Auto Shop Owners – Is the Problem Greed?

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greed

greedIn our last blog piece (Techs – Is the Problem Unreliability?) we talked about our survey asking about the most common reasons techs are fired. Many auto repair shop owners feel that the problem is that the quality of techs in the job pool is not good. Clearly from the responses to this piece, many techs disagree that this is the root of the problem of the tech shortage. They argue that there are many qualified and hardworking techs out there, and the problem is that owners and managers do not want to compensate them fairly for their time and skill. This drives good techs out of the industry. Is the problem greed? 

In order to let the techs have their say in the matter, the Automotive Management Network posted a second survey: If You Have Quit a Technician Job, What Were the Main Reasons? If you’re a tech in this industry, please take a moment to give us your feedback on this issue by voting in our survey. Currently the top five responses are:

Pay too low (195)

Employer dishonest (137)

Unfair pay system (123)

Labor times too low (117)

Employer or other employees hard to work with (109)

These responses reflect what we’ve heard from techs in the industry many times before: pay rates are too low, and a flat-rate pay system compensates the owners more than the techs who do the work. In order to maximize profits under the flat-pay system, techs purchase more and better tools to assist them in meeting the time limit of the job (rather than not get paid for additional time spent). Those tools are expensive, though, and the investment often doesn’t pay off except perhaps in the long run.

This is no longer an entry level job for people with strong mechanical skills. Every year technology changes, and certifications must be redone – that costs techs their own money too. At what point does paying money to make money become just paying more money?

The pressing question then is how fairly is the money being made in auto repair being distributed between those who have invested time and money running an auto repair shop business and techs who have invested time and money building their own skill sets? Is it that they auto industry as a whole is getting squeezed so there is less money to be made compared to the golden days of the auto industry? Or is it similar to what is happening in other sectors of the economy: large companies acquiring smaller companies and squeezing out the little guy? Under this system, the average worker has less leverage and has to hustle more to make the same money.

Many auto shop owners have weighed in to say that in this economy it’s tougher to make a profit. Benefits aren’t what they used to be for anyone, and they are not paying their techs below what is fair. However, from the second most popular tech response above, it would seem that techs do not believe this is true. More of them are deciding you can’t make a decent living in auto repair any longer.

20 Comments on “Auto Shop Owners – Is the Problem Greed?”

  1. Rolling $80k in tool and 20 years experience to gamble everyday whether or not you’ll make money each day got old, I had days I made very good money but they barely outweighed the days that I either stood around because there wasn’t enough work to go around or got stuck working on the jobs that didn’t pay because lesser techs would avoid them at every cost. For these reasons I left automotive and I’m not looking back. It’s a shitty business ran mostly by car salesmen.

  2. I made $15 per hour in 1991 and had decent insurance benefits. I moved into management and worked my way up to service director before I hated it enough to go back to being a tech. Now I make $18 per hour and if I had to pay for the same benefits I’d be making less per week then I did in 1991. I am lucky that my wife has good benefits or I could not do this. I am an excellent tech and specialize in the difficult diagnosis everyone else calls s**t work. I do this because I love it. (yea a little crazy) I watch lesser techs flush wallets for more money per week because that is what this business has devolved into. This great ‘technician shortage’ is not as great as everyone thinks or we would make more. Simple supply and demand requires that. Don’t fool yourself. This business keeps finding ways to need fewer techs. Longer or eliminated maintenance intervals, power trains that simply don’t break down, warranties that go on forever and then become recalls that pay nothing because you have no choice but to do it. A group of techs went on strike in Chicago and the dealership pushed their boxes out in the street. They aren’t worried about a technician shortage at that dealer. If you really enjoy this work, get a job in a dealership and enjoy the technology. If you want to make money, go to a chain store and flush wallets. I made $300 a week more at the tire store before I went back to a dealership but I was bored out of my mind. Techs are at the bottom of the food chain in this business. Get over it or get out.

  3. My son is an excellent Tech. He is fast with superior skills. He has invested a fortune in quality tools. I went to the garage where he worked to get an oil change. Normally there are a lot of extras included. All I got was an oil and filter change no extras. Both my son and I were stunned when I was charged $135 for 20 minute maximum oil change. Not repairs or diagnostics. 4.5 litres of oil and a filter period. I realize the garage has to make money as well as the Tech but this has to stop. I drive a modest vehicle the garage owner has a top end pickup plus a few other high end cars. He lives in a nice home and takes a couple nice vacations a year at my expense and that of his clientele. I now do what I can and my son helps me out the real problem in the industry is in my opinion is that garage owners want to live like princes what ever the cost is to Techs and clients

    1. I’m not sure where you get the idea an oil change is “20 minutes maximum”. We get paid from parking space to parking space, not the time in the air and that oil change includes a fairly comprehensive vehicle inspection. I started as a tech in 1983. I am master certified. I get paid $7.20 for an oil change. Our oil change is $39.95 at a new vehicle dealership. You went to the wrong place.

  4. Large reasons. 1st is pay rate. Too low for the money you need to invest in tools. And time you need to invest in knowledge.
    Example I can make the more money as an electrician with a $300 investment in personal tools and a 4yr apprenticeship.
    2nd thing is book time.
    We can negotiate a wage and guaranteed hours and next week the book time is cut by a few tenths. And there’s nothing we can do but work faster. Jobs that paid an hour now pay 6 tenths.
    3rd is fairness some guys get the better paying work. Some shops have computer programs to make it fair. But seem to still feed the chosen few the better paying gainers.
    4th owner greed they make money selling the car and commission from the lenders and fees for the paperwork every single part of the process is profitable. Most owners would close their service department down if they could. Manufacturers require it so they have to do it.
    Seen dealers use the shop as the slush fund.
    I can’t get a Porter to bring in a car for service but if sales needs a car pulled out and or washed for a test drive or sale the Porter is on it.
    The porters salary comes out of the shop budget. So shop pays the overhead for porters, maintenance guys, some office staff service writers and service manager. They are all getting their pay checks off the backs of the Techs. Owner doesn’t see the profits because of the overhead. Got a 50 cent raise once Labor Rate went up $5 bucks sign next to it. Due to an increase in mechanics pay labor rates had to be adjusted.
    People think that the Tech makes a hundred bucks an hour. Not true obviously.

    1. Most dealers don’t make very much profit from the sales department. The majority of the the money does from fixed ops, which is parts, service and body shop. Yet. The salesmen usually drive new cara while the techs drive junk.

  5. The problem is not greed, you charge what you have to charge to keep the doors open. The problem is you have a lack of qualified technicians. Many general service technicians who have limited skills expect to make what a more experienced technician makes even though they haven’t made the investment in time, education or tools to further their career. Good technicians with the tools, knowledge and ability are always well paid.

    As far as the apprentice comments above, I totally agree. Technicians coming out of these so called training programs at the community college or the technical institutes are a joke, they can’t even change oil properly or complete a PM checklist without issue. It becomes a burden on the shop owner to hire these people because most of us do not have the time to train an apprentice, take on the added liability of their inexperience and to top it off they want to make an unrealistic salary that is not comparable to their skills (or lack there of).

    As far as the slow mechanics go, even if they do the job right they usually will not invest in the tools to complete the job faster, that is on them. The have the ability to change their earnings capacity and choose not to.

  6. One day I looked around at what *I* provided in the way of tools etc, and what the boss provided, and the fact that he was always gone, leaving me to do the diag, estimates, parts ordering, selling, repair, write up, billing and collect the ticket. Now I am self employed.

  7. The problem with raising rates is almost all shops base their rate on local dealer rates and they almost always stay under them. When I worked at the dealer the warranty rate was set by the manufacturer and the customer pay rate was only allowed to be a certain percentage higher.As an owner and a tech I feel our shop rates should be in the $200 to $250 an hour range and dealers should be at the $300 and higher range. Unfortunately peoples pay have not kept pace with the real world and these rates would make it unaffordable to do even basic maintenance.

  8. Upper level Techs today are doing work of Engineers. The shop owners have to raise door rates to support techs pay of $50 an hour soon! Here is a wide spread article I wrote about this in saving what few techs we have ..

    Auto and Collision Techs, $50 clock hour PLUS production and sign-on bonus, full benefits- Did that futuristic help wanted ad headline make you more nervous than an albino hitch-hiking in a blizzard? It should. And it is not too far off from today. As a matter of fact my prognostication is that it will be a typical ad by the end of 2019. Here’s why …….

    The incredible shrinking skill force – The 2007 recession that followed the collapse of the housing market, the stock market and ultimately the car biz, took a cataclysmic effect on blue collar workers’ heads including Technicians. We are all still reeling from the recession blues because it pushed all of our minds into completely different mental zip codes. But the result on Technicians (and we had a shortage before the recession) is that 25% were laid off when cars weren’t serviced. Papa wrench went home with a pink slip and that removed their motor cortex. Very few ever returned.

    The CAR CZAR effect – We all remember when Steve Rattner (who had never been in the car biz) in 2008 decided that there were too many CJD and GM dealers and decided to turn into Buzz Saw Al Dunlap from the Sunbeam days and ordered the de-franchising of hundreds of dealers. (That worked well, Steve. You had to reinstate them when Americans loyal to those brands had no place to go, as well as destroying many peoples’ livelihoods and some dealers’ family legacies). Suffice to say that many Techs let go under a government siege like that, also never returned.

    Your favorite uncle is now a Tech thief, Uncle Sam – Look out into your shop floor. How many of your Techs are Baby-Boomers? If they were born in 1954 or before, Social Security can be taken when they reach 62. If their job seems unpleasant at 61, it can seem downright intolerable at 62 because they now have what seems like a miracle lifestyle change opportunity.

    Astronauts landed on the moon with less technology than what today’s cars and trucks have – Many Techs are just not up to the upgrade challenges of today’s systems.

    Those fracking oil companies – Good news/bad news: Good news, regardless of the Keystone pipeline and oil prices dropping rapidly, most Wall Street gurus predict that oil and gas industries will carry this nation into great prosperity for at least a decade. Now the buzz kill, even though oil has dropped precipitately, fracking and oil companies are recruiting skilled labor, paying $100- 150k with full benefits and golden retirement plans. And what do the oil/gas/fracking company recruiters look for? Tech savvy dependable workers who can work with their hands, and these recruiters love Auto/Truck/Collision Technicians.

    Not My Kid – How many of your Techs are encouraging their kids to become Techs? There is about as much chance of that as Ted Nugent being voted man of the year by PETA. Even if a parent or relative did encourage them, I bet the youngsters would look at their parent like they were on crack. Millenniums defer driving as long as they can, never mind get interested in fixing cars. And with Google as the driver of their future car, what could go wrong?

    Solution – Here is my two pronged approach:
    1 – MOST IMPORTANT, save the Techs we have from leaving the industry by paying Techs like the professionals they are. Even mid-skilled Techs perform tasks that college educated Engineers perform. With that in mind, right out of pay scale websites shows an average 5 year experienced Engineer makes $65k to $75k a year. Upper skilled with 7 plus years experience makes $85k to $95k+. Great ones should make $125k to $150k a year. Techs by 2016 should be in this same range. Where will the gross come from to pay these wages? It starts with ALL INDEPENDENT SHOPS AND DEALERS and/or YOUR Factory Rep raising rates. Start that process soon! By the end of 2016 if you’re not paying your average Tech $50 an hour, you won’t have any.

    2 – Revamp our whole apprentice program to a model like Germany. I speak to Shop Owners and Dealership Fixed Ops Managers all across the country, and they tell me that graduates from trade schools are nowhere near trained enough to be unsupervised, never mind give them a ticket and let them start in. I have heard that many graduates still can’t even safely rack up a car on the lift. Do yourself a big favor, put in any search engine “Germany’s Apprentice Programs” and read about them. Here are some highlights:
    o Germany funds and co-sponsors trade programs taking most or all of the financial burden off the employers
    o Germany’s employers start interviewing seniors in high school and hire them to start the apprentice programs as soon as they graduate.
    o The net effect is that 50% of Germany’s high school graduates who opt for higher/continued education, enter trade schools.
    o Most German apprentice programs are 4 plus years with many hours of on-the-job training AT THE EMPLOYER’S site. Or with exactly the equipment the employee will use on the job,
    o German educators recognize that there must be people to design things, AND more people to build and fix things

    There is no more deadly trap than the trap we set ourselves – If we keep just using our same daily practices, in two years our Tech shortage will be so great we all will be in panic mode. – Joe Henry

  9. Employee retention is dependent on several things. A fair pay plan should have employee buy in and some form of accountability on their part. Open communication is very important for retention so small problems can be dealt with quickly. Regular staff meetings will show your willingness to retention. Providing shop tools for the techs to use on certain jobs will also help their productivity and show them you want them to have the tools to do their job.

  10. Unfortunately there is no short answer for this issue. The severe shortage of technicians has many factors. Some of it is social, some of it economical but both of those lead to the root issue of a business model basic and .

  11. As a mechanic and shop owner, one issue is that most mechanics work on the side and there are a lot of shops who lose income and have mechanics who are not sharp when they come to work. In the Toronto area I come across shops who hire fellows who are not licensed and pay very less and a lot are not from Canada. This makes it very hard for mechanics to have real job security. The other problem is that we work to close to the public, where as plumbers and electricians, have unions they joined and protect there position, mechanics have not been so lucky. One other thing which really gets me in Ontario as for our trades we now pay yearly large fees to stay qualified, these people have no bite in keeping the trade honest. This action only created a mass of jogs with no bite. Have been involved in several cases and it is discussing. So sorry for expressing my thoughts but nothing will happen. The fellow who sits in Ottawa whom I spoke with has no understanding at all of our industry.

  12. I agree with under paying techs when I was manager at Midas they used to dangle the carrot of un obtanable goals giving bounes based on flat rate time. At the counter we were instructed to sell tires at any cost even if it meant free alignments and oil changes to get the customers into new tires. The free labour was never paid to techs and orders said just tell them they got something so be happy. I quit that job . Mechanics are well educated people and should be treated as such.

  13. I was a dealership tech for 16 years, prided myself on getting every possible certification. Achieved GM world class in 2008 (only 1300 or so nation wide) this got me the highest per flat rate pay in the shop, but also starved me out of the business. Management knows there are limited techs that can actually diagnose problem vehicles and even fewer who can repair them quickly. This means you quickly loose money watching under qualified techs gobble up the easy money, while your fixing the problems and getting fewer hours. I am now an instructor for GM. No more flat rate circus rodeos…..

  14. Some techs have the hands and brains for working smart and fast. Some don’t. I have a great young tech no comebacks but is slow. And a great one that can slam out a ton of work without thinking twice. A great way to find techs is to teach a young tech your way of working smart and it will pay back ten fold.

    I always ask 20 something-year-olds how much do you think a tech makes and it blows their mind when they find out 70-80 k is common .

    Teaching

    1. If like to know where this 70-80k is common? I’ve never heard of anyone hitting anything close to that around here. I’ve been wrenching 20 years, and I’m about $30k shy of that. But i fall into that category of”does good work. No comebacks, but is slow.”. I work at a pace where I’m comfortable I won’t forget anything or screw anything up. I’ve learned over the years how fast I can go and produce good results. And I prefer to stay at that pace.

      1. No kidding. Been at this trade for over 35 yrs workin my arse off. Never made anymore than $50k a year and they think we are being paid to much. Have had a $2.50 in raise over the last 14-15 yrs

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