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FeedCIC survey reveals need for improved paint and materials compensation
Oklahoma City, April 27, 2012—Ninety-four percent of respondents included in a recent survey conducted by a Collision Industry Conference (CIC) committee said the collision repair industry’s methodology for compensation of paint and materials is poor and needs to be improved.
Tony Nethery, business development manager for COLORMATCH, who participated in a panel discussion on the subject during the CIC meeting Thursday in Oklahoma City, said the cost of paint and materials is increasing for shops—especially the more efficient products—yet the reimbursement percentage has either remained stagnant or decreased. He said the average shop only obtains about 3 percent net profit on paint and materials.
Nethery said the current system used by the industry to pay shops for paint and materials is very antiquated, and it’s becoming increasingly important to identify a better methodology for compensation.
“A few years ago, the industry averaged 4 percent net profit on materials; now it’s down to 3 percent,” Nethery said. “What happens when it gets down to 1 percent? We are a dying industry, and we have to do something about it.”
Michael Lloyd material damage manager for California Casualty Management Co., who also participated in the panel discussion, agreed. He said shops are getting reimbursed the same amount, regardless of whether they use a high or low-end product line.
Lloyd said paint and materials calculators that are commonly used by the industry lack in consistency. With technology that is currently available, he said there is no reason that should prevent the development of a new system.
In addition, paint and materials compensation rates for shops vary within different markets across the U.S., said Gary Wano, owner of GW & Son AutoBody Inc. in Oklahoma, also a participant in the CIC panel discussion. He said there needs to be a standard strategy in place for shops across the country to get paid the same for paint and materials.
“There is no doubt the system is flawed,” he said.
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I wonder who the 6% who thought the current system was appropriate were?
I find it difficult to believe that material profits are only a 3% average, what market area does this extremely low average represent? It is easy to find a vast numbers of shops making 10 times that amount on materials? I can except that there is a large range of profit percentages on materials I strongly believe the differences (wide % range)comes more from the priority and effort a shop puts into Lean Material Management and less on the quality or brand or materials. It is easy to find shops using low end material not making much on materials and the opposite with shops using high end materials making consistent strong material profits. If a shop has turned to Lean Production,5S, or similar programs/methods they should also look to Lean Material Management.
What planet are you from Jim?You have to have darn luck just to break even these days.400 dollar a gallon clear.100 dollar a pint tints.If you do mirrors and bumper covers all week,I sure would like to see your materials profit.Maybe you could teach us all how to do it.Then everyone can have surf and turf for dinner!!!!