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Improving your effective labor rate

Tuesday, May 1, 2018 - 06:00
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Reviewing Motor and Mitchell procedure pages indicates that most welded-on components are to be considered structural. Replacement of inner structures like upper frame rails, aprons, core supports and lower rails are some of the items identified as structural repairs. Calculation of the structural labor rate is similar to other rate calculations. Since structural repairs require a higher skill set than removing and repairing a bolt-on part as well as specific equipment, the rate should be based on the expense involved in training a structural technician and maintaining the equipment required. Inter-Industry Conference on Auto Collision Repair (I-CAR) clearly defines a difference between a non-structural and structural technician in their training profiles, and OEMs are requiring specific equipment in their structural repair processes. 

Mechanical repairs follow the same theory. If it takes a mechanical skill set to complete a repair, then a mechanical labor rate should be charged. There is often an argument that repairs accomplished by someone hired as a body technician cannot be billed as mechanical. That might have been a good argument once upon a time, but in today’s environment it really does not apply. There are collision centers that have trained their technicians through OEM programs that include specialized mechanical operations as well as enrolling technicians in dual roles within I-CAR and Automotive Service Excellence (ASE). As vehicles become more complex, there are many operations outside of panel replacement and structural repairs that fall into the mechanical category. Most estimating system platforms, while not inclusive, will identify common mechanical operations with a “m” in the labor margin. 

I encourage you to review the estimates you are writing and compare them to the skill sets and equipment you are using during the repair process to see how they line up. I believe you will find you are not being properly reimbursed for the investments you are making in training and equipment to repair today’s complex automobiles. The only way you can maintain profitability in a repair environment that requires high technical skills and expensive equipment is through appropriate labor gross profit.

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