Technician Pay Will Continue To Go Down
By Gene White
The gross earnings that our highest paid technicians will make in the future will continue to go down. Many high tech technicians are making more than graduate engineers! The need for mechanics, C and D level workers, will continue to increase. This is dictated by a rapidly changing market place, plus the fact that vehicles are vastly different than they were ten years ago when high-tech diagnosticians became desperately needed. Recruiting and training were the driving forces. Diagnostic equipment is becoming more sophisticated, on-board memory has become more focused, product quality has never been better and the integration of electronics and mechanical equipment is much more sophisticated. Unit replacement is beginning to rule. Rarely do we overhaul an engine, cylinder head, alternator, starter, water pump, fuel pump, wheel cylinder, master cylinder, or even automatic transmissions. Our entry-level technicians now have much more training and knowledge in electronics than they had years ago.
Computer Industry Parallel
The computer industry is a good parallel to what is happening in our industry. Years ago, a computer was as large as a home and required an in-house engineer to make repairs just to keep it running. As we developed integrated circuits, computer chips and replaceable circuit boards, less skill was needed to keep them running. Today, a technician runs a self-diagnosis program on a computer, which indicates which component or circuit board is bad. The technician replaces that component then reruns the program to see if this corrected the problem.
Driving Forces
Extended life components are requiring fewer repairs. Engines are lasting 200,000+ miles, automatic transmissions 100,000+ miles, drive belts 60,000+ miles, spark plugs 100,000+ miles, coolants 100,000 miles, brakes 50,000 miles, and tires 50,000 miles. Exhaust systems last "forever" except around salt, etc. Fluids are manufactured to higher standards and doing a significantly better job. The life of these components will continue to improve. The projected life of a heavy-duty diesel truck engine, bearings and piston rings is now 1,000,000 miles, up from 250,000 miles less than ten years ago.
Maintenance (lower skilled work) could become a part of the warranty and be required to be performed at the dealerships.
We are reaching maximum labor rates. John Q. Public will not pay more money per hour for repairs, therefore there will be less dollars to pay highly paid technicians to do the increasingly lower skilled work.
Electric-driven vehicles, not hybrids, will require only about one third of the repair and maintenance that internal combustion engine-driven vehicles do.
Unless vehicle sales increase, and mega trends do not indicate this in the United States, or we increase our extended warranty penetration, "high tech / high paid" work will continue to decrease.
The Future: Shop Organization And Pay Plans
With this scenario, I see no ability to pay technicians more. We are going to have to learn to make a profit doing the limited maintenance work, gaining back that market from the various mass merchandisers. Keep in mind that serious rumors abound for a closed hood internal combustion driven vehicle to 60,000 miles.
This leaves us with few options for keeping and paying the number of high-tech technicians due to lessening business needs and recruiting the lower skilled mechanics (C and D level) that will be needed for the future.
Pay plans must be revisited. We probably will wind up with two completely different management structures within our shop to match the emerging work mix: one for high tech repairs and one for mass merchandiser type maintenance operations.
Organization structures must be re-evaluated. Selling and advertising techniques must be assessed.
Internet access for our service customers must be enhanced.
We must consider pay plans that follow the mix of work skills on a job- by-job basis.
Employee empowerment along with satisfaction surveys and employee feedback using continuous improvement techniques are going to become our future.
Organizations must become much leaner, and more customer focused and pro-active rather than serving our traditional roles, using pyramid-type organizations.
Our labor rates must be competitive in the market place and be skill-driven. Our customer labor rates must be driven by the market place – not driven by our warranty labor rate. Our hours of operation must also be driven by the market place.
To survive, we must keep training technical staff, pay them what is necessary, be market and customer driven, AND STILL MAKE A PROFIT!
Gene White is President of Gene White Management, Inc. He is a recognized expert and has conducted in-dealership evaluations and training (automotive, heavy-duty trucks, recreational vehicles and marine) for the past 27 years. He has published many "expert" level articles and has conducted workshops for NADA, ATD, FADA, NACE, WD & S, accounting CPAs, and multiple State Associations and 20 Groups. He is a member of SAE, IIE, and is a Charter Member of the National Bureau of Management Consultants. gwhite@dealeronline.com
