First, let me give you a little background on our body shop. The body shop’s net profit in 1999 was the best it had ever been under my predecessor; I took over the shop in 2000. The net profit for that year was up 78%. That’s right — 178% of 1999. It gets better. The following year it was 139% of 2000 or 240% of 1999.
At the time of the evaluation, we were 269% of 1999, up 169% net profit in four years. We were — and still are — above ADA, BASF and PPG Top Ten, and we’re consistently on top of our Dealer 20/20 GM Group. (All comparisons are available if needed.)
I’ve been in the automotive business all of my working life of over 20 years, mostly in the body shop. I’ve also worked as the service manager and as the coordinator over the service, body shop and parts departments. I’ve sold both cars and body shop equipment.
After having a free shop analysis from the consulting company that was working with our service department (for about $50,000 for three months; total time in service about five days), I had hoped for some new ideas in sales, production or cost saving.
What I got was Jack S#@!! Let’s just call him Jack (since that was his name). Jack told me he’d never run a body shop or even worked in one. He had worked in used car sales and in the service department, but he didn’t say how long.
Jack’s total combined “profit growth opportunity” was more than our total profit by 200%!
Hold on now. He said it was actually the gross profit and not the net he was talking about (his report said “profit”). This got my attention and the attention of the general manager and president of the company.
OK, now we’re talking about 28% increases (still a big increase) and not a 200% increase.
Jack’s plan?
Jack said the monthly flat-rate hour’s capacity of our facility was 6,604 hours. We have eight techs; that would be 192 hours per week per tech, or 480% production. If we add two techs — as per Jack’s plan to increase to 10 techs — it would be 153 hours per tech per week or 383% production.
Jack’s report had other ways to help with that 200% profit increase. Paint and materials inventory is approximately 150% of what it should be (according to Jack). We stock 88% of our total monthly sales — pretty good turnover.
Jack also had other ideas, like cutting tech pay by 6% — the same tech he’s getting 380% production out of. (Our shop’s normal production is 160% to 200%.)
Jack also thought of raising our labor rate and giving about $60,000 net profit to the parts department. But that’s another story. Raise prices and cut costs. Why didn’t we think of that?
I have, over the years, attended many factory-training programs including GM, Ford, PPG, BASF, DuPont and others. I’ve also attended many seminars and workshops that I’ve found very helpful. I’ve always gotten something out of the seminars — some more than others, but always something. So after about five or six months, I looked over Jack’s assessment again, hoping to find something I could use. After all, it was a 20-page assessment of body shop opportunity, very well-typed with charts and graphs — and not much else. It frustrated me all over again!
Fortunately for me, the owner, president and general manager are all three very intelligent people so I got very little grief over Jack’s report.
Still, I can’t help but think “what if” it had been my first year and not my fifth and I had no track record to prove my point? What if I didn’t have 20 years experience under my belt? Makes you think.
Since the time of this report, we ended the year with profit up 18% and up 216% over the last five years. I’ve received the GM Mark of Excellence for body shop manager for sales, customer satisfaction and GM training. We also received the No. 1 Top Performers for 2004. I probably won’t take Jack’s report with me to Maui, Hawaii (the grand prize).
I say all this to make only one point: If you’re going to hire a consultant to help your business, make sure he’s done the job before. Don’t learn to fly from a cab driver — ask a pilot.
Writer Jim W. Patrick is the collision repair manager for Lang’s Chevrolet in Beavercreek, Ohio.
