Transmission Repair

I would never live in a Democratic state or town. They overburden businesses and citizens in a myriad of ways.

To my knowledge, California is the only state where flat rate is illegal. See https://www.ratchetandwrench.com/topic-category/finance-and-operations/article/11488505/the-legality-of-flat-rate-pay

I agree with you Joe, especially about writing estimates. In my view, more can be gained by ensuring estimates are correctly written than any other owner activity. All of my techs punched a time clock and were getting paid for at least 40 hours per week, sometimes more @ time X 1.5. This made correctly written estimates an imperative. As a general rule, my management style was to not pressure the techs to become more productive. I've found that when techs are pressured, mistakes and misdiagnosed problems increase while at the same time, profitability decreases. I've found that new techs will soon get into "the rhythm of the shop" set by other long-term techs. If they don't, I try 1-on-1 coaching. If that doesn't work after multiple tries, they were simply a bad hire for the shop and were soon terminated. Too many shops look at published times as the gospel. The title of a published labor time book is Parts and Labor Time Guide, and as such, should be just used as a guide. It's not the bible. In our shop, over the years I have found the published times for transmission work to become increasingly inaccurate. In the early part of my career, the most labor-intensive times were for 3-speed automatic transmissions. Back in the day, we could beat published times by 50% or more. Today, it's just the opposite. Published times are much too low, even with all the adds. Over the course of my career, I have grown more confident in my labor and parts estimating skills than any published book. In closing, let me say this topic dovetails perfectly with your other conversation on "Technicians Are Demanding More Pay" How can a shop afford to pay top wages with poorly written estimates?

My YouTube channel made most repairs amazing. That's because we had over 2,200 customer videos of their transmission. In each 3-4 minute video I would explain 3 important things, 1. What failed. 2. What we are going to do to fix it. 3. What we are going to do to keep the failure from happening again. I would then follow up with either a text or Email of a .pdf of the final invoice, including tax. If we found anything extra after that, we would just eat it. Part of an amazing experience is not surprises.

I define an amazing experience by great communication. The more I communicate with the customer, the better. The mode of communication doesn't matter. It can be through direct fact-to-face communication, a phone call, text, Email, or a video. Keep the customer informed and make sure you understand his needs. People are prone to go with what they know. Make sure you read all of Joe's blog on customer retention.

Because I'm retired, the transmission shop I have the most contact with was once a sales & management client with me for about a year. Because of his inability to hire a competent transmission rebuilding tech, he has pivoted his business into more G/R than a transmission repair shop. The phone has a lot more activity, causing more R.O.s, and smaller AROs. In addition to supply chain issues and inferior parts quality, he has the "triple whammy" of failure to hire competent technicians. Needless to say, his business is suffering at a time when he should be retiring. He's 10 years older than me.

Once again, you're right. We received about 20% of our business from referrals. We received multiple comments on our website and YouTube channel because they were full of good information. I had a customer that actually wanted to watch his transmission getting rebuilt. He sent us multiple referrals. Below is a local investigative reporter, Bill Gephart, who works for a one of the local TV stations. (3:04) https://youtu.be/Loo6V7Nln-o

I agree with points #1 & #2. However, unlike #3 repeat transmission business is very difficult to predict, unless it's an annual service. Repeat business in the transmission business is usually either a warranty job as in leaks, a malfunction, or a very unlucky person with multiple vehicles. But that's just me. It's very different from the general auto repair business. In a nutshell, while I do try to make all customers feel good about the repair and communicate effectively, it's more of a transactional business model than a relationship business model because I rarely see the customer again. I can easily imagine how critical customer retention is in general auto repair, and I agree. Our business is usually (as we call it) "won & done."

Here's a Florida school teacher who had her homeowner's insurance go up more than 80%. California is having the same problems as Florida when it comes to homeowner's insurance. 3:46

I saw a news story where a Florida homeowner dropped his $7,600/yr. homeowner's insurance premium and instead, is putting $7,600/yr. into a savings account to self-insure himself. There hadn't been a hurricane in 6 years and he has over $45K in his savings account. He also said that it normally takes 90 days for the insurance to process a claim, and even longer to start on the repairs. He reasoned that by being self-insured, he can repair any hurricane damage in less than 90 days because he can start on the repairs immediately. Florida and California are 2 states I wouldn't want to live in or do business in, but that's just me. Here's what Monica/ChatGPT says about self-insuring: ========================================= 1. Cost savings: By self-insuring, you can save money on premiums that you would otherwise pay to an insurance company. You can set aside a portion of your budget to cover any potential damages or losses. 2. Flexibility: With self-insurance, you have more control over your coverage. You can choose which risks to cover and how much to allocate towards each risk. 3. Customization: You can tailor your coverage to fit your specific needs. For example, if you live in an area prone to hurricanes, you can allocate more funds towards wind damage coverage. 4. No deductibles: With self-insurance, you don't have to worry about paying deductibles when making a claim. This can save you a significant amount of money in the long run. 5. Peace of mind: Knowing that you have a plan in place to cover any potential damages or losses can give you peace of mind. You'll be able to rest easy knowing that you're prepared for the unexpected. Overall, self-insuring your home in Florida can be a great option for those looking to save money and customize their coverage.

Black Hills Tire of Rapid City, South Dakota is approaching training students even earlier than most. They are holding Camp DRIVE, a two-day automotive camp for kids aged 12 through 15, which was launched to teach kids about automotive maintenance and to meet professionals in the field. Check out the article at https://www.ratchetandwrench.com/shop-life/repairer-profiles/article/33012914/camp-drive-i-wanna-do-this-when-i-grow-up

When we use the phrase "check-in" most of us think about checking-in a new vehicle and the inspection process. Here's a short article that gives new meaning to the phrase and found the majority of shop owners skip a proper check-in. https://www.ratchetandwrench.com/running-a-shop/operations/article/33011339/most-auto-repair-shop-owners-skip-checkins

I've always believed prices are like a 1-way check valve; they go up but never come down. The problem I've seen with the shops I've worked with the most is improper pricing. They don't keep current pricing and they don't use a markup matrix. The result of these two issues is somewhere between leaving money at the counter and giving work away. In the transmission business, prices change every day, which means checking the price on every part, and every invoice. Auto parts in general also have different pricing levels that can change based on the invoice. A shop pays Level 4 one day and pays Level 3 the next day. Watching each invoice is a tiresome job that must be done every day. Another pricing strategy that causes problems is fear; the fear of asking for the money. Never let fear enter into a pricing issue. The antidote to fear is confidence. You have to have confidence in your pricing structure. Confidence comes from believing. You have to believe in your pricing to have confidence. The bottom line of the invoice may seem like a lot, but if you believe in your pricing structure, it will only seem like the fairest price. Fair to you, your employees, and your customers.

A great article about Gen Z people coming into this industry and becoming leaders in Ratchet & Wrench. https://www.ratchetandwrench.com/site-placement/trending-stories/article/11462823/the-next-generation-of-shop-leader

Lost production, too. The transmission industry has been hit really hard with inferior parts. Many transmission shops now only buy parts from the dealer and learn they are not only better, but competitively priced, too. Soft parts (overhaul kits, clutches, seal kits, etc.) are often less expensive than the aftermarket. If a transmission shop was to exclusively buy parts in the aftermarket, half of them would be imported. 100% of aftermarket transmission filters are imported and I see pictures and hear horror stories about it. Because a transmission filter is on the suction side of the pump, it's not uncommon to hear a transmission won't even move after a rebuild with a defective aftermarket transmission filter. Of course, the less experienced techs think they did something wrong and pull the transmission back out and tear it down only to find a bad filter. Lost Production City.

Yeah, the inferior part problem is as bad as you're hearing. It's not just automotive parts, either. It's all over, in different industries. Everybody tries to save money, and in the end, it bites them in the ass. I recently saw a news story where 4 airlines grounded their 737s due to "fraudulent parts." Instead of buying engine parts from the OE (GE) they bought them from somebody in the UK. As it turns out, the FAA certification papers that come with each part were bogus. Some of the parts were critical engine parts. (turbine fan blades) Check it out... 4:21

Q: Are you making the income you need, deserve, and expect from your auto repair shop business? A: (Long Answer/Story) Yes. After 17 years, we moved from a poor location/income level in Lindon, Utah to a great location/income level in Draper, Utah when I was 53. (2008) I knew retirement was just around the corner and with intent & planning we became the highest-priced transmission shop in Utah. (even higher than the dealer) We had such a long warranty and great service; we didn't have a problem getting our price in such a high-rent area as Draper. https://www.draperutah.gov/276/Demographics Lorraine (wife) and I paid ourselves paychecks collectively $100K/yr. She's an accountant and reported every penny we took in. She was still able to draw money into a savings account that averaged $125K/yr. In 2013, we bought the property for the appraised value of $860K. In 2015, we weren't doing as well and only broke even that year. We then decided to sell the shop (asset sale only) to http://www.tannertransmissions.com/ which had 5 locations and we would be the 6th location. We sold only the assets of the business for $330K and charged $11K/mo. for the building lease on a 10-year lease. In the summer of 2020, my wife went by the shop and noticed there was no sign on the building. Long story made short; the last 3 years we had the shop we were averaging $1.2M-$1.3M/yr. In the 5 years Tanner had the shop, the revenues continually dropped to only $400K in their last 12 months. That made rent 33% of revenue and no shop could withstand that. Of course, near the end, we were having a hard time collecting a lease payment. By the time we found out he had closed and taken all the assets with him. He still owed us a little on the assets but the big debt is he broke a 10-year lease after only 5 years. We took him to court and have an $85K judgement against him we can't collect because the business entity he did business as has no assets/money. I put the building up for sale in 2020 and we still owed $320K on the $860K mortgage. The building had not grown in appraisal value during the 7 years we owned it, but I felt it was worth A LOT more. The more I looked, the more I found out there was absolutely NO REAL ESTATE for sale on Interstate 15 at all. That's including Salt Lake City and Draper. I did find some undeveloped land way-off the freeway that had a $2M-$3M/acre asking price. I then listed our $860K piece of property for $3.2M. (THINK TRUMP) I listed it on LoopNet.com and BizBuySell.com for that amount. I also had a sign made/installed to put on the building that didn't list the asking price. It took only 2 weeks to get a bite from a plumber driving by who saw the For Sale sign on the building. He had a fleet of 40 trucks and some digging/trenching equipment. It didn't take him long to learn I was asking almost 4 times the appraised price. He negotiated the price down $900K to $2.3M. (2.7 times appraised value (again, THINK TRUMP) He put $500K down and signed a 30-year mortgage contract for $9,100/mo. I've previously posted what happened to that deal and I had learned NEVER to finance anything without having an early payoff penalty clause in the contract. NEVER run a TV ad like this in Utah... 0:30 http://www.tannertransmissions.com/media/tanner_30.mp4

In my experience, techs leave their jobs, they rarely leave the industry. The few that leave the industry just aren't cut out for this type of work. In the transmission industry we need to do all we can to attract and TRAIN quality employees.

Yeah, you're right Joe. We are a transmission shop and RARELY had a wait customer. Perhaps 2-3 waiters a week, rarely more. We wanted 10-year-old and newer vehicles for obvious reasons.

Joe, all of this is very true, especially about employers being underpaid. I could never pay top wages until the shop as a sole & separate entity made a decent profit. After that, I was able to pay $25-$50 per clock hour, not flagged hour. ($1,000-$2,000/wk.) All my guys (except the manager) punched a time clock.

I left out the part about training, manuals, & seminars in #2. Skills Gap

I agree with Joe that an oil change-only is a tough business model. Follow Joe's recommendations.

The shortage of workers in the trades is a complex issue with several contributing factors. Here are a few reasons why the trades may struggle to find workers: 1. Perception: Over the years, there has been a societal shift towards placing greater emphasis on obtaining a college degree rather than pursuing a trade. As a result, many young people may not consider the trades as a viable career option, leading to a smaller pool of potential workers. 2. Skills Gap: The trades often require specialized skills and technical knowledge. However, due to the lack of emphasis on vocational training in some educational systems, there is a gap between the skills required for these jobs and the skills possessed by potential workers. This disconnect can make it challenging for employers to find qualified candidates. 3. Aging Workforce: Many skilled tradespeople are nearing retirement age, and there may not be enough new workers entering the trades to replace them. This demographic shift exacerbates the shortage and further highlights the need for attracting and training new talent. 4. Perception of Job Stability: There may be a perception that jobs in the trades are less stable or have limited opportunities for career growth. This perception can deter individuals from pursuing careers in the trades, leading to a smaller labor pool. Addressing these challenges requires a multi-faceted approach. It involves raising awareness about the benefits and opportunities within the trades, promoting vocational training and apprenticeship programs, and bridging the gap between industry needs and educational curricula. Additionally, offering competitive salaries, benefits, and career advancement opportunities can help attract and retain workers in the trades.

No inflation easing here in Salt Lake City suburb of Draper. It's just as expensive as always.