Flat rate vs. actual time
by David C. Grainger
President, The Guild of Automotive Restorers
I recently watched a television program on which a restorer from the American south was interviewed and discussed the restoration business. It was fascinating to note that he seemed to have all the same staff, all the same customers and all the same problems and solutions as I. I was very interested when he spoke about the correct restoration of any vehicle taking from one thousand to four thousand hours depending on the vehicle and its condition, and that he was not just talking about 1932 Packards and 1920 Silver Ghosts, he was talking about 58 Chevys and early sixties Valiants.
Interestingly enough, I have over the years spoken to many restorers who have had all the same problems and complications in their craft, the catch being that they did not restore cars. One was an art conservator, another a restorer of old buildings, several boat restorers involved in the restoration of antique wooden boats, and several gentlemen involved in the restoration of antique aircraft, indisputably the most exacting of all the restoration disciplines.
I am often asked why a body shop can paint a car for less money than a restoration shop, and there are of course those who constantly raise the issue of paint shop chains offering paint jobs for two hundred and fifty dollars. The answers to these questions are of course quite simple. In fact, a body shop cannot paint a car for less than a restoration shop if they are going to do the same job and as a matter of fact, when they attempt to do the same job, costs often exceed those from a restoration shop where experience is a great cost cutter.
Most body shop are in the business of taking a car which has been in a collision or perhaps is eight or nine years old and needs to be freshened up a bit. In very few cases are the cars stripped to bare metal, chrome, trim and glass removed which is always the case when a car is being restored.
Of course when all the paint and body work has been removed any corrosion or old repairs have to be repaired and the panels all made straight and tidy before the repainting process is started.
In all the automotive trades there is not one that is as complex and demanding as that of a restorer, and yet the restorer, and certainly the restoration shop, has the leanest profit margins of any of those trades. Why? Another question simply answered. When a car is being restored it is done in real time in a billing system called Time and Materials. This simply means that the owner of the car pays for real hours spent working on the car and for the materials involved in its repair. I'll discuss the why of this later. This is a fair system in anyone's eyes and the only workable solution during a restoration.
In almost all other automotive trades a system called flat rate is used. This means that long before a job comes in the door the price of doing that has been determined by the industry. Those costs are usually published in flat rate books and it is in these books that the cost of fixing your crumpled front fender or replacing that fuel injection system is written in stone. Now in most cases those times are easily kept within even by relatively inexperienced tradesmen, but when the tradesman is experienced and motivated, watch out. I had a good friend who was a cracker jack body man. He was fast and efficient, so much so that he could usually be counted on to be on his way home by three or four in the afternoon if he felt like it. In real time he rarely put in a thirty five hour work week but he was never happy unless he had been paid for eighty hours in a week. He was allowed by the shop owner to come and go as he wished because while he made a lot of money, the shop made a killing from his work. He made out so well he ended up moving out to the west coast and to semi retirement by the time he was in his early forties. I once got a hold of him and asked if he would like to come and work in a restoration shop. He was interested until he found out that it is a time and materials job, at which point, with real regrets, he turned it down. It seemed that working part time he was able to pull down a fair bit more money than he could make in restoration working a full week.
So you ask, why is restoration done in time and materials rather than in flat rate? If you were to try to flat rate a restoration there are two things that could happen. One is that that those figures that I mentioned at the beginning of the column would be double. When a thousand hours is estimated as a ball park on a job it is a very real guess, but no more than that because the car and its condition will be the end determiner of the hours that the job will take. Now to lock in a flat rate at least twice as much time would have to be estimated on the job. So, if a job was really a thousand hours to accomplish, flat rate could be two thousand hours just in case the job turned out to be more difficult than originally thought. Now if the flat rate was set at a thousand hours for a job that was thought to be a thousand hours in duration and it really took fifteen hundred hours to accomplish two things can happen.
The first is that the shop is going to lose a pile of money by subsidizing one third of the restoration from its own pocket and after a few jobs, go bankrupt, or at one third into the job the shop is going to realize that to restore the car properly is going to take much more than the original estimate so, if the price is truly locked in, the shop may decide to start short cutting and compromising the integrity of the work in order to meet the estimate.
I have for many years thought that the flat rate system is a less than perfect system from the owner's standpoint because most of the time the owner pays more time for a job to be accomplished than it actually took, and when you factor in that many flat rate shops in large cities can charge up to and in some cases over a eighty dollars an hour it makes for a pretty tidy profit margin.
Time and materials is at least fair to all parties concerned providing of course that both parties, both the shop and the owner, live up to their obligations, which are to restore the car properly in the case of the former, and to pay for that service in the case of the later.
So how come a restorer with years of experience can't put anything but an educated guess on how much a car will cost to restore?
It is in fact the huge complexity of the job involved that makes it almost impossible to accurately forecast how much the job will be to within a few hundred or even thousand dollars. To give you a very simple example. Take a car's water pump. Just one small mechanical part of a complex machine, itself a machine in its own right, tasked with the job of pumping coolant through the rest of the car's engine to keep it operating at tolerable temperatures. So we have a part critical to the car as a whole.
Now take it off the engine. For the sake of argument say it is off of the engine of a fifty three Buick, so it is forty six years old and a replacement is not available. So if the engine is low miles perhaps only a couple of hours needs to be spent on the water pump, removing it, disassembling it, sandblasting the parts, painting and then reassembling the pump, which now looks and is in perfect working order. So if the shop rate is sixty per hour, the water pump has cost one hundred and twenty dollars plus tax.
Now what if when the pump is removed from the engine, all the bolts are rust seized into place and two snap. Now we might have two hours removing the pump from the engine in order to minimize the damage to the pump. Now, with it off and disassembled we discover that the impeller is completely worn out, the shaft on which the front seal is so badly corroded that sealing it will be impossible and to finish matters, the pump housing itself has a great big crack in it and a couple of badly attempted brass repairs to that crack which have warped the impeller housing.
So the shaft has to be milled or a replacement made and a seal found, the impeller has to be rebuilt if a replacement cannot be found or an impeller which is close in dimension perhaps customized to fit. Then the housing has to be properly welded using an exotic gas procedure which ensures it won't re-crack in the same place, and then the housing has to be checked internally to make sure that the impeller will fit and pump properly. After all of this then the whole affair has to be painted, the broken studs removed from the block and the block re-tapped for new hardware. So how does that compare with the first job? It has probably taken a minimum of ten hours which is little more than a day, plus shipping of the casing to a specialized welding shop where the cast can be properly welded, the costs of that welding perhaps another couple of hundred dollars. So you can end up with a thousand dollars plus tax in the water pump. (This is based on a replacement being impossible to obtain which with some cars is a very real possibility, although not as likely with a 53 Buick). Now imagine this kind of thing happening repeatedly throughout the restoration and you can imagine why it is impossible to determine how much a job will cost before it is done, unless of course you take a worst case scenario for every part of the car.
This is why a restoration will never be as simple as a straight forward body job on a five year old car, or an engine rebuild on a six year old engine. Time and previous repairs ravage old cars.
The restorer and the restoration shop are tasked with the job of making a Phoenix rise from the ashes, shiny and new and in many cases, even better than when the object being restored was new. That is what restoration is about, no matter whether it is a Model T or a Duesenberg, a Victorian Manor house or a 1938 Chris Craft power boat, a 1939 Piper Cub or a B 17 Bomber.
There is no logic to the restoration of old things, but there is a lot of commitment, craftsmanship and passion to the preservation of the machines and buildings of the twentieth century. There is no doubt in my mind that this passion will extend itself far into the twenty first.