COVER STORY CIC Navigates Challenges Amid Unprecedented Inflation, Workforce Shortages & Evolving Technology Collision repairers face challenges in today’s market unlike anything that’s ever been seen before. Unprecedented rates of inflation drive costs up, compounded by constantly advancing technology that requires ongoing investments in tools and equipment. At the same time, shops struggle to hire and retain qualified employees amid the ongoing workforce shortage. The most recent Collision Industry Conference (CIC), held in Oklahoma City, OK, addressed these challenges and more. “The recent rise of inflation affects a growing number of businesses, but small businesses in particular are faced with the challenge of determining how to adjust and pass it along to ensure that they survive through these rising costs,” explained Aaron Schulenburg, chair of CIC’s Parts and Materials Committee and executive director of the Society for Collision Repair Specialists (SCRS). “What are the causes of inflation, and how should shops plan ahead? There’s never been a time where we’ve had to pay closer attention to what’s happening in our businesses to help guide the decisions we’re making. “Auto body repair prices were up over eight percent in November 2021 over 2020,” he continued. “Understanding what’s actually causing those increases will help businesses communicate how they’re being affected by those changes.” In response to the committee’s question, “Are settlement practices changing in accordance with costs?” 81 percent of repairers answered in the negative, while 63 percent of insurers took the same stance. Rick Palmer (Computer Logic, Inc.) examined pricing
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information since 2017, observing that “there’s an obvious disparity between the increase in costs of paint and materials versus the compensation that is reflected on the allowance amount.” Although reimbursements for materials have increased by 18.5 percent since 2017, repair facilities have experienced an increase of 43.9 percent during the same time period; the current rate of $34.60 should actually be $46.38 if it had maintained consistency with inflation. As Ryan Mandell (Mitchell International) dove into an analysis of collision repair costs, he acknowledged that there were some increases in 2017-2018, but “from there, it was pretty stable until we started to raise during the COVID time period, and then we’ve seen some rather steep increases quarter over quarter. “There are a couple of really unique factors that are at play here,” he added. “We have to look at each individual company’s supply chain, and we’re going to see a lot of variability depending on the manufacturer and what kind of strategies they have in place. They’re extremely impacted by the cost of moving cargo, and raw materials are becoming more and more expensive.” Increases in the price of petroleum results in higher costs in particular, since it is used in manufacturing steel, plastics and paints. The conflict between Russia and Ukraine is having a major impact on the availability of parts as well, since seven percent of the world’s wiring harnesses and over 50