Chapter 13
Gus's Garage

By Jake Snyder

Publisher’s Note: We begin our second year with Gus this month, and I think a real sense of comradeship with Gus and his intrepid consultant has developed here at INSIGHT and among faithful readers who turn to the back page every month to catch up with what’s going on at Gus’s Garage. INSIGHT is proud of Jake Snyder, Gus’s writer and real-life collision industry consultant, and congratulate him on his first year’s literary achievement here! Body shop owners can contact Gus’s expert for advice by e-mail: jjremotepro@att.net.

Gus and I sat down with Fred, the owner of Hometown Chrysler. Included in the meeting was Fred’s financial manager, Rich. The meeting was brief and informal as Fred had asked Gus to stop by and take a look at his bodyshop over and get an idea of what Hometown’s operations were all about.

Fred explained that, after 12 years of not developing the bodyshop as an equal and complimentary operation to the new car dealership, he had finally concluded that it was time to give up and hand-off the operation to an autobody professional. Fred thinks that Gus is the one to turn the autobody operation into a market leading operation.

He likes the idea of creating a high profile autobody operation that will help Hometown Chrysler entice the new car customers back to the dealership for all their vehicle service needs. In addition, Fred envisions that a high volume shop attracting a large number of customers and delivering superior service will generate great sales leads for his new/used car sales staff.

He said there were two key elements to his strategy: First, re-establish the bodyshop as a mirror image of the professional image and high service levels offered at his dealership; Second, the bodyshop has to attain numerous insurance referral relationships.

To Fred, an insurance company referral is a third-party endorsement of the Hometown Brand. By engaging multiple DRP Agreements in the autobody shop, Hometown Chrysler can strengthen its brand identity in the local market and create another marketing channel to consumers.

Rich told us that shop sales were around $2 million over the last 12 months. Overall revenue growth has been relatively flat for the past three years. He also estimated that approximately 50 percent of the autobody repair sales are for the vehicle brands sold by Hometown. They had not developed any terms for the sale of the business, but they did suggest that Hometown could hold a loan obligation and lease the building and property.

Hometown Chrysler is a high volume dealership selling approximately 400 new and used cars monthly. The service department averages 40-60 repair orders daily.

Fred is planning to strategically compile and manage customer data that is gathered from multiple contact points and customer experiences in sales, service, and autobody repairs. He would like to develop promotional schemes that would crossover his diverse service and product offerings. Ultimately, the objective is to maximize customer retention and referrals and to double Hometown’s share of the new and used car sales market.

Gus was not yet ready to get into any specifics, but he did acknowledge to Fred that he was very interested in purchasing the autobody operation and would like to first get a look at the shop and come back next month to further assess and analyze the financials and business records. We only had time to spend a couple of hours looking over the operations so we suggested that it was time for a shop tour.

While walking back to the bodyshop, Fred noted that Tom, his bodyshop manager knew why we there. He said Tom was a good employee and has been with him for 20 years and would like to see Tom stay on board indefinitely. He realized that Gus would not be obliged keep any of the bodyshop employees, but because of his loyalty to his key employees; he would find them a home in the dealership if Gus decided he didn’t need them.

The shop was filled with cars and there was a significant inventory of driveable and non-driveable cars in the lot. Tom had told us that he averages about ten small dealership internal and warrantee jobs weekly. He said that there were a few occasions when the autobody shop did 20 to 30 small dealership jobs in a single week.

The building (see Illustration 1) dimensions are 125 by 200 feet or about 25,000 sq.ft. The steel I-beam construction showed no evidence of disrepair or deterioration. The slightly pitched roof has a clear span with no supporting columns interfering with the floor layout. The metal walls also have high mounted translucent panels installed for natural lighting. There is good ventilation from roof vents and two large wall mounted exhaust fans.

There is a large nicely finished customer drive-in area next to the office and used for estimating, sales, and shop loading. Inside the shop area we counted 14 metal bays, six paint bays excluding aisle space, and two detail bays. The metal shop has two frame machines: a large drive-on machine, and a drive-on bench/lift type. Several of the metal bays are fitted with floor anchors that did not appear to be used. In the paint shop there are two booths backed up against the wall: one is a heated side draft; and the other, unheated. The paint department also has two portable infrared heat lamps and a curtained prep bay.

A low-level block wall separates the paint department from the metal area. Similar, but slightly higher walls separate the drive-in area from the metal department and the detail bays from the paint area.

Tom has 17 people working for him in the autobody shop: six metal techs; one painter; two paint helpers; two detailers; two service writers; two customer service reps; one parts manager; one driver/porter. Half of the staff has been with the body shop from the first year it opened approximately 12 years ago. Tom came over from the service department when the shop was first opened and has continuously held the bodyshop manager’s position. He has a friendly manner, and spoke highly of his staff.

Gus and I had been discussing how the office spaces and the production areas were uncluttered and orderly and that there was a general simplicity to the workspaces. As we talked about how there was nothing really exceptional about the place, it dawned on us that the shop was minimally fitted and equipped. As we explored further, it appeared that except for the IRT lamps, three paint guns, and two PC’s, everything else in the shop had to be original equipment from when the store first opened 12 years ago.

There were no lifts or computerized measuring systems. The management system used for repair order management is the dealership system. In fact we were willing to bet that even the majority of shop processes had remained relatively unchanged over the past 12 years.

By looking around at the maturity level of the employees and the friendly manner in which everyone interacted, Gus and I were witnessing an operating unit that had evolved into a solid work team. Although the techs were performing individual functions, everyone appeared to go about their work in a very deliberate and methodically manner that was meeting the expectations and specifications for each next processing function. We guessed that over the years, the employees had become good at resolving their own problems without bothering management.

Gus and I looked at each other and immediately wondered if the simple and consistent operation we were looking at was a good thing or a bad thing? I wondered if this little community of people, led by Tom, had insulated themselves from normal business pressures by constructing a shield of consistent delivery, mediocre work, and zero conflict? Have the employees in the bodyshop learned that it is best to "maintain a low profile and not rock the boat?" That the right work ethic is based on "not doing too much or too little, but just the right amount and to bide your time?"

Generally we were pleased with both the shop and Fred’s overall strategy, but we had to proceed cautiously and not underestimate the challenges and expenses involved with this venture. Additional investments for equipment would be needed. Consideration will also be needed to develop an effective strategy and plan to gain employee buy-in for any kind of change initiatives.

Establishing a business relationship with the Hometown Chrysler could be potentially very rewarding for Gus, but there are still numerous questions to be asked and negotiations to be made, before he is able to make a commitment and purchase the operation.

Jake Snyder, creator of the popular Gus’s Garage series, is interested in hearing from shop owners with real-life questions.
E-mail JJ the Remote Pro, Gus’s intrepid consultant.