Canadian repair shops led the charge in technician efficiency and utilization, but lagged behind U.S. counterparts in profit margins and parts markups, as revealed in the State of Heavy-Duty Repair report compiled by Fullbay at the TMC.
The 80-page report revealed several notable trends in 2022, with 74% of shops raising their labor rates by varying amounts from $7.10 an hour (all figures U.S.) for smaller shops, and up to $14.60 an hour for shops with 21-40 technicians.
Geographically, the Southwest raised rates the most at $13.10An hour, while Canadian shops put in labor rate increases averaging $10.90 per hour. Of those shops that hired workers, 92% increased technician pay, while only 40% of those who didn't raise labor rates were able to increase technician pay.
According to Fullbay CEO Patrick McKittrick, it is important for shops that didn't increase labor rates to have to do so this year to retain technicians.
Technician compensation rising
Canadian technicians earned an average $44.80 an hour, higher than all US regions except the U.S. southeast, with the lowest pay being $35.10 in the midwestern states.
Technician pay is increasing, with 46% of technicians paid by the hour and 28% paid by job. There is a growing movement to pay technicians on a per-job basis versus per-hour basis, with more shops moving to billing the exact amount of time it takes to do the job.
Hourly wage increases for technicians varied widely in 2022, with larger shops with 41 or more technicians increasing wages to $8.20 an hour and small shops with only one or two techs increasing pay to $3.10 per hour.
Efficient Canadian Shops
Canadian shops have the most efficient technicians in North America, with an efficiency rate of 88% and utilization rate of 79%. Glen Grader, owner of Integrity Fleet Services, noted that efficiency follows utilization, and that the added efficiency drops to the bottom line.
Canadian shops also had the highest average invoice size in 2022, at $1,242, and had the second highest labor rate at $119 per hour.
The study found that technicians are loyal to their employers, with nearly half (49%) having spent more than 80% of their career with their current employer.
Parts and inventory
Canadian shops have lagged behind American counterparts in terms of profit margins and parts markup.
Parts managers and shop owners have adapted to the current parts shortage by stocking more than traditionally, with only 29% saying they currently purchase what's needed and more.
85% allow customers to supply their own parts for a repair, but few will provide a warranty.
Only 10% of shops have experienced disruptions due to the parts shortage, but 17% of responding shops said the ability to source parts was an "absolute mess" in 2021.
It took "a lot longer" than usual to get parts, falling to 25% in 2022.
Cost increases slowing
Decisiv, a study service management platform conducted with TMC, found that parts and labor cost increases have slowed by the end of 2022 compared to the previous year.
This indicates that despite economic headwinds and supply change challenges, commercial vehicle service operations continued to successfully offset increases driven by factors outside of their control.
Decisiv concluded that lower parts prices and reduced labor wages are responsible, but other factors such as a slowing in truck freight demand and the arrival of long-awaited new trucks should also reduce demand for parts and repairs.
