What's Really Causing the Technician Shortage?Written By Mary Sedor
Article Date: 09-01-2007
Copyright (C) 2007 Associated Equipment Distributors. All Rights Reserved.
Executives on AED's Product Support Round Table say it may be less about the number of technicians and more about an inefficient service department.
As the construction equipment distribution industry changes, equipment dealers will have to learn to differentiate themselves in the marketplace. Service is one area in which dealers can truly shine.
AED’s Product Support Round Table met in May to discuss the key issues in the product support arena, including technician shortages, extended warranties, flat rates and maintenance contracts.
Essentially, the Round Table is a focus group comprised of senior executives – both manufacturers and dealers – of major construction equipment lines. The group is charged with the task of analyzing, developing perspectives, and providing recommendations for AED on key issues and trends affecting the distribution channel.
Round Table members who are quoted are not identified by name in order to preserve and encourage candor and freedom of expression throughout the meeting.
Finding and keeping technicians is a perennial challenge for equipment manufactures and dealers alike. Typically manufacturers and dealers are described as having a dependent relationship on each other. When it comes to technicians, the group agreed that this is really where manufacturers and dealers are in direct competition. However, the lack of technicians could be the symptom of worse problems – a service department riddled with inefficiencies and a less-than-stellar technician image.
“Is it that we don’t have enough people, or do we have them but the whole service department is antiquated and not up to speed enough to get production through the shop?” asked one dealer. “Is it really a service technician shortage or is it inefficiency?”
About five years ago this dealer brought in a consultant from the auto industry because he was backed up with five weeks worth of work due to a technician shortage. After the dealer made all of the recommendations they were out of work in four days.
“It really opened my eyes that there is a different way to do this,” he said. “I can’t help but think that we can all get techs if we really want them – we have to go buy them. The problem is if you don’t have enough money to compete against the auto, heavy trucks and government customers.”
Another dealer agreed that perhaps the problem was that equipment dealers have technicians but are not making maximum use of the techs’ abilities.
“Sometimes we dumb down our expectations,” he said. “We have people who can do more if we asked them. We need to use the people we have to the fullest of their capabilities. We might not even know what they can do yet.”
One of the compound problems dealers are facing is that equipment is becoming increasingly complex and computerized, and the technician workforce is aging and not as tech-savvy as the younger generation.
“In the past you would have an old generalist who could work on anything,” a dealer explained. “As equipment became more sophisticated, digital and computerized, we have to develop a whole new type of technician — someone who has the ability to go out and use a laptop but can also turn wrenches,” he said.
Another dealer agreed that for him finding technicians isn’t the problem; it’s the skill level.
“One of the things we’ve done as dealers is drive it down to the bare minimum of people. There is not a new influx of people with new ideas. If we can get the guy into the shop we can get him trained, but how do we get him to the next level to be a senior tech? Most schools teach the bare basics.”
Attitude is another important factor for technicians. Getting a qualified technician with the right education
to do the job is important, but so is having a technician with the right mindset.
Yes, it’s important to get the right talent in there but it’s also the caliber of person you’re getting. We recently let go of a few people who were talented mechanically but didn’t have the right attitude,” that dealer continued.
Manufacturers responded by discussing what they could do to help dealers gain more experienced technicians and drive efficiency in the shop.
“Manufacturers should help dealers increase the number of master technicians in operation, said one manufacturer,” “Second, dealers should take advantage of standard jobs to whatever extent possible, to drive technician efficiency.”
He went on to say that the dealership service department in the future will most likely look more like an automotive service department, as dealers should use more standard jobs based on technician skill level instead of a setting separate standard rates in the shop and the field.
“Something manufacturers can do is look for and quantify what the technologies of tomorrow will be today and use that knowledge with community college training so they have a better foundation today of what they will see down the road,” he said. “The last element is, again, looking at how we improve efficiency within the dealership and within the manufacturer-dealer chain.”
The group agreed that the image of the construction equipment industry is in dire need of assistance. The outside world views a technician as a dirty job and one that’s not really considered a career path or position of honor. While the group did not come up with a solution on how this shift can be accomplished, they emphasized that cleaning up the image of technicians will be necessary to attract more people into the industry.
A manufacturer who has only been in America for a few months shared his observation that while talent is available, not many people are attracted to the industry. He believes the solution is apprenticeship. In Europe, technicians are compensated at a higher level and their positions are respected, a sharp contrast to their American counterparts.
One dealer mused that young people are not attracted to the industry because technicians have historically been paid at an economical rate.
“Is part of our problem self-induced because we didn’t value service as part of our business as much as we should have 25 years ago?” he asked.
The “grease monkey” mentality has infiltrated the general public’s view of technicians and it’s difficult to change, said a dealer. One solution the group identified is the need to create a career path for technicians. This dealer works with three different colleges and annually graduates 36 apprentices with two-year associate’s degrees. The dealership pays the technicians’ tuition if the techs stay in the program for two years. After they graduate the new techs are placed in a three-year training program at the dealership.
“Hopefully we have them for a while when they come out,” he said. “We ask them their goals and provide them with a career path.”
Although this dealer has six dedicated trainers in the organization, they still struggle with fulfilling the quantity of training required.
Warranties and Flat Rates
The cost of warranty process administration, submitting claims from different territories and training technicians to submit the paperwork were all discussed during this portion of the Round Table. Dealers noted that manufacturers reimbursed based on a rate the manufacturer establishes in a completely different environment. One dealer suggested diagnostic reimbursement in exchange for using a diagnostic expert or master technician for the repairs. Ultimately, the dealers expressed concern that warranty work isn’t one size fits all.
“Warranty recovery is the actual completion of the warranty claim,” said one dealer. “The difficulty we have is that we can have great service techs but a lot of them are not paper oriented, so they can’t sit down and do the claim.
“The first thing we do is educate the customer on the specific warranty timeframe,” he continued. “One of the biggest things in our industry is the warranty term. We have to be very astute at filling out warranty claims.”
One dealer suggested modeling warranty work after the auto industry and that manufacturers use the same environment as dealers when establishing a warranty rate.
“How often do you get to buy a car from the lowest-priced dealer and they say they will do warranty work?” he asked. “We all understand that somehow there has to be an equitable relationship. You do this in a time center, engineers do it and they never use the same tool twice. There’s no cleanup. And the best time is our labor rate time. Warranty is a huge expense for us. Somehow we have to get back to the table.”
One dealer said the concept of the car dealership is fine, but it should be looked at again with the dealer as a part of the process.
“We don’t need to be a part of the decision, but it boils down to money and time,” he said.
One dealer noted that they are not compensated for travel costs. He’s in Texas and it takes several hours just to drive out to the end user to diagnose the problem, get back to the shop, get the part and drive back.
“Would the auto industry be as efficient if they were driving to their customers’ houses, diagnosing the problem and fixing the car in the driveway?” he asked.
Dealers noted that the customer expectation level is changing. They want a response right away.
“When the customer’s machine is down that’s their only problem in the world,” he said.
One manufacturer responded that he couldn’t give dealers the best answer, but he said getting over the issue will mean incremental change.
“No one ever criticized us for establishing flat rate too high,” he said. “The near term changes we’ll see are things like service times established in a dealership to address the issue of using a factory time study approach. The warranty reimbursement rate is what it is.
“Clearly, driving product quality is important to every manufacturer or you won’t stay in business,” he continued. “It’s about satisfying customers’ needs without giving a burden to the dealer organization,” he said.
Variables in training, territories and tools were all major factors over which dealers expressed concern related to warranty reimbursement.
“It’s important flat rates reflect the actual fair and reasonable repair time,” said a manufacturer.” There is a lot of value in driving warranty off of flat rate – it drives some incentive to put the right tech on the job. Another incentive would include diagnostic reimbursement in exchange for the master tech.”
Manufacturers also said they don’t have a preference about which dealer performs the warranty work – as long as they file a claim, any dealer can do the job.
Dealers have found that smaller intervals are better when it comes to maintenance contracts. Plus, additional work can be generated from customer support advisors (CSAs). In addition, dealers say the customer doesn’t want the price to change over the life of the maintenance contract.
“For seasoned guys who are tired of being in the field, they can put in a CSA who can go out there and be our eyes and ears, and find work,” said a dealer. “It’s generated because they have the experience and know what to do, and know what they’re talking about.”
Dealers agree that maintenance contracts are an opportunity to show their expertise to the end user.
“Maintenance contracts are the perfect opportunity where we as an industry can highlight the fact that we do things right,” another dealer said. “We’re well educated and we want to take care of our customers.”
One dealer said he made drastic changes in his service department, particularly in the area of product support sales reps (PSSRs). Instead of being a delivery guy, the PSSR has been elevated into a value-added position.
“It was a significant difference. It’s easy to have a PSSR all of a sudden become a parts gopher. We are changing the direction from a parts order-taker to working accounts and becoming a customer liaison,” he said.
Manufacturers agreed that elevating the PSSR into a customer liaison is helpful.
“Now they have a reason to go to the customer and have something to talk about,” one manufacturers said.
Customers and Warranty Work
Dealers are very much opposed to allowing customers to complete their own warranty work. At least one dealer on the Round Table uses that option sparingly. However, the hard truth is that some customers are completing their own work. Manufacturers allow the major national accounts to complete their own warranty work, provided it’s noninvasive.
“That’s Pandora’s box,” said a dealer. “Service is our last stand, the last frontier, and manufacturers are selling us down the road by going straight to the customer,” said a dealer.
Dealers at the meeting were unified in their dislike for allowing the customer to perform their own warranty work.
“It has an impact on the dealer,” another asserted. “It dilutes the value of the dealer. I can see the next generation [of end users] not understanding the manufacturer/dealer relationship and undermining it. That destroys the culture of a network we support.”
Manufacturers allow major rental companies to do all their own maintenance because they have a staff that can respond quicker than a dealer to basic, noninvasive repairs.
“We work to retain our dealers, and they have the opportunity to provide their customer with completed warranty repairs to the extent they want for noninvasive repairs,” said a manufacturer. [But dealers] are authorized to let an [end user] account do a repair because they have the technicians on staff.”
One manufacturer said he accepts warranty claims directly from end users.
“We’re sourcing parts from dealers at a price dealers sell,” the manufacturer said. “[End users] are reimbursed for net cost on parts and a negotiated rate on warranty.”
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