It was a problem that Shon Kim never seemed to be able to solve. Every couple years, he would try to implement an express lane at his 24,000-square-foot shop, Fix Auto Gresham, in East Portland, Ore. But like clockwork, technicians would slowly start getting away from express jobs and working on bigger, non-express jobs, until finally, the express lane all but faded away completely.
“It defeats the purpose of having an express lane,” Kim says. “It was very frustrating.”
At the same time, he started noticing just how many bumper replacements were going through the shop. The shop was only repairing roughly 25 percent of those bumpers, even though industry reports, such as those from Mitchell International, suggested that more hours exist to do a quality bumper cover repair than are currently being estimated across the country. It also coincided with a trend Kim was noticing of smaller repairs, like bumper covers, increasing and larger repairs diminishing.
“I’m thinking, ‘This is a viable market just repairing bumpers,’” he says. “I thought, maybe if this is separated not just by a wall, but an actual physical location, maybe that will work.”
That’s when Kim came up with the idea of creating another location, an express shop, dedicated to same-day repairs with a specific focus: non-structural, light-duty repairs.
Kim has been the owner of the shop since 1992 and joined the Fix Auto network in 2002, before eventually becoming a franchisee in 2011. The shop has always been high-volume and he’s run the shop with a focus on the numbers and an eye toward the future. He recognized early on that repair vs. replace was going to become the norm and that larger jobs were diminishing.
Recognizing that opportunity, Kim had tried to implement express repairs for several years with little success. At first, he says, the training and technology to repair plastics simply wasn’t there yet. But more than that, he says that when the express lane would slow down, the shop would start load leveling work to the dedicated staff of the express lanes.
“We would move some other work to them and a lot of times, it didn’t qualify as express work,” he says. “Ultimately what happened was that over time, we were right back to the same mix of all techs working on all different sizes of jobs. The discipline to keep it separated was really tough.”
Kim says there were a number of issues prohibiting him from keeping the express repairs in house. By 2014, training and technology had made it more feasible, but he couldn’t get past the managerial problem that would eventually result in distributing non-express work to the express lane technicians.
What’s worse, those smaller jobs were becoming increasingly prevalent and, he says, would have meant a lot of lost dollars if he stopped working on them.
“Upwards of 70 percent of our total ROs qualify for express work,” he says. “Out of that 70 percent, probably another 80 percent are bumpers only.”
But without the set-up to repair those jobs, they were dragging down cycle time and clogging up the shop.
“[Bumper jobs] typically aren’t a highly profitable job for a tech, so naturally they push those aside and work on the things that are more profitable to them,” he says. “It’s also very difficult when you have a painter who’s looking at 6–10 bumpers in a given day that are all different colors.”
He knew that those bumper jobs couldn’t be ignored and at the same time, improvements in nitrogen plastic welders were making just about every bumper repairable.
“With the direction bumper repairs were going, the technology and new equipment that’s available now with the next-gen welders, there is enough work to keep a dedicated staff consistently busy,” he says. “It’s just a question of being economically feasible. Does it make sense?”
Kim crunched the numbers, he consulted with other top shop owners who had successfully implemented express repairs, and he took meetings with Fix Auto corporate and the business development services of his paint company, Axalta. He discussed workflow, plastic welders, marketing opportunities and products that would help speed up the process, such as UV primers and speed clears. He also gauged enthusiasm with insurance companies and found a strong response.
“Their hot button right now is cycle time,” he says. “If I’m able to do a 24-hour or same-day repair, it does a lot to not only my overall cycle time, but also the insurance company’s overall cycle time. I had a lot of support from them.”
Finally, he made his move, leased a 3,600-square-foot former Maaco Auto Body facility only 1.5 miles away from his main shop on a major intersection, and in January 2015, completed his vision of opening an express shop, Fix Auto Express Gresham, specializing in bumper repairs.
Kim says he recognizes it was a big investment (more than $100,000) and a large risk, but he says that after attempting express repair in his shop for so many years, he knew that physically separating the work to an offsite location would be the only way to eliminate the temptation of giving that department larger jobs when workflow dictated it.
The express shop’s staff, which is paid on a flat-rate system, is small: just a shop manager/estimator, a plastic technician he moved over from his main location, a painter, and two shop helpers. Before opening the express shop, he had the team undergo training from both the plastic-welding and paint companies, and they began doing some plastic work at the main facility before moving.
The express shop was already equipped with a paint booth, but he also purchased two $3,700 Urethane Supply Company Nitro Fuzer Nitrogen Plastic Welding Systems. The nitrogen gas system combines hot air and nitrogen welding capabilities to create a strong weld that eliminates oxidation of the plastic during the welding process and also eliminates cure time.
Now, all bumper cover jobs from the main facility are automatically transferred to the express shop. Kim purchased a cargo van that the express shop uses to transport bumper covers to and from the main shop. If the job is a bumper repair in conjunction with other body repairs, a technician will remove the bumper and transport it in the van. If it’s a bumper-only job, the whole car will go to the express shop.
The same process goes for the wholesale work the shop has been doing for a rental car company. Every morning, a technician will drive to the company’s main location, remove the bumpers and bring them to the express shop before reinstalling them in the afternoon.
“We’ve eliminated the logistics of having to move vehicles,” he says. “It’s worked out really well.”
That wholesale work, which accounts for four to six bumper covers per day, has also been integral in helping the shop refine its processes and workflow.
Kim says the shop was a hit from the start. Already, the shop does at least eight covers per day, and he estimates that it will be able to double that number.
“The two techs I have at the express shop, they’re flagging more hours now than they did when they were working on metal,” he says.”
Although it was a hefty investment, he says the shop is “financially sound and running in the black” and he expects to recoup the cost in a year or so.
The shop is already at a 24-hour cycle time and has been able to offer guaranteed repair times for a select segment of vehicles, with the hope of getting down to same-day repairs. Due to the lack of wait time for additional parts, he also hopes to implement an extended shift.
The express shop has a higher gross profit on labor than parts, which quickly helped recoup the cost of both Urethane Supply Company welders.
The shop has also been integral in helping drive down cycle time to seven days at the main facility.
“At the large shop, those techs and painters not having to deal with the small repairs and the bumpers, their efficiency has gone up because they’re able to stay on the larger size jobs,” he says. “I removed not only the repairs that we generated at that location, I also removed the bottleneck from the main facility that was slowing things down.”
Demand also hasn’t been a problem. Besides the load leveling from the main facility, the express shop has already experienced walk-in traffic, half a dozen insurance companies have expressed interest, and an insurance company brought 16 field staffers and DRP coordinators for a presentation on the process. Kim recently hired a part-time marketing person to market directly to agents and educate them on the benefits of repair versus replace.
“For claims, it seems like field staff have more claims than they can handle. With the volume of bumpers we’re doing and the cycle time, it’s very attractive to the claims department because those numbers factor into their overall cycle time. It’s a win-win for both sides,” Kim says. “On the agent side, the average customer has a $500 deductible. Most of our repairs are in the $600 mark, while the average replacement is $900–$1300. If you have that kind of a loss, that policyholder is going to turn in a claim. If they can avoid a claim, though, they are going to pay out of pocket. It’s a win for the policyholder and the agent because the agent doesn’t want to increase their loss ratio.”
Kim says that for his shop, opening a second facility was the right choice for capitalizing on the smaller work available to him.
“I think when you can have a dedicated staff and keep things separate, there are huge benefits,” he says. “One, I was forced to have the discipline of keeping things separate. From marketing standpoints, too, there’s different things I can do at that location. Also at the same time, at the large shop, those techs and painters not having to deal with the small repairs and the bumpers, their efficiency has gone up because they’re able to stay on the larger-sized jobs.”
The way he sees it, repairing rather than replacing is the future and it’s given him an advantage over other shops in the area.
Working on express repairs can create a unique opportunity for shops to better retain, attract and service customers—in addition to bringing your business increased revenue. However, Tom Hoerner, business solutions leader at BASF, says there are certain considerations to take into account.
In almost every collision shop, anywhere from 40-60 percent of their business is in small repairs, usually under $1,500 and under 12 hours worth of repair time. You can almost make an argument that everyone has the need for it. There are several benefits: First of all, it’s a positive impact on cycle times and touch times. If you have small repairs and you’re not getting them done in three days or less, it’s going to bring your overall scores down.
It also improves cash flow. If you’re getting cars in, getting them done and getting them processed, you’re getting paid for it. And if it’s done right, you’re really improving profits. Those smaller repairs can often be done with a lower skill level. You can lower your effective labor cost and improve your profits by putting the right tech to the right skill level.
Express repairs also attract insurance companies. Days of rental is a big number that insurers are watching. If you can have a lot of repairs in that one or two days of rental, that makes a significant difference in your performance and your attractiveness.