The labor rate problem : the way we see it.

Posted on 02-17-20 by petermba@optimum.net

Hello to our network partners & industry associates. I have listened to many arguments, proposals, issues,ideas, frustrations, threats & predictions over my 35 years from the insurance side & now for the last 5 years the autobody side on how the auto body industry has gotten & continues to get screwed by the insurance company but not one comes close to the labor rate issue. Its a problem the auto body industry created itself & has the tools & answers to overcome, yet goes on in perpetuity. I am fascinated by the endless bemoaning of industry owners as they cling to “fairness” to express there displeasure with the current wage per hour dilemma & ignorance over basic business operating principles such as free market, private ownership & competition. The leaders & purveyors of all this noise are at once the same people who want to claim the mantle of individual ownership & self determination. You cannot be an individual entity(body shop) operating in a particular industry wanting to stand alone, manage & operate your business, recruit & train people that fit your business model, purchase & invest in equipment that positions your shop for the future to be competitive but support & promote a monopoly mindset thru unity of purpose when it comes to labor rates.

Look, in most all other industries in a free market economy price & quality are normal business parameters that all business’s within a given industry make decisions over nearly every business quarter or on a yearly basis. Goals are listed, price is established & targets are set. Price & quality are competitive metrics that management sets. In most industries you compete on one or the other or at times both. Its very tough to compete on both but if you are in a niche business, have a particular technological advantage or your target market is a certain demographic it is possible. Point is, in the auto body industry price is labor rate.

We would be remiss if not to mention the unique problems that confront the auto body industry such as the insurance sponsored repair programs(DRP). Similar problems exist in other industries such as when the government grants special privilege by legislative actions that result in competitive advantage to other business’s in that industry or industry sector. The DRP initiatives are at once a product of freedom of association & the basic right to contract between two parties. We fully appreciate & support those free enterprise principles. The problem as we see it is when such arrangements populate a given industry that they become so numerous, the results being a segregation of the industry into majority & minority status creating a De-Facto Monopoly.

These arrangements must be overcome with effective marketing, alternative business models such as CollisionServicesNetwork & fierce independent business initiatives that set your body shop apart from the DRP shop. We believe that price needs to be an important competitive component of each body shop in the collision industry. At what price to compete at should be identified & embraced by each individual body shop consistent with there business goals. We do not support or promote any approach to labor rate(price) that is the product of legislation or price controls. Self determination & individual business initiatives should be the controlling factors as an attribute of competition when it comes to labor rates.

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