The severe labor shortage in the U.S. is impacting many businesses, including the fleet industry. Two key factors contributing to the labor shortage, among others, are the large scale retirement of Baby Boomers exiting the workforce and the near-universal acceptance of the work-from-home business model allowing employees to work remotely regardless of geographic location.
The earlier COVID lockdowns and the ongoing work-from-home business model have precipitated what is being called the “Great Resignation.” These and other market forces, in total, have created a perfect storm of labor shortages and nurtured a job market that is conducive for employees to jump ship for better opportunities elsewhere.
“With limited options to an available qualified workforce, increased wages, and the volume of available positions within the job market, it poses real challenges to the overall operations of fleets,” said Ralf Wessel, manager of fleet services for Wallenius Wilhelmsen. “Employees are more selective today than ever as COVID created a change in the workforce with different expectations.”
Labor shortages are affecting every segment of the fleet industry, especially centralized fleet operations with in-house maintenance facilities, such as municipal and utility fleet operations.
“We simply cannot fill boots quick enough to keep up with either COVID sick technicians and/or technicians moving to better private sector jobs once we have trained and properly certified them for ASE/EVT/CNG and CDL licensing and/or certifications,” said Kelly Reagan, fleet administrator for the City of Columbus, Ohio. “ This dilemma adversely impacts overtime budgets and puts additional stress on the current work force, often pushing them to the point of exhaustion, especially during a snow event. We are currently experiencing a loss of about 25% of our current work force for these very reasons.”
Another root cause making the labor shortage persistent is the difficulty in retaining personnel or hiring new talent, which is more difficult than in past years. Fleet organizations are challenged by high employee turnover since those left are then doing double duty to keep things moving forward.
Ongoing Tech & Driver Shortages
Even prior to the pandemic, there were pre-existing shortages of automotive service technicians. As general labor constraint increased during the pandemic, the ongoing technician shortages has become more critical as vehicles become more complex and as the industry transitions to EVs. These market trends not only require recruiting new techs, but also developing the programs to retain talented employees.
“Our focus has been on what are the reasons that techs leave to jump to another organization. Are we really losing a seasoned tech for a few bucks when it cost 10 times that rate to hire, train, and retain new talent? This is something to think about as we continue in the struggle to retain our talented people,” said Aaron Alvarado, area fleet director-Pacific Northwest, British Columbia, Alaska for Waste Management. “Our number one focus should be our people and how they are treated, if its a daily grind and they are burned out we have lost the battle in terms of productivity and motivation. Take the time to recognize our folks, techs ,and support staff. Sometimes we focus on the primary lines of business and support elements get looked over, we can’t let this happen and recognition needs to be on the forefront,” added Alvarado.
In addition to the technician shortage, there is also a massive shortage of drivers with commercial driver’s licenses (CDL), which has been an ongoing issue for the past 30 years. The industry is coping with the driver shortage, but it shows no signs of abating. “A common challenge is the limited availability of drivers for vehicle transportation and hauling/towing services,” said Yogi Shivdasani, vice president, North America supply chain for LKQ Corp.
A Deeper Labor Shortage
The labor shortages in the fleet industry now extends deeper into every organization, especially among fleet service providers. Fleet managers complain of staffing issues with vendors whether maintenance or collision repair shops, even FMCs. As key employees leave to take on other opportunities, more pressure is being felt by the support members of the organization to assume more responsibilities.
“Many companies have lost key personnel who are not easily replaceable. There is increased pressures on office personnel due to labor shortage and the lack of experienced personnel,” said Bob Martines, CEO of CCM.
It is a never-ending quest to find competent personnel with the necessary requisite job knowledge or experience and once hired to retain them.
“The real struggle is hiring, training, and retaining the best personnel for fleet operations whether at the technician level, fleet executive level, or in between,” said John Brewington, CAFM, CEO of Brewington & Company, a fleet asset and management consulting company. “As technology advances, the technologically savvy employee, regardless of their position, will be harder to retain due to the competitive landscape for such personnel.”
There is a real change in the quest for the best talent and the industry really needs to do more to develop the next generation of skilled-trades employees.
“We’ll need to change how we identify, train, recruit, and retain skilled folks. The kinds of skills will also change as new business models are going to change how we procure, support, and maintain fleets and fleet services. The ability to use data, AI, and leverage technology is an integral need to the future of the business, not just an afterthought,” said Ken Jack, vice president – fleet operations for Verizon. “We need that balance of practical experience that’s only learned over decades, as well as fresh thoughts that come from a wider range of backgrounds than we may be used to. There is a real brain drain occurring, and we’ll need to also embrace more diversity across all roles in fleet management to keep our businesses competitive.”
Cost of Employee Turnover
What makes employee turnover so expensive is that the cost to replace an employee goes beyond their compensation and includes a variety of other factors, in particular training.
“The cost of employee turnover is often times overlooked as a cost to fleet. However, whether it is simply the time spent removing the information of one driver and onboarding another driver to more costly moves including detailing vehicles, moving vehicles and storage, or doing state changes. The great resignation will continue to add to the burden of keeping a fleet,” said Joe Pelehach, vice president of Motorlease.
Use of Third-Party Vendors
One consequence to today’s labor shortages has been a renewed interest by companies in outsourcing fleet management services.
“Companies who have lost key people and are having difficulty replacing them, are looking to outsource some of these functions. CCM has experienced an increased interest from existing clients and prospects to take on more of the daily fleet responsibilities,” said Martines.
This approach is being examined by a number of different companies. “Leveraging third-party to enhance staffing shortages has been a strategy in many locations as we continue to strive to fill vacancies. The business need to continue to run and lack of staffing is an issue were continuing to work but we still need to service our customers. Establish or reestablish your relationships with your third-party vendors to enhance your support and ensure you are using a strategic approach to repairs. The primary focus of our fleet is PM efficiency, when major repairs hit engines, transmissions, or drivelines that consumes the majority of our techs time. Is there an opportunity to farm those out and focus on our primary roles? This takes some strategy and tactics along with trusted partners in order to enhance our performance, might be time to reach back out and get with our partners and see what services they can provide,” said Alvarado of Waste Management.