A Silver Lining Right Under Your RoofBy Ron Slee
Article Date: 04-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.
After decades of a throw-away mentality, didn't you expect this to happen sooner or later?
Parts and service departments are expected to see a revenue gain of 3 percent in 2009 over 2008, this on top of a gain of 1.8 percent in 2008 over 2007 according to the National Automobile Dealers Association. Sound interesting?
It has to happen sooner or later. Demand for parts and service will rise if only because machines are being held on to longer than previously. One of the byproducts of this change in the market is very significant: Equipment owners will be holding on to assets of all classes for a considerably longer time. If you think about it for a moment you will come to the realization that we in North America have been “trading” or replacing prime products, for all classes of assets, long before their useful life was expended. This is part of the “consumer spending” that has driven the U.S. for the past three decades. That era is over. We will find that all of us will retain assets, take care of products, and maintain things better than we have for some time. For some, it will be for the first time.
This will be good for local suppliers of parts and service, not necessarily for suppliers of those prime products locally. Internationally, the demand for machinery and equipment will continue to ramp up after this blip, as the world economy grows and populations in Asia and elsewhere grow their buying capacity. This is a natural transformation.
So where are we in the parts and service business? It is time we got out of the bunker mentality and got going again.
Let’s get in more regular contact with our customers; let’s go visit them, let’s get closer to them and get to understand what their views are on the future in this “new world.” They are in the same market we are, and they have a much more real view of the world as they are closer to the demand side of the marketplace. What are the needs that they feel today? How can we adapt our businesses in ways that can satisfy those needs? That is the key question. It is no longer just about how we can shed assets and reduce people and operating expenses; it is about how we can grow the business in parts and service.
Do you remember the litany of excuses and opinions expressed as to why we could not increase our labor sales over the past several decades?
We now have the responsibility to help our customers in very meaningful ways. We need to be able to extend the useful productive life of a machine. That is our job anyway, isn’t it? So now we can show our true colors.
- Complaining about our inability to find and retain talented technicians.
- Customers telling us that they would gladly let us do their maintenance work if our prices were in line with their costs.
- Customers saying in focus groups for 20 years that they didn’t want to have technicians on their payroll.
- Customers saying that the only reason they outsource labor is that we are not responsive enough.
Rarely have the parts and service groups seen this wonderful opportunity to recapture respect inside the dealerships and the marketplace, as well as increase the market-capture rates from the customer as we have now. Let’s not blow it.
Re-examine your maintenance programs. These programs do not need a fully trained, journeyman technician – they never did. We need specifically trained maintenance technicians, or what I have been calling a group of “Pro-Techs.” These are people who are starting out in a trade career and serve the role of protecting assets by providing regularly scheduled maintenance as defined and designed by the suppliers and published in the owning and operating manuals provided with the equipment.
In the automotive market the average age of a vehicle in the entire U.S. fleet of cars and trucks was 9.2 years, a record. The 4.8 percent of vehicles that were scrapped was the lowest level since 1996. You can’t extend the life of a capital asset without proper maintenance. This is especially true with our machines and equipment. Our customers are expecting to be able to make money with their equipment. It has to work properly and as it was designed to work. We have to be sure that the maintenance is being done as prescribed. We have to recapture control of this market. It is in our customer’s best interests, as well as our own.
Remember the saying, “Ignorance is not knowing what to do?” Well, I believe we know what we have to do. Stupidity is knowing what to do and not doing it. I have been in this industry for quite a long time, and I don’t know any stupid people still working in it. I hope that means we will finally get serious about maintenance. The time is not now; the time is long since past.
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