Greg McConiga
Forum Replies Created
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For as many shops as there are there are as many reasons why a tech believes working in one place is better than working at the other. We are having EXACTLY the same discussions about the trade as we had 40 years ago… with the added challenges of embedded technology treated as if our national security depended on keeping it secret and a crop of youngsters who view a car as an appliance and a forty hour workweek as if it’s a life sentence at a maximum security prison.
For you denizens here who are “more mature” you’ll remember that I’ve worked in both arenas as tech, working shop owner and manager and even at that there’s no guarantee that I have anything to offer other than one more opinion… but for what it’s worth, here’s what I think I know….
All makes and all models is nearly impossible to do anymore for a number of reasons. Tooling, software, training and proficiency all weigh heavily against it now. It CAN be done, but doing it profitably is virtually impossible unless you severely limit the number and type of services offered. Even at that, smoking an instrument cluster in a Porsche after a brake job because the software that homes the rear caliper pistons is hard to swallow at $1200 a copy… which two local indy’s discovered last month in our market area. Nothing nefarious or incompetent here, just outdated software and difficulty getting the information that could have prevented the problem.
From what I see “directed repair processes” are making us all dull. We are acclimated to having the car’s computer do lunch with our diagnostic computer and proceeding from there. I still baseline a car before I drive it… still check coolant, engine oil, brake fluid, feel the brake pedal and look at the tires, belts and hoses… and then do a short test hop followed by my road test. The flat rate guys all think I’m an idiot because “what’s it pay?” but then I’ve not had to walk back from a road test or call a customer explaining why I was behind the wheel when the rods sought their freedom from the block.
Dealer life can be very good IF you have good support people, a parts department that stocks parts and a good work mix. You get good training (too much at times I think) and the shop has to provide all the tricky tools, but every day will be a bitchfest because… well… because every tech is born with a bitchbone and it just comes out at times. You don’t HAVE to know HOW it works anymore… you have to be really good at reading the flow chart (the directed repair process), recording your results, complying with documentation and image requirements and cultivating a good relationship with your tech line guy who will tell you what part to hang if the flow chart lets you down. Just because you follow the recipe for cake doesn’t mean you always get cake… sometimes, for reasons we will never know… you get biscuits.
On the indy side you tend to be or become a much better mechanic (which is by definition a more highly skilled person than a technician.) You learn to think, work around problems and shortfalls in tools or equipment or information and figure out how it’s supposed to work and then make it work, whether it wants to or not. You’ll spend more on personal tools and in my opinion you have to be the kind of person who loves a challenge. Of the two paths, in my experience, you’ll generally earn more money at the dealer if you can master the dealer game plan, but at the expense of peace of mind at times because of the politics and bitchfests that get inside your head and destroy your sanity.
Let’s face it, it’s a dying trade anyway. ICE cars have 2500-5000 parts and the electrics have 15-30…. If they couple plug-in EV with autonomy, in a very few years there won’t be privately owned transportation at all… and with no parts to fail there’ll be nothing to fix. Even the body shops will get hammered as fewer cars are wrecked due to technology. People in fifty years will pick up their cell phone or whatever has taken its place by then, and a self driver will whisk into the drive, take them to where they have to go and bring them back… all for a fraction of what it costs to own, insure, maintain and operate a private means of transportation (you won’t have a driver to pay and the cost of operation for the autonomous plug-in EV makes it a natural business venture.) Even long distance trips will be possible with car exchanges strategically located every few hundred miles with fully charged cars waiting for you to swap into to continue your trip….
It would be interesting to see what the very, very few techs working the trade then will be complaining about then…. but I’m hoping I won’t be around to find out.
Best to all,
GregMc.
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These questions always intrigue me as they beg for simple answers to complicated questions in an industry that will be, in my opinion, nearly completely gone by 2050, due in large part to our own refusal to see our own faults. First question… what is a middle class income these days? In my dad’s day, he made $35-40 thousand a year… with a company funded pension and company paid health care. I’ve struggled most of my adult life to earn $60-70 thousand a year working at least two jobs while paying from that my own pension, my own health care and an average of about $10,000 a year for tooling, subscriptions, con-ed and equipment. A hundred dollar bill is about like a $20 was… and in my opinion it takes about $100,000 a year to be middle class in America 2017. Do the math once on house payments, a car payment, insurances, groceries, utilities along with the self funding requirements I listed above plus taxes and you’ll see I’m not too far off.
Ours is the only industry that insists that we are paid on what we know, while paying our techs on what they do… at six minute intervals. I particularly loved the comment about a tech coming fully equipped with a big tool box full of tools… but I guarantee you that if I showed up with my tools and equipment you’d have a fit because it would take a semi trailer to move it all. Having a tech show up with a bunch of tools sounds good until you realize it takes up two of your stalls… stalls that went from production to storage. What you really want is a guy that grinds out hours and hangs parts… but you just won’ t say it out loud because you know how it sounds. There’s a lot that goes on in a production driven shop that isn’t good and a lot of it goes unnoticed because we’re smart enough to avoid asking a question we don’t want the answer to.
We price our goods and services on a variable scale justifying it on the nature of a competitive marketplace while in many cases performing work with huge exposures to liability at discounted prices and flat rates (think brakes for example.) We are the only industry that I’m aware of that insists that the technician become a defacto business partner with us by supplying his own tooling… Have you ever seen a factory employee (who often makes more money and has better benefits) show up with his or her own punch press or lathe or Bridgeport? Yeah… me neither. I always thought it would be smart to supply the tools… all of them… so that it would be impossible to leave and go elsewhere (right about here the tool truck guys are having a stroke….)
To make matters worse, techs often come with school loans (“you’ll make a hundred grand a year!!”) and the real working lifetime of a tech is actually pretty short. He’s good by about 25 and worn out and broke down by 60… he damn sure better be making a lot of money if all he’s got is a 35 year working career!
We are on the cusp of seeing the single most disruptive technology break down the doors of our trade. We will see a doubling of all electric vehicles every two years according to SAE… and these are cars with about 15 moving parts as opposed to over 5000 in a IC car. Brake life with advanced regen systems will be in excess of 100K miles…. battery life will double… and I’m betting that the manufacturers will come up with warranties that are at least 10 years and 150,000 miles out. Why not? There’s nothing to break and every visit to the shop walks them past the new product, which is where the manufacturer makes his coin. Combined with environmental pressures and an increasing level of consumer awareness of the absolute stupidity of private car ownership ($6000-12000 a year to own a depreciating and decaying asset that sits parked for 90% of the time)… along with an exploding autonomous vehicle population will change the face of American society and mobility.
So… what’s a tech worth? One that shows up every day sober, clean and well groomed… has good work habits… cheerfully attends any and all con-ed… takes care of his investment and yours with equal concern… keeps the work area clean… stays on a problem well after 99% of the techs would either give up or commence tossing parts at it until it goes away and remains engaged and passionate about the business no matter how difficult the challenges… I would not be able to put a number on that guy, he’s that rare. If you find him, pay him what it takes to keep him because he’s the Hope Diamond in the gravel pit.
Best to all,
Greg
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Using selected goods and services as a loss leader to promote traffic is just another marketing technique and if you choose to use it then one way to look at lost income is write it into your advertising budget, rather than viewed as lost or unrecoverable income. The lowly LOF (Labor Opportunity of the Future) is often used to pull traffic. Sometime in the late 1970’s (as an independent) we ran a full service at about $29… but we checked the lights, horn, loaded the battery, pressure tested the cooling system, did a dry park check, aired up the spare, lubed locks and hinges, tested the charging system and handed the customer a State of Health report on every visit…. and we sold a ton of work off it. By the mid to late 80’s our average ticket was just a tick over $400… big loot for those days. In the interest of full disclosure, I now work for a mid sized dealer group (about $9,650,000 in annual service RO sales) and we have slowly moved away from the real cheap oil changes, sticking to the middle of the road now… a bit less than the average Goofy Lube (which runs $45-50 total average) but less than the premium shops. Our EFRH on our services runs about $75 per hour, against a full retail rate of something north of $105 (varies between our locations.) What we should be concerned about is what’s going to happen in the marketplace, and here’s what I think will gradually happen: We are going to end up with controlled volume dry sump systems (there will be a dry sump tank with excess oil in it and controls that keep a controlled 1-2.5 quarts of oil in the engine to knock down the windage issue that costs us MPG so we can hit those 50-60 MPG numbers the government has demanded) and with that we will see tank R and R as we begin to isolate our waste oil streams to keep them more recycle friendly (once you mix various weights with various additive packages the waste oil stream becomes less useful… if you isolate the incoming feed stock streams to all 0W-20 then you can re-refine to 0W-20… something a tank recycling or cartridge recycling program would make doable.) Since drain interval is largely set by the volume of oil over which contaminants are spread and the quantity of additives contained in smaller volumes that are depleted (by design) what will intervals become if we install a system with 10-20 quarts that increases total system volume, automatically makes up for consumption over extended operating intervals and maintains tight in-engine crankcase volumes? We could be looking at 12-36 month drain intervals before long… and since the oil tanks will be serviced on an exchange basis only… clearly marked and controlled to avoid cross contaminating the waste oil stream… the whole idea of a low priced oil change might become just one more thing of the past. At the end of the day, what a service costs a customer is always too much unless you build the value of what you’re doing for them first… The customer always thinks it will be faster that it really will be, easier than it ends up being and cheaper than what it ends up costing, so the only thing we can do is reset and manage their expectations… building the value proposition first and discussing the costs last. Best to all in the New Year,
GregMc.
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This is where life gets complicated, doesn’t it? I don’t know that there is a fixed interval that we could establish that wouldn’t waste some money for some customers. Even though we switched over from a “change by interval” to a “change by physical inspection” some years ago, unless you’re going to do the fluid analysis (pretty darned expensive if you do enough to establish a “real” change interval for each and every customer) there’s just not a great way to wring the last dollar out of the cheap fluids that protect the expensive parts, is there? All working fluids in all systems are subject to oxidation (same as your poor old used up mechanic’s body), shear, contamination, the accumulation of wear materials and thermal degradation. I think it’s safe to say that we waste 25-50% of the money spent on PM fluid exchanges… and I tell our customers exactly that. I tell them right up front, we can test it at $50-$100 a pop and plot an exact change interval, or we can err on the side of safety and just keep an eye (and nose) on the fluid and change it at a reasonable interval… and I tell them that we know that in all probability we are wasting a few dollars when we do this. Without testing we just can’t be certain. Every working fluid is 80-90% base and 10-20% additives… and additives are sacrificial BY DESIGN. Why risk turning a working fluid into an abrasive slurry and save $85-$200 in PM money to destroy $500-$5000 in parts? Part two: you can schedule PM. It’s a known quantity. You know when because you can predict it and you know how much because the prices are set by a competitive marketplace. You know the impact on your budget and how many hours the family chariot will be out of commission. Preventative Maintenance is a completely knowable thing… but Breakdown Maintenance is a crapshoot. It will cost what it costs and it will take as long as it takes. Every customer you see knows how much time and money they have… they know how much is in the bank account or on their credit card and they know how long they can be down without a ride… all of which is a hell of a lot more controllable if they do a preventative program instead of a breakdown program. Last thing I’ll say about this is you should be telling your customers to use a Top Tier gas.. I recommend only Shell in my area, and I’ve got photographs that can show you why. We were doing a ton of PM for fleets years ago… in the fuel injected era, but it was early EFI, not as well controlled as modern engines. We were working on an expeditors fleet of vans, built by a company that back then couldn’t get 100,000 out of a differential or transmission to save their life. He was trading out every 150,000 or so because of repair costs. Two years in that interval was 500,000 miles. Still true today? I think so. The intervals might be longer now, but you need to replenish and replace those sacrificial elements in the fluids to keep those parts alive. I’m a big fan of fluid replacement… and a little skeptical of the chemical additive programs. Some work, some don’t… so I personally don’t use them, I just change the fluids, but that’s just one man’s opinion.
Best to all,
GregMc.
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We do, and we collect hazmat for tires, oil filters and waste lubricants as well. For shop fees it’s a percentage of labor, currently 7.25%, capped at $20.00.
We explain it this way… (and it’s both true and accurate…)… it’s a part of the normal labor charge that has been broken out and moved into a separate account to offset small use items that include nuts, bolts, wiring supplies, lubricants, windshield washer fluid and top off fluids and so on. We do this so that you aren’t confused by dozen of lines for small amounts on your bill and it allows us to account for our costs of doing business. We will cheerfully remove the line if you ask us to, but your total will be the same since shop fee amount will just move back up into the labor.
We wash out the account at year end and adjust the percentage and cap as needed.
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Well, I’ll offer my opinion…..
I don’t talk “diagnostics” and I never talk time. I talk money. We charge for “testing, inspection and if needed, partial disassembly of the vehicle as necessary to follow the directed repair process.” I then ask for a “call if over” number. The customer knows how much is in their bank account… and they know how much is left on the credit card and they know how much they are willing to spend to return the family chariot to good health. They gave me the first buying signal when they drove up to my door… and the second when they asked me to troubleshoot and repair their car. I might say something like “we will begin with a series of tests to identify the root cause of your concern and follow those results to their logical end. Since at this point I don’t have a clear indication of the problem, how about this; I’ll call you if the testing and repair exceed $250.00… would that be ok with you?” You’d be amazed how often the customer will upsell themselves by saying something like “well, it’s got to be fixed… just call me if it’s going to be over $500.00.” This gives the tech sufficient time to delve deep if need be and if we get if fixed for $200 we look like a hero. If it looks like it’s going to run heavy, we call with a detailed report, complete with pictures to support the request for more money. Obviously these numbers are general… you’ll have to adjust them for your market. Here’s the deal… the MOST expensive time you sell is testing and inspection because there are no parts attached to that time (unless the repairs proceed from the results) and you often have to have the most expensive equipment and tech on the job. That inventory… time… is the most perishable inventory in any business and the hardest to accurately track. High tech time has to sell for the equivalent of both the time and the lost parts pull-through and every second has to be collected.
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While the overall range of labor rates vary widely, what we often miss is that the overall cost of the job isn’t that much different within a given economic area. There will be discrepancies in high rent areas like NYC or San Francisco… but within those economic micro-climates the overall job costs will be very similar for those shops following all the rules (insurance, licenses, mandatory compliance and so on….)
The gross profit must be what it must be if you hope to pay the bills and the net for any business should easily exceed what your investments yield, otherwise why be in business….? Just to buy yourself a job? We don’t pay bills with labor rates or percentages we pay our bills with dollars… the rates and the percentages are just there to help us break the data and calculate where we are and where we need to go. We routinely ran a $450.00 average ticket…. in 1987 and 1988… by being the highest priced shop in town… which can also be a marketing strategy when done correctly. Your unique selling points and unique market position can be based on price, quality, warranty, amenities or value, in this case defined to be getting a lot for the money. My philosophy is that every customer starts out thinking that it will be cheaper, faster and easier than it will really end up being and that my job is to help reset those expectations to something more real world. No matter what you charge for your goods and services you must first explain the value before you ask for the money because even if you only charge a dollar for something it’s too much unless the customer sees two dollars in value for your offering. Last thought for today… I’ve been doing this for a long time (why yes, I am slow to learn, thanks for asking….) and when the labor rate was $14 an hour my house was $11,000 and a new car was anywhere from under $2000 to a little over $8000. Now a single family dwelling runs from $75000 to $175000 and a car runs from $20000 to $75000. If we consider just these two economic indicators, a car and a home, we see that the rate should be roughly $140 an hour… up by a factor of ten, just like housing and cars. We won’t talk about food and energy, but we certainly could justify an even higher hourly rate if we did. The flat rate system is archaic and long overdue for replacement, but if we’re going to keep using it, it should at least reflect current economic realities. Best to all, GregMc.
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It depends on the vehicle. A lot of late model cars run more negative camber than older cars and the tires on those cars should be rotated with every oil change… in part due to accelerated shoulder wear and in part due to extended oil drain intervals. We recommend oil changes based on crankcase capacity and owner drive cycles, with the longest recommendation set at 1000 miles per quart of crankcase capacity. In our experience the contamination load determines the drain interval. For large capacity sumps the rotation interval may be shorter than the drain interval… in no case do we exceed 6000 miles for recommended rotation and all rotations come with a free brake inspection.
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There are two costs, the gross sales needed to offset costs only and the income lost when a new and profitable job isn’t in the bay in the place of that “comeback” or “won’t leave.” Divide your cost by your NET profit percent to determine how much income it will take to pay the comeback. Let’s say your net is 15% and your cost of materials and labor is $500. Divide $500 by .15 and you’ll see that it takes $3333.34 to make back the $500… plus the lost income from a lost new and profitable job. This assumes that you only account for cost and not retail for your comebacks. Add to the $3333.34 the amount of new income lost… let’s say a thousand dollar job… you lose not only your net of $150 but also the gross profit from which your bills and liabilities are paid… Assuming your overall GP is 55% that’s another $400 gone from the checkbook…. I’m sure others account for it in other ways…
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Not ok too use at all. I’ve tested them repeatedly and final torque for a hundred pound stick can vary from 75-140 lb-ft depending on gun, air pressure and technique. Plus they have to be replaced periodically because the calibration changes with use. Torque wrenches only and they are calibrated annually.
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The classic model for a typical independent shop: gross profit on labor, 70% (tech’s wage is 30% of labor produced.) Gross profit on parts, 40% (divide parts cost by .6 or multiply parts cost by 1.67 because it’s gross profit not cost plus 40%)
Personnel expense as a percent of total gross profit (parts and labor gross, total) 40%. Includes all benefits for all employees, non-tech personnel payroll, all payroll matches, office personnel, runners, porters, drivers, etc.
Semi-fixed expense 15% of total gross profit (training, phone, data services, warranty work, travel, training, advertising, outside services like trash, etc, memberships, dues and subscriptions to name a few…)
Fixed expense 15% of total gross profit (rent, amortized/leased equipment, repairs to real estate, heat, power, taxes, depreciation and insurances to name a few…)
Net profit 30% of total gross profit
Best,
Greg
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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.
