Should Collision Repairers Unionize? - BodyShop Business

Should Collision Repairers Unionize?

Some say that unions could be the solution to low wages and other issues in the collision repair industry. Others say unions would make those problems worse in a "careful what you wish for" scenario.

The concept of collision repair facilities encouraging unions to penetrate the industry is akin to business heresy. Why on earth would any body shop owner invite a party into its business which could raise their costs and add unproductive rules and regulations? But perhaps it’s not as insane an idea as it sounds.

Gaining Leverage
I conducted an interview with Lou Baffa a dozen years ago for an article on the 1963 Consent Decree. Baffa, a former New York body shop owner and head of the now-defunct Auto Body Association of America, suggested that shops invite the Teamsters into their businesses as a way to leverage insurance companies.

As radical as bringing the Teamsters into our industry sounds, it tells us a little about the way things were in the 1960s and ’70s, when Baffa was as big a leader in the industry as any. In those days, there was no Coalition for Collision Repair Excellence (CCRE) or Society of Collision Repair Specialists (SCRS). There were, however, a handful of local “breakfast clubs” and a few fledgling associations devoted to the body shop owners and their interests. And while the insurance industry’s grip on the collision business was in its formative stages, the DRP networks we saw then were nothing like they are now. Comparatively speaking, it was the land of milk and honey.

Associating with the Teamsters, a union with legendary solidarity and a degree of brutality, seemed the equivalent of setting oneself ablaze to ward off a chill. Yet Baffa suggested with a straight face that body shops should open their arms to the union solution. But at that time, of course, unions were an essential component in our nation’s industrial growth and clearly were a necessity during the industrial revolution.

Today, it seems that is less the case as union membership has been on the decline for a number of years.
Galen Munroe, the communications director at the Teamsters, is unsure if they represent any technicians in the industry, but he’s fairly certain that Baffa’s effort to collaborate with them never materialized.

Sam Cicinelli of the Automobile Mechanics Local 701 (folded into the International Association of Machinists and Aerospace Workers), which claims to be the largest mechanics’ union in the U.S., representing auto mechanics, body techs, heavy truck mechanics and other blue collar trades, believes the collision repair industry could benefit from unionizing.

“The insurance industry has pummeled the industry down to where it is today, and I believe with the assistance of organized labor in conjunction with the body shop industry, we can collectively restore the industry to the level it deserves to be at,” said Cicinelli.

Cicinelli says Local 701 has some representation in the dealerships that still have body shops in Chicago, Northwest Indiana and Southern Wisconsin. Many of the other shops closed, he said, due to the “costs associated with keeping up with environmental issues and equipment.”

“Those that decided to remain in business incurred the spraybooth costs and are still in existence, providing quality work for their customers as well as a convenience,” says Cicinelli. “They’re also having the work done by trained, dealership-approved union body shop employees – something many tout as a marketing advantage because the quality of the work is way better than an independent shop’s.”

Cicinelli believes it would be beneficial to both employers and employees to have a union body shop because of the low-cost healthcare package with excellent benefits for both the union and non-union employees with benefit costs employers can’t compete with. They also offer a pension plan and 401(k) plan.

“Having benefits ensures that a company will retain quality workers, as they’re less likely to ‘roam’ from employer to employer,” Cicinelli says. “They also take more pride in their work as they view the job at a unionized establishment as a career instead of simply a job.”

Another benefit, Cicinelli says, is that they also have an apprenticeship program which offers training to both current employees and future employees.

Labor Rate Disparity
What initially spurred my interest in unions was the disparity between the labor rates paid in the San Francisco market and those of the rest of the state of California, Los Angeles in particular.

Gigi Walker, owner of Walker’s Auto Body and Fleet Repair as well as a past president of the California Autobody Association, said that San Francisco had unions for many years, mostly dealership body shops. In fact, she said one of her first jobs was in a union shop making $23.50 per hour compared to the non-union shops’ flat rate of $10 to $12 per hour.

“As times changed, the dealership body shops went away and the local body shops contracted out to provide repairs for the many dealerships that closed their shops,” says Walker, who operates a 10,000-square-foot shop about 30 miles inland of the San Francisco Bay. “Some of that hourly wage went with them, but the union part did not. In the last few years, I’ve seen hourly change for flat rate here in the San Francisco area. But as far as Southern California, it’s a different horse completely. All the shops work on flat rate, and the labor rate (door) is half of what we get here. It makes no sense at all because Southern California bumps up the labor on repairs. A dent here would take a tech six hours real time; maybe in Southern California it could take 12. Maybe hourly was strong for so long here because it eliminated funny time.”

Walker says the rate in Contra Costa County averages $78 but can be as high as $80. She reports that Alameda County is $1 higher on average, and San Francisco County is about $3 higher. According to Walker, the DRP rates are about 10 to 20 percent lower per hour.

Valerie Lofrano is the human resources manager for F. Lofrano and Son, Inc., a four-store operation in the San Francisco area. She says their techs were originally in the Automotive Machinists Lodge 1305 when they opened in 1974. However, after a year-long negotiation process, their employees opted out of the union in 1989.

“At that time, the unions in San Francisco were stronger and created the wage and benefit culture which was a basis for our labor rate,” says Lofrano. “We offered (and still offer) good wages and benefits going forward as a non-union shop, but are no longer mandated to adhere to a union pay scale whereby any employee must earn a particular hourly wage versus the employee who’s worthy of earning such a wage. There’s a sense of relief in knowing that.”

Lofrano said that back in the day, shops in the Bay Area took the lead from San Francisco on fixing their labor rates.

“Doing business in San Francisco remains more costly for a number of reasons, so I don’t think I would agree with ‘organized labor’ being the No. 1 cause,” she said. “Businesses here are challenged with ordinances and compliance requirements that don’t exist elsewhere in the U.S., let alone Southern California. This equates to time, which means money.”

However, Lofrano believes that the City of San Francisco has, in some ways, helped maintain the union culture because of its laws. For example, it was the first city in the nation to pass a Paid Sick Leave Ordinance, and is now one of only three cities where such an ordinance exists.

“It’s particularly interesting for us, since we operate locations within our corporation in both San Francisco and Marin counties – each with its own set of rules,” Lofrano says. “Higher costs, higher wages. Our people have to pay more to live here, so we have to offer commensurate pay. On and on, but if we want to do business here, this is how it is.”

Ben Steinman, chairman of the ASA Missouri-Kansas Collision Division, said that the St. Louis area has had union body shops ever since he could remember.

“That’s the reason why the St. Louis labor rate has always been higher than Kansas City,” he says. “I think it started with the OEM plants and the dealership competing for employees. It does seem that there are more unions in dealerships than in independents. The labor rate is higher, but they usually give a parts discount.”

Headaches Enough
Steve Behrndt, one of the core members of CCRE (Coalition for Collision Repair Excellence), believes the collision repair industry has enough headaches already without involving unions in its business.

“The unions created many problems in America’s manufacturing where the manufacturers have just gone elsewhere,” says Behrndt. “Don’t get me wrong – I realize the benefits of a strong union where companies take advantage of their workers. However, I don’t believe collision repairers can survive with the insurance industry on one side and unionized workers on the other.

“Unionizing cannot stop the infiltration of the insurance industry into our repair world; more than likely, the insurance industry will just forge a relationship with the unions, and the continued abuse of the repairers will take on another identity.”

Kyle Kuzdek, manager at Szott Collision Center in Detroit, Mich., believes that drastic measures are needed to protect technicians’ pay and shops’ profit, but wonders if unionizing would give repairers the leverage they need.

“I could see the problem arising that, if you don’t get a very high rate of people jumping on board, the insurance companies would just steer to shops that are non-union,” says Kuzdek.

Charles Dillard, director of finance at Precision Body & Paint in Beaverton, Ore., also believes that shops would not gain any power over insurers.

“I believe it may have short-term bargaining benefits to the worker, but would put one more burden on the plate for business owners who are already on the edge,” says Dillard. “I think many small shops would close under one more administrative overhead. Besides, this would not have any power over the rates the insurers would pay.”

The Automotive Service Association (ASA) believes that unions are better suited to other industries.

“The top issue our members have relative to labor has been making sure that the potential employee pool is well-trained. Assuring that vocational schools are well-funded and encouraging apprentice programs are all helpful in this regard,” said Bob Redding, who serves as general counsel and lobbyist for ASA. “We believe that our independent repairer members provide competitive packages and a safe workplace for their employees, and [the union] debate would be better served in other industries.”

Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, has some worries about the economic impact unions could have on body shop owners.

“Labor unions, by definition, are organizations of workers that have banded together to achieve common goals for the workers they represent,” Schulenburg says. “Unions are formed to improve working conditions, bargain with the employer on behalf of union members and negotiate labor contracts through the use of collective bargaining. Business owners or businesses cannot unionize, so the formation of a union would be for technicians and staff members in the industry to have stronger negotiating leverage over
the individual collision repair business. As an association who represents those very businesses, I would be greatly concerned about the economic impact that would have on our members.

“Today’s market already presents such significant challenges over these small business owners, and unions can have a perceived history of benefitting the unionized worker at the expense of both the business and its shareholders.”

Schulenburg doesn’t necessarily buy that unions would give the industry more leverage over insurers.

“I’ve heard the argument that the increased pressure from unions could benefit the industry because it would justify necessary increases in rates, which could be used as leverage to get carriers to increase the rates they pay,” says Schulenburg. “My question would be, when has our industry ever successfully leveraged our necessary costs over the carrier for reimbursement?

“In my opinion, unionization may bring short-term benefits to employees within the industry, but long term would simply be another mechanism that creates undo burden for the repairer by increasing the cost of labor without the guarantee of increased remuneration for the business’s services. If the business doesn’t succeed and maintain profitability, it has no way to support its employees, union or not.”

Count Brad Larsen, collision center manager at Harmon’s Cadillac-Buick-GMC in Proctor, Mont., as one of  the people who believe unions would be bad for the collision industry.

“Unions are simply another form of technician and shop licensing,” says Larsen. “They restrict trade by restraining competition and greatly restrict individual freedom. Worse yet, unions go one step further by playing both sides against each other and becoming corrupt. It seems that almost all men are inclined to destroy free agency through power.”

The Workers
The union question is really about workers – those in the trenches. Barney Slifer, a 30-plus year line tech at Arnell’s Paint and Body Center in Burns Harbor, Ind., believes that if the question is whether unions would be beneficial or harmful to auto collision repair labor, the first step would be to define what exactly is a fair wage – and what and who gets to make that determination.

“The answer, from a skilled and experienced repair laborer’s perspective, is actually quite complicated and nuanced,” said Slifer. “But with the widespread acceptance of throttling schemes…it’s the insurance corporations that are allowed to determine what sort of ‘fair’ wage they would rather pay.”

Slifer believes that “yesterday’s” repair shop owners, a majority of whom began their careers as techs on the shop floor, would come together and resist insurer controls. They understood that by doing so, they could earn good labor rates for themselves and wages for the skilled repair employees that worked under their roof. But Slifer believes the modern day shop owner is a different beast.

“Today’s shop owner is corporate compliant and exists merely to carry out the directives of his or her master,” says Slifer. “They’re servants, tools who are used as money conveyors to move repair labor wages upwards to insurers, with a wee piece of the wreck referral action for their trouble.”

All that said, Slifer believes that a national collision repair labor union may still arrive, but only after even more devaluation of repair labor skills, increased on-duty hours and declining wages.

Secret Meeting
Wade Ebert, who operates American Auto Body in Springfield, Ill., was asked by a group of shops to investigate the possibility of joining a union. He met with the Machinists and Aerospace Union, thinking they would have an appreciation for the tooling, training, mindfulness, precision and accuracy required to restore today’s cars and trucks.

The shops thought the union might be able to provide the structure to set up an educational and apprenticeship system actually run by the industry rather than one infiltrated by and pandering to insurers.

“The thinking was that the standard of service we provide begins at the hands of a well-trained and supported workforce – rather than one that is scrambling and scratching for every penny in a ‘trial by fire,’ ‘whichever way makes me the most money is best’ mindset,” says Ebert.

“The biggest consideration was making this happen across a market area. Awareness of how this would drive costs up was paramount – this would drive up rates, and both DRP and non-DRP shops were very concerned about losing market share. Plus, the shops wanted more security for their labor force and more interchangeability of technicians as well. They just weren’t sure the union – and the associated costs that go along with it – was the place to make those gains. Ultimately, the prospect was left on the table.

“[The shops] did absolutely ‘get it’ that, if properly administered in any particular market, employee compensation would drive shop labor rates to more uniform reality – versus suppressed labor rates, cost shifting and funny times.”

Ebert still believes that union involvement would be a good thing and could lead to the repair of fewer near totals, more leverage against insurers, greater legislative clout and broader appeal to consumers as an employer of not “laborers” but “professional, conscientious vehicle reconstruction technicians and planners.”

“Insurers would have to deal with the power of the unions and all the families that back them,” he says. “This would be especially effective whenever insurers propose some draconian legislation claiming that it’s an effort to ‘hold down rates’ when we all know where those ‘saved monies’ really go.”

Echoing Ebert’s comments about a well-trained workforce being the foundation of the collision industry, Vartan Jerian, vice president of H&V Collision Centers in Albany, New York, says that could be a benefit of unionizing.

“If it meant that the shops would have a better and more skilled workforce that was trained by the union shop, I would be for the idea,” says Jerian.

Hal Davis, manager of Collision Solution in Chicago, considers himself anti-union but, like Ebert, believes unions can be a good thing under the right circumstances.

“I think in a collaborative setting that they can be of benefit,” says Davis. “If we had uniform costs, I think it would help raise the professionalism in the industry…and I’m referring to owners, not employees.”

Mike LeVasseur, president and COO of Keenan Auto Body in Philadelphia, says he’s not anti-union but doesn’t think it’s a good fit for the collision industry today.

“I’m all for organized labor, and the unions have their purposes, but in my opinion, our industry can’t afford the costs and some practices of union labor,” says LeVasseur. “I’ve seen several union shops in the Philadelphia region implode due to the ratio of cost to sales. In the DRP environment and the variables associated with collision repair, I just can’t see it working.”

A Self-Made Handicap
In the final analysis, the struggle for an equitable labor rate has historically been handicapped by the collision repair industry itself. The overcapacity of repair shops in relation to the market demand for auto body work has had the effect of shops feeding upon each other. There have always been shops with sufficient credentials to do repair work willing to undercut their competitors. However, when labor expenses are clearly higher due to organized labor costs, insurance companies have little choice but to compensate accordingly.

“The day may arrive when insurers and shop owners will be confronted with a large and formidable repair labor union,” contends Slifer. “They’ll be forced to come to better working conditions and equitable wage terms with labor. They’ll have to. Strength in numbers, baby.”

Charlie Barone has over 36 years of experience in collision repair. He’s an ASE Master Certified technician and a licensed damage appraiser, and has been writing since 1993. He can be reached at [email protected].

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