Reprinted Courtesy of Body Shop Business, April 2003
Question answered by: Mark Claypool, President and CEO of Mentors At Work
Quite the question, don't you think? In putting this article together, I sought the input of no less than 60 people from all facets of this industry and was fascinated and, quite frankly, inspired by many of the responses I received. Some of the people I spoke with said it was a "loaded" question. Others agreed with the way it was phrased. Still others said we needed to stop pointing the finger at any one group and seek the long-term answer.
Regardless of whether you agree or disagree with how it was phrased, the fact that the question was asked in the first place should serve as a wake-up call to many in this industry. We have long-term employment needs that the majority of this industry is addressing with short-term solutions.
Are you guilty of this?
It never ceases to amaze me how people in this industry complain about image and entry-level employment, yet when presented with proven techniques, programs and services, make excuses why they can't take the necessary steps. Instead they continue, day by day, to work in their business rather than on their business. Much to my encouragement, I'm seeing a slowly increasing trend toward addressing these issues by some of the best shops in country. And that's good for this industry because a slowly rising tide lifts all boats.
Scott Irwin - the BodyShop Business reader who asked about our industry's viability - is a collision repair instructor himself, someone entrusted with training our future workers. So what are the members of his advisory committee - your peers - telling him? Where did he get this slant on things? Aren't these advisory committee members doing a disservice to the industry by perpetuating this kind of thinking? What must the administrators at this school be thinking? I don't even want to know what the parents in that community are thinking.
When considering this question, the key words I saw were "viable enough." Is the collision repair industry viable enough that young people - or anyone, for that matter - would consider working in it?
To attempt to answer this question, I have to ask you, the industry: Do you plan on being in business in the future? If so, wouldn't you agree that without people, you're out of business? So are you communicating your opportunities well in your community? Are you addressing the image problem our industry faces? Are you actively recruiting year round?
We have a host of rewarding careers and opportunities for people, and with unemployment around 6 percent, how many of these people even give our industry a thought? Why would they? Do they know anything about us, other than what they may have seen on "CBS News" or "20/20"? And if that's all they know about us, we have some serious work to do to set the record straight.
What the Industry Says Most of those who I talked with said we have a very viable industry for people to consider but we do a horrible job promoting ourselves. Let's take a closer look at the feedback I received from some of your colleagues in the industry when I asked them the question from instructor Scott Irwin about the viability of the industry considering the control/ stranglehold he perceived that insurers have on us:
"I agree with the terminology that Scott Irwin used in asking the question," says Roger DiOrazio, CEO of Collision Revision, a group of 21 shops in Illinois and Indiana. "He used the word 'stranglehold' to describe insurer control over this industry, and I think this is exactly what's happening. As such, I don't think this is a viable industry for people to consider today. Profits have been squeezed down to such a low percentile that it's increasingly difficult to hire someone who's not productive from early on. Of course, this does nothing to solve our long-term employment needs, but what choice do we have? We run an effective apprenticeship program here, and we'd like to see [insurers] supporting this kind of initiative more.
The writing is on the wall if the insurance industry doesn't realize [what they're doing to us] and back off a bit. I don't know where we'll have cars fixed in the future. The last two years we've gone backward as an industry. The insurers are forcing more controls and more paperwork and making it so difficult to make even a marginal profit.
We think the insurance companies should have to pay us administrative charges for all the paperwork they force us to do that they used to do themselves. And they should base it on the size of the repair ticket.
To attract more and better people, we need to be subsidized for health care and other benefits in order to be competitive with other industries. We'd also like to see subsidies for apprenticeships. Insurers have to take away the gun they have to our heads with regard to the discount structure they force upon us.
Consolidators deserve some of the blame, too. They're accepting all these insurance company controls strictly for revenue sake and cash flow, with no regard to the bottom line. Then the insurance industry is forcing these controls upon the rest of us based on this model.
Until some of these things [change], why would anyone get into this industry and get paid half of what they're worth? Look at the labor rate mechanical shops get for their work, and you'll see what I mean. Take away the insurance company controls, and people get paid their worth."
"I guess my real concern is that the view of 'stranglehold' is a self-perceived vision," says Chuck Sulkala, also executive director of the National Auto Body Council. "I'd hope the individual making it doesn't relay his thinking through to the student or parent who's seeking further industry information.
There's absolutely no question that this industry is viable. And just as we didn't have a 'stranglehold' view 35 years ago when I came into the industry, I think that 30 years from now the industry will be different from how we know it today. I believe that the pendulum swings and that it's still moving. How many repairers do you know who are millionaires today and got that way because they worked hard at a chosen profession? How many other industries can offer an entry-level person a world of opportunity É with rewards unheard of or even unthought of?
There's no question that the insurance industry has a vested interest in our industry, just as they did 35 years ago. The stranglehold is one that we've put on ourselves. Why is it that some people shrivel up and die away in some situations, while others with the same customers, same employees, same background and same opportunities survive and even thrive? I live by the statement, 'It's not what happens to you in life that's important. It's how you react to it and what you do about it.'
As more owners become better educated about their business, where their profits come from and how to be the best and most profitable they can be, then, and only then, will the repairer take even greater control over his future and that of his employees. If insurance work doesn't pay for this individual, then he shouldn't do insurance work. It's really a conscious decision on his part. There are many shops that simply don't do DRP work, and there are some very successful ones at that. And there are some unsuccessful ones that have all the DRP work they want. It's all about running your business and making your decisions.
"I've never felt that the way the insurance industry and the collision repair industry interact affected entry-level people's decisions on coming to work in body shops," says Michael Giarrizzo. "No student or entry-level person has ever expressed that to me.
People in this industry, at whatever position, can make a solid living. People from outside the industry aren't aware of that and also don't know how to get into this industry. We have to make it simpler and define what the career path is, how to start.
There are 53,000 shops still out there because no one has really changed the way we do work, the way we fix automobiles. At Sterling, we have no interest in operating conventional body shops. We're discovering what we feel is a better way, and it's a fun path as we see it working and as we see employees setting goals of where they want to be and achieving these goals.
We need strong administrative support of school training programs. Where school programs are weaker, we need to try and educate them and parents about our opportunities. We have a full court press on and will change the way people think about this industry.
We're following a direct and confident path on this issue and are very passionate about this. The way we fix cars needs to be changed, and at Sterling we're changing it. We're developing a team environment. We've identified four levels of techs in both the body and paint departments and have compensation packages [for each level].
Our entry-level people aren't dependent on what our senior techs can teach them. In a conventional store, the senior tech often thinks that an entry-level person working with him will slow him down. In our environment, new people have outside training as well as on-board training. All techs have incentive to help a new person or any person on the team to become more productive. Our entire network is moving toward four-day work weeks, and our offices are open six full business days. The entry-level techs and the growth of our workforce is dependent on acquiring specific skills within the system, not necessarily possessing the skills required for all components.
Our process will soon lend itself to addressing the challenge of huge tool investments needed by each any every tech. We want our stores to be fully tooled - specific tools at point-of-use in specific areas of the shop. We don't need multiple tool sets within the shop, and techs don't need to spend all that money on redundant sets of tools, especially entry-level people. This is a major culture change from the subcontractor mentality that exists in shops today.
We've got to be able to deliver a more consistent quality product in a dependable, timely fashion. Today, as an industry, we aren't very predictable. Process change will drive that. We'll suffer a bit as we change our culture, but we're starting at the entry-level and building up to that point. We think we could be a completely different business than the industry norm and are working toward it, but not without pain. It takes a ton of leadership and courage."
"I believe it to be a matter of perception: Is the glass half full or half empty?" asks David Fait, president of Auto Body World, a group of six shops in the Phoenix area. "Every industry struggles for success. If it's not the business partners, it's the competition or a more demanding customer. Today, in our market, people are making record compensation with huge opportunity due to the lack of enough people coming into our industry. Despite insurers trying to control us - that is, to control their costs, the same as we would - they still need good shops to repair vehicles. It's simple economics.
I don't know who's been twisting Scott Irwin's tail, but it's sad that a collision repair instructor feels this way. I don't think there's been a better opportunity than now for someone to enter our industry. The game is changing and, in many ways, becoming more difficult - but with difficulty comes greater opportunity as fewer people can or want to compete."
"I feel compelled to respond to this question simply because of the way it was asked," says Bob Medved.
"If I were one of this instructor's students, I'd probably run away from the collision repair industry, screaming. Can you imagine a college professor telling his students that the field they've chosen is in such disarray? How motivated do you think his students are to pursue a career in collision repair?
A lot of industry leaders are realizing that this 'industry' includes repairers, parts and paint suppliers, data providers and yes, even insurance companies. Until we all realize that and start working together as an industry, change will come slowly, if at all. I don't think generalizations such as 'insurance companies have control/stranglehold' really help this industry. Using these broad-brushed statements is not only irresponsible and incorrect, but damaging to the students as well. Do we want to breed another generation of angry young men and women?
I can't speak for our competitors, but I can tell you what we're doing to bridge the gap. Over the past few years, I've been hearing the same concerns across the industry. Repairers saying, 'I can't find good young technicians, and if I do, they go to work for another shop offering a slightly higher wage. How can I attract and retain good new people?'
Well, the first thing we have to do is grow them! What are our school districts producing for our businesses? In most cases, nothing at all. If your readers haven't heard about it, the Bush Administration is seriously considering cutting all funding to secondary vo-ed programs. The Perkins Act puts $1.2 billion a year into secondary vo-ed programs. The money, along with this education, could be gone as soon as 2004.
It's about time we (the industry) pull together and do something about it! State Farm, along with 18 other industry partners and five collision repair companies have teamed up to create a model secondary collision repair program with the Philadelphia School District. Success in our industry will only come when businesses partner with education and the communities in which they live.
Most secondary tech school instructors don't realize the amount of support our industry businesses are willing to offer if just asked. The Philadelphia School District discovered this after our initial project meeting. The industry partners told the school district that they'd provide anything they wanted. Anything! So, that's one big piece.
The second major contribution came from the collision repairers. They've committed to hiring graduates from this program if the graduate possesses the necessary skill set for an entry-level technician. In addition, paid summer internships were also offered. State Farm is providing late-model salvage, help with curriculum and offering our trainers as substitutes so the tech instructors may attend continuing education of their own. Also, with our contacts in the auto manufacturing industry, we've recently procured a donation from Nissan for six 2002 Nissan vehicles to this program.
A local advisory board was established to keep things focused. The advisory board members include representation from the industry, the school district office, the instructors and most importantly, parents. Yes, parents. If you don't have buy-in and support from the parents, you won't have many students.
Our industry needs to promote itself better. When have you ever seen an ad for collision repair as an industry? Think about other industry ad campaigns and you'll understand what I mean: 'Got Milk?' 'Beef, it's what's for dinner,' 'Pork, the other white meat.' These are all examples of an entire industry working together for the good of the cause. How will we do this? Surely not by making broad-based criticisms that aren't based in fact, but opinion. This industry has spent years saying bad things about each other. Instead, let's set a good example of cooperation and see what follows."
To CCAR, the larger issue is that less than 5 percent of shops comply with existing OSHA and EPA regulations. Should a person prepare to work in an industry that isn't safe? Is the industry creating long-term illness for technicians or for society as a whole?
The biggest issues in our minds at CCAR aren't directly economic but do wind up with costs that are staggering. Consider a collision shop with five technicians who produce 10,000 hours a year of billable collision repair work. If the shop differs in opinion on labor costs by $1 an hour, there's a $10,000 'difference of opinion.' At the same time, if one technician develops a back injury that requires surgery, the expense to the insurer and society ranges from $25,000 to $35,000. Workers compensation and insured wages run into the thousands.
Add in the lost opportunity for repair volume. How about the shop, which now can't get work out on time? The customer and the insurer are angry because cycle time is slower. The owner is missing wages. The insurance goes up - and others' policies do as well."Who lost? The answer is, 'Everyone.'"The hidden concern for technicians and society is even worse and occurs when shops knowingly or unknowingly pollute. They charge for 'hazardous waste' but then pour oil or antifreeze down the drain. The employees know, but what can they do? Shops that knowingly pollute cause injury and illness to us all. Shops that don't have valid safety compliance training for technicians send a clear message that the human being isn't valued in this industry.
Should a technician come into the industry in a shop that isn't compliant?
"The labor rate and labor times battle will never end. The social battle [to make] shops environmentally and occupationally sound should already be over, but sadly, it's only beginning."
Why Do We Struggle?
With all that you've read so far, how can there be any doubt that at the right facility, there's great opportunity for people in this industry? So why, then, do we struggle so with entry-level employment?
For a number of reasons. Let's examine a few and take action:
- Image -
Our industry image continues to hurt our ability to recruit new people. There's still a small percentage out there who perpetuates our poor image. They get caught, they get prosecuted and most importantly, they get headlines. And we all suffer. Scott Irwin - the instructor who asked the question that prompted this article - and his fellow instructors struggle, as a whole, recruiting students to fill their classrooms and shops. Administrators, who often buy into our poor image, would like nothing more than to close down the auto programs and fill those spaces with computer labs. Computer labs can be filled with little or no effort.
"I truly believe it's a cultural issue behind people entering our industry," says a manager of training and customer technical service at one of the paint manufacturers. "The first cultural issue was created by past practices in the industry and the types of shops and conditions. The current cultural issue is the belief that only a college degree can make you successful in this day and age.
"I believe we're addressing the issue by directly jumping to the solution without addressing the symptoms. The symptoms are that most kids aren't aware of the profession, schools don't promote the profession - except to those students with minimal possibilities - and finally, the country hasn't recognized this to be a tremendous issue."
- Environment and safety -
What's the public's perception of our industry? They think we're dirty, we pollute and we operate in unsafe environments. And who would want their kids to work in this industry if that's what they think?
How do you stack up? Are you meeting all the laws and EPA and OSHA regulations? Statistics tell us that most of this industry isn't, and fines are starting to mount up. If you're compliant and meeting all expectations, use that to distance yourself from your competitors as you recruit new people. The public is where your pool of future workers is going to come from, and if they think this industry is unsafe and unclean, they won't give you a second thought. Show them otherwise.
- Tool costs -
We cannot allow tool costs to be a deterrent to recruiting and retaining new people - but they are. We hire an entry-level person and expect him to buy tools at the low starting wages we pay him. Let's see, food and shelter, or tools. I think I'll take food and shelter and work at the fast-food joint down the street and make the same wage.
Put yourself in their shoes. At Mentors at Work, we have suggestions about how to deal with tool issues. Sterling's Giarrizzo also had some interesting suggestions earlier in the article that should've gotten your attention.
- Culture -
Employees are disposable. You may not agree, but to an outside observer looking in, he'd say this accurately assesses our industry culture with regard to employees.
We have techs (some would call them subcontractors) jumping ship to work for competitors because they have little or no loyalty to their employer (and you thought wheels on tool chests were for moving tools around in the shop). Plus, we suffer a 70 percent failure rate with new people. We make poor first impressions on new people who don't feel wanted or needed. More often than not, new people also don't see the shop taking a professional approach to get him up to speed. We see the same old approaches to the same old challenges and are getting the same old results.
The good news? Smart shop owners are doing more than complaining. They're taking real steps to solve this issue and are, at least to some degree, succeeding. We see it every day with our Mentors At Work clients who are establishing apprentice programs. In the long run, these shops will come out on top, while the rest will fall by the wayside - bitter and still not understanding what went wrong. It's a shame, but mark my words, I'm right.
- Pay -
Our industry entry-level pay is terrible. We often don't pay enough to attract people to our field, and in some cases, we can't even compete with fast-food joints.
The fact is, we need to pay new people perhaps more than we feel they're worth initially. And that's OK. It happens in every industry. You just have to take this on with the mindset that you're investing in the future. It takes money to make money, and if you have a system in place for training and retaining new technicians or for taking them to the next level, you'll see a return on that investment. Once again, smart shop owners out there are on top of this and are seeing real, positive results.
Is This Industry Viable?
Bottom line? Yes. There's career viability in this industry, and not just viability, but rewarding opportunity. Where do you find it? Where does the public find it? Who's communicating it? Where do collision repair instructors turn for support to educate their administrators and parents and for recruiting students so they have full classes? The answer to all of the above can be you - if you're willing and able. If not you, then who? And if not now, then when?