Training represents a huge tax on the bottom line, but it needn’t be
Getting penalized for being smart
In most industries, bright, well-trained staff at the top of their profession get recognized and remunerated for their high skill levels, or at the very least do not get penalized for it! But what about our own industry, what do we do to encourage staff to take training courses and advance their careers?
Below is a classic example of two technicians in our own industry. Technician “A” is smart with a good education and has taken every factory course available and passed every one with high marks. On this particular day, he did two electronic diagnostic jobs that paid straight time. He then did one “Diesel” warranty job that took three hours and only paid two. At the end of the day he earned a total of six hours flat rate. Technician “B” is not the brightest bulb in the chandelier and has no factory courses, he did three wheel alignments, two brake jobs and a brake fluid flush, all no brainers and made 10 flat rate hours. They are both paid $28 per hour, so technician “A” earned $168 for his efforts and technician “B” earned $280. Now, the story gets worse as they both were there for eight hours. Technician “A” the specialist earned $21 per hour and technician “B” the grunt earned $35.
Guess what, technician “A” quit and now works at the airport with a reduced hourly rate, but with a guaranteed eight hour shift and no racing against the clock. He now also has great health benefits for his family and a pension which means he can retire at 50!
Could the above example be why it is so hard to attract well-educated young people into the industry and why some technical training institutes have cancelled apprenticeship classes due to low registration intake? It seems that most kids these days want to be computer engineers and stay clean, while the ones who want to get into the industry are those that failed Grade 12.
A friend asked us this question recently: “My son is not doing well at school with both English and math, do you think he would be a good candidate for an apprentice mechanic?” Obviously, changing the name from mechanic to technician has done little to improve the general public perception. But moving on from the public perception, we surveyed a number of service managers and asked this question: “Would you like to see one of your own children get into an automotive apprenticeship program?” The answer, from 90 per cent was: “No way!”
Who pays for the training?
Our own belief is that the manufacturers should be paying for the technical training, but instead of that, as in Europe, it appears to have become a profit centre! Some manufacturers are using the big stick method as a motivation for dealerships to send their staff for training, by linking technician training to the warranty rate. The problem with that is the warranty dollars in most cases are so low as a percentage of total labour, that dealerships could be better off by taking the lower rate. Another franchise insists that the technician’s identification number be recorded against the warranty labour operation to make sure that they had the required training. One service manager from a domestic vehicle brand store told us that their technician training expenses for 2012 were around $20,000 not including continual IT updates.
Now take into account lost technician productivity, the cost of special tools and you finish up with a huge drain on the bottom line. This is why we believe the OEMs should be paying for, or at least financially supporting product training. Maybe if dealer principals were not more interested in vehicle allocations and vehicle sales incentives, they would spend more time on this huge dealership expense and go after the OEM!
What is the incentive for getting highly trained? Well for starters, if you are a high producing technician and used to being 120 per cent efficient on the flat rate system the chances are you will only get paid straight time when you are away on a training course, costing you money.
Now for the big turn off, the OEMs have never been generous with warranty labour times, which are often impossible to beat and it is the trained staff getting most of the warranty work. When I myself was a technician it always bugged me that the people on the assembly line, that caused some of the warranty failures in the first place, got paid more money than I did trying to fix them and
losing productive hours doing it!
Looking at the real financial impact
Now let’s take the $20,000 training expense we talked about earlier and work out how much labour we have to produce to cover that, supposing we get to keep 20 per cent of the labour dollar on the bottom line. That works out that you have to produce $100,000 in labour just to cover the basic expense, not counting all the other incremental expenses we talked about!
Over the last several years, we have seen it tougher to put decent money on the bottom line, so maybe it is time the manufacturers stopped demanding so many training dollars from the dealership and came to the pump, but this will not happen unless dealers start demanding it.
Our advice is get your service manager to calculate just how many training dollars your store spent last year and what it took off the bottom line!
