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Like bulls in a bullfight, Spanish collision repairers struggle to stay alive. But, as their country and their country’s way of doing business changes, they’ll need to assume the role of matador if they wish to take charge and survive.
Imagine a place where bulls play an important role in the culture, but where the people refrain from charging through anything. A place that takes a more leisurely outlook on life. A place that celebrates life rather than rushing through life.
A place where there’s no demand for businesses to stay open as many hours as possible to make as much money as possible. A place where — in the middle of the work day — business owners close up for long, leisurely lunches. A place that embraces holidays and vacations — month-long ones — and where people stay up late like every night’s a Saturday.
A colorful place. Flamboyant, yet leisurely.
This place is Spain.
Molded by centuries of tradition, Spain still clings to much of its heritage — such as afternoon siestas — but, like many of its European counterparts, is slowly finding that it must modernize its approach to life and business to compete on a national, and international, scale. Such is also true for Spain’s collision repair industry.
Time Is On Their Side
Before delving into the Spanish collision repair industry, it helps to take a brief look at the country’s culture, which has been, up until recently, the dominant force behind how businesses were managed.
With a population of 39.5 million people, Spain is one of Europe’s least densely populated countries. But because Spaniards like to be in close proximity to one another, you’ll often find families living together in an apartment that would be a bit crowded by American standards.
Known as easygoing, sociable people, the Spanish have a much more relaxed attitude toward time than Americans — and most Western cultures for that matter. What’s different is their daily timetable. The Spanish tarde (afternoon) doesn’t really start until 4 p.m. or so and goes on until 9 p.m. or later.
Although this is starting to change, the Spanish work day traditionally begins at 8 or 9 a.m. (Monday through Friday) and goes until 2 or 3 p.m. At this time, where possible, a long lunch is taken that consists of a "starter," a first course, a main course and a dessert. And lunch, as well as dinner, in Spain is considered a social act in which the family sits together around the table.
For some families, lunch consists of a good meal and lingering conversation. For others, lunch means a good meal and a 30- to 45-minute nap, known as a siesta. Spain’s hot climate has a lot to do with the tradition of taking a siesta — a practice thought to be very healthy for people who’ve eaten such a large lunch, especially in Spain’s summer, which holds high temperatures of more than 86 degrees F.
After lunch, beginning about 4:30 or 5 p.m., the afternoon work session begins and lasts until about 8 p.m. In the evening, then, most people eat dinner at a fashionable hour, which means eating a light meal any time from 9 to 11 p.m.
Although Spaniards are trying to keep with traditions of years past, the longtime practice of closing early in the summer seems to be dying out or at least breaking down, especially in Madrid and Barcelona, due to the impact of international business. Nowadays, many companies break only one hour for lunch, leaving no possibility for a siesta.
Still, business and store hours vary — being a little less consumer friendly than in America — and many government offices don’t even bother opening in the afternoon any day of the year.
And then there are the holidays — at least 14 official holidays a year in Spain, eight of them observed nationally and the others locally. In addition, the country’s regional governments observe four holidays, and local councils add two more. No matter how large or small, every city or town also celebrates its local saint’s day.
And don’t forget Spain’s two main vacation periods — better known as "going on holiday." This is the week leading up to Easter Sunday and the whole month of August. Because many restaurant and shop proprietors also take their holiday in August, dining and shopping selections for visitors is very limited. Could you imagine Florida retail-store and restaurant owners shutting down for a whole month to go on vacation, leaving tourists to fend for themselves?
Such is Spain.
Spain’s Autobody Industry
Spain is one of the major European car producers and is home to factories for Ford, Seat (Group VW), VW, Renault, Citroèn, Peugeot, Opel, Nissan, Suzuki and Mercedes. Spain has a total of about 15 million cars and a total of 20 million vehicles, including trucks, motorbikes, vans, buses, etc. And the forecast for Spain was that more than 1 million new cars would be sold in 1998.
With cars come accidents, which is where the country’s 9,500 body shops come in. The number of shops is down from around 11,000 because, between 1993 and 1994, Spain experienced an economic recession that took its toll on, among other things, many body shops. The medium-sized shops (those that have to support a relatively expensive structure of personnel and equipment) were hit hardest by the recession. Consequently, there was a reduction of medium shops in the market, while most small shops (usually family owned with poor equipment and repair methods, but with loyal customers) maintained their numbers. Large Spanish body shops — which are typically very professional, well-equipped and relatively well-managed — in contrast, have been growing in number.
Because, since 1996, Spain has been enjoying a prosperous economy, which has meant a lot of work for the refinish sector, body shops have been profitable in general. Still, it’s expected that the number of body shops will continue to decline, while the shops that continue to exist will be bigger and better.
Sound familiar? Although consolidation isn’t yet a buzzword in Spain and the shrinking of the Spanish market may be for different reasons, our American market has noticed a similar reality: The number of shops is declining, while the remaining shops are becoming bigger, better and stronger organizations. A noticed difference, however, is that our "Mom and Pop" shops don’t seem to be enjoying the security our Spanish brethren are experiencing.
Though it’s difficult to obtain a figure for what an average Spanish body shop earns per year, it’s normal for a shop to earn between 3 and 6 percent net profit after operating costs. (Unfortunately, net profit is a tricky number to pin down for various reasons. One such reason: The owner could be paying himself a huge salary, which would decrease his net profit percentages.) Operating costs for a Spanish body shop break down to 52 percent for parts, 42 percent for labor and 6 percent for paint and materials.
When it comes to management, controlling what’s going on in the paint shop is the main obstacle facing Spanish shop owners. It seems that everything concerning paint and materials is like a "black hole." Spanish shop owners know how much they purchase in paint and materials, but nobody (generally) tracks how much paint is used per car, how many jobs are re-done, what over-mixed paint costs the shop or what the real and optimal level of stock required in the paint shop is, etc. What becomes obvious when examining the Spanish industry is that Spanish shop owners haven’t yet encountered the level of competition American shop owners have, in which they’re forced to streamline their operations, reduce waste and increase profitability to survive.
To help Spanish shop owners do just that, ICI Autocolor has been focusing its efforts on specific training for body shop managers with the launching of its paint-management system. But there’s a long way to go. In fact, there are more managerial problems than technical problems in the Spanish refinish industry.
Speaking of the managerial side of things, the average painter or collision technician, working eight hours a day, five days a week, earns a net paycheck of about $1,000 to $1,071 per month — with the average overall wage in Spain being from $1,071 to $1,143 a month. Consequently, many painters and "body fitters" work overtime every day or on Saturdays, resulting in many of them earning more than $1,429 a month.
Insurers in Spain
A major problem for Spanish collision repairers has been how to charge for a paint repair. (Yes, it’s a challenge no matter where you live.) Traditionally, there was a price per panel — but it was impossible to separate labor costs from paint and materials costs. In addition, the level of damage and the size of the panel weren’t considered. As time went on, auto-manufacturer repair manuals appeared — which made it easy to assign labor times for different types of panels and for the severity of damages — but regarding paint materials, none of the auto manufacturers (except Ford) provided information on how to charge. The common practice today in Spain is to calculate the paint and materials as a percentage of labor. Though not a very scientific method, it’s better than the one previously used.
To help create an even better method of charging for paint repairs, Mapfre Mutualidad — an insurance company with the largest percentage of Spain’s market share — actually opened a center to create a valid charging method for the market — a method that’s now widely used throughout the country. (While repairers have the choice of using the car-manufacturer method or the one created by the insurance company’s center, 80 to 90 percent of repairers writing paint-repair estimates preferred the center’s method. A bit scary, at least from an American standpoint.)
Obviously, the insurance industry has a very strong influence on Spain’s collision repairers — with 80 percent of the repair work being insurance-paid jobs. But a very important difference between Spain and its neighboring countries is that insurers in Spain can’t force vehicle owners to go to a specific body shop. A car owner, thus far, can take his vehicle to the body shop of his choice, without any limitation (an independent or a dealer shop).
After a car owner’s decision has been made, it’s the insurance engineer and the body shop owner who are responsible for negotiating the final price for the best repair. In short, there aren’t any direct-repair programs (DRPs) in Spain. What does exist, however, are recommended body shops for customers who don’t have a preference.
While insurers haven’t yet created DRPs in Spain, some are looking into opening their own collision repair facilities. In fact, Mapfre has already opened two body shops in Madrid. The first one, now about nine years old, was created to pilot all the improvements found in the insurance company’s research center. The second shop opened last year, and its aim isn’t to pilot anything, but to make money. It repairs more than 150 cars per week, and considering its means, equipment, management and production methods, is a true 21st-century operation. (While, in America, two Texas body shops were purchased not too long ago by an affiliate of U.S. Fidelity Holding Corp. to be run as non-profit shops for insurance claimants only, no insurer has yet gambled on buying a U.S. shop to run as a money-making venture.)
Mapfre’s experience with owning and running these Spanish shops has been so good that it’s considering opening more shops, setting the stage for other insurance companies to do the same.
Image and Education
The consumer’s image of the Spanish collision repair industry is bad. It’s where our image used to be before we began consciously and actively trying to improve it. Consumers tend to distrust repairers because they assume that when getting repair work done, the shop will try to deceive them one way or another.
Why? Because, traditionally, many body shops have deceived consumers. For instance, when someone goes to two or three body shops for estimates, the differences in price are sometimes shockingly different — and difficult to justify. In the last several years, some consumer associations have denounced this situation, and large body shops have begun operating more professionally. Still, many shops have a long way to go in the "fair practices" department.
Besides the fact that many shops are unethical with their customers, another part of the problem lies with the customers themselves and Spanish tradition. Historically, the Spanish haven’t been in the habit of denouncing irregularities in services, shops, etc. because it was assumed that complaining wouldn’t get them anywhere. But that attitude, too, is beginning to change. Consumers are realizing they have rights, are standing up for them more and are becoming more selective of their service providers, which is helping to force some change.
Consumers aren’t the only ones becoming more educated. Repairers are, too. Traditionally in Spain, many people involved in the autobody sector have a low level of education. Many entered the industry very young as apprentices and grew into professionals via working experience. To help better educate those entering the industry, a specific automotive-repair-sector educational plan for boys in professional high schools was created. Up until last year, however, it was more focused on mechanics and electronics training than body and paint repair. It’s expected to take five or six years before the results of the change in the program’s focus will be realized.
No Time for a Siesta
What’s considered the biggest challenge facing the autobody industry in Spain today? Mindset.
Many of Spain’s body shop owners and managers started out as painters or repairers — later deciding to start their own businesses. And there’s nothing wrong with that. That’s basically the story here in the States too. However, the reality is that many of the Spanish haven’t yet been able to "change the chip" in their minds as many of their American counterparts have, and they still act as repairers not as managers.
But — as our industry has been learning — with a willingness to learn, a commitment to see change through and a little patience, a lot can be accomplished and improved. Those who fight to survive will find future success.
Here’s to our Spanish neighbors — and us — becoming matadors of our own industry struggles.
Writer Eileen Benedict is associate editor of BodyShop Business.
Special thanks to Ildefon
A Closer Look
• Located in Madrid, Talleres Pescador (talleres meaning a place where a car can be repaired) has 650 square meters of shop space and is situated on the ground floor of an apartment building. The owner, Miguel Angel Madrigal, also has other premises, which consist of mechanical and electrical repairs, located in Aravaca, about five miles from Madrid.
Established in 1987, Madrigal’s body shop employs six people, five being production personnel: three painters, one body technician and one mechanic. Per month, these workers repair about 50 cars, with the repairs having an average invoice of about $600 (90,000 pesetas). Their labor rate is about $30 per hour.
Talleres Pescador focuses more on paint jobs than body repairs and doesn’t — because it would need to use more parts — repair large damages, which would increase the shop’s average repair ticket. The shop charges about $850 for a complete paint job on an average car.
To do these repairs, the shop has one spraybooth/oven, a "paint box" with a "mixing scheme," a scale and visor, one jig, three "elevators" (lifts), and a spray-gun cleaner.
Challenges for the shop come in the forms of high rent (being in the center of Madrid) and not enough space to park cars. On a positive note, the shop is very open to using new technologies (such as ICI Autocolor’s Aquabase waterborne paints and HVLP technology), which will help it to be seen as more friendly by its neighbors — especially since it’s located beneath apartments!
• The second body shop, Tallers Novo (tallers also meaning a place where a car can be repaired) is located in the city of Barcelona, in an area called Bonanova. The owner, Josep Antoni Jal, is in charge of the general managing of the business and customer relations.
His company is divided into three sites, which are located very close to one another. One focuses on mechanical and electrical repairs, while the other two perform body and paint repairs. Both body shop sites have a total production area of 500 square meters.
The shops employ 14 people, with 12 of them in production: three painters, four body technicians, five mechanics and two body shop managers. The body shops repair an average of 100 vehicles per month, with the average invoice running about $650 and the labor rate being about $32 an hour. An average "charge out" for a complete refinish is about $950.
Differing from the norm of 80/20 insurance/retail work, Jal’s body shops have a ratio of 50/50, due to Bonanova being a rich area of Barcelona, with many customers able to pay for their own repairs. To make the repairs, the shops utilize two spraybooth/ovens, two paint boxes with mixing schemes (one in each site), one jig with a laser measurer, "elevators," HVLP guns and ICI Autocolor’s Aquabase paint.
Bull Is Big
• El Toro! El Toro!
Though increasing numbers of Spaniards may be opposing bull fighting on the grounds of cruelty, most still regard it as a test of a man’s intelligence and will against the formidable strength of the bull. Although a fairly recent survey reported that 60 percent of the Spanish have no interest in it, it’s also been known to come second only to soccer as the most popular national "sport" — though it’s covered in the arts reviews, rather than sports pages, of Spanish newspapers.
• Would You Run with a Bull?!
The encierro, running of the bulls, is the most dangerous — and perhaps most puzzling — ritual in Spain, made even more risky by the large amounts of wine consumed by its many participants and observers. Broadcast live throughout Europe, it takes place in July in Pamplona and many smaller Spanish towns.
Daily bullfights being part of a legendary fiesta, the running of the bulls always preceded the day’s fights for the simple reason that the bulls had to get to the ring somehow. Once they’re let loose, they charge their way down several streets to the plaza de toros (bull ring), and the brave — or foolish, depending on how you look at it — race madly along with them, aiming to keep close … but not too close.
Not surprisingly, many people are hurt — sometimes killed — every year. For this reason, travel books give tourists these tips: Only the able-bodied and sober should plan to run, and leaping from a building in hopes that friends below will catch you is not a good idea. Many people do this each year and are not caught.
Fiestas, Flamenco and Late-Night Fun
Along with fiestas, flamenco folk songs (cante) and dances (baile) are an integral part of the Spanish experience. Accompanied by stylized guitar music, castanets and the fervent clapping of the crowd, dancers are filled with tension and emotion. Flamenco dancing, with its flash, color and ritual, is characteristic of Spanish culture. While other types of music, song and dance survive in locales throughout Spain, flamenco stands at the center of the national stage. With some of the best flamenco taking place in smaller bars or in a flamenco tavern, the encounter involves listening to the heartbreaking laments of gypsy sorrow, tribulations, hopes and dreams.
When enjoying such events and entertainment, Spaniards know to make late plans because, just as dinner begins late, night life — and there’s plenty of it, especially in Madrid — doesn’t really get underway until after 11 p.m. And it generally lasts until around 3 a.m. Madrileños (people who live in Madrid), in fact, are so fond of prowling around at night that they’re known around Spain as gatos (cats). In no other European capital would you find the core of the city filled with swarms of people buzzing around so late into the night as this one, especially on weekends. Everyone here seems to stay out late,