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A structural labor rate is a must for collision repair shop success

Tuesday, October 23, 2018 - 07:00
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Structural replacement is becoming more and more prevalent as advanced driver-assist systems are detecting and mitigating the potential damage caused in accidents, resulting in more repairable vehicles with a higher severity.

Structural replacement is demanding on a shop’s resources. Aluminum and carbon fiber are no longer the only substrates worthy of a special structural labor rate. All vehicles from the smallest, most economic, to the largest luxury flagship are using advanced structure designs that require increased training, time, and resources to repair. To achieve an acceptable level of gross profit dollars per hour on structural replacement, collision repairers will need to assess and analyze their total invested costs and determine what a proper rate is for structural replacement.

Structural replacement is different than body or frame labor. This is because on their own, both body labor and frame labor generate enough compensation and efficiency to allow proper levels of gross profit dollars per hour to be earned by the shop and in turn shared with the employee as compensation. However, structural replacement is a cumulative process that requires both body labor and frame labor due to the resources involved. OEM procedures require that structural parts be positioned and installed on a frame rack where the installation position can be verified and held in place during the attachment process. Sounds simple, right? Except, upon closer inspection, structural replacement requires two valuable assets — the frame rack and a highly trained body tech. The structural replacement operation is most often less efficient than any cosmetic body repair. Structural replacement is also less efficient than frame straightening operations that are based off judgement times. Then there is the issue of curing. Most manufacturers that use adhesive to attach structural parts require that the vehicle not be moved until a full cure has occurred. This is why developing an effective structural replacement labor rate is key to a collision repairer’s future success. There are three main benefits that can be realized by implementing an accurate structural replacement labor rate.

First, determining and collecting a proper structural replacement labor rate can help a shop generate the sales and profit it needs during a heavy structural replacement job. When it comes to structural replacement, the process can be lengthy. It is not uncommon for a vehicle that needs a frame rail or multiple pieces of structure replaced to occupy the frame rack for anywhere from two days to upwards of a week. This poses several issues for a collision repairer. First, the frame rack is a valuable asset and a limited resource for a repairer. When a frame rack is occupied for an extended period it can impact a shop’s production schedule and sales potential. Developing an appropriate rate that compensates the shop for both the highly trained tech performing the most difficult of replacement operations and for the use of the frame rack during the entire replacement will ensure that the repairer will maintain acceptable levels of gross profit dollars per hour. This will enable the second benefit to be realized from an accurate structural replacement rate.

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