Joe Marconi

On June 8, 2012, the EPA gave final approval for the use of E15 ethanol blend fuel for sale for vehicles 2001 and newer. But this ruling is not without controversy. Among those opposed to E15; The Alliance of Automobile Manufactures, The Specialty Equipment Market Association, General Motors, Ford, Chrysler, Toyota, Volkswagen and other foreign car makers. Those opposed to the E15 state that the chemical properties of E15 are harmful and destructive to certain automotive parts. In addition, there are no steps to insure that some motorists with older cars may use E15 by mistake. The EPA says it has done extensive testing on E15 and states that it completely compatible in 2001 vehicle and newer. We all know the effects of ethanol can have on certain vehicles. What’s your opinion on E15 and the EPA ruling?

Are multi-shop conglomerates edging out the traditional mom and pop independent body shops? It appears that doing business these days is getting more and more challenging. Business owners are being faced with a multitude of issues: decreasing margins, declining accident rates and flat projected market growth are just a few of the problems that shops need to deal with these days. In addition, insurance companies feel more inclined to favor large consolidated companies, and not small independents. If you are an independent body shop, how are you planning for the future and how will you market your shop to compete with the giants?

I don't blame you, I would feel the same way. There needs to be more accountability these days. Everyone must earn things in life. While I do like the fact that this tech wants BMW training, he needs to realize that there is a cost attached to that. And, he has to abide by the policy of the shop. If he is mature about it, he will learn and be better off. If he takes a negative attitude, like it's punishment, well than that's not too good. Having employees is not easy. We tend to go the extra mile for our people, and sometimes we feel let down. I get discouraged at times, but will always remain positve and respectful for everyone that works with me, and give them everthing the need to suceed.

You have a good point. And as time goes on, reviews will become less and less credible. Anyone can make a review, even if you have never been a customer to a particular business. To make a review on Tire Rack, you need to log in with your invoice, this filters out non-customers.

I don't dissagree it's not worth that much, but at that point, sell a tire. It becomes a point of what value the customer sees in the repair vs a new tire. If we all got 50 bucks for a major tire repair, we may end up doing less repairs and sell more tires? The consumer may not see the value in the repair if the price is too high, even though we may be able to justify the cost. I hope I am explaining my self clearly....

For an inside repair, which includes dismount, inspection, properly repairing the tire, remount and balance: $28.50. AND, that's a giveaway when you factor in the time it takes, but at that dollar amount, people complain. WHY? Because shops up the street will plug any tire, and many times not charge for it. We scrutinize every tire now before we repair it. If there is any evidence that the tire was driven low, or if the tread depth is too low or if we feel that to repair the tire will compromise safety, we sell the a tire(s). We also do tire repairs at N/C, because all our tire sales come with free rotation and free tire repairs. I don't mind this, these are my customers that are loyal and come back for all other services and repairs. Great topic, glad it is continuing....

Routine services and apparantley the door worked ok most of the time...but when it didn't we did approach the customer.

Your point about finding out the reasons why he or she leaves is well-taken. Sometimes we don't know. Is it money? Is it flex time off? Or something else? I guess it's all part of the process of continuous improvment. Thanks!

You are so right about NASCAR. I had the chance a few years back to go into the garage area before a race and I saw with my own eyes the mechanics applying strips of duct tape to the back of the hood and fenders. I asked them about it and they said, "We use it all the time, works great and saves time having to repair the hood and fenders so much". Amazing!

Welcome to the site Amanda! There is good and bad in every industry and every walk of life. Being a veteran in auto repair for nearly 40 years and the co founder of AutoShopOwmer, I know many, many, many more hard working techs and shop owners than I do the bad apples. Now to address your question. This is tough one. I have been in business for 32 years and there are always peeks and valleys in work flow. The winter in New York (where I am located) does slow down. To offset this, we do a lot promtions, mainly to our own customers, months prior. We identify all future needs of all our customers and map out the next fews services. For example; if a customer has the oil service and tire rotation today, we look for whats needed in the near future and beyond. If the T belt is due in 6,000 miles and rear brakes are getting low, we make sure they get a remindner and a phone call. But the key is to speak to them at car delivery. This is just one thing you can do that does not cost any money, just good old fashion "customer service marketing". Once you build your customer base and income, you can think about other forms of advertising and marketing, but it all starts with your customer base. Hope this helps and good luck to you!

Sure, that would be great...

All great comments. Pricing is one of the most difficult things about business. Too high, we chase people away, too low, we go broke. You need to look at your Cost of Doing Business: What it takes to keep the doors open. After that, you need to add a percentage for return on investment, known as profit. Profit only happens when your gross profit dollars exceed your breakeven. Please don't base your price structure or labor rate by the guy down the block. I know that Coke compares prices with Pepsie, but not all of what we sell are commodity items. You need to be smart and have a strategy when setting prices. Those items and services that are most compared by consumers must be priced competitively, that's basic economics. But other types of repairs, such as brake line repairs, welding, specialty work and other difficult repairs are priced at a higher margin. That's also a law of economics. Brain surgery is worth more than cleaning bathrooms, right? At least I hope... Overall we need to achieve a profit, if not we will not be around for long. These days, I agree, so many people are questioning price that it makes me nuts. My advise, be competitive when you need to be and be very profitable when you need to be. I hope I summerized my thoughts clearly.

Years back when I started in the repair industry it was common to rust proof and undercoat vehicles, especially in the Rust Belt. I remember when I first went into business in 1980 my first business cards included Rust Proof/Undercoating. We got away from that, but now that people keep their cars longer, rust plays a role in whether someone should keep their car or not. Is there a market once more for rust proofing and undercoating? Are there shops out there that do this type of service? I would like to hear any feedback from other shop owners.

Great approach Gonzo, thanks for the input. Always nice to hear how other shop owners deal with this delicate situation. Thanks!

As a shop owner for 32 years I know all too well the many hats we wear. But, we need to ask ourselves, "Should we be doing all that we are doing"? I found out many years ago that by doing the things we should not be doing actual holds us back from achieving our goals. We need to focus on the things that we are a really good at and the things that bring us the greatest return, in business and in life. Trying to do it all and wearing all the hats of the business may end up being our demise. Start by tracking all the things you do in the course of a day. From that list choose the things that you need to do and the things you should not be doing. I remember visiting a friend at his shop. When I arrived at the shop he was on the roof repairing a leak. Now I ask you, "Is this something that will bring him the greatest return for his business"? It may take time to change the way you think, but your success will be determined not by you alone, but by how you get others to help you along the way. This, in turn, will help others achieve their own success.

The other day, a customer brought his car in for a routine oil change service and the technician noticed a light stain from the water pump. The technician brought this to the attention of the service advisor who informed the customer. This is a long-time customer who never questions us on any recommendations or work. Because this customer lives 30 minutes away, we always make arrangements to accommodate him while he waits for the vehicle. We were booked for that day, so we scheduled an appointment for the following day. The customer reminded the advisor that he must wait while the work is being done and asked how long will the job take? The advisor responded by saying, “Let me create an estimate and I will be happy to discuss how much time we will need and the cost for the job”. Looking at the labor time on his screen the advisor turned to the customer and said, “The book time is nearly 5 hours, so you will be here for a while”. The customer replied, “Not a problem, I’ll take a walk, go to the mall, no problem”. The customer arrived at 8am the next day and we got started on the job right away. The car was dispatched to our top technician, who also has the highest productivity rate in our shop. We had the parts all accounted for and asked the foreman to help when needed; to insure it gets done on time. Our goal: to have the job done by noon. The job was done by noon, returned to the customer and all was well. Right? Wrong! The next day the customer called and asked to speak to me. It’s never a good sign when I hear over the page, “Joe, Line 3, customer requests to speak to you”. It was the water pump customer. He started by saying, “You know Joe, I’m not one to complain, but the guy at the counter told me it was about a 5 hour job and you did the job in 4 hours, why did I get charged for the nearly 5 hours, and not just the 4 hours”. I paused for a moment to collect myself. Inside I was upset. I don’t know who I was more upset with, the service advisor who told him the book time, or the customer. I began to explain the details of the job to the customer. Now, I need to clarify something. Once you start explaining yourself after the fact, you have lost the battle. The customer has his perspective, and his perspective is reality, which is the only reality we need to consider. But I proceeded anyway. I told the customer that we use a labor guide as just a guide and by telling you the labor guide time of nearly 5 hours can mislead you into thinking that this will be the exact time for the job. I continued to tell him that we had all the tools and parts laid out and that the foreman also helped to get the job done quicker. I knew by his response, “But your guy said it’s about a 5 hour job”, that I was going nowhere with this. We had made a crucial mistake and now we have a disgruntle customer. I apologized and agreed with him that from his perspective it looks like we overcharged him. But I also reminded him about the discount we gave him, and that the price also included a cooling system service, using BG products, that comes with a lifetime protection policy and that the price he paid was a fair and honest price backed by a great protection warranty. I am not sure if this made him happy. He said that he will be back in the future. I hope so. The lesson here is simple. We need to move away from stating parts and labor. At my shop we know better than that. This was a slip of the tongue. The advisor was merely trying to convey to the customer that this particular job will take a while. He was just trying to prepare the customer. We need to do better next time. Telling customers a particular job is 2 hours, 4 hours or 10 hours is misleading and hurts both parties; the shop and the customer. A job is worth what a job is worth. This is not to suggest that we don’t need to have some standard, guideline or benchmark. I am saying that you should not tell a customer, “The Labor is 4 hours and the parts are $100, so your total will be $580.00 with tax”. This is not an effective way to sell work. I am also not a fan of posting labor rates. Our labor rate is $105 per hour. Luckily in New York you do not have to post the actual rate, just how you arrive at the rate. (Yes, this is correct, check with the New York Department of Motor Vehicles if you don’t believe me). I am not sure about other state laws, but you should check. We all know the issue with hourly labor rate. Let’s say your labor rate is $100 per hour and your give your tech a work order for an oil change and front brakes with rotors on a Honda Civic. The labor for the oil change is $15.00 and the labor for the brake job is $100. The oil change takes your tech 30 minutes, which means the effective rate for this operation is $30.00 per hour. Now, your tech also takes 30 minutes to replace the pads and rotors, making the effective labor rate on this job, $200.00 per hour! So I ask you, do we really need to post a rate that has no justification? Plus, when a consumer looks at the rate, he or she looks at what they make per hour. They won’t tell you, but they are thinking, “Boy, nice to make 100 bucks for an hour’s work”. Most consumers don’t understand GP percentage on labor and the net after payroll and expenses on that $100. We have many meetings at my shop with the service advisors on this subject. One of things I preach is to consider the complexity of a job, not just the published book time. I make this argument; it takes 4 hours to cut someone’s lawn, and it also takes 4 hours to remove a brain tumor. Are both jobs worth the same? We all know the answer to that question. The point being, an entry level tech performing oil changes and tire rotation is different from an A tech performing complicated diagnostic work on a Mercedes. They both may take one hour to complete, but the A tech’s work must be billed out at a higher rate. That’s basic economics. I had an issue with my well pump a few weeks back and I called my plumber to check it out. He called me on my cell phone and informed me that lighting must have hit the well and I would need a new well pump. He gave me the total price, the warranty, the benefits of the pump he was installing and all the little extras he would do while he was there. He never mentioned time or a breakdown on the pump or additional parts. I had no idea how long he took to install the new pump, nor did it matter. A job is worth what a job is worth. We all need to adopt a policy which moves away from selling parts and labor time and price a job for what a job is worth. Breaking down the labor time and parts brings up questions and issues that complicate the selling process. The time to review parts and labor is at car delivery, not during the selling process. Notice, I said parts and labor at car delivery, not parts and labor TIME. We get caught up with this labor time issue and it hurts us. We need to track technician labor productivity and efficiency, but we need to sell a complete job, giving the customer a total price with taxes and all the benefits that come along with doing business with you. View full article

Mitchell is very resonably priced. It depends on how many stations you want also. You should speak to a rep for more information. As far as flagged flat rate hours, there are so many ways to skin this cat. Some shop owners pay the tech a gurantee hourly base, any where from 30 to 40 hours. Then, if they hit a predetermined productivity number, they get a bonus for every hour above that. There are many formulas you can use. Again, you should track each tech for a month or so, find out how productive they are. Then after you know this, calculate how much you need to book in order to acheive for sales goals and profit goals. This way you are not just coming up with someone else's numbers. This will insure that you are paying bonus and payroll on what the shop earns in profit. As far as how much to pay...well that's hard to say. It depends on the quality of the tech, the expereince, etc. Plus, many shops pay on a sliding scale. For example, for the first 40 hrs booked, the tech gets $20.00 per hour. Over 40 to 45, the tech may get $24.00 per hr. On and On. I can tell you that in my area good A techs are earning anywhere from $20.00 to above $30.00 per hr, before bonus. I know one shop owner that pays straight time to 40 hrs booked (in a 40hr work week) and time and half for anything booked over 40 hrs. It also depends on you labor rate and how effecient your shop is and how effecient your shop is at selling profitable repairs. Also, how the tickets are written. It gets kind of complicated. I hope I did not cloud the issue, but as you can see, there's a lot to consider when setting up a pay plan.

The issue with splitting tech time must be accounted for properly. Accurate time keepping and record keepping procedures must be designed. If you estimate that a job will take 6 hours and you put two techs on a job, each portion of the job must be broken down into segments of the job. It's not easy at times, but you need to be fair to the customer and fair to the techs. Once the job is broken down, you need to assign the time properly in your managment system. We use Mitchell. In Mitchell you can divide the labor time among many techs and the hours can be split any way you need to. What system to use you? So, splitting the tech hours should not impact the business in any way. As far as performance bonues are concerned, I would first track everyone's hours for a least a month. I would also make sure you review your Cost Of Doing Business numbers, to know your breakeven and what you need above breakeven. Also, make sure you track gross profit dollars. Basing bonues just on sales or booked hours is not the best way. Find out at what point the shop is making money and base the bonus on this number.

Determining the labor rate for a particular shop, whether it’s a body shop or mechanical is an exercise that every shop owner should perform. If you look at average labor rates across the country you will see a wide range. I know shop owners in some parts of the country that charge $55.00 per hour and other shop owners that charge $120 per hour. I think it’s important to know what your Cost of Doing Business (CODB) is, determine your breakeven, and calculate your return on your investment. Every shop is different. For example, If I own a six bay shop with a million dollar mortgage, new tow trucks and a new alignment machine to pay off, my CODB is a lot higher that a similar 6-bay shop with no mortgage and no other debt. But, with that said, there are some costs that are constant: payroll, utilities, training, upkeep, etc. So, although we cannot take a “cookie cutter” approach, we can make an assumption that is based on what a modern body shop needs to earn. In my opinion, a labor rate of $42.00 is too little. At that labor rate, what do you pay your workers? Assuming a shop runs at 100% efficient (which most times it does not), at $42.00 per hour, you will not have enough labor GP to pay techs a decent wage, unless the shop supplements income with other profit streams. Sorry for the long-winded reply, but I am not for setting labor rates, nor am I telling any shop what to charge. I think each shop owner needs to do the math and determine how to remain profitable. What I can tell you is that I speak to many body shop owners and mechanical shop owners around the country, and the game they need to play with the insurance company when it comes to labor charges does not help the industry.

Well Gonzo, you did it again. Great article! I remember back in the mid-nineties I was a member of the CARQUEST advisory council. It was an honor and a great opportunity to meet the cream of the crop in our industry and discuss issues with people from CARQUEST. I feel we got a lot accomplished and I have to tip my hat to CARQUEST for having the awareness to bring shop owners from around the country together to help raise the bar of the auto industry. It was from these meetings that TECH NET was born, among other great ideas and promotions. It helped me also see that a shop owner can rise up and not just settle for being average. However, as you so eloquently explained, when I first went to these meeting I was amazed at how polished some of the shop owners were as well as many of the reps from CARQUEST. I clearly remember looking at their hands and then looking down at my beat up hands. I would sit during the meetings hiding my hands under my arm pits. I don’t know if I was embarrassed or what. But thinking back now, it was foolish on my part. These people were not judging me by the look of my hands. We all respected each other because of what we brought to the table. You are right, we should be proud of what we do. There are so many shop owners that started as mechanics. Many have remained a mechanic. Besides, what better way to keep the Johnson and Johnson Company in business!

It's really hard. We do alignments, check engine lights and other small repairs for a body shop in my area, and he told me the other day that the insurance companies pay $46.00 per hour in our area. He hates it and to be honest, it leads to a lot of "creative" writing. You know what I mean?

I just added two new downloads; How to Hold an Effective Meeting and Time Management. I have been behind with my goal to add new content, but back on track and will periodically added new subject matter which I feel shop owners can use to help their businesses. Thanks, Joe Marconi