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Do the facility math

Shop Operations

Do the Facility Math

Comparing your shop to industry benchmarks is a great way to identify areas to fix or improve.

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Mark R. Clark is owner of Professional PBE Systems in Waterloo, Iowa. He’s a popular industry speaker and consultant and is celebrating his 32nd year as a contributing editor to BodyShop Business.

Do the facility math

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I’m a big fan of using industry benchmarks to identify the next thing to fix or improve. From how much of the RO is usually parts to what percentage of the parts should be OEM to how much space is required to store and manage them, industry-typical answers exist.

Some people object to any industry benchmarks because the median firm’s results are never like “their firm.” What I know for sure after 47 years in this business is that firms that do the same thing (fix collisions or sell paint or manufacture PBE equipment) will have similar operating results. Some will do better and, equally certain, some will be worse. My goal is to have you identify each area where your firm is below the benchmark. Save the congratulations on your high scores for later, but let’s get started fixing your low ones right now.

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Two Caveats

Two caveats to using any auto body benchmark number to manage your own business are 1) get as much input as you can, and 2) don’t get caught up in minor differences. For example, I say the paint portion of paint and material is about 70 percent. Other industry sources say 75 percent is liquid, yet others say it’s two-thirds (66.6 percent) paint and one-third sundries. Round numbers rule the day, so somewhere around 70 percent is a workable benchmark.

In my programs, we do lots of business math and make assumptions using my benchmarks. Even using my very own numbers, there are often multiple ways to calculate any desired benchmark. For example, by using production-per-tech, I predict the sample shop’s annual sales are about $1.2 million. By using my typical stall value, that same shop’s sales are more like $1.35 million. Then, I remind everyone that in my world, $1.2 or $1.3 million is the same thing – round numbers to compare to your own are always about right.

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Building Basics

Long before you consider using my benchmarks below in your own facility planning, get more input! Ask your jobber, paint rep, insurance adjustors and peers for their advice. Put everyone’s predictions together and you’ll get a useful range.

I say that it takes about 1,000 square feet per production technician to make today’s shop profitable. Right now, some of you are ready to log onto BodyShop Business’s website and tell me that your shop produces eleventy-zillion dollars with just 100 square feet per tech. Some do better, some do worse; congrats to those who excel in any part of our business. I stand by my 1,000-square-foot guesstimate.

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I say that the production area (number of techs x 1,000) needs to be about 80 percent of the total building and the remainder divided among the office areas, break room, restrooms, storage, etc. Of the production space, I suggest 60 percent be devoted to metal work and 40 percent to refinish.

Of whatever that total area is, set aside 10 percent of that number to store and manage crash parts. I remain convinced that the biggest impediment to speedy collision repair is poor parts procedures. Having enough space to sort, stage and store the parts is a critical profit driver.

Stall size varies on the intended purpose. I use 25’ x 16’ for both detail and estimate stalls. In both operations, all the doors may be open at once. A 25’ x 15’ space makes a good pulling or frame stall; be sure to protect surrounding stalls with a sturdy curtain or cement block half walls. At 25’ x 14’ for ordinary metal stalls and 25’ x 12’ for paint stalls, the shop space fills up fast.

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I use a 25’ minimum aisle width; it takes about 23’ to turn the average car into a 90-degree stall. Narrower aisles are possible with angled stalls, but production space is wasted on either end.

Stall Value

My preferred method to predict body shop sales is to multiply the sample shop’s technician head count times some sales-per-tech dollar figure. That number varies with the efficiency and door rate. At 1,952 work hours per year, a $45 door rate at 100-percent efficiency produces $88,000, but a $65 door rate makes it $127,000.

My fallback shop-sizing tool is to establish a stall value (also dependent on door rate and speed) and multiply by the number of shop stalls to approximate the shop’s annual sales. My range is between $90,000 to $130,000 per stall. Using $110,000 per stall, a shop with 11 stalls would produce about $1.2 million.

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Many shops keep restoration cars parked in shop stalls for months, if not years, at a time. I contend that if your shop needs that stall to complete the 1,000-square-feet-per-tech rule, I can make a case it’s costing the shop $44,000 to store that car ($110,000 x 40-percent gross profit). If the shop has lots of space to spare (like five techs in an old KMart), then parking the car for months may be free but is still a dirt trap. And it scares the heck out of Mrs. Smith to see dust-covered old cars next to hers: “Has that been here since 1967?”

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I recommend two stalls per tech, but I believe the national average is around 2.3. I think today’s production speeds necessitate two dedicated stalls. Sharing a middle stall between two techs makes for more arguments than production, and three stalls keep technician productivity up but torpedo cycle time. In my experience, techs petition for their third stall when the shop does poorly with parts management.

Stay at Work

Any productive shop layout will strive to eliminate wasted efforts – less roaming around, more working on the repair.

I’m sometimes in the local “cool shop” as the expert from out of town (key consultant ingredient is to be from elsewhere!). I see tiny shops produce work that would explode some facilities that are two or three times as large. I see large, architect-designed shops with unused bells and whistles that look great but produce poorly. In general, your space is your space. Much as you can dream of the perfect facility or the ideal remodel, the reality is you best make efficient use of your existing facility.

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“Think before you act” was great advice in kindergarten and remains so today. Draw out your floor plan, and move the work smoothly in and smoothly out. High auto body production is more a matter of careful scheduling and thoughtful workflow than the perfect shop spaces. That’s a benchmark I see in all the best places.

 

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