Finding solutions to alleviate current capacity issues.
A big issue many collision centres are dealing with at present is staff shortages. The COVID-19 pandemic saw many shops see major slowdowns in work volumes and in order to keep the lights on, many culled their staff counts. Additionally, many senior staff members, including technicians that were looking to retire within the next few years pushed those retirement plans forward, creating a vacuum in the labour market.
Change in relationship
This labour shortage has led to a capacity issue for many collision shops and an interesting dynamic in the relationship between repairers and insurers. When volumes were low during the darkest days of the COVID-19 pandemic, insurers held all the cards. They could essentially dictate the door rate by charging premiums to their customers and paying less to the shops, who were often fighting over each other to stay busy. Now the narrative has changed. As the economy has opened up again and more people head back to work and start driving, shops have seen a big increase in repair volumes. The trouble now, is that in many cases, they don’t have enough staff and technicians to handle the work.
We saw this really take hold in the U.S. and now it’s spread to Canada. We’ve seen more and more insurers creating their own collision repair centres such as TD and Intact. These companies understand the capacity issue happening in the industry right now and have teamed up with repair partners who are able to provide the work they need, at an above-average labour rate.
For collision centres, now is the time to renegotiate rates with your insurers, if you haven’t already. We have positions to fill and we can only do that properly if we are offered a fair labour rate for the services we provide. In most cases, a collision centre today is not going to work with anyone who is only willing to pay up to a 30% labour rate, since they won’t be able to cover their operating costs, including hiring and training the staff they need. At 45-50% it becomes a lot more feasible.
Technicians are an asset
We have to remember that our technicians are an asset, much like our tools and equipment. If we can’t find technicians to perform the work, we can’t employ estimators, and if we can’t have them, we can’t have parts people, and if we don’t have parts people, we don’t have management and ultimately don’t have a business to run. Technicians are the lifeblood of our business. We need to pay them well; we need to train them, and we need to provide them with the right support so they will stay with us. Additionally, we also need to ensure we have an ongoing recruitment strategy, that creates a pipeline to bring the next generation of technicians into the fold. In our case, we offer a mentorship program where apprentices and junior technicians work alongside more experienced staff until they are ready to take on these roles themselves. They, in turn, will then mentor and train the next generation entering the workforce and so the cycle continues
As business ramps up, it can be very easy for us as managers to say we can’t find the time, nor have the resources to do this, but the fact is, our industry needs technicians now. By taking an active approach to recruiting, training, and properly compensating technicians we can help secure the future of both our businesses and our industry. Otherwise, we just resign ourselves to poaching technicians from our competitors. Such scenarios rarely benefit anyone and the last thing our industry needs are strategies like this which cause productivity to fall and business costs to spiral, especially in today’s high inflation environment.
