops tend to do lots of bumper jobs, which are ideally suited for getting multiple jobs sprayed in the booth at the same time, suggests Craig Seelinger, VisionPLUS program manager for BASF.
“One of the things we’ve seen that has really helped decrease cycle time and increase touch time on vehicles is for a paint shop to get a list ahead of time of what’s coming into their department, so they can actually prepare for it,” Seelinger said. “They can then load the booth properly to paint and clear four or five bumpers all at the same time, during one booth cycle rather than four or five individual booth cycles.”
Having that advance notice of what needs to be painted can also eliminate a part sitting in the department for half-a-day before it gets edged out.
“If it doesn’t get painted until the afternoon, that car won’t get reassembled until the following day,” Seelinger said. “But if it gets edged-out in the morning, it can get reassembled that same day.”
Standardize the process and the products. Having all technicians follow the same process reduces errors and often leads to fewer products to inventory.
“This applies right down to sandpaper,” Seelinger said. “One tech likes to use 220, another uses 240. You can use either one, but why duplicate inventory just because one likes one better than the other?”
Standards can reduce costs in other ways as well. Ronak points out that the amount of high-solids primer the paint shop has to apply can vary widely based on the quality of work coming over from the body department.
“Going from a 150-grit final finish to a 220-grit final finish on bodywork and all prepped areas prior to priming can actually cut primer liquid costs and the time associated with it by half,” Ronak said. “So do you have a standard and system that supports that level of finishing?”
Standard operating procedures help ensure all the shop’s materials work in unison to reduce costs, Ronak said. Finishing to 220-grit, for example, requires the use of fine finishing filler because high-build fillers will quickly plug up finer grit sandpaper.
“So you can’t just say, ‘Finish to 220,’ without having all the right systems and products in place, or you will use far more in sandpaper than you would save in primer,” Ronak said.
Avoid over-mixing. One profit-killing problem to look for is whether painters are over-mixing, mixing too much of a color than they need for the job. Charlie Whitaker, technical advisor for Valspar Refinish, said this is especially true when a painter begins using a different paint line.
“They can be a little pre-programmed, looking at a panel and thinking they’ll need, say, four ounces to cover that,” Whitaker said. “If the new paint line has better coverage, that may be driving the amount of waste up.”
“And with waterborne, we find that to be very common,” Axalta’s Trapp agreed. “Our waterborne product basically covers in a coat and a half. But the painter may be used to needing two, three, even four coats. So he’s still mixing for that, even though he only needs a coat and a half. Eventually you’d think that they’d stop doing it. But sometimes they don’t. We can check a mix report and see a painter frequently using a common mix size and not adjusting for the size of the job.”
Those extra ounces of mixes often end up sitting on a shelf, never to be used, Seelinger said. In addition to taking steps to reduce that “waste,” Seelinger said, painters can look for ways to put any such mixed product to use, such as for ground-coats.
Mix everything on the scale. The over-mixing issues raises the one standard operating procedure all the paint company representatives recommend: Make sure all sprayable products are mixed on the scale.
“Mixing on the scale can be a huge benefit to a shop because it will allow them to track their actual use of individual products,” Seelinger said.
In addition to helping with inventory control (see below), mixing everything on the scale can help shops compare product use among painters within the same company or, using paint company data, against industry benchmarks.
Trapp said rework also can show up on the mix report, when it shows the same color was mixed twice in one day or three times over the span of a job.
Feltovich said another measurement that consistent use of the scale allows is: refinish labor hours produced per gallon of clearcoat used. If the shop is hitting the benchmark of having paint materials account for 10 percent of sales, Feltovich said, the shop should be producing 75-80 refinish hours for every gallon of clearcoat consumed. This is a good way to measure for potential waste or, worse yet, potential theft; that can be tackled by limiting access to paint materials, making these items available through the shop’s parts department or production manager.
Ronak agrees that production hours per gallon of clear is a good measurement, but notes that the benchmark can vary based on the product sprayed. He advises checking with your paint company or just tracking it over time to look for variants. Overall, he said, use of the scale allows a shop to ensure the volume of liquid product it sprays is within 4 or 5 percent of what it buys, when measured on at least a 3-month window.
Variants or changes in consumption may not always signal theft, but it can alert a shop owner to dig a little deeper, Seelinger said. One shop saw its use of clear jump, only to learn that painters were spraying an extra coat as “insurance” against an over-zealous buffer trying to cope with dirt problems because the booth filters needed to be changed.
“If you don’t track it, you just think your paint materials bill is sky-high, when in fact it’s technicians being creative to come up with solutions to problems taking place within the paint shop,” Seelinger said.
Use smarter inventory controls. Whitaker said SOPs, including mixing everything on the scale, can help a shop track exactly how much of what products are being used. That’s information, he said, that can a shop time and money when it comes to ordering and inventory.
“You can dial it in to a point where you know what you need to have a 10-day or two-week supply,” Whitaker said. “Ordering based on real usage data keeps inventory to a minimum, reduces the time the shop has to spend ordering, reducing trips for the jobber, and eliminates ordering things that don’t provide value and that drive up costs on materials.”
Justifying full paint times on repaired panels
Ronak said he’s watched over the last 12 years as the average overall number of refinish hours on estimates has fallen while labor rates have not risen nearly as quickly.
One cause he cites: An increased push for use of partial paint times on repaired panels. That concept makes little sense, Ronak said.
“The refinish times are to refinish a clean undamaged panel,” Ronak points out. “Once there’s damage on that panel, it justifies more refinish operations, not less.”
Shops seeking to justify full paint time on may want to download a presentation that a Collision Industry Conference (CIC) committee compiled back in 2006. It is available at ABRN.com/CICPartialRefinish. Among the information it provides are notices from all three major estimating system providers that their blend formulas were not intended for use on repaired panels.
For more ideas and tools, shops also may want to check out ABRN columnist Mike Anderson’s take on the subject from last year. Read his column by visiting ABRN.com/PaintTimes.
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