The Georgia Collision Industry Association (GCIA) recently released the results of its 2009 labor rate survey. Almost 300 shops answered the survey, sharing how much they would need to charge to turn a profit.

GCIA Executive Director Howard Batchelor said he believes the rates collected by the GCIA are skewed lower than they should be by shops that tailor their rates for insurers and overlook the ever-increasing costs of doing business.

“Until we can educate the shops to really put down the rate that they need to make to make money, it is skewed,” Batchelor said. “Shops need to think about what their costs are and take into account everything from the heating of their booths to electricity to new equipment."

The average GCIA shops say they need to charge for paint and body labor went up about $1 compared to last year, according to GCIA statistics.

On average, GCIA shops said they would need to charge the following for labor and materials to turn a profit:  

Paint materials – $27.58

Body materials – $24.88

Paint labor – $41.08

Body labor – $41.18

Frame labor/unibody – $62.87

Mechanical labor – $75.47

Aluminum/exotic metal – $62.68

Storage – $20.43

Sublet mark-up – 25.09 percent

The survey also asked shops to list number and types of employees and the number of stalls in each shop. The following is the average:

Body – 3.58

Paint – 1.55

Estimators – 1.55

Preppers – 0.92

Detail – 0.95

Administrative – 1.49

Stalls – 17.13   

Batchelor noted that in Georgia, insurers try to impose DRP-style rates and rules on non-DRP shops, driving down rates and profitability. All the while, insurers are placing increasing burdens – from training and equipment requirements to administrative duties – on the shops they do business with, he added.

The bottom line, Batchelor said, is that shops need to be honest when participating in labor rate surveys and base rates not on what insurers want to hear, but on what’s needed to cover costs.

“We need shops to base their rates on what it’s going to take for them to make money and pay their bills in an increasingly expensive operating environment,” Batchelor said.

The GCIA is made up of a mix of DRP and independent shops. The GCIA survey, in its third year, is for informational purposes only. For more information, visit www.gcia.org.

In 2008, John Shortell of BodyShop Solutions answered the reader question, "How do you raise rates and tell insurance companies what they should be paying for without losing business?" Click HERE to read Shortell's response.