Analysis of Technician Supply in the Collision Industry 2013
The availability of qualified repair technicians in the collision repair industry is an ongoing concern for shop owners and operators in recent years and appears that it will continue to be for the foreseeable future.
There are a variety of factors that have contributed to the shortage of qualified technical employees in the industry. They include:
- An Aging Workforce
- Increased Competition for Employees
- Shifting Market Share to Larger Shops
- Turnover (both inter-industry, and extra-industry)
- Shrinking Workforce in an Industry with Increasing Demand
1) An Aging Workforce –
In 2013 the average collision repair technician is 39 years old according to I-CAR’s Education Foundation. According to the same study, 48% of the technical workforce falls between the ages of 36 and 55. In a job with the physical demands of collision repair the 83,136 technicians in the US that are between the ages of 36 and 55 will start leaving the industry over the next 10 years as they retire and move on to less physically demanding professions.
This phenomenon is not unlike most industries in the US as baby-boomer employees are approaching retirement age. The difference in the Collision Industry is that a combination of conditions has created a deficit in new talent entering the workforce.
2) Increased Completion for Employees –
The I-CAR study also reports that 61% of working technicians in 2013 were hired from another shop. This nomadic culture within the workforce has created an environment where employee loyalty is extremely challenging for shop owners. As increased expenses compared to minimal revenue increase from the insurance industry over the last 5-10 years has put pressure on a shop’s profitability. Often times as technicians move between shops there is an increased offer of compensation to attract that employee. This effect puts increased pressure on the profitability of shops in the market because margins are shrunk as labor costs outpace revenue increases out of necessity to fill the workforce.
3) Shifting Market Share to Larger Shops –
In 2013 there are 40,488 collision repair facilities in the United States which is down 3,047 from 2007. In the same time period the average number of employees in the remaining shops has increased from 8.4 in 2007 to 13.3 in 2013. This trend is indicative of the growth of larger facilities as some smaller shops have been part of the 3,047 that closed during the last 5 years. Since 1995 the number of “large” shops (more than $1 million) has increased from 15.3% to 66.5% in 2013. Furthermore, the average square feet per shop has increased from 5,761 in 1995 to 13,524 in 2013.
As the average number of employees at each shop has increased it has further increased the demand at those facilities to attract a stable workforce thus further increasing the pressure on the collision repair workforce.
4) Turnover (both inter-industry and extra-industry) –
While turnover rates in the industry have stabilized slightly since the turbulence of the economic crisis five years ago, they still remain a major challenge for collision repair operations. According to the I-CAR study, one out of seven technicans left their jobs in the last year and 50% of existing employees have been with their current employer for 5 years or less. The vast majority of the turnover in the industry (53%) is derived from people leaving one shop for another. By contrast only 6.6% of employees left their jobs this year to exit the industry all together.
5) Shrinking Workforce in an Industry with Increasing Demand –
In 2001 there were a reported 214,000 Collision Repair technicians in the US, this year there are 173,200. This means that in 12 years the industry has lost 40,800 techs (19% of the workforce). The US department of labor calculates that based on increases in vehicle sales and demand for collision repair services over the next 5-7 years, the industry will need over 181,000 techs. This means if current trends continue the industry need to find a way to create 24,800 new technicians to fill the need. This vacuum of available help will likely further increase the pressure on employee retention within an already competitive industry.
Where do we look from here to address our technician shortage?
The pressure on existing talent will no doubt increase exponentially over the next five years. Therefore employee retention programs will be vitally important. As an industry we have to more effectively attract new blood in to the industry through partnerships with tech-schools. In order to attract qualified people into the industry we have to market the potential a career in our industry can offer and find a way to entice schools and guidance counselors to promote the industry as a viable career option. Inter-industry apprenticeship programs and interships may be a way to get tech school students valuable real-world training to make them a more viable candidate to would be employers.
Report prepared for the members of AASP-PA
Prepared by Gregory C. McVicker – Collision Division Director
(Figures compiled from the Collision Repair Education Foundation’s 2007 and 2013 “Snapshot of the Collision Repair Industry” reports and the US Department of Labor’s website.)
