Sergio DeSoto Weighs In-House vs. Contracted Installers

Before I break down this month’s topic, I’d like to say thanks to the ST staff. No matter what subject I choose, they hold me to high standards. They hound me for details until I’ve described a subject thoroughly enough to make my column helpful for you. It’s my goal to help shop owners grow their businesses and be successful.

Having said that, I want to discuss what I believe is one of the most important things a wrap-shop owner needs to address: handling the logistics of contracting outside installers. When you’re running
a tight ship, how to manage your installations is a tough decision.

Several factors should influence your choices. How many installers should you hire in-house? How many outside contractors should you hire for installations, and when should you do it? What performance standards do you set for in-house staff and outside contractors, and how will you manage and pay them? The decisions you make will impact your bottom line – and your reputation as well.

Many successful shops have several installers on staff, but there are other, highly profitable operations that have one, or even zero, employees who apply wraps in-house. Let’s break down each option; you decide which choice suits your production and profitability needs.

If you have consistently high volume, you may choose in-house installers. Keep in mind that the national-average wage for a highly qualified installer is $20-25 per hour ($800-$1,000 per week). If you provide benefits to your employees, add approximately another $500 per month to the equation.

Depending on the installer’s skill level, you’ll probably move three or four full wraps out the door weekly. Inside installers can also help with other diverse projects based on your offerings, such as signage fabrication, pressure-sensitive-adhesive vinyl applications, vinyl weeding, premask application and so on.

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Honestly, if your volume can support having inside installers on your payroll, that’s not necessarily a bad thing. However, if your volume drops over a prolonged period, your cost per employee will rise dramatically. I suggest creating a ratio – hire one inside installer for every 3-5 wraps you produce a week. This will fluctuate a bit, based on the jobs you most commonly produce. It takes more manpower to wrap three sedans than it does three vans or box trucks – if you wrap tractor-trailers or building fronts, you’ll devote even more time to each project.

If you’re just starting out, hire an outside installer on a per-job basis until you can build to at least three wraps per week. Their hourly rates are higher than in-house staff, but you’re not paying for downtime or benefits, which will help keep your bottom line in the black. If you hire outside installers, you can, depending on the projects, save $1,500-$2,000 monthly.

If you’ve taken a hard look at your sales and decided to ramp up capacity (see ST, December 2012, page 20 for Sergio’s column about managing growth and production), your opinion about hiring installers may change. My experience tells me most profitable shops don’t have any in-house installers. Think about that; I know it seems unlikely that paying outside installers a higher hourly rate would ultimately save money. We’ll address that later. First, let’s examine considerations when hiring outside contractors.

Know the risks
Hiring outside installers involves huge risk, and can lead to huge mistakes. Even though several certification programs exist, it’s still a gamble that you’ll get the end result you want.

First, installer experience varies. Look at their work history and check their references. Don’t rely on current certifications. Some certification programs have lowered their standards. An installer may only need to watch a video to receive the basic certification level. Make time to view an installation a prospective employee has completed in person; don’t trust photos or a video.

Always make sure a contractor maintains professionalism. A good installer will squeegee well, but will also effectively manage proper representation of your shop, scheduling and billing.

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Obviously, an experienced installer’s expertise will cost more than a rookie’s. Unfortunately, because ours is still a relatively young profession, there isn’t an industry standard for compensation (and, cost of living varies widely from region to region). Do research and make sure you’ve built the proper installation fees into your jobs.

Remember, if you’re focused on hiring cheap installers, you’ll eventually get what you pay for. Experienced professionals won’t come back to help you if you offer bargain-basement rates. Pay based on skill, and be aware that hiring rookie installers will likely result in warranty issues. And, finally, pay contract installers on time.

If you don’t, they won’t return, and you’ll quickly develop a bad reputation. Create a standard contract for outside installers. You may need help from an attorney or an accountant to create this; do what-
ever is necessary to protect yourself.

The contract should specify your expectations, i.e., the installer pays for any panel he ruins, and a warranty period guarantees his work. A good installer should warranty his work for one year. Make sure he signs a non-compete clause that guarantees he specializes in installation and won’t steal wrap design or production business from you, or go after any customers offsite.

I suggest adding a condition to the agreement that requires your contractors to wear apparel branded with your logo. Also, make sure you’ve accurately outlined invoice and quoting procedures so projects flow smoothly.

In or out?
Now, back to the question of in-house staff versus outside contractors. My advice: If you’re doing wraps full-time, hire a highly skilled installer (or a formerly superior installer who’s slowed down with age) to manage your installations. This way, a loyal employee is verifying work before it’s signed off, and the rates quoted are fair and equitable for your busi-ness. Then, by perfecting your workflow and increasing capacity, you should hire outside installers.

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Think about this; one installer in-house handles three to five wraps per week, and is paid every minute he’s on the clock. Based on the capacity of my shop’s printer, a Mutoh ValueJet 1624, a team of outside installers can handle 5-20 wraps per week, and are only being paid for specified jobs. If you own a large-format printer, you should produce 20 wraps per week (working normal hours, and with a roll running overnight).

If you hire six in-house installers, that’s approximately $6,000 a week in payroll. If you have two slow weeks, your profits will disappear. If you hire outside installers, your margin on a specific job will be smaller, but, because you’ll better maximize your capacity, your overall profit will be much higher. Many shop owners don’t realize they can get a massive revenue bump by simply printing more and taking advantage of a professional outside licensed installer using their current equipment.

I advise all shop owners to increase output. Even if you have only one printer, one laminator and one cutter on your production floor, your small shop should be able to produce 3-5 more wraps than most shops currently are.