Top Challenges Facing Public Sector Fleet Managers in 2007
The most burdensome task facing public sector fleet managers is managing fuel costs and identifying ways to decrease this expense. As the cost of diesel fuel has risen at a rate greater than unleaded gasoline, government fleets have been especially hard hit because of their heavy concentration of diesel-powered trucks and equipment.
However, it is the unpredictable volatility of fuel prices that most affects fleet managers. When gasoline and diesel prices rise dramatically and unexpectedly, it severely impacts public sector fleet budgets. “We generally have to cut somewhere else in the budget to cover the overspending in the fuel account,” said John McCorkhill, fleet services director for the City of Lynchburg, Va.
Unpredictable fuel prices make it extremely difficult to stay within budget and forecast future budgets. “You may be tracking okay at mid-year, but if prices jump, you may well be over budget at yearend,” said Mike Judkins, fleet/equipment manager for Hennepin County, Minn.
One way public sector fleets are dealing with higher fuel costs is rotating out fuel-inefficient vehicles. “We are obtaining vehicles that are fuel efficient and environmentally friendly, yet able to do the job,” said Mark Brochtrup, fleet manager for the City of Coppell, Texas.
Uncertainty about New Diesels
There is uncertainty about the reliability of new diesel engines required by the 2007 diesel emission standards. The increased cost of the new engines versus those they replaced has caused consternation.
“There is also concern about the use of ultra-low sulfur diesel (ULSD) in older heavy-duty vehicles, especially fire apparatus,” said Brochtrup.
Another concern is the lubricity additives necessary for older diesel engines still in fleet operation. “This will need to be monitored with precision,” said Kevin Browning, fleet manager for the City of Leesburg, Fla.
In addition to lubricity additives, particulate traps must be retrofitted to older diesel engines. However, delivery of particulate traps and installation has not been timely. “Even starting a year before the deadline date to get them installed, we are still waiting months for delivery,” said Robert LaRoche, CAFM, fleet maintenance manager for the City of Glendale Water & Power in California.
Some fleets elected to buy gasoline engines instead of diesels in 2007.
“Considering the additional average cost for a diesel engine; an average cost of $3,000 for the emission-control device to meet 2007 standards; additional maintenance costs for filters, oils, and additives; and an average additional cost of 50 cents for a gallon of diesel fuel, simplified my decision to purchase trucks equipped with gasoline engines,” said Fred DeBono, fleet and warehouse manager for the City of Cape Coral, Fla.
Fleets are also considering deferring diesel purchases until 2010, when the newer, more stringent emission standards become effective. “Replacement of heavy-duty trucks is being delayed until at least 2010, when we will be faced with even more stringent emissions regulations. Fire trucks are being refurbished at a fraction of the cost of replacement. These processes will stay in place until we learn more about the effect new fuels have on diesel engines,” added DeBono.
Lowering Operating Costs
Across the board, fleet operating costs have increased. “The price of fuel has increased, as have tire and parts prices, but there have been no budgetary increases,” said Dave Cole, mechanical maintenance & warehouse administrator for the City of Glendale, Calif.
Driving these increases has been the cost of raw materials. “There have been ever increasingcosts of raw materials due to increased world demand,” said Michael Blanck, director of fleet services for Douglas County in Roseburg, Ore.
In addition to material costs, personnel costs have increased. “My key challenge is cost control. This involves dealing with rising operating costs, especially personnel costs,” said Marvin Fletcher, CAFM, director of fleet services for Hanover County, Va. “I am dealing with these cost increases by improving efficiencies and other measures.”
Another approach seeks to control operating costs at the user level.
“I am seeking to instill into our drivers and operators a sense of ‘ownership’ in the equipment they use every day,” said Brochtrup of the City of Coppell, Texas. “This will help keep operating costs down, as well as ease the load on the fleet techs.”
The struggle is managing expenses to keep internal rates as low as possible. One way to do so is to maintain the highest possible productivity levels and billable hours.
However, in the final analysis, these costs must be passed on to the users.
“Overall, I can say the most critical challenge is the rising program costs across the board,” said Sherry Lewis, associate director, transportation for the University of California, Los Angeles (UCLA). “I pass all costs through to my users, who cannot understand why cost continues to rise beyond the typical 3 to 5 percent. High inflationary costs for fuel, labor hours, sublet repairs, and vehicles are a challenge to pass on to units that are state-funded and cash-poor.”
Funding for vehicle replacement is an ongoing struggle. “I am always showing lifecycle costs to new bosses and at budget time fighting the ‘just one more year’ response!” said Collins Downing, manager, transportation & parking for Loyola College of Maryland.
Many fleet managers agree with this assessment. “As always, there’s never enough necessary funding for vehicle replacement, and fleet managers always have to fight for what they get,” said Dennis Tucker, fleet operations manager for the Illinois State Police.
The cost to outfit law enforcement replacement units is an increasing expense. “By the time a computer, radios, radar, and video are added, a vehicle can cost more than $40,000,” said Tucker. “Small departments have to make tough choices between buying cars and outfitting them with needed up-to-date equipment.”
Another challenge has been the trend away from the traditional model-year introductions by manufacturers.
“The biggest challenge for government fleets is the manufacturers’ ever-changing model-years. I traditionally ordered the bulk of my vehicles in July/August, with most deliveries in October, and held an auction in November. Due to both Ford and Chevrolet introducing new pickups, there was a delay in getting the new trucks. The bulk of my orders came in November and December, and I was selling used vehicles in January, not an optimal time to sell used vehicles. This was the first time in 20 years we did not have our own auction,” said Bill Roberts, associate director, parking & transportation services for the University of Minnesota in Minneapolis.
Another challenge is the disposal of out-of-service units.
“When we first started having auctions, we were one of the few retail auctions around and got very good prices, between wholesale and retail. Now, we struggle to get loan value as there is an auction almost every week and sometime two,” said Roberts.
“Even before my orders were delayed this year, I decided not to have an auction and hired a remarketing company to help sell our vehicles. We started to sell our medium- and heavy-duty trucks on eBay two years ago, with great results. I am currently also listing some light-duty trucks on eBay,” Roberts added.
Lack of Technicians
If the problem was not so serious, the lack of qualified technicians would elicit a “so what else is new” sigh. But the rate of retirements at many fleet operations makes this shortage a pressing issue. Fleets are finding it difficult to locate replacements for vacant or soon-to-be-vacated positions.
“There is an overall lack of qualified technicians entering the mechanical maintenance field that makes it difficult to replace our retiring veteran mechanics,” said Cole of the City of Glendale, Calif.
Specific specialties are suffering even more severe shortages. “Good mechanics, especially diesel mechanics, are proving hard to find. I expect this trend to continue. Current demand for this skill set exceeds the supply available in the labor pool, and young people do not seem attracted to this career field in sufficient numbers to meet projected demand,” said Judkins of Hennepin County.
The demographics of public sector technicians are skewed toward middle age and older. There has been a variety of initiative to attract younger technicians to work for public sector fleet operations.
Some fleets have sought to set up an apprenticeship program, but have found it difficult to do so.
“I have attempted to set up internship programs with the local technical programs in area high schools. Given our budget restraints, I cannot compete with the OEMs that have far more perks to offer. So, we are short of technicians, as are most fleets I know,” said David Higgins, director of central fleet maintenance for the City of Boston.
One stumbling block is that public sector compensation is often not competitive with the private sector. “Technicians seem to only consider ‘take-home pay’ early in their careers and do not factor in the reduced risk and additional benefits of government employment until they are near retirement. It is difficult to attract and retain exceptional, young, and talented technicians to government jobs,” said members of the fleet management team of San Bernardino County in California.
There is strong competition for technicians in the job market. “Although we have recently hired a number of new technicians, the challenge remains to find not only qualified technicians, but ones that have a strong work ethic. In government, we are also competing with private sector shops that typically compensate at a higher rate, so we are left to find those candidates who want job security, benefits, and are qualified — all in the same person,” said John Clements, manager, fleet operations for San Diego County.
The shortage of technicians also impacts the amount of time fleets can devote to technician training.
“Staffing restrictions don’t allow enough time for specialty training without interrupting workflow,” said Stephen Kibler, fleet manager for the City of Loveland, Colo.
Training is becoming more critical as new vehicle technologies are introduced.
“Training on newer vehicle technologies, such as hybrid vehicles, 2007 diesel emission controls, and particulate traps, is a challenge,” said Richard Battersby, fleet manager for Contra Costa County, Calif.
To meet the City of Cape Coral’s diverse fleet servicing needs, DeBono instituted a cross-training program seven years ago that has increased mechanics’ efficiency.
DeBono also reorganized his fleet operations to implement a technician advancement program. “I have a mechanic helper as an entry-level position, mechanic I, II, and III positions, and a lead mechanic. Entry-level mechanics begin a employee-in-training (EIT) program and are promoted according to their skills level after passing a number of written and hands-on tests.”
The shortage of technicians appears to be getting worse. “We have been looking for a light equipment technician for several months and can’t find a qualified applicant. We’re getting calls from technicians from as far away as Florida expressing an interest, but they want assistance to make the move, which is something we don’t do when hiring a mechanic. The time is coming when we may have to relax our approach and pay to move a technician to Lynchburg, just as we would a department director,” said McCorkhill.
In addition to technicians, fleet managers also report difficulty in recruiting support personnel.
“I am finding a growing challenge in obtaining support personnel. We are aware of the difficulty in getting and keeping good technicians; now it is becoming a problem in obtaining support staff that have a genuine interest in wanting to learn fleet management staff support,” said Betty Linck, C.F.M., fleet director for the Town of Greenwich, Conn.
The technician shortage promises to be an ongoing issue for public sector fleets.
“Municipal organizations such as mine may need to re-evaluate their compensation, retirement, and incentive packages to retain or recruit these skilled positions in the future,” said Ron Raines, fleet manager for the City of Topeka, Kan. “I intend to begin working more with local trade schools and community colleges to draw more interest to our industry, but I expect the technician shortage to become more prevalent, until we start seeing new people coming into the technical repair jobs,” added Raines.
The Alt-Fuel Struggle
Public sector fleets, due to EPACT and the Clean Air Act Amendments of 1990, have been in the forefront of mandated alt-fuel vehicle acquisitions.
“We are continuing along the path of alternative fuels and hybrid technology, said Brochtrup of the City of Coppell, Texas. “The trick is that I must move to a greener fleet that can accomplish the multitude of municipal tasks, while maintaining costs as budgeted.”
Many fleets are likewise attempting to balance political concerns to create a greener fleet against the realities of cost-effective fleet management.
“Our top challenges revolve around alternative-fuel costs. Very few good answers are available, but there are some that can provide advantages. For instance, I am currently pursuing the possibility of bringing E-85 infrastructure to our facility. Part of the advantage would be to make the product available to other local government fleets. There are two specific challenges associated with this initiative. First is to create the logistical and administrative structure that makes it possible to sell fuel to other agencies. Second, to find and take advantage of the funding available,” said Alan Brown, fleet manager for the City of Littleton, Colo.
Fleets are also finding it difficult to acquire OEM-produced alt-fuel vehicles to meet EPACT mandates.
“EPACT mandates continue to be a challenge as the OEMs scramble to determine what vehicles will sell in the retail market. Ethanol is not an option in California at this time, and it may not become one. Natural gas vehicles, which are my programs fuel of choice, have very limited options beyond the Honda Civic GX and a few others for general-purpose fleet vehicles. In my long-term planning process, it is difficult to know where the industry is going. I read something new every day. Certified conversions exist to re-plumb vehicles to CNG, but at a cost-prohibitive expense,” said Lewis of UCLA.
Fleet concerns about alternative fuels vary by the region of the country.
“Many Midwestern cities and states are mandating the use of flex-fuel vehicles, but the lack of police vehicles that are E-85-capable are making it difficult to buy ‘police-certified’ vehicles since only one of the four are flex-fuel and that one is the most expensive,” said Tucker of the Illinois State Police.
In addition to the difficulties in acquiring OEM alt-fuel vehicles, fuel quality is an issue. “With B-20, the bio-portion seems to have varying quality. We have gone through quite a few fuel filters and have had some algae grow in our diesel tank, but that was easily fixed with an additive. The fuel providers still seem reluctant to provide anything but traditional fuels and are quick to blame any problems on any fuel that does not come from an oil refinery,” said Roberts of the University of Minnesota.