Solving the Technician Shortage - Product Support Round Table
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SECTION: Product Support Round Table

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Contact Kim Phelan at (800) 388-0650 ext. 340.

Solving the Technician Shortage

Written By: Pam Gruebnau & Mary Sedor

Article Date: 11-01-2006
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.

Dealers discuss what works in recruiting techs, PSSRs, the future of flat rates and more.

What's the biggest concern facing your business? Dealers respond:

  • Recruiting and training technicians.
  • Handling the growth we've experienced in the last two years.
  • Manufacturer/dealer relationships and unrecoverable warranty expenses.
Manufacturers respond:

  • We tend to deliver technology more quickly than dealers can handle it.
Dealers respond:

  • Our technicians are introverts by nature and aren't good communicators. If we could figure out a way to develop their communication skills, we could save a lot of wasted hours in the field, and do a better job of communicating with the customer.
  • Technicians are like bill collectors - they don't go out to a happy customer. Our emphasis is to get the best quality mechanic we can, whether or not he's good at interpersonal relationships.
  • There's an emerging business philosophy that we should take what the individual is good at and make them better. Maybe we could put a customer service person with a technician. How often do you talk to a technician at a car dealership? You talk to a customer service person. They have the tools and the computers in front of them to deal with customers.
  • We find guys that are articulate and make them product support sales reps.
  • We have a position called service writer. He produces quotes and communicates with customers and technicians.
  • We surveyed our customers and employees to ask when we should respond to a service call. Employees had a range of answers; the average was two days. The customers‘ response was that four hours is acceptable. That's a major disconnect.
  • As much as possible, we give our most qualified technicians advanced technology, such as remote diagnostics. We have the ability after analyzing the data to send the guy out with the right part. Every manufacturer should make diagnostics standard; it shouldn't be an option.
Manufacturers respond:

  • Everything we've talked about is reactive. We need ways to get to the problem sooner, repairing before failure.
Dealers respond:

  • We have first responders we call "ambulances," but neither customers nor manufacturers are willing to pay mileage or costs.
  • The issue we have is the techs that are experts in some areas are unprepared in others. The guys with 30 years experience still have the ability to make the machine run; the younger guys don't.
  • Some dealers are selling "first responder service." They promote the value of having someone there the same day and knowing how long equipment will be out of service. It seems to be catching on.
  • Machine information systems that provide a condition report to the dealership are vital. With emissions certification, every machine, no matter how small, comes with an electronic controller. And pulling data off the data bus is much easier with a common piece of communication hardware.
  • We're getting tons of calls on Tier III engines, and they're all fuel related. We go out to a call, and they have plugged fuel filters and dirty fuel.
  • We know we have to grow our own technicians. One of the things we're doing is the PaYS program through the military. If a new recruit has an interest in working in our type of dealership, the Army puts them through training we specify; when they're discharged they're immediately able to work for us. With military personnel that are returning, we're doing quick-hitting four-month advanced training. Our goal is to train 12 students a session, which gives us a total of 36 new technicians a year. Upon completing the certification, their pay increases. We also give incentives for the top percentile of testing.
  • We're trying to get mechanics from high schools and vocational schools. Half of them work out; half don't.
Manufacturers respond:

  • We started working with recruiters two years ago. We were disappointed in the quality. We now have a recruiter on staff.
  • I met someone from Canada that was going to Germany, Switzerland and the Baltic countries to recruit people to work in Canada. It's been fairly successful. People from Germany want to come to North America to learn the language and then go back.
Distributors respond:

  • The biggest issue is the language barrier. Many contractors have foremen that are Spanish-speaking, and they run the operation.
  • What about third-party service providers? Are we creating incentives to bring them back to the dealership?
  • We've had some come back. They're a different type of employee because they're use to moving around. If they have an issue, you have to deal with it before the option of leaving again occurs to them - something that's less a problem when the tech has been with you for 15 years.
  • One thing I've been seeing is with the 50-plus technicians: They have a wealth of experience but they're looking at the wear and tear on their bodies and they're 10 to 15 years from retirement. We're scrambling trying to find ways to utilize them in a support role in the service department. They're even willing to do something else for less money because they're tired of the physical demands.
  • The average age in the service department is dropping. The more experienced people are moving on, and younger guys are coming in at a more rapid rate.
Are dealers having more success establishing flat rates? Do we need an industry standard?

Distributors respond:

  • Define success. Compared to the auto industry, we're a long way away from success.
Manufacturers respond:

  • Are manufacturers helping? We pay flat rate on warranty and have standard labor for repairs on every model.
Distributors respond:

  • We're trying to download every electronic flat rate on the machine side and that leaves us building about 75 percent. We'll always need the manufacturer to give us more information to start with.
  • With the electronics involved, we have to reinvent the wheel every time they come out with a new model.
What percentage of work do you do on flat rates?

Distributors respond:

  • We do 70 percent at the main office; in the branches, it's probably 40 percent to 60 percent. We make more money on change orders than on bidding the job.
  • We get reports on how many things have been flat rated. The flat rate variance is still negative. The shop is flat rating after the repair is done to fix an overage.
  • The challenge we've had with parts internally is that we produce a standard job ticket and the technicians feel like we've taken their artistic freedom away.
  • We can't get parts quoted fast enough. Our manufacturer introduces new products and all the parts change and with them the service quotes.
  • I don't see how flat rating can ever be successful unless manufacturers lead the charge.
  • We don't flat rate field work. We don't flat rate cleaning or diagnostics, and often we use change orders. We use manufacturers' flat rates for labor and we try to set rates for parts.
Are customers asking dealers for guaranteed costs?

Manufacturers respond:

  • We have a standard new-equipment warranty. Customers can purchase extended coverage. We stay away from repair contracts.
Distributors respond:

  • We guarantee three to five years.
  • Our manufacturer has extended warranties at no cost to the dealer.
Manufacturers respond:

  • I would say we are selling fewer extended warranties as a percentage of sales today than we were a few years ago. The reason is that the cost is continuing to go up. Contractors are asking for a different approach.
  • We have a standard warranty that comes with the machine. Some dealers are using extended warranties to take the risk out of the service contract.
  • When we started with extended warranties, we didn't make oil analysis a requirement. Condition-based maintenance turned into a different type of support. We need to add to what we get from oil analysis.
Distributors respond:

  • Dealers are having success providing total machine maintenance contracts.
  • We put a GPS system on two products that were working side by side. We monitored them and were able to see a difference in fuel consumption. We showed it to the customer and told them they needed to train one of the operators. They were impressed.
  • The manufacturer that makes GPS standard equipment with every machine will be the leader.
More dealers are employing full-time product support sales reps (PSSRs) and marketing their product support capacities. How are dealers measuring ROI?

Distributors respond:

  • It's always a struggle to measure ROI from PSSRs. Yet, being able to measure growth in a particular area with a particular group of customers would help. We pay a bonus for growth in a territory. A guy has an incentive to grow his territory and he makes more money doing that. They get 1½ percent for sales in the territory and when growth has exceeded last year by 20 percent, they get 3 percent for the rest of the year. If they grow it 50 percent, they get 5 percent.
  • We've put together a sales training program with eight weeks of class time. We train them for two months on the construction industry: This is what a dozer is, this is who owns them, and this is how they use them. After about six weeks, we get a feel for who is more comfortable with product support.
  • Anything our PSSRs sell has to be quoted and on file before the work is done if they are going to get credit for it. Also, we make sure we're paid for the work before the commission check is cut. We expect $1 million minimum in gross sales from each PSSR.
  • If you can find that rare service guy that has a sales personality, that's great. But we hire personality before we hire technical ability. We hired a kid that was a bread salesman, and he didn't know much about anything except he could talk to lots of people. He doubled sales in his territory. You can teach a dog to hunt but you can't teach a dog to love to hunt. We can teach the technical skills.
  • We have a former football coach and a water salesman working as PSSRs.
What's the annual compensation for a PSSR?

Distributors respond:

  • Getween $50,000 and $60,000.
  • We pay $24,000 base plus commission. Our PSSRs range from $45,000 to $130,000 annually.
What is the impact when dealers provide product support for all brands of equipment?

Distributors respond:

  • It's additional revenue
  • It meets customer needs because they have mixed fleets.
  • We won't turn the work away, but we don't aggressively solicit it.
  • We think it's a liability issue.
Does anyone employ technicians on contract?

Distributors respond:

  • Yes, we keep the independents in our area busy. They come to our shop to work. We'd like to get more of them.
  • The contractor that wants to build his own shop and have his own mechanics is a lot better off outsourcing labor to a dealer or third-party provider.
  • We use subcontractors, such as electricians and fabricators.
  • In Canada, dealers use contracted technicians. We experimented with contract employees and paid them by hours billed. If there wasn't any work, they'd go out and find their own. We paid 55 percent of the labor rate and 5 percent of parts. If they needed field service trucks, they leased them from me and paid their own expenses. One guy made $120,000 as a field service representative.
  • I put an ad in the paper for contract labor and got 25 of the most talented people I've ever seen. They were independent and wanted more work.
Manufacturers, are you equipping customers to do warranty work?

Manufacturers respond:

  • They can change a cylinder but we won't let them get into the guts of a machine.
  • We reimburse the customer for repairs that are non-invasive.
  • We have rental operations that can do non-invasive repairs to a certain dollar amount and we supply training. We also do it for national accounts.

    Are more customers sourcing parts online?
Manufacturers respond:

  • We limit it to merchandising items, primarily because of the channel and what their expectations are in terms of proprietary parts.
  • Our online parts sales are perceived by customers as the dealer's parts.
Distributors respond:

  • Customers are sourcing parts every day and night online.
What percentage of your business is online today?

Manufacturers respond:

  • There's a huge variation. It depends on the customer. There are those that use it and like it because they have a parts catalog and can use a shopping cart. The challenge is they don't always pick the right serial number.
  • Does the customer know what dealer the order is coming from?
  • When the customer enters the transaction, he identifies his dealer. The dealer knows, too; and pricing is set by the dealer.
Do your dealers have their own websites?

Manufacturers respond:

  • The dealer provides a price list and updates it when the business system is updated. He shares that link and ties it to the dealer business system. The customer can see if two are available but he can't see if 100 are.
Distributors respond:

  • He only has access to that dealer's info? What if another dealer is ordering? Is it still filled?
  • The dealer sets up the customer so they can enter the website. You can't pull up the site otherwise. However, another dealer can set up a customer in your territory.
  • It's a necessary part of distribution and it's growing.
  • It's cheaper. We're still trying to justify $6 to $8 to process a transaction over the counter vs. $0.75 online.
  • I think we'll see overseas dealers involved in this.
    bought from other dealers.
  • We have customers go to another dealer to buy parts, and then bring them to us to install them.
At what point does the OEM's ability to design exceed the dealer's ability to service the product? How do we close that gap?

Distributors respond:

  • We can't get enough bodies through training.
  • We can't either. The only way to close the gap is training, but it has to be on a much larger scale than what we're accustomed to.
  • You can't retain training when there's no machine. If the manufacturer would make sure their tech support is in place before they ship machines that would help a lot. Even the OEM's people are not up to speed when you call tech support.
  • AED's certification of technicians is the best thing that's happened in a long time.
  • Sometimes service managers don't want more technicians. I found that out the hard way. I have applications sent to me now and I hand carry them to the service manager. We do the interview together.
  • I visited someone in the service management position a year after I'd left the company and they said "I finally got this sucker down to where I can manage it." Basically, he'd shrunk that whole end of the business. No growth means they can easily manage what they're doing.
  • I had some bad experiences sending resumes and applications back to the shop. I'd ask what happened to that guy, and my service manager would say he wasn't qualified, he
    didn't show up, etc. I got involved.
  • We hire from tech schools. We don't run out to local dealers and try to take their techs. It pains our service managers because they want to hire people already trained.
Do you track technician turnover?

Distributors respond:

  • We're down 12 percent from a few years ago.
Manufacturers respond:

  • The North American average is between 12 percent and 15 percent.
Distributors respond:

  • We did skills assessment testing. We have 440 technicians and we created a three-year training program for them. We pay based on performance. They have to have the skill level. The biggest benefit is that they now know how valuable they are. They also know the training they get is just for them. Next year is the third year, and we'll do it again.
Is the DOT a factor in your technician productivity?

Distributors respond:

  • Yes, they work so many hours and then they have to go home.
  • I'll have a guy two hours from finishing a job say "Sorry, I'm out of hours."
  • We have to send rescue people out to drive service trucks back.
  • There was a time when the DOT would stop and want to see the tech's log. After getting thumped a few times, everyone is in compliance.
  • We have techs call the supervisor and say "I'm going to run past my hours. What do you want to do?"
  • We use resident field guys because once they drive to the shop, they're on the DOT clock. We're doing things like shuttle drops for service technicians.
Do you let service technicians take trucks home?

Distributors respond:

  • If they live within 30 miles, they can take the truck home or leave it at the nearest branch.
  • We dispatch technicians from home.
  • We did a study and found field service technicians spend 3.9 hours a day in the shop.
  • We send parts to the mechanic's house.
  • We have GPS on all the trucks.
Do you give technicians tools?

Distributors respond:

  • We require technicians to supply their own tools.
  • Anything larger than a 1-inch drive, we supply.

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