More than 30 people, almost all people in the collision repair industry, testified Tuesday before a unique commission created to consider auto body labor rates paid by insurers in Massachusetts.
During the four-hour-plus virtual hearing, speaker after speaker told the commission that auto insurers’ refusal to pay for a labor rate in excess of $40 over the past 30 years is responsible for real pain in the collision repair industry, threatened its survival and set members of the public at risk.
Calling the $40 rate “absurd,” “dangerous,” “criminal,” “insulting” and “a disgrace,” speakers called around the 15-member commission to endorse an invoice currently prior to the Legislature that will enhance the rate and tie it to the region’s Consumer Price Index.
That bill, H.1111, happens to be being considered by the Legislature’s Joint Committee on Financial Services.
Many speakers noted the recommendations of a similar commission created in 2008 to address the labor rate issue were never adopted, and they blamed an insurance coverage industry that they said is unfairly suppressing rates.
“There is no need down the sink any more time about this study,” said Tom Ricci, owner of Body and Paint Center of Hudson and legislative chairperson for that Alliance of Automotive Service Providers of Massachusetts , who served on the 2008 commission.
“From ’88 to 2008, all the information is compiled for the reason that other labor rate report. Enact that, focus on it, update the data, and we’ll have everything we need. But act onto it, please. It has been way too long that nothing has had place,” Ricci said.
Matthew Ciaschini, of Full Tilt Auto Body, expressed frustration which was echoed by many people other speakers during the day.
“In the time we've been in business, we view virtually no movement on the insurance reimbursement rate, despite recommendations from your last labor rate commission, regardless of the rise of minimum wage, regardless of the rising costs and expenses, and regardless of the rate of inflation through the years,” Ciaschini said. “Quite frankly, I’m appalled that something so obvious must be studied.”
Several speakers discussed losing technicians to shops in neighboring Rhode Island, Connecticut, Vermont, Ny and Nh, where allowed rates are higher, and the impossibility of attracting new technicians to the field when pay scales are below those of competing trades. It’of particular concern once the average chronilogical age of technicians within their shops is in the mid-50s, or higher, they said.
“How can we hire the children in the future into the industry when they’ve reached pay for tools? They’re exposed to chemicals in the spray booth. Paint, welding, grinding – it’s no easy or safe industry. It’s dangerous,” Matthew Penacho, of Mike’s Auto Body, said.
James Marshall, the owner of Marshall’s Autobody, who serves around the board of the Shawsheen Valley Technical Senior high school, said he's seen the decline in interest among students. “Since i have took with that role some 20 years ago, there was a graduating class of no less than 10 each year, and today it’s right down to 2 or 3,” he said.
“We’re can not get kids within our own program due to the labor wages they [insurers] want to pay,” said Tim Arruda, a car body instructor at Upper Cape Cod Regional Technical School. He said his informal survey showed that hourly rates in the field are $100-$125 for plumbers and carpenters, $75 to $100 for electrical technicians, $100 to $125 for auto mechanics, and $40 for collision repairers.
“We’re using a hard time selling to these young teenage kids who come into our program, trying to locate a future,” he said.
Ed Clark, the organization fixed operations director for that Herb Chambers companies, the largest automotive retailer in Massachusetts, said his company has “invested millions of dollars in facilities, equipment, and training to provide the state citizens with quality repairs.”
“We can’t manage to pay the the repairing technician a fair wage so that you can repair these cars and produce a living,” Clark said. “A lot of my technicians are in retirement now. And that i really don’t know where we’re likely to turn to, to find replacements.”
“We are working on incredibly sophisticated vehicles,” Dan Wenzel, of Wenzel’s Auto Body, testified. “They might require talented, smart and experienced technicians. Advanced steels, ADAS systems, you’ve heard it all already from all of my colleagues.
“To retain these technicians, recruit new blood in the market, offer a benefits package, pay for training, pay support staff estimators, parts personnel, customer support representatives, purchase proper equipment, it is imperative the labor rates are increased and increased now,” Wenzel said.
“If a significant rate increase does not occur ASAP, it'll negatively affect Massachusetts consumers, leading to balance billing for rates not covered by insurers, a lot longer lead times to repair vehicles due to technician shortage. There is a massive backlog in many shops which i know, so the lead time is growing and it’s growing more each day,” he said.
Speakers also noticed that insurers are willing to pay prevailing labor rates well over $100 to mechanics or sublet services, and will pay higher rates to collision repair technicians working approximately the state line from their shops.
Kathy Andrus, who with her son is running Precision Autocraft, the store in the Berkshires started by her late husband 43 years back, told the commission she doesn't realise why insurers are prepared to pay more to shops 10 minutes down the road, in Ny and Connecticut.
“I really believe that if you're able to comprehend the plight that we’re all in, and do something really quickly before all of us disappear, that might be awesome,” Andrus said. “I am talking about, we've shops closing in our area already. Therefore we have lots of work. We simply can’t make it profitable enough to help keep our employees happy and bring anyone else in. It’s extremely difficult.”
Donald Dowling, who owns Marblehead Collision, said his shop has paid $7.Two million to its employees over the past 4 years, but recouped only $6 million, “due to the inefficient reimbursement rate from the insurance companies.”
Dowling noted that “a mechanic gets roughly $135 [an hour] to replace parts on the vehicle. A car body shop will the exact same thing, so that as all of you know, we obtain $40. Yet, if I bring that car the insurance company’s paying for to the mechanic, they will outlay cash that $135, as long as they come with an invoice. It’s disgusting.”
“I’ve been in this particular issue since May of 2001,” said Bob O'Koniewski, the executive vice president from the Massachusetts State Auto Dealers Association. “It’s very frustrating, because it’s the same stuff over and over, and especially it’s frustrating in the insurance side from the equation, because it’s almost as if they don’t believe that there’s a problem out there.”
O'Koniewski said he feels that the voice from the consumer has been missing from the discussion, and said he wants to learn about the effect from the industry’s challenges on customer satisfaction.
“We've not had a consumer aspect to this … it must be a part of this discussion,” he explained.
The commission plans to hold a second virtual hearing. Time and date have yet to be set.
The commission would be to report on their behavior to the Joint Committee on Financial Services in July.
