By Keith Reinhardt
Don't let a small problem become a big one. Do you ever tell yourself this when your collision repair shop is trying to wrap up a vehicle's repairs, but instead the vehicle is held hostage due to an incomplete mechanical or electrical repair that your facility cannot perform? There was a time in the automotive repair industry that the corner gas station-garage could perform every vehicle service and repair on all makes and models of automobiles manufactured. Likewise, a good mechanic was perceived as one who didn't use manuals and could diagnose and repair every component and subsystem on a vehicle. In addition, unlike today, owning a shop didn't require a financial outlay in equipment that at times could be larger than the building that houses it. Disclosure laws and other legalities were not a big concern and profit was almost proportionally guaranteed with a shop's productivity.
Today's modern-day collision repair facilities are quite different from those of the past. Due to the perpetually changing technologies that automotive manufacturers must use on new vehicle models to meet federal Environmental Protection Agency (EPA) regulations, Corporate Average Fuel Economy (CAFE) requirements and National Highway Traffic Safety Administration (NHTSA) regulations, collision repair shops are having to contend with constantly changing and expanding repair techniques. Consequently, auto body repair shops cannot profitably perform every service or repair that emerges. In this day and age, they must “pick and choose” their expertise of repair areas and develop a business strategy that can determine how to profitably handle repairs that may be beyond their normal expertise. Capital investments in equipment purchases must not be made from an emotional “must have” passion, but from a clear cost-effective strategy distinctly created for the shop. In contrast to the past, even today's best-trained technicians will quickly become outdated if they do not participate in some type of continual training. Training of existing employees or the hiring of new qualified employees must be considered. Usually, to keep production high, you want to do what you do best. For shop efficiency and cost effectiveness, a plan that details which jobs are to be sublet should be established. When subletting jobs, applicable disclosure laws and other legalities must be understood to determine who is responsible for the repairs.
Obviously, creating a plan of attack for conquering mechanical and electrical repairs in your shop must be completed in a logical manner. This procedure will greatly influence your business success. Let's take a further look at some of the most prominent items that can affect your plan of attack.
Equipment Investment
When determining your shop's equipment needs, your first consideration should be how you envision your shop. Do you aspire to be the shop that can repair anything and everything that is brought to your door? Subsequently, you may invest a considerable amount of time and money, and cause a temporary decrease in the shop's productivity only to repair a small percentage of vehicles that show up. Therefore, to be profitable, you will want to determine the areas of repairs that are well-matched to your shop.
Profitable equipment purchases will satisfy a shop's need. For example, after performing structural damage repairs, or replacing damaged suspension parts on a vehicle, an auto body shop may have to sublet the task of a vehicle's wheel alignment due to a lack of equipment. This shop would then have to schedule and wait for the completion of the wheel alignment job. During this process, if a bottleneck is created within the shop, an equipment need has been discovered. The next step after this discovery is to complete a Return on Investment (ROI) on the identified equipment, in this example a wheel alignment machine, to determine if purchase of the equipment is feasible. The ROI should be developed by assessing if the equipment purchase will:
- Reduce operating expenses relating to shop materials cost.
- Reduce direct or indirect labor cost.
- Contribute to a gross profit by increasing efficiency and productivity.
- Contribute to a gross profit increase by generating new revenues.
- Recompense additional overhead cost accrued during the time the equipment is in use. These overhead expenses may include financing, utilities, employee training, facility remodeling and other operating costs.
Additional considerations when purchasing equipment include asking yourself if alterations must be made to the shop for the installation, how often calibrations or software updates will be necessary, and if technician training requires a one-time training process or involves a complete training course. It may even be necessary to employ a specialist just to use the equipment efficiently. Given the shortage of qualified technicians today, this may become an expensive proposition. Therefore, if you're faced with a repair that is beyond the shop's ability to complete, due to a lack of equipment, use a logical basis for equipment purchases that involves using your head, not your emotions.
Subletting
Another option that presents itself when conquering auto body electrical and mechanical repairs is to sublet the repairs to a mechanical or specialty shop. Let's consider some of the advantages and disadvantages of this option:
Advantages
- Absence of investment in equipment and information systems.
- No lost time or incurred expenses relating to employee training or the hiring of new qualified employees.
- Using the expertise of the repair or specialty shop of your choice.
- The shop's resources can stay focused upon the areas most associated with collision repairs, thus repair quality and customer satisfaction standards can continue.
Disadvantages
- Although you are not directly performing the repairs to the vehicle, in most areas of the country your shop is still responsible for the work. Similarly, if you sublet work out you generally must state this fact with the vehicle's written estimate.
- Loss of direct control over the quality of the repair.
- Shop productivity may decrease due to the time the vehicle is outside of the shop's environment.
- Supplementary personnel may be necessary to attend to the logistics of scheduling and transporting the vehicle.
- Additional vehicle transportation cost may be encountered, especially if the vehicle is immobile.
Although subletting can decrease some burdens for a shop, you must remember that your reputation is on the line each time a vehicle is returned to a customer. For this reason, choosing a quality repair shop that you can trust and build a business relationship with is a necessity. For the most part, the decision to sublet mechanical or electrical repairs comes down to the business judgment of whether or not it is more cost-effective to have the ability to perform these repairs in-house.
Prioritizing Resources
The ability to successfully repair a modern-day automobile depends upon a process that you must be able to visualize. Today, a technician's diagnostic ability requires more education, experience and critical thinking skills than ever before. Technicians must recognize what resources are available to them and know how to use them effectively. Consequently, an auto body shop has a monumental task in determining the mechanical and electrical repair areas that it can successfully conquer in-house.
When determining areas in which to invest, it would be in the shop's best interest to first identify the areas of general automotive repair that are most closely associated to collision repair. Considering that auto body repair already has a close relationship with the areas of steering and suspension, heating and air conditioning, and electrical subsystem areas relative to restraint systems and lighting systems; it would seem wise to explore the investment potential of resources in these areas. Other areas, such as engine performance, will require a disproportionate amount of time and money to handle a small percentage of repairs that an auto body shop performs.
Because of unknown variables like customers' future vehicle purchases, manufacturers' system changes and government regulations, developing a successful plan can be a lot like selecting lottery card numbers. Nevertheless, establishing appropriate areas to allocate your shop's resources will increase productivity and, perhaps, create new revenue. So, when looking at ways to conquer electrical and mechanical repairs in the auto body shop, carefully evaluate your shop's needs, use logic and select the alternative that you deem is essential for your shop's future success.
| Keith Reinhardt is an assistant professor of automotive technology at Southern Illinois University Carbondale in Carbondale, Ill. He holds a master's degree in educational administration and is an ASE-certified master automotive technician/paint and refinishing. His e-mail address is kvette@siu.edu.
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