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Looking for additional help and have placed ads on Indeed, Craigslist, tech company sites & even reached out to tech schools in the area. And with all of that only 5 applicants called to set up interviews. And none actually showed up. Although one did call to say he couldn't make the interview because he accepted a job at another shop. 

Curious to know how other owners are dealing with the tech shortage? 

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Something we are trying in our rural market. 25,000 postcards to every household within 15-40 miles distance from our service facility ($7000 cost). Not everyone agreed on the message, especially where the $1000 should go. 

The individual we are looking for, is not out looking for a job. We have tried a similar path to yours, including no less then the avenues you are trying, with zero responses in the last 3 weeks. 

I am hopeful we will stir up some responses. I am confident that not every technician working in this 600 square mile block we are dropping postcards to, is satisfied with their employment situation

Example attached. 

74136_TRAVER_1123_McKay_102521_8.5x5.5_version2.pdf

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  • 2 weeks later...

We need to raise our prices and raise our pay.

In the trucker forums I follow, the big Industy players claim it is hard to hire truckers, the truckers all complain the companies do not pay enough.  

 

It is too easy to get a decent paying job working from home. In our industry you could work as an adjuster for warranty programs, insurance companies, work for identifix, or look outside the industry too. 

Someone made an Uber for Auto mechanics also, which is not going to help. Anyone with tools can log into the app and see local jobs and what they offer.

TLDR offer $10 more per hour then you currently are and see if you get any interviews lined up.

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If you are surrounded by businesses selling widgets for $1, You have to have some damn good skills to push widgets at $5. 

The best way to set your labor rate is to call around to shops in your area, see what they charge, then set your rate according to the quality you try to provide.

If you are a budget shop you should be on the lower end. If your shop focuses on quality with a great warranty and loaner vehicles and shuttles ect then you should be near the top. If you do not know whether you are budget or quality you should sit down and figure that out. 

I am not sure Joe why it surprises you so much that some shops are still sub $100 an hour. You know some houses still sell for sub 100k dollars? Are you trying to say I should be able to buy a house in the most dangerous area of Chicago and sell it for $500,000? Come on man, you have to realize there are different markets.

I think what may end up happening is some of the lower income areas may end up with out shops as it becomes harder to run a profitable shop in said areas. That being said, there is always someone willing to fill a hole when it comes to business.

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I will challenge you and say why such the focus on the labor rate. How about you price your self $5 lower then the average of 10 shops near you, then do those myths you talk about to create your labor multiplier. This way when someone calls up and asks what's your labor rate, it looks like it is $ 75 an hour when it is really $125 an hour because you do the labor guide x 1.5

I just do not understand how you think a shop is going to go the long game selling labor at $ 200 an hour when everyone else is at $100 an hour. If you do those maths and find your labor rate needs to be twice the surrounding shops, maybe you need to trim the fat Instead of raising rates. Why does it cost you so much more then all the shops in the area for similar products. What are they doing that you are not that they can afford to charge less? Do these shops have horrible reviews and are about to go under?

And you most certainly can compare houses to cars. If you want to open a high priced quality focused auto repair shop, you should be looking at local housing prices, median incomes ect. You can not expect to sell labor at $ 200 an hour where houses sell for 100k. You should not be pricing labor at $ 75 an hour where the average house goes for 1.5 million. The two very much go hand in hand.

 

Now I realize I contradict my previous post where I say try offering another $10 an hour. Maybe that is just not possible in your situation, I get it. 

Yourmechanic is the new app, the "Uber" of auto mechanics. I just checked out the website. They told me I could make up to $70 an hour, more then what I make as a shop owner. I filled out an application,  I will report back how it goes. My shop runs itself, so maybe this is a great way for me to make some extra play money and maybe I can drive some clients to my shop also.. It sure does make me wonder were things are going and how long the app will last. How long will those techs want to deal with the headaches that come with it. And what if I end up loving working for the app lol.

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3 hours ago, Joe Marconi said:

  And please don't ask me to do the math on this post. Every shop is different, and every shop owner needs to sit down and do the math individually. 

 

 

 

You should at least put the formula here, otherwise your just shouting "everyone should charge more" with no actual reason why then "because there are maths somewhere."

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I liked your posts. I was looking forward to your response to my last post about the housing prices median incomes ect. I think the back and forth is productive. I thought we could do a podcast, point counter point with two Italian Americans. I do hope you will continue the discussion with a response to my post prior to me asking for the formula.

There are some very generic formulas that can be used, I would have to look them up. Here is a link with some really great information on how to run the numbers. Maybe I will take some time and try to find a formula I can post.

https://www.bplans.com/auto-repair-shop-business-plan/financial-plan/

 

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  • 4 weeks later...

"I was thinking of this topic yesterday. I received notice from the landlord that the rent will be going up about $4 per my average monthly produced hours."

Well done! I believe if every shop owner should take their fixed expense increases, and drill them down to their additional cost per billable hour.  At least then, maybe owners would give themselves permission to raise their labor rate. If we know that in the past 12 months our average fixed expense cost has increased be a certain dollar amount and divide that amount by the average hours we billed in a month, and that number was $8.81, do we ask ourselves "where is the money going to come from??", or do almost all of us know the answer, and react quickly.  

I can assure you that "react quickly" is not the case for many owners.

Frustrating conversation with a close friend just yesterday, that owns a shop in a town 30 miles from mine. Town is 3 times the size of mine and has an expressway, National Guard base, with higher household incomes and higher educated households then mine, and he runs a great shop. Great techs and front counter personal. He is like the rest of us, 2-3 weeks backed up. His labor rate is sub 3 figures by fifteen points and feels like he can't go up, because he claims the dealer is sub 3 figures by 5 points, and he can't charge as much as the dealer. He is about as likeable a guy as you will meet, and has a good relationship with most of the other auto repair shops in town. He tells me their all convinced they can't go up, because of where the dealer is at, and the fact that the big tire store in town will not go up with them. What absolutely insanity! 

For sure, with this group of independents, they don't understand the math, or won't take the time to to do the math. For sure they don't understand the value of doing the math.

I interviewed a tech yesterday as well. Works for a large dealer group in a town 30 miles north of my friends. Double the size of my friends town and even better demographics, with a good reputation. The tech tells me  their 16 points north of three figures. That's lower than my lowest rate, and 28% lower then my highest rate. I know these guys know the math. I sit with them in advisory council meetings. Their sharp as hell. What gives!!

Like I said, frustrating conversations.

I ask my friend what he was worried about, losing work?? He already told me he spills 8-10 phone calls a day for service and how much he is disappointing his long time customers. 

Apologies for the cryptic labor rate. Not sure what the rules are on using simple to read actual rates in an open forum

Done venting for now

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Another thing you could suggest to your friend, if he is really hesitant on bumping the hourly rate, many RO systems have a built in labor hour adjustment. I have mine set to 10%, so if a job bills one hour in the guide, the RO system writes it as 1.1 automatically.  I have no problem justifying this as all my guys are instructed to take extra time to make sure everything is done 110%.

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2 topics here I'd like to touch on. 1st up is technician shortage. It is real. It doesn't matter what you offer for pay if the guy doesn't want to work or loves his boss he's not working for you. Every shop is hiring. I don't know of any that aren't. 

2nd is shop labor rates. I'm in the poorest county in the state and my rate is over $100/hr. Being the nice guy wearing out my body and equipment for next to nothing is not an option. Basic business I add up all my expenses and divide by working hours and came up with a number. Add for the bad word profit and depreciation and I can't understand how anyone is under $100/hr in today's world and staying in business unless they are under insured, running into the ground. or independent wealthy. 

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14 hours ago, Hands On said:

Another thing you could suggest to your friend, if he is really hesitant on bumping the hourly rate, many RO systems have a built in labor hour adjustment. I have mine set to 10%, so if a job bills one hour in the guide, the RO system writes it as 1.1 automatically.  I have no problem justifying this as all my guys are instructed to take extra time to make sure everything is done 110%.

This is what we've been doing for years but it's 30%. In the rust capital of the world every job takes longer and uses more oxy/acetylene than we want to admit. 

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Easiest thing to do is use a multiplier & see if there is any blowback, example—each hour multiply by 1.25. Try for month or so, then go to that. Then you can give your guys cost of living raise. Don’t go slowly broke, it’s pointless, sell or quit prior to. Make business decisions based on needs not on what community says. We are ultimately like the coroner, no one comes to see you because they are having a good day!  Stop worrying about the internet, they aren’t growing mechanics/technicians on trees. These schemes are short lived, it’s someone trying to make a quick buck. At the end of the day, be a business owner, know what it takes, get some training if needed! There are some free resources available, all you have to do is READ! 
 

We all are concerned with the future but, all we can control is today, tomorrow will be enough trouble on its own without anyone worrying about it.  

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I believe some owners have just checked out, especially if they have a stable crew that takes care of most of the day to day, the bills are being paid, the owners are getting paid, ect. Maybe no one is getting paid what it is worth, but everyone is comfortable. 

This is the case with my friend, but does not explain the younger owners that surround him. Techs turned business owners I suspect. Maybe even DIY owners/staff running the front counters. One of the best things I ever did was to get off the front counter.  

Our flat rate guide labor multiplier has varied from 15% and now at 30%. This is to insure that the guide built into our POS is at the top of the labor times when the three(or more) guides are compared. It also covers some additional time for the rust/corrosion we have to deal with in the upper northern tier.  Our POS system also matrix's our labor rate up $40 (33%) over our base rate, over the first 10 hours of labor. This is to cover the lower parts GP$ that typically go along with higher labor hours. I have no doubt that customers notice how much higher we are than our competitors, but we seem to find more than enough work to keep a staff of 10 busy. I won't allow my techs to be tied up on marginally profitable work, if I have a choice. 

I am probably the opposite of my friend. I refuse to have nothing to show for our efforts. I may close the doors one day for being too expensive and refusing to budge, but I won't have any regrets in the process. 40 plus years in business and no debt does offer freedoms that many may not have the options for. Yet I truly believe there is always room for all shops to improve, every single year.

I hope we are able to kill the acronym TLDR(too long, didn't read) in our industry. There is no room for that thought process. Better we go to GPFR (get paid for reading)

Best Wishes All

 

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12 hours ago, rpllib said:

I believe some owners have just checked out, especially if they have a stable crew that takes care of most of the day to day, the bills are being paid, the owners are getting paid, ect. Maybe no one is getting paid what it is worth, but everyone is comfortable. 

This is the case with my friend, but does not explain the younger owners that surround him. Techs turned business owners I suspect. Maybe even DIY owners/staff running the front counters. One of the best things I ever did was to get off the front counter.  

Our flat rate guide labor multiplier has varied from 15% and now at 30%. This is to insure that the guide built into our POS is at the top of the labor times when the three(or more) guides are compared. It also covers some additional time for the rust/corrosion we have to deal with in the upper northern tier.  Our POS system also matrix's our labor rate up $40 (33%) over our base rate, over the first 10 hours of labor. This is to cover the lower parts GP$ that typically go along with higher labor hours. I have no doubt that customers notice how much higher we are than our competitors, but we seem to find more than enough work to keep a staff of 10 busy. I won't allow my techs to be tied up on marginally profitable work, if I have a choice. 

I am probably the opposite of my friend. I refuse to have nothing to show for our efforts. I may close the doors one day for being too expensive and refusing to budge, but I won't have any regrets in the process. 40 plus years in business and no debt does offer freedoms that many may not have the options for. Yet I truly believe there is always room for all shops to improve, every single year.

I hope we are able to kill the acronym TLDR(too long, didn't read) in our industry. There is no room for that thought process. Better we go to GPFR (get paid for reading)

Best Wishes All

 

Well said!!!

 

Can’t understand why people are scared to raise prices in tight labor market, everything on average right now is up between 7.5-16% on average, that’s everything! Go up marginally if you like but go up! If not you better realize your fixed expenses are increasing all around you! Recognize the vacuum! It will suck your profits up! Also your employees costs are rising, they may not be asking for a raise, but I can guarantee you they see fast food paying $15-18 per hour! Why get dirty & buy tools plus all the headache, if they can make close to mechanics pay & flip burgers! Pay attention folks!

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      It always amazes me when I hear about a technician who quits one repair shop to go work at another shop for less money. I know you have heard of this too, and you’ve probably asked yourself, “Can this be true? And Why?” The answer rests within the culture of the company. More specifically, the boss, manager, or a toxic work environment literally pushed the technician out the door.
      While money and benefits tend to attract people to a company, it won’t keep them there. When a technician begins to look over the fence for greener grass, that is usually a sign that something is wrong within the workplace. It also means that his or her heart is probably already gone. If the issue is not resolved, no amount of money will keep that technician for the long term. The heart is always the first to leave. The last thing that leaves is the technician’s toolbox.
      Shop owners: Focus more on employee retention than acquisition. This is not to say that you should not be constantly recruiting. You should. What it does means is that once you hire someone, your job isn’t over, that’s when it begins. Get to know your technicians. Build strong relationships. Have frequent one-on-ones. Engage in meaningful conversation. Find what truly motivates your technicians. You may be surprised that while money is a motivator, it’s usually not the prime motivator.
      One last thing; the cost of technician turnover can be financially devastating. It also affects shop morale. Do all you can to create a workplace where technicians feel they are respected, recognized, and know that their work contributes to the overall success of the company. This will lead to improved morale and team spirit. Remember, when you see a technician’s toolbox rolling out of the bay on its way to another shop, the heart was most likely gone long before that.
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