As of April 2, 2020, a record 9.9 million people applied for unemployment insurance in two weeks, many of them laid off from companies experiencing business slowdowns caused by the COVID-19 pandemic.
In the Chinese language, the word “crisis” is composed of two characters, one representing danger and the other representing opportunity. While we’re in the midst of an employment crisis, if the fleet industry is proactive, this vast labor pool of idled workers creates an opportunity to make a dent in the shortage of technicians, especially if training programs are offered.
Left unabated, the technician shortage will drive up maintenance costs. The No. 1 contributor to increased maintenance costs in CY-2019 are escalating labor rates due to the ongoing labor shortages of qualified service technicians.
Prior to the pandemic, there was an uptick with labor expenses primarily in the entry level tech positions, such as quick oil change techs and tire technicians. While, at the moment, there is less urgency due to the decline in service work, these labor pressure will recommence once the pandemic recedes and the economy enters a recovery stage.
The fleet industry needs to be proactive in promoting the availability of jobs and benefits in the vehicle maintenance industry. In parallel, the industry needs to reach out to idled workers to identify entry-level job candidates. Once the economy turns around, these new-hires will have the opportunity to progress through the ranks with on-the-job training that will expand their skillsets.
Retirements Outpace Tech Recruitment
There is currently a talent drain in the fleet industry caused by the retirement of long-tenured fleet professionals at many organizations.
The technician shortage is being further exacerbated by the fact that older skilled technicians are retiring from the trade at a rate faster than younger technicians entering the profession to replace them. Not only is there a labor pool gap, but retiring Baby Boomers are also creating a significant gap in the loss of institutional knowledge dealing with perfunctory or hands-on skills. There is increased and intense competition from individual fleet organizations to acquire qualified technicians from a shrinking pool of retiring Baby Boomers.
In addition, there is a shortage of qualified fleet management professionals, such as managers, supervisors, and data analysts, who have the capabilities to analyze and execute on the myriad data produced by fleet management information systems, telematics, vendors, and ECMs.
Skillsets Changing Due to Vehicle Complexity
New vehicle technology improves vehicle safety and operating efficiency with each model-year, but it also requires advanced technician skills, more expensive shop equipment, and additional steps in many diagnostic and repair processes.
This is increasing pressure on independent shops to boost wages to attract the new talent, translating into higher shop labor rates. Employees with advanced technical skills are becoming more difficult to find in the job market as more experienced technicians retire and fewer young adults enter the automotive repair industry.
As vehicle functionality becomes increasingly dependent on electronics and software, it has begun to stretch the skillset of some technicians at independent service providers. Increased vehicle complexity is requiring the hiring of technicians with a higher technical skillset, who typically command higher salaries. In addition, with more technology embedded in all brands of vehicles, independent shops are being required to make significant investments in diagnostic equipment to diagnose and repair malfunctions.
All parties in the vehicle maintenance industry needs to develop a “labor pipeline” that will create the opportunities for entry level techs to gain the skills to maintain the vehicles of tomorrow.
Renewed Pressure to Increase Minimum Wage
The impact of rising labor costs will grow as minimum wages increase. The COVID-19 pandemic will bring renewed calls to mandate a minimum living wage, which, as the pandemic persists will show the number of employees living paycheck to paycheck.
Historically, quick lube oil change facilities and tire retailers are a good starting point for individuals interested in being automotive technicians or working in the industry while attending a technical college. Wages at these types of facilities are typically comparable to other low-skilled positions or entry level positions in other service industries.
These types of positions are most likely to be impacted by increases in minimum wage with the larger metropolitan areas passing ordinances for $15 or higher hourly wages. For that reason, labor cost will be the driving factor increasing oil change, basic preventive maintenance services and tire installation costs. These increased labor costs are passed through to consumers and fleets in the form of rising shop labor rates.
The Industry’s Window of Opportunity
The pandemic-induced nationwide slowdown in economic activity has created a lull in urgency in recruiting techs.
But once the COVID-19 pandemic subsides, there will be a resumption of the intense competition for skilled technicians between dealerships, independent service providers, and fleets that operate in-house maintenance facilities putting upward pressure on shop labor rates.
Now is when the fleet industry should be proactively identifying these future technicians. The fleet industry has a window to tap into this idled labor pool, who will look attractive to other industries experiencing labor shortages leading to increased competition to recruit this talent.
The time for fleet to act is now.
Let me know what you think.
mike.antich@bobit.com
