Removing the RoadblocksBy Mary Sedor and Kim Phelan
Article Date: 07-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.
Technicians must jump through many financial hoops to enter the workforce - thanks to dealer generosity and creativity, the leap can be made less painful.
Imagine a world in which employees were required to provide their own office furniture and supplies in order perform their duties, or nurses the beds for patients, and commercial airline pilots their own planes. What an absurd notion. Yet it’s the life of every young service technician in our industry who struggles under the burden of purchasing his or her own tools, even from the early days of postsecondary technical training.
Now, clearing the barriers of entry for young technicians may not exactly be at the top of a dealer’s priority list these days. At a time when many dealerships have resorted to layoffs in the service department, the need for securing highly qualified technicians would seem hardly urgent. Yet experts such as Ron Slee are exhorting dealers to come to their product support senses and recognize the dawn of a new era in which factory-authorized equipment maintenance and repair must become a more primary revenue mainstay.
And whether dealers seize the product support opportunities before them now or wait for the economy to turn, sooner or later well trained technicians will once again be in high demand – and the sufficiency of their supply will continue to fall short.
“The dynamics have changed but all of the same issues that affect us long term, in terms of tech development and retention still exist,” said Jim Price, executive vice president of Groff Tractor, a Case dealership in Mecha-nicsburg, Pa. “Next spring, dealers are going to say ‘Ok, I need a lot of guys,’ and we’re going to run through the supply of available techs. But many will have found other professions [by then], and we’re going to end up in the same position we were in two to three years ago, or maybe worse.”
In its ongoing endeavors to rebuild the technician workforce, The AED Foundation would be among the first to acknowledge the many challenges involved in attracting kids toward technician careers today – and those who do pursue a rigorous course of training find one of the tallest hurdles lies in the heavy cost of purchasing their own tools. For postsecondary/college students, it’s a sizeable enough obstacle, now compounded by economy woes.
“The average cost for our tool sets is between $4,000 and $5,000, and it could go as high as $6,000,” said George Stanek, HET/HMT/CAT Department Chair at Linn State Technical College in Linn, Mo.
Stanek says that in their first semester in college, technical school students not only have to come up with the money for their classes, but then dig deeper to pay for their tool kits. Some take out student loans, others rely on their families for support.
“It’s a good chunk of change that technical students are hit with,” said Stanek. “It’s kind of a shock sometimes when they add up their first-semester costs: Books, housing, tuition, and then another $5,000 for tools.”
And that’s only the cost for a basic set.
“It’s not enough to live with for a very long time,” said Stanek. “They will probably have to double that in a short period of time after they go to work and get placed in a full-time position.
Once employed, “a technician making approximately $15 an hour could be purchasing between $15,000 and $25,000 in tools,” according to Gary Leavitt, president of Toolchex, a third-party administrator of a tool reimbursement program.
“That’s a lot of money to spend to have to do your job,” said Leavitt.
Fortunately, Stanek says he hasn’t seen the cost of tools become a deterrent for any student thus far. Typically, dealers step in and help students purchase their tools either by establishing a payment plan or sponsoring students and paying for a portion of their education and tools in exchange for a commitment to work. And others support their young recruits through reimbursement programs.
For example, at Groff Tractor Price offers his technicians the option of participating in the Toolchex program, and 15 are currently taking advantage of it.
“It didn’t help them buy the tools when they bought them originally, but it did lower their tax burden so they can buy more tools with the savings on their taxes,” said Price. “For guys coming into the shop, it helps them right away, but most of the guys who went in the program were playing catch up.”
Either way you look at it, a little extra money in their pockets is a big plus. Technicians might realize $100 to $200 more in their take-home pay, says Leavitt, cash they can use to invest in tools or simply to live on during rough economic times.
“Because of the wages technicians make, generally they can’t itemize their income tax, and even if they could they are subject to a 2 percent limitation on their tool purchases,” said Leavitt. “Technicians don’t get fair deductions, even though they are required to use the tools for their employment, but participating in a tool reimbursement program can help them get some of that money back.”
The Toolchex program is one complete, universal plan fully administered by the company, with no minimum requirement on the number of technicians enrolled, and no mandatory time period in which technicians must remain in the plan.
“Once a dealer adopts it, we do an enrollment period with the technicians and they decide whether they want to participate or not,” said Leavitt. “It’s a pretty simple process. The techs have to submit receipts for tools purchased from the past four years and continue to give us receipts after that. All we need to know is if the technician worked during the pay period, and he receives a separate check from us.”
Well Rounded Approach
Easing the financial squeeze for technicians can, of course, come in a variety of shapes and sizes, as modeled by Ditch Witch of Oklahoma. The four-branch dealership headquartered near Oklahoma City offers technicians a menu of bonuses, tool allowances and tuition reimbursement.
“You have to customize your program as much as you can to fit the employees,” said Gary Bridwell, president of Ditch Witch of Oklahoma. “Just one box doesn’t fit everyone; we’re a relatively small dealership and that gives us the flexibility to fill those packages in different ways for different individuals.”
The help begins at Square 1: While its technician interns are still enrolled in the local technical school, the company provides them with a $750 tool allowance.
“It’s one way to get them started, because the cost for purchasing tools is a big hurdle for any young tech just entering school,” said Chris Jones, director of service.
The company also offers tuition reimbursement in exchange for a three-year work commitment. In addition, technicians are evaluated biannually on their progress, efficiencies and education to determine eligibility for additional rewards. In spite of the economy, the rewards-based program continues, though somewhat downscaled.
“We are very big on the sweat equity deal,” said Bridwell. “We also try to get the guys to reach certain goals through incentive pay. We encourage them to do a certain amount of education by giving them credits to a tool salesman.
Technicians also have the opportunity to earn monthly bonuses. For example, the company hard-quotes every job, or in other words, applies flat rating on all service work. Technicians earn their hourly wage and a bonus is calculated off the flat rate.
“The whole idea is to give them an incentive to work smarter and harder,” said Jones. “We saw a value in giving them a bonus that isn’t part of their salary because it gives them an opportunity to buy more tools without taking money away from their families. We see a lot of them investing in tools with that money.”
To assist the newer techs, the company purchased a set of specialty tools that the technicians can check out and return.
“We want to be sure they are a fit for their job before they invest any more in tools,” said Jones.
And the result of all this goodwill? Bridwell boasts a less-than-5-percent turnover rate among his technicians.
“Technicians are the foundation of the dealership,” said Bridwell. “Dealerships with the best service typically win. As a principal owner or a director of service, if you’re willing to invest in those technicians, they see it, they feel it, and they understand it. Their commitment to you becomes stronger – and as it grows, it adds value to your end users.”
A Helping Hand
Back at Groff Tractor, Price extends additional assistance beyond the optional tool reimbursement program. The dealership safeguards technicians’ investments by insuring their tools on the company’s property and in its dealer-owned trucks.
“On average, the value of tools is about $25,000, and the more experienced guys have tools in the $50,000 to $60,000 range,” said Price.
Another form of “insurance” is the dealer’s stance on broken tools: Groff Tractor pays for the full replacement cost on any tool a technician accidentally breaks on the job.
To assist newcomers, Groff Tractor pays a third of the purchase price of any tool required for the job if the technician buys through a designated supplier – a policy Groff suspended in January at two locations where layoffs were necessary, but Price says he hopes to reinstate the benefit soon.
“We turn the spigot on and off depending on economic times, but the program is especially valuable for newer techs,” he said. “But now I have technicians who are better equipped to do their jobs. I’ve invested in them as an employer and I hope that makes them happy to be there.”
Groff Tractor also works with its local technical schools by sponsoring scholarships.
“This is a tough business,” he said. “We expect them to be smart, communicate well and be highly technical, but to get to that level you have to spend money.”
Expense Versus Investment
Spending money when money is tight is the dealer’s dilemma, but all the more vital to technical students, whose personal economic battles may involve loss of jobs for parents while juggling the high cost of tuition and tool payments.
“These kids might have to depend on federal programs or anything they can to assist them, said Stanek at Linn State. “But whenever dealers can provide additional assistance, I think that’s fantastic. If dealers step in, they can work with potential employees from their immediate areas, which a big plus for everyone. Now is the time to be building those relationships. They can have a hand in choosing people right out of the chute, and when you provide opportunities to people, they usually feel a certain amount of loyalty. If they are good technicians, they’ll stay with you.”
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