Recent conversations with clients and industry colleagues have centred around how the industry is changing. Labour rates, although acknowledged, have been largely out of step with any sensible matrix of scaling over the years. Even acknowledged with some insurers; providing the body shop hits all key targets, the rate technically increased and so too the margins achievable in those areas which make up the profit per repair.
Then we talked about salaries and how some top technicians can achieve salaries of a significant level, certainly commensurate with other trades. Arising from this was a key topic of debate.
Perception, when you judge something based around itself, the view is an inwardly reflective opinion. For example, if we believe a good salary is a good against what we know then, we will perceive it as good. This was then linked to labour rates and how some of the top performing shops are still able to make a successful and profitable business from the current model and pay those good rates of pay. However, due to the variable sizes and scales around the industry of body shops this can never be viewed as the benchmark.
We talk about the skill shortages and yet continue to believe we pay good rates and salaries, payable based on the current model.
My input was this, if the labour rates had kept pace with inflation over the past 20-plus years, would that have allowed us to improve, increase and recruit a higher level of talent into the industry? So, the question was not as to whether the current rates pay enough, but if the labour rates had been where inflation would have allowed them to be, maybe we could be paying even higher rates of pay, making the industry more attractive to even more talented people and to increase the attractiveness of the industry to new apprenticeships.
This would then change the perspective to one of not what we currently pay, but if we could pay significantly more, could we bring in the calibre of new talent for whom the industry would never have been a consideration otherwise? The ones who would have gone into the commercial sectors, with better pensions and terms.
Owners of many body shops in the past and some even today still use the business like a lifestyle business and I am not saying that is not their right, but it does split those investment-led businesses from those lifestyle businesses. So, any increases in labour rates could have potentially only benefited the owners and not the business via reinvestment modelling and those within it. A point I must concede, I understand and agree with.
So, where does all of this leave us? Well, it leaves us with the same old arguments and a market which will continue to separate, between those who have a lifestyle model and reinvestment scalable model approach. It’s likely the corporates would choose the investment-led model and a private consumer who could make an independent choice of the local friendly model or experience would do so. But how many of those owners are there, especially when soon the vehicle technology will inform the customer where to take it or indeed who’s already been informed to collect from the scene of the accident.
In summary, the discussion concluded by realising the age-old conundrum of the market rate is the market rate and it’s the model and how you work within the market rate which will determine the winners and losers in this game of economics versus emotions.
What we know is everyone has a perspective, which is their own version of reality, but the thing we always have is the possibility to change how we see things. As Wayne Dyer once said,” Change the way you look at things and the things you look at change.”
By Mike Monaghan