Transmission Repair

12 minutes ago, Transmission Repair said:

Why can't we get hourly rates nearer to these rates my attorneys' office charged?  Even the low man on the totem pole gets $80/hr.  Notice this billing was over 3 years ago before the pandemic hit.  If a shop wants to hire and retain top talent, a top talent wage/salary is mandatory.

Article date: Sept. 25, 2023 5:30 am ET  

This is a Wall Street Journal article that you can either read, or click on the "Listen to Article" near the top of the article.  It takes 6 minutes.  

The authors of the article are suggesting the labor shortage is not a short-term issue; it's long-term.  Reading/listening to the article will give you the "big picture" view of the problem.  It's easy to think that the automotive aftermarket is one of the few industries that have a labor shortage, but it's not.  It's all over.  Read on...

WSJ - Why America Has a Long-Term Labor Crisis, in Six Charts

On 9/20/2023 at 12:30 PM, nptrb said:

1099 is a tricky slope to manage in the auto industry. I agree with you that it's not a great way to go. 

Natalie, early in my career I worked at an auto parts store.  I would hang out with an older guy, Tom Sitka, of Sitka Transmissions to just watch and learn about transmissions.  I wasn't concerned about learning anything other than the technical end of the business.  As it turned out, he had some unpaid 941 taxes and the IRS got involved.  The unpaid 941 taxes were a mere drop in the bucket when compared to all the 1099s he had the majority of his employees on.  In the end, the IRS said he had "misclassified" the majority of his employees.  Long story made short, the IRS padlocked his building and later confiscated all the tools and equipment in the building.  From that point on, he was doing transmissions by himself at his house.  I would help him just to learn but that didn't last as I found a job in a transmission shop.

Listen to this 17:39 conversation between Michael Moore (UAW supporter) and Kaitlan Collins of CNN about the United Auto Workers strike.  Compare this conversation to our current tech shortage.  I can draw many parallels. 

Michael Moore On The Importance of the UAW Strike

1 hour ago, Joe Marconi said:

I don't know what's worse: the tech shortage, the lower than needed rate of young people becoming techs, or the fact that there are many technicians leaving our industry. 

I guess all three topics are serious issues, but techs leaving the industry has to move to the top, in my opinion. 

What can we do as Shop Owners to provide a healthy work environment and career that tells techs we care and we want you to stay? 

 

Young techs have it rough.  Their earning power is less -PLUS- they need to make a major investment in tools and diagnostic equipment.  Think about it; they need to spend the most when their earning power is the least.  Many forget that most young techs are also saddled with the added expense of a growing young family with kids.  In our market area of SLC, UT, a fair starting compensation package would be $25/hr. or $1K/wk.  And that's just to start.  This is 2023 and we have a tech shortage that's not going away on its' own.

Providing a healthy work environment is relatively cheap to provide while company benefits are not.  The first thing a shop needs to do is get top marketing and sales training.  This will give a shop the tools and knowledge necessary to charge top dollar.  We aren't going to solve the technician shortage and retention problems paying what we used to.  Payroll needs to be no more than 20% of sales, not including benefits.  Instead of working the problem from the front end, we need to work the problem from the back end by asking yourself this question: "What do we need to charge to make labor no less than 20% of sales?" Here's a partial view of our 2012 P&L statement showing our cost of labor was running 17.3%, so IT IS possible:  2012 P&L Redacted

We need to start thinking like a tech thinks, not so much as a shop owner.

14 hours ago, Joe Marconi said:

Yes, I listened to it also.  The fact is that if every auto repair shop hired one apprentice, we could solve the tech shortage.  We, the auto aftermarket repair shops have to do this. No one will do it for us.  And I also agree that we need to pay our people better. However, we need to improve the bottom line for repair shops and owners too. 

The transmission repair industry has unique needs in that we are short on experienced transmission rebuilders.  Hiring an apprentice is merely the starting point to a 10-year learning process.  I consider it the equivalent of hiring an apprentice with the goal of ending up with a seasoned ASE Master Auto Technician.  What do you do if you need a seasoned ASE Master Auto Technician NOW?  That's what it's like trying to hire an experienced transmission rebuilder.

Inflation causes everything to go up in price.  Things cost more than ever before.  Therefore, I believe we as shop owners need to pay more than ever before.  A lot of problems can be cured by paying the top wage in any given market area.  The last seasoned transmission builder I hired was back in 2015 and we were offering $104K/yr. just to start!  I could only imagine what a similar offer would be in today's 2023 dollars.  According to the Inflation Calculator, $104K would be $130,230.69 in today's dollars, or $2,504.43/wk. Add to that all the company benefits and the total cost of employment could easily be $200K/yr. or more.  All of these numbers are for the SLC, Utah market.  Other markets could be higher.

There's a lot of advantages to paying more than anybody else.  The first thing that comes to mind is if your employee makes a move to another job, they would be taking a substantial pay cut.  On the other hand, we need to raise our prices to cover increased payroll costs.  A shop simply can't afford to pay top wages without charging top prices.  Charging top prices is not possible without going through top sales and marketing training.  And so, the training cycle continues.

Share your thoughts on paying and charging top dollar.  How would you hire a highly experienced tech?

I just heard a Carm Capriotto webinar with Cecil Bullard as the guest.  I thought he had a great plan to cure the technician shortage.  Here are some of his talking points...

Here's the link to the webinar:  A Plan To Solve The Technician Shortage

Recent surveys and articles in the industry point to the fact that 73% of shops need to hire one or more employees in the next 12 months and that for 85% of those, it would be a technician • As much as 29% of the technicians are over 55 years old, and they are aging out of the industry • Only 15% of our industry is under 35 while 29% is over 55 • Every Automotive Service and Repair Business in North America will move their labor rate up $20 per hour tomorrow. We use $10 of this to increase the pay of every technician and/or mechanic working in our shops immediately.   We make it financially appealing to come into our industry by moving the wages up substantially.  If every shop (or 90% of the shops) did this, it would change our industry for the better dramatically.   We start new technicians that are learning at $25 to $35 an hour or $50K to $70K per year (a real living wage where they can support themselves and buy tools), and we pay veteran A-technicians $45 to $65 per hour or $90K to $130K. We take $5 of the increase and make sure we have a full benefits package.  Medical, vacation, dental, a reasonable number of sick days, a good retirement plan, all national holidays off with pay, including Thanksgiving, Christmas and New Year’s, as well as anything that other professional jobs offer. • We take the other $5 of the increase and join a non-profit organization that will market to the mothers and fathers out there (and potential technicians) and let them know that being a technician in a modern shop is a cool job, is financially viable and every bit as professional as becoming a lawyer, doctor, dentist, programmer or professor. • Lastly, every shop owner books an appointment at a college, auto tech school, or high school and ‘volunteers’ their time to talk to the students, teachers, and administrators about our incredible industry.

I used YouTube videos in our shop to replace the boring tasks usually written in a Standard Operating Procedures (SOP) manual.  Some of our examples:

• How to take care of the air compressor.  

• How to service the spray cabinet parts washer.

• How to service the recirculating solvent parts washer.

• How to use our electric car pusher.

• How to use our flywheel grinder.

• and more…

Actually, an entire SOP manual could be done in video instead of a written novel that’s rarely read.

Here's an article out of Ratchet & Wrench magazine on how to figure out what your shop is worth...  How The Value Of Your Shop Is Determined

19 hours ago, SW Car Care said:

Absolutely not.  I've had guys sheepishly ask in the past, but they are given the standard response, "If I'm paying my taxes, YOU are going to pay yours!"

That's one of the big reasons why the Democrats wanted to hire 87,000 new IRS agents!  Not reporting income goes on in this country a lot more than we know.  It's rampant.

3 hours ago, Joe Marconi said:

Great point about workers comp. No one enjoys paying taxes, but as you point out the risks are too great, and as I mentioned earlier, how does this help raise the bar for our profession? 

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

On 10/22/2022 at 6:46 AM, Joe Marconi said:

I recently read an article that said that giving a technician a pay guarantee each week promotes complacency and leads to lower production.  In other words, if they don't produce, they don't get paid.  Really?  While I do get the logic, I don't agree. 

I am not going to promote one pay plan against another, but for me, if I require a technician, or any employee to be at my company a certain amount of hours, then they will get paid for every hour they are there. Now, I do believe in performance-based bonuses; so if someone produces more, they need to be rewarded for that. 

What I have found is that business success and maintaining high production levels requires hiring the right employees, and having the right culture combined with the right leadership.

Your thoughts and comments? 

 

Here's a 9-month-old video of a Wisconsin shop owner who pays his techs a salary.  Moreover, he's thinking about going on an 8-hour day and only 4 days a week.  Yet he's going to pay for 40 hours regardless of them working only 32 hours.  The video states by 2025, our industry is going to be short of 800K auto technicians by 2025.  Take a look at this short 2:14 video below...

On 10/22/2022 at 6:51 AM, Joe Marconi said:

Perhaps this is a trick question, but it's worth a discussion.  Many auto repair shops spend a lot of money to get new customers. But what about the ones we have already?  

What marketing strategies do you have to attract new customers and retain the ones you have now? 

I just found this on my Facebook feed.  The lady posting this applied for a sales person position that I decided against hiring.  But we did become FB friends.  Check out her FB post about a synthetic oil change.  This is a good way to retain new customers.  Take note how this might apply to your operation.

On 9/9/2023 at 6:23 AM, Joe Marconi said:

I like to refer to CRM as Customer Retention Marketing, which is nothing new in the auto repair business. And everyone reading this understands its value. However how many shops consistently implement a CRM process that boosts future service appointments? Which will help to reduce slow times for your auto repair shop. 

An effective CRM starts at car delivery. Inform and BOOK the next appointment for your customers.  Also, inform them of upcoming needed services, and discuss a timeline for any deferred and declined work. 

Fill your calendar in advance with future appointments from your existing customers. A VERY AFFORDABLE way to market your company.

Lastly, this strategy is nothing new, but it needs to be revisited from time to time. Especially since the last few years have been banner years for most repair shops.

A consistent CRM process is perhaps the most effective and affordable way to market your business.

What CRM strategies to you use to boost your future business? 

A great article on this topic I just ran across...

https://www.ratchetandwrench.com/shop-life/columnists/article/33003161/broski-customers-as-friends

I never paid anybody off the books.  I did lose a potential hire once for not paying him off the books because he was collecting unemployment.  I agree with you, Joe.

I’ve been following the topic of Artificial Intelligence (A.I. or AI) with great interest.  Here’s the results of a recent study…

The study was conducted by asking the chatbot to determine a possible diagnosis for 36 standardized "clinical vignettes." The A.I. bot was able to determine a medical diagnosis accurately about 72 percent of the time, based on the patient's symptoms and personal medical information. Sep 4, 2023

Additionally, there is another study going on about AI’s use as an automotive service advisor. LEVERAGING AI WITHIN THE AUTOMOTIVE SERVICE INDUSTRY

I feel while all of this, and more, are very interesting topics, the good old fashioned personal contact and conversation can’t be beat when it comes to acquiring and keeping customers.

I've talked about this before.  You say an OSHA inspection is rare and I have to agree.  In my 40-year career I've never experienced an OSHA inspection.  Moreover, I know of only one other shop owner who ever had an OSHA inspection.  He claimed a disgruntled ex-employee filed an OSHA complaint, but he wasn't sure.  To me, OSHA is like the "Mattress Police".  You know those tags on mattresses and pillows that say to not remove under penalty of the law.  Removing the tag is a federal offense.  Has anybody ever really been charged with pulling the label off?

When I went to sell my shop's real estate, the buyers were more worried about ground contamination than anything else.  They sent in a hammer-drill rig to take samples to make sure the ground wasn't contaminated with hydrocarbons, as in gas or oil.  They did a total of 6 holes, mostly around our oil/water separator tanks in our parking lot.  See https://www.youtube.com/shorts/ReSYTfvZ7EU?feature=share  Two of the holes were drilled inside the shop near the floor drains.

This was done at the buyer's expense of about $5K.  The subject of an OSHA inspection never came up before, during, or after the sale.  They didn't even ask about a fire inspection, either.  Maybe it's because I'm in Utah, I don't know.  The nearest area office for an onsite inspection is in Denver, a 7-hour drive away.  https://www.osha.gov/contactus/bystate/UT/areaoffice  Perhaps OSHA enforcement is more stringent on the east coast.  However, I must agree, the if you're selling your shop, getting an OSHA inspection may be the prudent thing to do.

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46 minutes ago, Joe Marconi said:

You bring a lot of great points. The transmission business is different, such as collision shops. It would have been interesting to see if you could have gotten customers back after a major repair for a fluid service, health check or some other way to keep in contact. As you say, a one and done type customer base has no real value. 

Whether the customer & vendor lists have value or not is the type of transmission repair business model it has.  I know of several shops in my area that also do General Repair (G/R).  For instance, did you know that 66% of Aamco's customers were for G/R, not transmissions?  Speaking of transmissions, the vast majority of Aamco shops buy remans and DON'T have a rebuilder on site.  I believe an Aamco customer list would be of much greater value than the traditional transmission shop, like mine.

We were a transmission specialty repair only; we didn't use CRM at all and perhaps I should have.  I don't really know.  Because the majority of our customers had us perform major transmission repairs, what else could we sell them?  Hindsight being 20/20, perhaps I could have used CRM for future transmission service jobs. (fluid, filter, and a road test looking for codes) But the fact remains we didn't engage former customers with CRM.

Unlike the general auto repair industry, our relationship with the customer was more of a transaction-based than like relationship-building which is critical for the G/R industry.  When I was trying to sell the shop, our customer list wasn't worth anything.  At least the prospective buyers didn't think so.  Early in the sales process, I was trying to impress the buyer that our customer list had value, the buyer asked me, "Why would I want a list of people that just had their transmission rebuilt?" OUCH!  They surely can drum up the Annual Service Jobs from all of our 1-time customers.  So, I left the buyer with the customer and vendor lists without being compensated.  They were like me and never followed up with customers.

On 12/28/2022 at 4:33 PM, Transmission Repair said:

This is Todd Hayes' signature line he closes all correspondence with...

Unlimited Cars Unlimited Technician!

Now Hiring SuperStar Service Writers & Technicians

Call or Email

Todd Hayes 386-547-3682

[email protected]

Read about Todd Hayes' and Perry Adams' success in all of their repair centers.  One of his shops does $1M/mo. (Yes, that's ONE MILLION DOLLARS A MONTH.  The rest of his shops are doing $500K/mo.  Read about his techniques in the article below...

In The Trenches With The Wrenches

They say everything costs more these days.  I found more evidence of this when looking at Ratchet+Wrench Management Conference registration fee of $999.  Wow.  Add in airfare, hotel, etc. and this event for even just ONE person in a shop will be at least $2K, if not more.

Although I'm sure the event will be worth it, to me it simply drives up training costs that needs to be calculated into a shop's pricing structure.  QUESTION: Do you have Training Costs as line item in your P&L?  As a percentage of sales, how much should be budgeted for Training Costs?

In our shop, we had 1% (~$12,000) of sales budgeted for Training Costs, but in reality, it ended up being almost 2% (~$20,000) because we trained ALL employees.  Because we were a transmission repair specialty shop, a year didn't go by without 3 or 4 new transmission models added to the mix.  We would close the shop for a total of 4 days just to attend our annual Transmission EXPO.  Most years, the EXPO was in Vegas, but not every year.  One year we really blew our budget when the EXPO was held in Washington, D.C.  OUCH!!

Tell me your story on training or continuing education.  

About 15 years ago I hired Roy H. Williams as my marketing guru.  Because his teachings are not industry-specific, I thought it would be good for me to get business advice from someone who is NOT automotive.  I learned a lot.  In late 2008, I was trying to select the best location for my shop.  I ran across this golden bit of advice and put it to work, making my gross revenue more than double.  You can read, listen, or both, to the piece of advice he gave.  It's only 3 minutes long and well worth your time IF you are faced with trying to select a new location for your shop...

Expensive Rent Is The Cheapest Advertising You Can Buy

7 minutes ago, pfseeley442 said:

I can tell you how I solved my issue with technicians. I was always looking to pay as low as possible. If I could get a guy in for $20 per hour I was happy. That happiness was always short lived. I finally sat down to figure out why I had big time turn over of help. The problem was me and how I thought about the value of a tech and the service writer. I know the value of these rolls but never put the right dollar amount on them. Also a $20 an hour tech is just that. When I finaly ran my business corectly, priced my labor rate and parts where they needed to be, hired qualified techs and service writers: holy crap what a differance. I went from an average of 600K per year to now averaging 1.6million per year (the last four years, out of thirteen) I also have pay of 250K per year for myself.  My techs get about 70K plus per year. . Front room gets about 65K per year. All salary, no pay plans, no games, just pay. With health care, 401k ect. I have four bays, one of them is an inspection bay. Good AC good heat, and very little turn over of help. So as an industry we know why there is a tech shortage, and the reasons for it. We just need to fix us first. 

The way you used to think is not uncommon within our industry.  I'm glad you finally saw the light.  Massachusetts has a high cost of living and your employees deserve your new way of thinking.  If you stop and think about it, you're merely a parts and labor broker.  The difference between your Cost Of Goods Sold and gross revenue should be around 60%.  If not, you're underpricing your work.