Panel & Paint
It’s always interesting to listen to what’s going on up and down the country from the range of highly experienced panel shop operators I speak with on a daily basis.
The challenges faced by all are very similar, and economic tension between repairers to get a reasonable return on investment, and insurers determined to maximise shareholder return, has never been more intense.
It’s easy to get caught up in these struggles, however as reflected in last month’s column – it’s always good to consider what’s going on in other countries to understand the trends and the counter-measures developed by many to stay in business or thrive.
The UK repair market
So you reckon you’ve got it tough – it’s time to harden up! Since 2008 the number of body shops in the UK has apparently decreased by 32 percent to February of this year. It’s expected to reduce a further nine percent by 2020, leaving them with a total of around 3,000 collision repair shops to carry out the country’s total workload – this according to independent research company Trend Tracker.
With an average insurance repair claim costing £1,380 (NZ$3,369) and leaving the repairer with an average profit of only £13.52 pounds (NZ$33.00) taking 15.7 hours to complete – a margin of less than one percent. Typically they have a ratio of front end staff to productive technicians at around 2:1.
The UK has a population of around 64 million, and with only 3,000 collision repairers that must mean some serious waiting times and greater percentages of write-offs – up to 30 percent in some parts of the country.
Some paint companies have done deals with insurance companies, making it that each shop has to have separate paint systems for different insurers.
So instead of whinging about it, panel shop owner Jon Palmer decided there had to be a better way than having three vehicles in process of repair for every one of his technicians. Sure it looked great – the workshop was full of cars and they were always busy making small money.
He discovered there was this thing called “work in progress” that was a very expensive overhead. The cause of the workflow problem was “departmentalisation” – the queuing of jobs waiting for a technician to become free to do the next operation so that the vehicle could be moved on to the next guy, and the next, until till it was finally repaired and ready to hand back to the owner. Cars having to be moved around was simply lost and wasted time.
Yep, just normal traditional stuff; you might think there’s nothing much that can be done about it – and you would be quite wrong. Job cycle times can be made much more efficient, and this is at the heart of BodyShop Revolution (www.bodyshoprevolution. com) It’s a workflow method that was developed in the UK way back in 2010 by Jon Palmer that utilises gas catalytic drying technology and robotics to drive throughput.
Using this technology, a body shop can dry 10–12 vehicles in a single eight-hour day using only one booth. When you consider this against a typical throughput of 4–6 vehicles, that’s a massive increase, using thermomolecular technology which cures fillers and paint in less than a minute.
Additionally robotic drying uses 70–80 percent less gas than a traditional oven.
Guthrie Collision Repairs of Nelson have been to the UK to learn more about the system, and learned it was more than just the equipment. Ricky discovered that Bodyshop Revolution is a whole new way of repairing vehicles that was developed to counter poor margins. The system relies on parts being delivered and ready for the repairs to commence, and one person per job – there is always someone working on it as it goes through the repair and paint continuous workflow process.
There are a few challenges to making it work here due to proliferation of models and parts procurement, but apparently these can be overcome.
They say madness is doing the same old thing day in and day out and expecting a different result.
Bodyshop Revolution is now in the US and Australia, but is yet to arrive here. Will your shop be the first in New Zealand to embrace a profitable new way of business?
Canada anyone?
We rarely hear of events in Canada, and their collision repair industry is no exception. I understand they have a very consolidated marketplace, with the top four or five collision repair shop groups doing almost 60 percent of all insurance company repair work. It is expected this will increase to 85 percent by 2018, making it a very difficult place to be an independent collision repairer.
These repairer networks work closely with Insurers to find reasonable solutions to parts procurement and other issues to ensure they didn’t have to have separate systems for each insurance company.
Improved relationships with Insurers have had considerable merit, and are good for those ready to adopt change rather than be left behind in a very dynamic and rapidly changing market driven by economies of scale.
Reading between the lines, it seems apparent that the rise of the panel shop groups have been the saviour of the Canadian collision repair industry – as opposed to what is left of their UK colleagues.
I’ve always maintained there is strength in numbers; it’s the naturally opposite strategy of “divide and conquer” that has worked so well for insurance companies the world over. So why isn’t it happening here in New Zealand?
Yes, there is definitely a place for a professional body representing all repairers, but the time of the independent panel shop has passed. You can try to preserve history, but unless you are a state sponsored museum you are in all probability on a hiding to nothing!
And the point is…
The point of this month’s article is that change is essential and you must embrace it to remain relevant. It’s time to do your homework; buddy up with some like-minded and progressive workshops, and do it better. There are some great solutions out there, and thermomolecular technology, a key aspect of robotic paint curing has got to be on top of your research list. Contact their operations manager: neil.parr-davies@bodyshoprevolution.com
If you’ve been hit by recent rationalisation of repair networks you have some additional challenges ahead. Necessity is the mother of invention, so it’s time to beat the bushes looking for answers.
You might start by looking at that tired old excuse for a website that has yet to be changed from when it was first established. As per last month’s article, you really need to think about what might attract a perspective employee, as well as a customer looking at having a car or fleet repaired.
We live in a time when it’s OK to be larger than life, hence the popularity of social media.
Panel shops do amazing things with bent, rotten and wrecked cars – check out a TV show on the web (or Sky TV) called “Counting Cars”, about a workshop in Las Vegas full of guys with attitude.
You might even have a crack at making a video or two about the good stuff you do and ham it up for the camera. It’s easy enough to upload a video to YouTube or Vimeo and link it back to your website.
Just for a laugh you might even send out a link in an email to some of your key customers. But, before you do, call Mark Seymour 027 758 5585 – he’s been talking quite a lot lately about some cool ideas and ways to create profitable business.
Ideas are the easy bit, action is much harder. It’s so much easier to bitch about a problem than fix it. As always, I enjoy a good debate and you can email me at peter179@me.com with your contact details and why I’ve got it so horribly wrong.