Transmission Repair

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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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.

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

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.

You're welcome, Carm. But the airline industry, military, and planes in general will continue using fossil fuel. There's no substitute on the horizon.

EV CONSTRUCTION INDUSTRY WILL LIVE OR DIE ON BATTERY PRICING One key factor will determine whether electric machines become the default choice for construction or a greenwashing gimmick — total cost of ownership. Read the whole story at... EV Excavators vs. ICE Excavators

Buying even minor parts for a Tesla is a costly ordeal. I predict the aftermarket will eventually start making aftermarket parts for a Tesla so that the buyer doesn't have to go through Tesla. A good example are coolant hoses. These are very commonly the first part(s) that need to be replaced on a newer vehicle. As the aftermarket parts supplies for EVs grow, so will the service opportunities. I just received this notice from Motor...

Every Tuesday at noon, we had our weekly shop meeting which included lunch on the company's dime. Some weeks there were hour-long webcasts, while other weeks might have us all recapping a job that kicked our tail the week before. Some weeks it was a pure gripe and bitch session. But I always listened. It's my belief that if a shop owner and/or the powers that be are truly engaged and approachable, it helps the shop run much smoother. I would like to believe I was very approachable because I heard any and every voice of discontent or friction. Sometimes, my crew would come up with some really cool ideas, too. If a shop owner is disconnected from their crew, that sets up a situation of high turnover. Really listening to my crew promoted higher quality of work and much less turnover.

This is what I call a "feedback video". This technician is giving reasons why there is a tech shortage as well as what's prompting him to look at another career choice. This video is worth a lot to shop owners. This tech's 2 main problem areas are a) the flat rate system and b) warranty work. Take a look... 15:22

Three questions to ask yourself if you are considering retirement: Have you had enough? Do you have enough? Will you have enough to do? 1a. Are you tired of the business? Do you wake up missing the great feeling of going to work in your own business? 2a. Do you have enough money to retire on? Can you depend on a recurring monthly income outside of Social Security? 3a. What will you do when you retire? Do you have enough to keep you busy? Any hobbies you wish to pursue?

Yes, he has a valid point. I believe there is a disconnect between quality techs and quality shops. It seems to me that the quality techs can't find a quality shop and the quality shops can't find quality techs. I also believe that a compensation framework built upon the flat rate system does more to push techs out of our industry than any other single cause. Running a close second is shop culture. In Adam Smith's 1776 book, The Wealth of Nations, he was the first to recognize the supply and demand theory of markets. As the quality and quantity of techs dwindles, compensation will increase. By how much will be determined by the markets. Over time, I further believe there will be a "shake out" of quality shops where the quality shops will thrive and the other shops will eventually go away. The future market for quality techs will be driven by the number of quality shops.

A written synopsis of the podcast (or any podcast for that matter) would be helpful in weighing usefulness vs. our time.

Being near Salt Lake City, they use salt on the road quite liberally because salt is so abundant, local, and cheap. We are in the affluent suburb of Draper, Utah and never see the rust bucket vehicles of other lower income areas. We were a transmission shop and worked predominantly on 10-year-old and newer vehicles that hardly ever had any rust. However, I once worked for a shop in a lower income area and we saw quite a few older, rust bucket vehicles. Change your demographics and you'll change the types of vehicles you work on.

The flat rate system promotes an adversarial relationship between management and techs.

I think the shop owners that like the flat rate system have never worked under such a Caddy-Wampus system.

Excellent podcast! I've never been a fan of the flat rate system because I spent a year in that system working at a Cheverolet dealer. IMHO, the flat rate system promotes shortcuts and poor workmanship. Not only that, but the flat rate system absolves all management responsibility of marketing, promoting, and keeping the shop full of work. I can't add up all the hours I was at the dealership, but yet, no work to do. I also do believe that ASE certification should be required to have a job in this industry.

Location, location, location... Listen or read the following link: Follow The Sound Of Bulldozers And The Smell Of Fresh Paint ===============RELOCATION STORY ============ When opening a transmission shop, most shop owners look for a suitable building. For the vast majority of my career, I was the same. The market location is rarely thought of. No consideration of a fenced vehicle storage area or even if that area is paved or not. Not a thought about traffic count. It’s the building itself and its suitability for transmission repair. Imagine, if you will, the most affluent area you know of. Further imagine opening a transmission shop in that same affluent area. After 16 years located in a lower middle-class market in Pleasant Grove, Utah with a median household income of $76,672, we contemplated moving to an affluent upper middle-class market in 2008 with an average household income of $149,514. The former rent was $1,800/mo. and the new rent would be $9,000/mo. “How in the hell am I going to afford a 5-fold increase in rent?” I thought. With an average gross profit of $1,500 per major transmission job, I reasoned it would take 6 major transmission jobs just to pay for rent. Then there’s payroll. Ouch! One of my sales trainers, Roy H. Williams in Austin, TX once said, “Expensive rent is the cheapest advertising you can buy.” The rent amount is often proportional to the amount exposure. Realtors often say “Location, location, location.” The location we were looking at was located right on I-15, the only north-south interstate freeway in the state of Utah. The traffic count of 5K/day on the frontage paled in comparison to the 250K/day of I-15. After much thought and losing sleep, we relocated to Draper, Utah which is a suburb of Salt Lake City. After the move, the issue of customers without money for the transmission repair all but evaporated. In Draper, if a customer didn’t have the readily available cash, they had room on their credit card. Completed jobs didn’t sit around; customers would pick up their vehicle as soon as the job was completed. We were suddenly in a world where money was no object but being without transportation was. This was before Uber of Lyft. The only substitute transportation was Enterprise Rent-A-Car. Our sales went from a 16-year high of $500K/yr. To $1.2M/yr. seemingly overnight. I tell this story because it was the first time, I thought like an Aamco business owner and not the transmission builder I was. As time went on, I eventually came to know my competitors, including the Aamco owners. I learned so much. It was nice to have a non-adversarial relationship with other shops. We eventually sold the business in 2015 and the shop real estate in 2020, and I became fully retired. ========================================= ATRA story… I joined ATRA during the winter of 1985 seeking how they could help a fledgling business. In the beginning, ATRA supported transmission shops in many ways, such as technical training, seminars, trade shows, credit card processing, business insurance, intershop warranties, and management/sales training. —------------------------------- ATRA’s revenue streams were varied, but all parts of the revenue stream were very helpful to ATRA’s success. —--------------------------------