by Mike Anderson
This month, we “ASK MIKE” for his thoughts on why shops need to participate in WMABA’s Labor Rate Survey and similar industry projects. We at Hammer & Dolly hope you find the following exchange useful, and we encourage you to reach out to us if you have a question for Mike on this or any industry-related matter that he can answer in a future issue.
Hammer & Dolly: Before you became an industry consultant, you spent many years as a member of WMABA and even served time on the Board. Based on your experiences, what did WMABA membership provide you in terms of information you wouldn’t have gained on your own? Why do you feel it’s important for members to participate in WMABA’s Labor Rate Survey?
Mike Anderson: Obviously, Top Gun: Maverick was one of the biggest movies released in 2022. One of the biggest things about that movie and its predecessor, Top Gun, is the importance of having a wingman – someone in your blind spot. In all the years I was involved with WMABA, the association helped people understand where their blind spots were in their businesses. When you’re so busy just working every day, you need somebody to let you know if something is going on. WMABA’s knowledge of and involvement in things on a national level – especially with its close relationship with the Society of Collision Repair Specialists [SCRS], SEMA and the Collision Industry Conference [CIC] – lets members know what’s coming down the pike.
In today’s world, information is coming at us at lightning speed. I’m sitting at my computer right now, and I have 7,091 emails in my inbox. I wish I had a WMABA to sort through them and determine the priorities! WMABA does a great job of helping members understand the hot topics in the industry and the things they need to be aware of – especially legislatively. I can’t say enough about the importance of what WMABA does.
Every year, I pick a theme that I talk about when I travel across the industry as a speaker. My theme for 2022 was, ‘Grow your team, grow your business and change the way you compete.’ We need to grow our team. That could mean taking your existing people and helping them get better at what they do or bringing in new hires. Everybody talks about staffing challenges. Well, part of those staffing challenges comes from not paying a competitive wage. We’re competing with the Amazons of the world and even burger joints and convenience stores that start people out at $20 an hour, three weeks’ vacation and 100 percent paid health insurance. We need to ensure that we can pay people more or offer better healthcare or other benefits, and doing that requires profitability.
In 2017, the average body shop was spending about 10 percent of their sales on administrative wages. Today, that number is closer to 15 percent. Somehow, we have to offset that. There will also be greater equipment and training demands as electric vehicles and other technologies possibly take hold. If that’s the case, then we absolutely have to stay profitable. One way to ensure profitability is to look at your processes. Another way is to capture more not-included operations. Another thing you may need to do is reassess your Labor Rates. I’ve never been a fan of those people who just raise their Labor Rates by $2 an hour – that’s one of the most ludicrous things I’ve heard in my life! To me, when you go to look at your Labor Rates, they need to be based on a number of things, such as your property taxes – which are different in Alexandria than in Fredericksburg. Also,
look at your OEM certifications compared to what somebody down the street might have.
There are a lot of considerations that we need to look at in regard to the Labor Rate. Another tool you can use in gaining greater insight into Labor Rates is to participate in WMABA’s survey whenever the association makes it available.
H&D: Absolutely! One comment we hear a lot from shop owners is that WMABA’s surveys – whether on the Labor Rate or insurance companies – allow them to provide information to the association without fear of repercussions.
MA: That’s the biggest value I see for an association. Members can bring up something without fear of retribution, especially if they are DRPs. So, it’s a big deal.
H&D: What advice would you offer someone who is new to taking an industry survey so they can get the most out of that process?
MA: When you go to take a survey, it’s really important that you set aside time to do it. You don’t want to be distracted; you want to make sure that you’re putting in accurate data and that you thought things through. Also, don’t just plug a number in; be willing to justify that number. Again, if you’re raising your Labor Rate by $2 an hour randomly, that’s just stupid. Build a budget or a forecast. I used to develop one for my collision repair business every October. I’d base it on what I was going to need to spend on my computer equipment, upgrades, training and facility improvements. All of that dictated what my Labor Rate was going to be. Don’t just do something carte blanche; put some thought into it and take part. If you don’t take the time to do it and participate, then don’t complain about the way things are.
Want more? Check out the March 2023 issue of Hammer & Dolly!