By Andrew Ardizzi
Winnipeg, Manitoba -- June 27, 2013
Meyers Norris Penny has released a health of the industry update detailing the latest trends in the province's collision repair sector.
The Auto Body Business in Manitoba Health of the Industry - 2012 report highlights a number of steps forward for the industry and its workers, notably an improvement in wages and benefits for journeyperson collision repairers and apprentices, a higher volume of recruitments complemented by greater retention rates and less turnover, while rate increases have enabled larger shops to keep up with industry costs.
The report notes that there was a cumulative net rate increase of approximately nine percent from 2010 to 2011, although shop wages as a percentage of overall revenue remained stable. It notes however that in shops with revenues ranging from $500,000 to $1-million and shops making over $2-million that there was a wage increase of about two percent.
Journeyperson collision repairers and apprentices both have seen increases in their total annual average wage -- journeyperson technicians have seen a six percent increase in their income, while apprentice wages have increased by an average of nine percent. Dissimilarly, while journeyperson painter wages remained relatively flat, apprentice painter wages increased by 13 percent. The report additionally suggests some work may have been shifted away from journeyperson repairers and apprentices.
Always an issue in the industry, Manitoba-based shops' ability to recruit apprentices is seen as a positive for an industry that in the past has struggled with retaining its young repairers. The report states that in 2011 there was a total of 166 new registered apprentices, compared to 147 in 2008 and 2009. This represents a 13 percent increase in the number of new, young prospective collision repairers entering the industry. Much of this increase is attributable to the Tool Allowance and Apprenticeship Grant program -- a component of the 2010 MPI -- that provided over 100 grants worth over $400,000 to apprentices between 2011 and 2012.
While these advancements in shop culture for apprentices are a noteworthy improvement, apprentice turnover rates stayed at 18 percent for collision repairers, while turnover for apprentice painters actually increased by 36 percent. The industry's retention rate was altogether reassuring, with turnover decreasing for every other position; journeyperson repairer turnover rates notably decreased from 27 percent to 17 percent. This brings journeyperson retention more in line within the healthy range for turnover rates in the province, considered to be anywhere between 10 and 15 percent.
Not only are Manitoba shops now better enabled to hang on to their young workers, rate increases have allowed larger shops to balance the costs of running their business. Shops earning over $2-million have seen a 1.2 percent increase in costs associated with materials, parts and wages, while the provincial average is offset by a 1.5 percent decrease in costs for shops in the $1-million to $2-million revenue bracket. This bracket also saw an improvement in their total overhead costs relative to revenue, improving by 2.8 percent. Meanwhile, shops earning over $2-million found a 2.3 percent decrease in their general expenses, balancing out the increased cost of sales.
While the Manitoba collision industry appears healthier than in past years, the report details the continued existence of challenges that continue to hamper collision repair shops. The Health of the Industry -- 2012 update notes delays arising from the supplemental estimation processes MPI requires of full-time administrative staff. It's reported this ties up administrative staff for an extra three to four hours, driving total repair time to eight to 10 hours worth of labour.
As well, despite the influx of young workers into the industry, there continues to be a problem with attracting and retaining skilled labourers. Specifically concerning journeyperson technicians, there can sometimes be a three-and-a-half to six month period between the resignation of a technician and the hiring of their replacement. The report further states new apprentices will only account for two-thirds of the total labour shortage caused by the exodus of journeyperson labourers. Given the shortage, some shops may need to hire more apprentices to help offset the lack of available journeyperson technicians.
Keeping the collision repair labour force staffed is additionally challenging due to the continually advancing state of industry technologies. As general technology and materials improve and environmental and safety regulations evolve, ongoing training is required to keep technicians privy and up-to-date with the latest industry developments. While these costs are a challenge unto themselves, the lack of availability of these training programs and educational institutions in some areas pose greater strain on a shop's ability to maintain its staff.
Additionally, while larger shops have been able to keep up with the costs of running their businesses, smaller shops continue to face vulnerabilities and run on a smaller scale, with nearly 75 percent of accredited shops operating below the $1-million revenue bracket. These same shops account for one-third of MPI business in Manitoba, and about two-thirds outside Winnipeg. In all, 90 percent of the province's collision repair shops operate outside the provincial capital.
Small shops are more susceptible to industry challenges, being less able to make necessary investments into equipment, technology and training programs. It's this lack of funds that makes it difficult for smaller scale shops to not only attract but keep its skilled labourers. With vehicles becoming more advanced and labour intensive, consumers will be more apt to take their vehicles to larger shops, potentially leading to declining business for smaller shops.
Moving forward, the report recommends the refinement of a strategy to not only attract new technicians, but improve the capabilities of shops to retain their young workers. The report recommends for ATA, MMDA and MPI to work together to discover means to compensate smaller shops who invest in apprentice training.
The report also encourages shops to train their workers in emerging technologies, understanding that as the industry evolves so must the shop and its technicians. It's concluded that joint strategies need to be identified and promoted to improve access to training programs such as I-CAR.
For the full Health of the Industry-- 2012 report, please visit mpipartners.ca.