Counting the Cost - Foundations
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: Foundations

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Counting the Cost

Written By Matt Di Iorio

Article Date: 06-01-2004
Copyright (C) 2004 Associated Equipment Distributors. All Rights Reserved.

Technician shortage costing dealers $3 million a week.

An equipment manager for a large contractor in the Midwest recently told me he had just hired three technicians. “Why?” I asked. “Because I had to” was the reply. “I only have one job, but it’s a big one.” He continued, “I’ve got to have the equipment our site superintendents need, where they want it, when they want it, capable of doing what they want it to do. And I just can’t depend on my dealers to do it.” The shortage of technicians is costing factory-authorized dealers nearly $3 million each week, according to a recent study conducted by AED. But that’s not the worst part. Dealers will survive, although foregoing growth in the department capable of generating the highest gross margins. Far worse than the sting of the lost sale is the fact that customers will find other ways to get equipment repaired. Many dealers have changed their approach to service management. They treat a billable hour as inventory on the shelf, much the same way a parts manager treats parts inventory. However, the parts manager has an advantage. If a customer orders a part that is not in stock, it can often be shipped by 7:00 am the following morning. It could take a service manager years to develop a technician that can recover those lost billable hours. The parts manager has another advantage. Parts on the shelf that have not been sold can generally be returned, or held for significantly longer than the dealer principal might appreciate. The point being: Most parts are not perishable, but a service department’s billable hours are. If a service manager invests in an additional technician so the company has more hours to sell, the hours must be hold immediately, or they’re gone forever. The technician can’t bill twice as many hours tomorrow to make up for the time lost today. You’ve no doubt heard the statistic that the average dealer participates in less than 25 percent of the service work done on the equipment he sells. You may also be aware three-quarters of newly hired technicians come from a neighboring dealer, and nearly half of U.S. dealers do not actively recruit from a local trade school. This year, The AED Foundation has recruited more than 300 entry-level technicians specifically for AED member companies. However, research indicates dealers are prepared to hire more than 3,000 in 2004 alone. The number of graduates from Foundation-accredited schools is limited by their ability to recruit students. Thousands of high school teachers, counselors and students are being contacted with letters and post cards encouraging them to consider careers in construction equipment, but much more work will be required. There is a great deal you can do to address the shortage of technicians and, in doing so, the opportunities to grow your inventory of billable hours, service revenue and profit. Contact Carol Schrader from The AED Foundation at or 630-574-0650 ext. 303 for more information. To subscribe, CLICK HERE.
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