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  • Editorial – Shop Licensing – What can we do with $100,000,000?

    Posted by Site Administrator on September 28, 2013 at 6:57 am

    Shop Licensing – What can we do with $100,000,000?

    First, let’s eliminate the backyard, underground, illegal hack shops.

    Next let’s allow only competent technicians to work on cars.

    Then we can get all legitimate shops to regularly write sizable checks to the state.

    We can make car repair more costly for the consumer.

    Plus, we can significantly increase paperwork and crossing “t’s” and dotting “i’s” in the daily life of shop owners.

    Now, all we have to do is get government on board and, when all is said and done, depend solely on government to make this all come true. After all, government regulations have been the savior of a whole host of industries. There’s…well…I’ll get back to this later.

    History is one of the best indicators of how things are likely to go, so let’s look at how the state with arguably the strictest licensing has fared. Michigan has collected well over $100M in fees from the auto service industry since their licensing law was implemented.

    Several of the goals above have been achieved. Increased paperwork, increased repair costs and over $20,000 in licensing fees for a typical shop. $20,000. Seriously.

    Tech competency may be slightly better.

    Backyard, underground, illegal hack shops? Many would say there are more now than ever. Going after such shops seems to be the number one selling point for licensing proponents, yet it simply will not happen. Cars have been repaired in backyards for over 100 years and will be for the next 100 years. Those who do so are determined and will always find plenty of ways to stay clear of any regulations. What proponents do not comprehend (or choose to ignore) is that the idea of state regulators combing the countryside for people working on cars in backyards is simply a myth. It does not occur in Michigan and it won’t occur in any other state. What the regulators will do is go after the low hanging fruit – the shop who registered and got their license. Easy targets for checking paperwork, signage, and a host of other details. Backyard shops take far too much effort to pursue. Anyone who tells you different is dreaming. Ask them for examples of successful efforts anywhere. There are none. If there were you would be hearing about it regularly.

    Question: Would the auto service industry in Michigan be better off today if ASA Michigan (or AASP or ASC, etc.) had controlled the spending of that $100,000,000 (or even 10% of that) instead of the state? Imagine the training, consumer information campaigns and other assistance that could have been provided to Michigan shops with funding like that.

    The answers to the problems this industry has can be found in many places. First, at your shop. Then there are other shop owners, trade associations, ASE and educational efforts. Yet so many in our industry seem to want to look to government for the solutions. Why on earth would anyone associated with a trade association want shops to have the added expense of licensing? Is it because the trade associations are rolling in so much excess cash that they believe shops would be better off spending that dues money for a state license?

    Are we as shop owners so inept that we cannot deal with Backyard Bob down the street by informing our customers what they get with us and what they get with him? Sure there will be some people who do not get it – these are the ones that you do not want as customers anyway! BB is doing you a favor by taking them.

    Are we so helpless that we need government to determine if a tech is good enough to work on a car in our shop? We just can’t tell without a government license?

    Look up the most successful shop owners in your state. See how much time they spend complaining about unfair competitors and hoping for government to make it all fair for everyone. They spend none. Instead they put their efforts towards making their business and industry a raging success.

    Which industries have been significantly elevated via government regulation? No, I can’t think of any, either.

    Regulation primarily does two things for our industry currently. Decreases profits (or costs consumers money depending on how you view it) and starves positive private and association efforts for funding. Can you find a few benefits here and there with some regulations? Sure – that’s true with just about anything. But they are vastly outweighed by the cost and negatives.

    How about we spend our time working on elevating our shops and our industry without government help. If we are going to get involved with government, then let’s start figuring out which regulations we can get rid of. That’s a government project that I can get behind.

    Tom Ham
    Owner of Auto Centric in Grand Rapids, Michigan
    President of AutomotiveManagementNetwork.com

    steve steeb replied 8 years, 9 months ago 9 Members · 8 Replies
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  • tmolla

    Member
    September 28, 2013 at 8:57 am

    Tom,

    Well-stated. I think you’ve captured the heart of the issue. We have to take responsibility for our own improvement, both as individuals and as an industry.

    Tony

     

     

     

  • jeepflexin

    Member
    September 28, 2013 at 9:39 am

    First, let’s eliminate the backyard, underground, illegal hack shops.

    Next let’s allow only competent technicians to work on cars.

    Then we can get all legitimate shops to regularly write sizable checks to the state.

    We can make car repair more costly for the consumer.

    Plus, we can significantly increase paperwork and crossing “t’s” and dotting “i’s” in the daily life of shop owners.

    Now,
    all we have to do is get government on board and, when all is said and
    done, depend solely on government to make this all come true. After all,
    government regulations have been the savior of a whole host of
    industries. There’s…well…I’ll get back to this later.

    History is
    one of the best indicators of how things are likely to go, so let’s look
    at how the state with arguably the strictest licensing has fared.
    Michigan has collected well over $100M in fees from the auto service
    industry since their licensing law was implemented.

    Hey Tom, first I would like to point out that in Delaware we are not an industry but instead we are a trade, industry typically is associated with standards and we have none. I am fine with you calling Michigan’s an industry because you at least have standards. I find it interesting that you believe or at minimum would imply that because Michigan hasn’t gotten licensing perfect you feel no other state is capable of making it work.

    Several of
    the goals above have been achieved. Increased paperwork, increased
    repair costs and over $20,000 in licensing fees for a typical shop.
    $20,000. Seriously.

    Seriously I’d like to see your math. Are you talking over 40 years? If that is the case make sure you mention how many millions you made during that time period too, it is quite easy to skew numbers to get the results you want if you don;t scale like for like.

    Tech competency may be slightly better.

    Here in Delaware that is the crux of the issue.

    Backyard,
    underground, illegal hack shops? Many would say there are more now than
    ever. Going after such shops seems to be the number one selling point
    for licensing proponents, yet it simply will not happen. Cars have been
    repaired in backyards for over 100 years and will be for the next 100
    years. Those who do so are determined and will always find plenty of
    ways to stay clear of any regulations.

    I do not disagree or have any illusions that the hack shops will find ways; however they will have to find a way that is harder less prominent for them. Minimum standards is about separation. Here in Delaware a customer has absolutely zero way to measure a shop’s capability versus the guy down the street. At minimum having shops who have achieved a state wide minimum standard give the consumer a chance the shop they are working with has a chance at fixing their car.  

    What proponents do not comprehend
    (or choose to ignore) is that the idea of state regulators combing the
    countryside for people working on cars in backyards is simply a myth.

    And truly I don’t think the regulators need to root out every single illegal shop, ultimately the responsibility for rooting out these shops will fall on other shops who encounter jobs that were hacked up by a shop with un-qualified techs. I for one would happily turn over info regarding shops whose hackery showed up in my shop.

     It
    does not occur in Michigan and it won’t occur in any other state. What
    the regulators will do is go after the low hanging fruit – the shop who
    registered and got their license. Easy targets for checking paperwork,
    signage, and a host of other details.

    Two things to understand. One what we are proposing is technical minimum standards, the shop’s responsibility of this is to employ those who have met the minimum standard. The only paperwork verification would be to verify certified techs were employees, current garagekeepers/ liability insurance and tax ID stuff. The shop owner would be free to conduct business in accordance to current applicable laws. 

    Two: Our current proposal has a component that creates a peer review board, the peer review component would have final say regarding the outcome and judgment of investigated wrong doing.  

    Backyard shops take far too much
    effort to pursue. Anyone who tells you different is dreaming. Ask them
    for examples of successful efforts anywhere. There are none. If there
    were you would be hearing about it regularly.

    Again just because Michigan struggles to get it right does not mean it is impossible, once upon a time it was “not possible” to sail around the world. As you probably know the reason for that was no one had successfully achieved it until someone did. Even then there were plenty of naysayers who felt investing money into sailing “to the edge of the earth” was absurd. I think you would agree that turned out well.

    Question: Would the
    auto service industry in Michigan be better off today if ASA Michigan
    (or AASP or ASC, etc.) had controlled the spending of that $100,000,000
    (or even 10% of that) instead of the state?

    Considering many other states are working on a solution that includes regulation I can only imagine that if Michigan were not regulated they would also be dealing with the same issues the rest of us are.I am truly jealous, all you have to do is tweak a system that is already in place.

    Imagine the training,
    consumer information campaigns and other assistance that could have been
    provided to Michigan shops with funding like that.

    The answers
    to the problems this industry has can be found in many places. First, at
    your shop. Then there are other shop owners, trade associations, ASE
    and educational efforts.

    Voluntary regulation has not worked, for a host of reasons but most predominant is that the hack shops are unaffected by any voluntary standard those of us in trade organizations abide by. They will be affected, especially if they are doing crap work, if there were a real minimum standard of which to measure them.   

    Yet so many in our industry seem to want to
    look to government for the solutions. Why on earth would anyone
    associated with a trade association want shops to have the added expense
    of licensing? Is it because the trade associations are rolling in so
    much excess cash that they believe shops would be better off spending
    that dues money for a state license?

    Simple Tom, nothing else has worked, not even put a dent in things. Competent techs are being forced out of the trade because more and more incompetent ones are flowing in. Guys like me are looking at the long term of auto repair and the writing is clear, if things continue as is the trade will not be worth being in. So faced with leaving the trade or improving our trade by installing minimum technical standards I will happily invest some of my hard earned cash each year towards minimum standards.

    Are we as shop owners so
    inept that we cannot deal with Backyard Bob down the street by informing
    our customers what they get with us and what they get with him? Sure
    there will be some people who do not get it – these are the ones that
    you do not want as customers anyway! BB is doing you a favor by taking
    them.

    Not hardly, we on an almost weekly basis are getting new customers (good customers) who did not know that competent shops even exist. Lets face it the BYB is claiming to be just as competent as you and I so just saying you are better doesn’t cut it. I strongly disagree that the BYB is doing us any favor, they may serve a function for true bottom feeders but like any cancer they spread their philosophy and poison the thought process of good people, once who just want their car fixed.

    Are we so helpless that we need government to determine if a
    tech is good enough to work on a car in our shop? We just can’t tell
    without a government license?

    Look up the most successful shop
    owners in your state. See how much time they spend complaining about
    unfair competitors and hoping for government to make it all fair for
    everyone. They spend none. Instead they put their efforts towards making
    their business and industry a raging success.

    That simply is not true, the top shop owners I know dream of a trade where there was a minimum standard to set us each apart.

    Which industries have been significantly elevated via government regulation? No, I can’t think of any, either.

    Ha let me help you. How about lawyers and  doctors? Both of those groups are heavily regulated pretty successfully.  One thing they share is the peer review component.  

    Regulation
    primarily does two things for our industry currently. Decreases profits
    (or costs consumers money depending on how you view it) and starves
    positive private and association efforts for funding.

    So I will level with you and say I don’t know what you have to pay a year in Michigan but what is being kicked around here in DE is a few hundred bucks a year for a shop and less than $100 a year for a tech. That is small potatoes for anyone I know, especially if it works in making life harder for the hack shops.

     Can you find a few
    benefits here and there with some regulations? Sure – that’s true with
    just about anything. But they are vastly outweighed by the cost and
    negatives.

    I see it the other way around, the negatives of government intrusion are outweighed by the potential to improve the minimum standards in the trade.

    How about we spend our time working on elevating our
    shops and our industry without government help. If we are going to get
    involved with government, then let’s start figuring out which
    regulations we can get rid of. That’s a government project that I can
    get behind.

    As a trade we have been trying to elevate ourselves in the consumers eye for years and have produced dismal results. Unfortunately I do not see a solution that does not include an enforceable standard, the only way to achieve an enforceable standard is with government help.

  • saeengineer

    Member
    September 28, 2013 at 12:43 pm

    Tom,

     

    As usual I agree with you 100%.

     

    Well writtern.

  • Larry Moore

    Member
    September 30, 2013 at 3:54 pm

    I believe this is a hugely misunderstood subject and therefore most discussions are based on some idea of what a shop licensing program is all about. Strictly speaking a shop licensing program is only a way to collect money for keeping a list of people who have paid the money and is usually done by government to pay for more government employees to push paper. 

    Years ago, when I had the time and energy to study such things I researched Mandatory Professional Certification and Licensing (MPC&L).  In order to have a successful program, ie one that improves the quality of work for the consumer, improves working conditions for the industry employee, and provides a level playing field for the shop owner – all of the above elements must be present and complete.  NO automotive program in the US or Canada has ever had ALL or even most of these elements.  Most good examples of MPC&L programs are done in professions such as doctors, lawyers, architects, etc..  Even so no program is ever a cure all, someone will find a way to mess with it.  The goal is build a program that is flexible enough to adjust over time and continue to be effective at accomplishing the goals.
    The data collected on programs that meet this criteria fill a notebook but let me summarize:
    – Mandatory, all participants in the industry must participate fully.  What ever rules apply to one apply to all, without meeting the rules of the program the business or individual cannot be legally employed or participate in the benefits of the program.
    Professional – as set of base standards and best practices is established by an oversight board made up of industry professionals that are elected and or appointed for a set period of time.  These standards are constantly scrutinized and modified as appropriate to accomplish the goals of the program.
    Certification – requires knowledge in specified subject areas which are trained and tested.  The best programs require a period of understudy or apprenticeship with the “master” being accountable for their apprentice for some period of time after they are certified to meet all requirements.  A new program allows grandfathering based on any number of criteria
    Licensing – a license to operate is issued based on meeting the above criteria the license is subject to withdrawal for specific behaviors which can be confirmed by an oversight board made up of peer’s in the industry.

    Notice that the word government does not appear in the above description.  Instead the governing board for this type of program is accountable to some element of government to assure the program meets the goals.  As long as the program works the government stays out of the picture.  It is meant to be established, operated and adjusted BY THE INDUSTRY OR PROFESSION.  It is sanctioned by a government body, usually state or federal.

    Okay now my two cents, which I have no doubt will bring me some flaming comments – our industry historically has been composed primarily of anarchists – by that I mean people who have gone out of their way to make sure no one can tell them what or how to do something.  I know because I was one, but that also means that this is an almost impossible group to organize, even if it can be shown that it probably would be to everyone’s advantage. 

    True professionals understand the value of standardized processes and procedures that are designed to assure the best possible odds for a desired outcome.  This applies to mechanical processes but also is true for business and professional practices.  Our industry participants have a huge fear of “government” even if that governing body is their own peers!  They believe that only they know the “true answer” and therefore working with others to find a solution will never work.  In other words they don’t play well with each other!

    There are many excellent examples of good MPC&L programs, both in the US and the rest of the world, but it requires the participants in the industry coming together to make it work.  Based on that I don’t know that it could ever happen in my lifetime.  🙁

    Just my two cents.

  • Philip Fournier

    Member
    September 30, 2013 at 9:19 pm

    Larry,
    I was on the same panel as you, as I’m sure you recall.  Tom has eloquently laid out the troubles with a government-run licensing program. Someone else has responded that Delaware is going to do it right.  I’m afraid the gentleman from Delaware is going to find out that the anarchists are going to sabotage his high hopes for a successful program.

    I would indeed like to hear where Tom came up with the $20k in costs for the Michigan program.  That is an OUTRAGEOUS amount of money.  We could easily afford to build a MPC&L program with that kind of money.  The trouble is that without government charging the fees on EVERYONE, that is never going to happen.  But if the government is collecting the fees, they will want to build the bureaucracy to squirrel the money away as Michigan has done so efficiently….if we want to call squandering money efficient.

    But really at the root of the whole thing is the general public’s idea that no one should have to budget for auto repair,  That being the case, every expense is unexpected, and cost becomes a factor so great that the back yard guy becomes the resource of choice.  In your high-rent district of Silicone Valley, I know that there are lots of tech-savvy and high income individuals plus your very considerable business skill that has built you a profitable and successful business.  In my neighborhood, where those living below the poverty line recently cleared 78% of the population, the non-registered (never mind licensed) shops do a marvelous job of sabotaging our already limited ability to earn an honest living.  I don’t think it is fixable.

  • Greg McConiga

    Member
    October 1, 2013 at 7:01 am

    Out of curiosity, has anyone kept track of how many decades we’ve had this discussion?  I mean the exact, identical, nearly word-for-word discussion?  Consider: who is the arbiter of quality versus hack work?  If we dug up Smokey, he’d tell us we’re all hacks and said as much when he shut down his shop in the eighties… said that there were no more mechanics left in America (before you start the whole tech versus mechanic thing with me, look it up… a mechanic is, by definition, more skilled than a technician… besides I have a natural disdain for pretentiousness.)  Do you suppose that the backyard shops could exist if there were no market for them?  Alternative repair channels only exist because people seek them out… so, what do they offer that isn’t offered in the traditional repair supply chain?  It’s mainly price… so are those that frequent these repair channels tightwads or are they people living in mean circumstances who have no other alternative? Who are these people that are doing these repairs?  Surprise!  For the most part, they are the day workers employed at the traditional shops.  So… what is the traditional shop doing that causes the employee to moonlight?  Is it because we “have a number” in our head?  Is it because we make it hard for the guys to make a living?  Is it because we apply turn-of-the-previous-century piecework processes to modern repair challenges?  Is it because “our number” isn’t the number the employee has to have to make a living for his family?  Our buddy Mitch once said our trade “eats its young” and he might have a point.  Just read some of the comments… it’s my contention that if one practitioner calls another a “hack” that no one is elevated… that in fact the whole trade is diminished.  Every time I’ve encountered someone in the trades who was a few mile markers behind me I did all that I could to help and all that I could to avoid impugning their work or questioning their intentions.  When a customer with a problem came to me I always referred them back to the shop they came from and often ran interference for them, in many cases going to the shop and meeting with the people involved to help them better understand what went wrong and why.  Last I checked, Jesus wasn’t a mechanic… everyone has had the occasional “technical oversight” and everyone deserves the benefit of the doubt and as much help as we can offer in an effort to help everyone become better.  There is an estimated 63 BILLION dollars in unsold repair and maintenance work left on the table each year and we’re fussing over some poor guy working out of his garage in an attempt to make a living… often because he can’t make a living while working in our shops.  Perfect.  And then we want to talk about the government getting in the act… even better.  The only thing the government is good at is creating and sustaining the military, the primary function of which is killing people and breaking stuff… great.  Let’s do that. 

  • lynne-carcarecenter-com

    Member
    October 7, 2013 at 3:03 pm

    The experienced commentators above have already said what most of what can be said. I agree that no government, by its nature, can do for us what we should be doing for ourselves. Before you roll your eyes heavenward, please note that it has been done…just not yet by us.

    But we who theoretically could license and govern ourselves with a minimum of governmental oversight are also a people known for our strong individualism. I smile fondly when I say, They don’t call us “independents” for nothing. If only we were moderately “inter-dependent” for a cause like building the credibility of an industry. And such a cause implies, probably requires, provable proficiency.


    It’s a lingering dream, and it isn’t even an impossible dream. Other fields like insurance and real estate, that by the way call for no less critical thinking or changing business models or technical knowledge, have already done it. But we do have a late start. 

    I’ve known and respected Larry, Phil, and others like them for many years. They were not just sitting in the bleachers calling down advice to the players, they were the players on the field. In California governance was a hot topic for years and we thought some form of industry-run or even a govt-industry hybrid might work. But we were fragmented and our multiple goals confused the government folks. Somewhere in the middle of our 3-legged race, we dropped our gunny sacks around our ankles and sprinted individually toward the finish line. Maybe we had to. The economy was an even bigger threat and it required our full attention.  

    Many of us still believe in the dream of self-governance. In the meantime, we work to prove our credibility in the communities where God has planted each of us…independently. 
  • steve steeb

    Member
    October 7, 2013 at 6:57 pm

    OK…  I have GOT to offer a few of my observations as a Mechanic in Michigan for the entire time the State has required shop and mechanic licensing.  I have had my own shop for the last 21 years.  The Licensing / Testing provision was the kick in the pants I needed to take my (back then) NIASE tests – just to set me apart from all the other “Licensed Mechanics”.  When I opened my own shop I was surprised that it only took a few years for me to reach to top tier of license fee (based on GROSS SALES).  I was actually paying the same fee to the state (my shop = 1200 square feet – two lifts) as the local Ford Dealer (30 lifts? – HUGE!)!  It didn’t seem like the risk to consumers was similar and that was a BIG red flag to me that this program was flawed.  Next I had a car in that had been “repaired” elsewhere for pay and I tried to help the customer deal with the State Bureau a bit (this was ten or fifteen years ago and details are hazy today).  But I DO remember getting the run-around and the lack of response (timely or otherwise) was amazing.  More recently I have been watching as our state ASA has tried to get the Michigan State Legislature to update the law a bit (it hasn’t been changed since its inception in 1974).  No dice.  Under our law; I am still expected to give a WRITTEN ESTIMATE for any repair over $20.00 in a day and age where I’m not sure I would answer the phone for that.  And there are people advertising “AUTO REPAIR” on Craig’s List that we all know aren’t licensed or insured at all but it seems the State is more interested in being sure I have the Certificates hung on the wall than doing ANYTHING about these folks.  And yet…
    I still favor some sort of Licensing and Regulation over the Wild West that auto repair is in so many parts of the country.  I think it is a very good thing that NO ONE in Michigan can go to pick-up a repaired car at a licensed shop and not have a clue what the bill will be.  There are lessons for other states that can be learned from Michigan, but our system could be fixed with a few tweaks IF Legislators would put PEOPLE and Common Sense above petty bickering and lobbyists!  Ring a BELL???