The shakeup that is COVID-19 has presented a challenge and an opportunity for organizations who were previously impacted by a technician shortage. According to Automotive News, “the No. 1 contributor to increased maintenance costs in CY-2019 were escalating labor rates due to the ongoing labor shortages of qualified service technicians”.
Excess demand for technicians sits at 49%
Technician Shortage Numbers
According to Automotive News, “the annual turnover rate for the most-skilled dealership technicians rose 27.2 percent in 2016”. This shortage could lead to great loses for shops and dealerships alike. The average technician generates $1,000 in gross revenue per work day. Meaning that, a job unfilled for 100 days means a potential loss of $100,000 to fixed operations.
Repair Shops who aren’t yet feeling the pinch will likely experience it soon. According to AutoServiceWorld, 38,829 auto techs graduated in 2016 while demand for new entrants sits at 75,900 per year. This means the excess demand for technicians sits at 49%.
The technician shortage will affect everyone at some level, and organizations who measure and adapt early on will be best positioned to mitigate negative impacts. How does a fleet or shop manager truly know their labor needs without tracking technician tasks?
1. Carefully track different types of labor
To get a more accurate breakdown, we recommend tracking and categorizing 3 types of labor – indirect, direct, and allocated. See a definition of each below:
In-direct labor is any labor that is not allocated to an asset. i.e. cleaning, running for parts etc.
Direct Labor is any labor associated with an asset. i.e. work-orders, inspections if associated to an asset, or fuelling if associated to an asset.
Say the technician works an 8 hour day. All time should be accounted for i.e. work-order labor, indirect labor, lunch as in-direct labor etc. If there is any time that is not direct or indirect, in the scheduled 8 hours of their workday these are unallocated hours.
2. Implement Strategic Hiring Practices
Strategic hiring will become key to best responding to the technician shortage. To optimize hiring strategy, your management and recruitment teams will need to understand which skillsets are needed in your shop today. Let’s face it, if you aren’t tracking labor, how do you know where you are short? Tracking labor through a paper, spreadsheet, or maintenance software system will help you identify and prioritize hiring by skillsets. When you’ve hired the right skills, you can assign tasks based on skill and experience, helping you ensure the job is done correctly.
3. Identify Gaps in Productivity
Busy does not always mean productive. To truly measure and manage your shop’s productivity you’ll need to track the labor performed, and optimize the labor hours you do have. Standard repair times help you identify real-time abnormalities in terms of wrench time overages and excessive breaks. If you track PMs, campaigns, repair hours, forecast replacement, reserved hours (how much time for walk-ins, drive ups, etc) you can boost wrench hours, and minimize time spent on non-essential tasks.
To find out more about tracking your labor, speak to an expert here.