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.
The second benefit of defining a structural replacement labor rate is to enable the proper compensation of employees that are performing the most critical, intricate, and labor-intensive tasks a collision repairer performs. This will help address the issue of technician shortages. One way a shop can help address this issue is through changing the way a shop and employee receives compensation for structural replacement. The collision industry is competing against other industries to recruit and retain employees. Providing the same compensation for replacing a door handle and a frame rail is a barrier to recruiting technicians into the collision industry. By implementing a new system to properly compensate for structural replacement, shops can effectively compete to recruit and retain employees into this great industry. For decades dealerships have been viewed as the expert when it comes to mechanical repairs. This expert status was bestowed on dealerships due to their OEM training, special tools, and access to OEM repair information that allowed them to perform any mechanical repair that was required on a vehicle. Sound familiar? This resulted in dealerships being compensated at a premium for their work. This premium was often two to three times that of what a collision repairer received. Today, collision repairers who have made the investment in OEM certifications, training, OEM approved tools, and access to OEM repair information are now in the same class, expert.
The third benefit of implementing a structural replacement labor rate for all vehicles is that it will cause more total losses. This seems detrimental, but it is counterintuitive. Large structural hits cost all stakeholders a lot of money. If more large structural hits are totaled as a result of increased compensation, then the customer will finish their claim cycle sooner, resulting in less stress and higher satisfaction. The insurance company will spend less in rental expense. Dealers will sell more cars. There will be more salvage available for sale, which in turn will put downward pressure on salvage values. Lower salvage values will increase the amount of repair possible before a vehicle is declared an economic total loss. This will help shops repair more vehicles that are greater than three years old and repair more reasonably sized structural hits.
In the end, it is up to each collision repairer to decide what is right and necessary for their business to succeed. Receiving proper compensation for highly skilled tasks has many benefits worth considering. After all, being properly compensated for structural replacement might be better for all stakeholders and help address larger issues the industry is facing. The choice is yours.
