National AutoBody Research has compiled a unique set of financial pressures affecting body shops, hoping that it can serve as a basis for labor rate negotiations between repairers and insurers.
There is a business case to make for adjustments in labor and paint materials, “particularly in the current economy that we find ourselves in rich in inflation, labor rate shortages, part shortages, logistics disruptions, exactly what body shops are currently dealing with,” NABR president Sam Valenzuela said inside a video accompanying the report.
Valenzuela said the intent is “to provide you with a nice resource to enable insurers and body shops to have fruitful, productive, width=”640″ height=”360″ preload=”metadata” controls=”controls”>https://www.nationalautobodyresearch.com/uploads/b/44616063-891826934545483117/report2022v1_365.mp4
“Because of the sizeable cost increases facing collision repairers,” the report concludes, “Labor Rate and Paint Material rate adjustments are required at this time to help keep repairers even and supply additional resources to draw in & retain necessary talent to maintain business operations, perform quality repairs, and provide excellent customer service.”
The issues recognized by NABR overlap with those referenced through the nation’s largest auto body shop chain, Caliber Collision, when asked recently by Repairer Driven News about indications it had adjusted its posted rates in major metropolitan markets.
“The entire collision repair market is facing unprecedented challenges including substantial skilled labor shortages, double-digit inflationary pressures and supply chain difficulties,” Caliber said inside a statement to RDN. “These 4 elements have been in addition to the continuing industry trend of increased repair complexity and the need for our industry to evolve. Consistent with our purpose to Restore The Rhythm of Our Customers' Lives, Caliber is closely working with our valued carriers along with other industry partners to successfully navigate these challenges together to guarantee the sustainability of our industry.”
Because it expects such cost drivers as inflation, labor shortages, and supply chain disruptions to carry on into 2022 and beyond, “NABR foresees that multiple rate adjustments will be needed to keep pace with increasing costs with time,” the report states.
“These adjustments are really needed now,” Valenzuela said, “to enable this industry to continue to draw in and retain new talent, still perform top quality repairs, making those investments essential to keep up with advancing automotive technology, all ultimately to provide consumers a secure and proper repair.”
The report compiles existing documentation for several drivers of increased costs for repairers, including:
- Labor: “[The] Collision repair market is experiencing lack of qualified workers, driving up wages to employ and retain qualified technicians along with other employees. Additional investments are now necessary to hire, train, develop, and retain skilled technicians and staff.”
- Materials: “Suppliers have increased their prices many times in twelve months 2022, with a lot more planned increases throughout 2022, because they themselves face increasing costs from raw materials & packaging, shipping & transportation, and labor & manufacturing.”
- Business operations: “Logistics disruptions are causing parts price inflation and shortages, as well as significant impact to repair shop time and effort necessary to find alternative sources for parts, manage delays and reduce impact towards the customer.”
The report notes that the Consumer Price Index expires 7.5% year-to-year in January 2022 and that the chair from the Federal Reserve has said that inflation is not considered “transitory.”
It also notes the effect from the jobs market, with 4.3 million jobs unfilled within the U.S. as of January. Within the automotive technician field, which includes mechanical, diesel, and auto body repair technicians, vacancies outstrip candidates with a ratio of 5:1.
Also examined at length would be the results of global logistics issues and also the increase in costs for paint materials.
The report “leads us for an opportunity and really essential for insurers and body shops to get together for many positive change,” Valenzuela said, “to adjust rates as to the what is required be to pay for to repair cars right, to have the right people who are trained and equipped and certified and also have the right equipment and facilities and so on to create a good, complete, safe repair for consumers.
“We think this road necessarily leads to the labor rate discussion and the requirement for some significant adjustments there,” he said.
NABR invites shops to visit laborratehero.com to report their labor rates, like a resource for that industry.
