At Autobody News, we get emails and letters every week from auto body shop owners all over the country. In most cases, they’re either venting about the industry or promoting themselves.
We like being a sounding board and learning from shop owners and managers to learn their concerns and what’s going on in their particular region.
Recently, we received an email and a phone call from Greg Rajczi, owner of Ken’s Auto Body in Galway, NY. He started in the industry as a young man working for his father and later his uncle, Jim Rajczi, at Jim’s Auto Body in Hyde Park, NY.
He learned every aspect of the business from his dad and his uncle and eventually took over his father’s shop 13 years ago. He cares a lot about his profession as a body shop owner and that’s why he’s not happy with the current state of the collision repair industry, in New York and nationwide.
He’s been running a successful one-man show since day one and is used to making a profit, he said. But now multiple factors are impeding him. The rising cost of materials, low labor rates and the insurance companies steering customers all are taking their effect.
“A lot of shop owners are dealing with these issues. Most are silently struggling and even consider closing their doors. I don’t foresee a great future for the auto body business unless things change,” Rajczi said.
One important issue on Rajczi’s mind is the fact insurance companies are steering car owners to their preferred shops, something he encounters every week.
“I don’t have a tow truck, and if I had a dollar for every time the tow company steered my customer elsewhere, I’d be rich,” he said. “If the customer can drive their car here to my shop, I can get the job. But, in the winter, for example, when the cars have to be towed, I lose them. Once they tow the vehicle to their lot, the insurance companies can steer them anywhere and they usually do.
"They’ve become sophisticated and know exactly what to say in order to scare the owner of the car. They say the repair won’t be under warranty if I fix the car. It’s a lie, but most people don’t know that.”
When he’s able to fight off the steering and get a car in his shop to fix, Rajczi then has to fight to get paid for the work.
“The insurance companies work really hard to suck all of the profit out every job," Rajczi said. "We’re already struggling with higher costs for everything and then they’re going to sit there and...
...pick away at the estimate? Ten years ago, a gallon of house paint cost $30 and now it’s more like $100. Techs used to make $20 an hour, but how can they survive anywhere in this country at that rate? They need to be I-CAR trained so that they can work on the cars today, but it’s hard to pay them a fair wage with the cost of parts and materials and the insurers trying to save every penny.”
The labor rates need to reflect today’s prices with inflation and other factors, Rajczi said. With the high cost of parts added to the fact insurers will wrestle without exception on every repair, every body shop has to deal with low labor rates.
“They’re all over the road with these rates, it’s crazy,” Rajczi said. “State Farm is at $65; GEICO is $48, and Allstate is at $52. They say they poll shops in each area, but why shouldn’t State Farm’s rate be the standard? If you own a shop, you know that the rate should be more like $85 to $100. So before we even touch a car, we’re in a hole caused by our labor rates which are ridiculously low.
“I tell the young kids, don’t get into this industry because you’ll never get paid enough,” he said. “This is not a good career choice---go to college but do anything other than this. With costs spiraling and DRPs grinding away on each repair to save pennies, body shop owners won’t ever be able to pay their techs enough anymore.”
Another annoying pebble in Rajczi’s shoe is the quality of aftermarket crash parts and the way insurers try to incorporate them into his OE repairs.
“The car manufacturers should say no to aftermarket parts because they’re not road safe. They say they’re certified by the Department of Transportation (DOT) but in the end, they’re essentially counterfeit parts," Rajczi said. "You can file the holes or re-drill them, but you’re not going to get a perfect fit because they’re not the same. Techs will start hating their jobs for putting parts on a car that won’t fit right, and I don’t blame them. Give that same guy OE parts and he’s a happy tech---no stress and no arguing about what type of part to install.”
Racjzi is also done with DRPs, another way the insurance companies can control shops, especially MSOs. His biggest fear is DRPs will eventually lead to the demise of smaller, independent shops.
“DRPs are not a beautiful thing, let’s make that clear,” he said. “Smaller mom-and-pop shops will often say no to DRPs because they are family businesses and they value their reputations. But for the big chains, it all about volume, and their attitude is ‘get it done’ at any cost. The problem is you have to pay upfront on everything and the insurance company expects their check at the end of every month. So, they end up having to shuffle money around or borrow it to keep the DRPs happy.”
Can this industry turn it around, so we can all make money without sacrificing peoples’ safety and still do repairs correctly? Only time will tell, but it won’t happen until body shops start getting together and communicating openly with other shops, the OEs and the insurance companies.”
If you want to share ideas and concerns with Rajczi, he is anxious to hear from you at kensautobodyshop@gmail.com.
Ed Attanasio