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Are You Throwing Away Money?

Every day, shops across the country donate their labor and product free of charge. Are you one of them? If you’re relying on a computer and the P-pages to do all your thinking for you, you’re losing revenue – and lots of it.

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Writer Phil Mosley is the general manager of two Mercedes-Benz Collision Centers, one in West Chester, Ohio, the other in Ameila, Ohio. In the industry since 1978, Mosley has done it all: tech, manager, insurance appraiser, physical damage manager and shop owner.

I have a challenge for you. Get up right now and go find the most opinionated, salty, senior metal technician you have and tell him that, from today forward, he’ll never again be paid to apply primer – and see what he says. Then go tell your lead painter the same thing. After that, call your CPA and tell him that starting today, you’ll no longer be charging a cent for primer or primer-related materials – that you’re giving it away for free. Next, put a sign out front that says, “We give away our primer, and we put it on for free!”

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Does this sound ridiculous to you? It shouldn’t, since you’re likely already doing it.

Unless you’ve been charging for priming as a separate line entry, you’ve never been paid for priming or the materials related to priming. And until you apply what I’m about to tell you and make changes to your estimating and billing procedures, you never will be paid for priming or priming-related materials.

You’ve been donating the labor and product free of charge. Did you know that? I bet that salty old body tech and painter know it, and I’m certain they’ll be glad to share their opinions with you.

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This is just one example of the numerous holes in the P-pages through which we’re losing revenue – and lots of it. We’ve all become dulled to the logic put forth in the procedure pages of the major information providers because we’ve become a point-and-click society. We’re relying on computers to do our thinking, and we’ve lost our skills and understanding of the premises built into the estimate databases.

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Getting Paid: It’s Your Choice
I was first trained to use a computer estimating system in 1981. Prior to that, like everyone else, I wrote estimates by hand, which required a functional knowledge of the P-pages – what was included and what wasn’t. But now that we live in a point-and-click world, we’ve stopped thinking about how to properly account for and charge for all necessary operations to repair a wreck. Even when we do remember how to use the P-pages, we’re so worn down by the insurance industry that we don’t have the guts to charge what we’re owed.

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Before you dismiss this issue as “petty” or say that you “cover” (cost shift) your repair times to get paid, let me give an example using priming. Consider the installation of a new quarter panel, typically sectioned in the sail panel in addition to the factory seams. You already have a picture in your mind of the sail panel section, finished with your filler of choice, feathered, scuffed, masked and ready to prime. But you have to realize that nowhere, in any of the information providers’ databases, has time been allowed to feather, scuff, mask, prime, guide coat, block sand and re-prime that sail panel section. Audatex, in their two-stage included operations, lists “mix apply and flash primer” (for adhesion and sealing), application of guide coat and block sand with a footnote that these are for welded panel operations. Audatex does not list applying primer surfacer or masking for a separate priming operation. Therefore, we’ve done it for free and donated the materials to the insurance company.

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Do the math. Consider the time consumed in the operation I just described multiplied by how many quarter panels you’ve installed multiplied by the free materials (expensive 2K primers) and find the revenue you’ve donated – and that’s on quarter panels alone.
Instead of getting paid legitimately, we’ve “cost shifted” all these years to be nice and “get along.” You’ve heard: “I can’t write that, but I’ll cover you somewhere else in the estimate” or “I’ll catch you on that one next time” or “I know you’ll lose money on paint on this one, but you’ll make it up on the next job.” It goes on and on, and we’re all guilty of allowing it to happen.

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People on the insurance side have someone beating them up all day long, so they’re afraid to write an accurate estimate for fear of their jobs (if they’re capable of writing an accurate estimate at all). And we, in the shops, are too afraid to speak up so we “play with the numbers.”

But this business of cost shifting to get along is death by a thousand cuts. We need to eliminate it from our industry entirely and get paid properly for what we do.
Is this petty? Or do you deserve to be paid for operations you perform and materials you consume in the course of a repair?

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Remember, materials used to fix the wreck and get it to paint ARE NOT “overhead” or “the cost of doing business.” They are products consumed in the manufacture of a product and are calculated into the cost of goods sold. (The gas bill and electric bill are overhead.)

The P-Pages and Refinishing
The Collision Industry Conference and the Automotive Service Association have both recognized “feather-edge prime and block” as a procedure that merits industry-wide acceptance (and payment). But feather block and prime isn’t the only primer issue …
Applications of e-coatings to restore bare metal to “new panel equivalent” are not an included operation in refinish time. Ever get a part in bare metal – hinge, valance, etc.? The time it takes to wash off that greasy shipping preservative, scuff it, etch prime it and get it ready to “scuff seal and shoot” is not included (it’s free) unless you catch it and charge for it.

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Solvent testing or tape testing to ensure the stability and adhesion of factory primer on plastic parts also is not included – and that’s if the plastic part comes in primer. Bare plastic, as you know, requires a handful of additional steps that you’ve been providing to the motoring public for free (and shortchanging your painter of legitimate time and pay). Even something as simple as applying tinted primers or value-shaded sealers is not included time and has always been done free of charge.

I once had a painter tell me, “I got paid to paint it, not to match it.” It was an irritating comment at the time, but he was absolutely right and now, I’m truly grateful for his honesty. Two of the major databases exclude any allowance in their paint time for color matching or tinting – it’s absolutely not included in their premise. One of the major databases includes time to identify, mix and spray out one variance of a color – one only. After that, you’re on free time. With two of the databases, the painter has to identify and mix the color for free and with another, he only gets paid to get the color in the ballpark and get it on the car.

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Bear in mind that we’re typically paying these guys on a percentage basis and that for every 40 cents the painter gets shorted, the shop gets shorted 60 cents. Tint paint for free, and you’re shorting your painter and throwing away your own revenue.

If you do charge for tinting color, do you put it in the paint labor column (adding material) or in body labor? An insurance appraiser will tell you that tinting color belongs in the body labor because you’re just “tweaking the color” and not using any material. Next time you hear that, take the guy to your mixing room and have your painter show him the half dozen (or more) variances he had to mix and waste to get the color “tweaked.”

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Here’s another one – setup for a second color. Not to be confused with two tone, this is when we have totally separate body panels of different colors or gloss levels. Case in point: a pickup truck repair with one color on the body and a contrast color on the bumper. You and your painter got paid to mix one color, clean one basecoat gun and apply one gloss level of clear, plus the material for one batch of mixed product. The time to identify, mix, tint to match, adjust gloss level to match and clean up after that second color, plus the added cost of a second color and/or a second clear, are completely ignored by the databases. It’s free!

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By the way, the information providers consider in their paint times that the entire paint job will be done in one continuous operation. So when we edge parts and paint them after they’ve been installed, we’ve introduced another step for free – mixing and catalyzing a batch of product, applying it and cleaning up afterwards, only to mix it up, catalyze it and clean up after spraying it again when we paint the installed panels.

More free product – more free labor.

I recently had a local staff appraiser write an estimate for a 10-hour repair to a quarter panel and manually cut the refinish time in half, calling it “blend within the panel.” (It’s policy of this particular insurer to manually insert phony refinish time on every repair panel – half of database time). There was about four inches of undamaged panel on this repair. Where the heck are we blending to?

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Where did this “blend within the panel” come from? As far as I can tell, it’s a purely arbitrary invention of the creative minds at the insurance company corporate offices. I can’t find it listed in the databases anywhere. From what I’ve been able to glean from the databases on this matter, they say that if primer touches the panel that full refinish time is warranted.

Insurers want to talk about what everybody else charges. You know the deal: “That’s all we pay because that’s all anybody else charges.” Who the heck is the “anybody else” in the shop who writes “blend within the panel” of his own free will? Who are the shop owners and managers in your area who thought it would be great to cut their paint time in half and call it “blend within the panel”? They don’t exist. The insurers invented this. (A friend of mine thinks that it worked out so well for the insurance industry when they started forcing us to work cheap on blending adjacent panels that they decided to get creative with how they pay us for repair panels as well. Who knows?)

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Stop Working for Free
It would be easy for me to go on and on dissecting the P-pages and talking about the holes in them (masking, buffing, half time for blending, melting clear within the panel, caulking, etc.), but I’m not going to do that. Hopefully, I’ve gotten your attention just enough that you’ll examine the P-pages yourself, thoughtfully looking at the work you do and discovering just how much money you’re throwing away every day.

I keep using the word “free” to drive home the point that we’re giving these operations and products away, taking profit directly from our bottom lines and taking away pay legitimately due to a flat-rate employee.

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If we don’t deserve to get paid for the work we do and the products we consume, do we deserve to be in business at all?

I know it’s simple to preach about a subject and it’s an entirely different story on Monday morning. But we’re going to have to start doing this right or we’re going to go out of business. We’re going to have to find the intestinal fortitude to charge for what we’re due. Insurers aren’t our regulators, and they don’t have any legal right to restrain our businesses. Yet we’re allowing them to.

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The insurance companies will be glad to let us continue to work for free. And why not?
We’re going to have to find attorneys who are willing to help us take up the fight – the fight for our very survival. We’re going to have to push and promote our local and state trade associations. We’re going to have to start running our businesses like businesses.

The corporate types at the insurance companies are turning the screws down so tightly on us and their own employees that we have to wake up and wake up soon – or we’ll join the already tens of thousands of shops closing for good.

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We have to realize that we’re not the “only ones who charge for that,” that these things are not “the cost of doing business” or “part of the overhead” and that they’re certainly not included in the times given in the information providers’ databases.

The days of cost shifting, making up for it on the next one or padding the repair times to cover insurance estimate deficiencies are over.

Writer Phil Mosley is the general manager of two Mercedes-Benz Collision Centers, one in West Chester, Ohio, the other in Ameila, Ohio. In the industry since 1978, Mosley has done it all: tech, manager, insurance appraiser, physical damage manager and shop owner.

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