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Hiring Technicians

Let's Talk Shop for BHPH - Pt. 4

By Gene Daughtry, BHPH Consultant

     Hiring is one of the most difficult parts of owning a business. If you think finding good sales people or a good accountant is tough, hire technicians! Nothing is 100% but as a rule technicians are a different group, a bit eccentric (being nice). I have opened 4 different operations in 3 states and maybe I am lucky but I have always had success getting a shop up and running so we could handle all of our recons and customer repairs. I feel that is primarily due to each of the Service Managers (Hiring the Right Manager 3rd article) I would hire the Service Manager first. The pay plan combined with the amount of work helps keep a technician focused. We had just enough techs so they had all the work they could stand every day.

     The word “depends” kicks in here. It depends on how much volume you do. Depends on whether you want a full function shop or just one or two techs on hand to deal with diagnosis and quick fixes. If you aren’t planning on getting into “wet work” (opening up engines and trannys) at your dealership then you may just need a good Service advisor and a porter plus. This article is about hiring a staff of techs to handle a full volume service operation in BHPH. Guys that can do engines, transmissions and diagnose issues in most vehicles we would sell.

     Technician is a skilled position in high demand. Often these folks are a little different (like sales associates, the traits that make them good at the job can also make them difficult employees). Head strong, know it all, can get hired at a new job everyday makes many of them temperamental. Understanding their skill level is important to you and their success (back to the manager hired to run the shop). You will want, as you grow, more specialized experience like transmissions, engine remove and replace, someone that can do electrical, a simple maintenance guy and maybe an import guy. Build a collective experience base of technicians to handle whatever comes in. They should be able to mount and balance tires, evac and recharge an A/C, pull an engine or transmission from many different vehicle models and change out a heater core without breaking a dash.

     The techs you need should have a considerable amount of tools, a big tool box and some special equipment, something for almost any issue. They will require good air lines for their pneumatic tools. If they have a laptop and request wifi that is good. A good tech may even have his own scanner, J Box or Pass-thru to be able to update vehicle computers. The tech has all the hand tools he needs to handle almost any rig we sell in BHPH.

     You should provide space to work with infrastructure like lifts, air compressor, good lighting, engine hoists, parts washer, if applicable tire equipment. There needs to be some type of climate control and I do not mean air conditioned bays. In north Texas it is swamp coolers in summer and some heat in winter. In Indiana you need good fans and great heaters. The equipment you provide needs to be in good working order, safe and enough available for however many you have working so they can work as fast as they want. I will cover more specific equipment and costs in another article.

Now lets talk Pay Plans: This is a topic that will be debated forever. I would not pay straight time myself. I have always paid on industry standard labor hours. I have had conversations with dealers that would only pay regular clock hours and use bonuses and team goals to achieve the desired numbers. In the labor hour or flag time pay plan each tech has to earn minimum wage for the hours they work even if they do not make that in commissions, just like commissioned sales people.

Also like sales people, you have to set goals and get new people if goals are not met to your satisfaction. Your techs should generate as close to 1:1 hours worked and labor hours generated in either scenerio. That is 100% efficiency. In my shop each of my higher rated techs gets 2 lifts and each lift has to generate 35 hours a week to meet goals. We use a monthly average because certain jobs, parts availability, hard to diagnose vehicles all interfere with efficiencies but generally wash out in the end. If your manager is monitoring the business, he/she knows who is getting things done.

Based on skill levels, you will be paying $18 to $30 an hour for flag time, if you have good techs. If you pay straight time it will be about the same in straight time pay. If you sublet the work out the other shops techs will cost you $50 to $90 per labor hour and control the work they do. If you operate your own shop you can get jobber rates for parts and charge retail. If you sublet you will pay the rate for parts the other shop charges. How many repairs per month does it take to fund your own shop? How many customer issues are caused by a sublet shop dealing with your customers vs. you dealing with them?

How many techs do you need? If you have an average of 8 hours of recon work per vehicle and on average each customer vehicle sold requires about 15 hours of repair during the life of an installment contract, do the math. You purchase 40 cars a month that is 320 labor hours. You have 600 cars in the street and 50 come in for repairs each month with an average repair of 5 labor hours. That is 250 labor hours plus the 320 in recon for a total of 570 labor hours/22 working days = 24 labor hours per day/6 actual wrench turning hours per day = 4 technicians needed. Faster, more efficient techs that are well managed maybe 3 techs. Look at the dollars. 570 labor hours at $22 per hour (our average tech cost in house) = $12,540 for the month or 570 labor hours at $60 per hour (average reduced sublet rate) = $34,200. Plus parts (your cost or theirs).

By having your own technicians you can also do many hours of repairs that normally fall under body repairs. You can charge Allstate retail rates ($90 to $120 per labor hour) for that work, job out the paint work and make an excellent markup. How much does it cost to replace the chains and solenoids on a 3.6 Chevrolet in your shop vs sublet? We could do that job just under $1000 in house, if we shipped it out that job was around $1800. We could deal with a blown head gasket for about $300, that job was easily $800 sublet depending on the vehicle. Every winter 10 to 15 of our customers would hit a deer. Each of those jobs would cost $700 to $2500 to repair. Allstate (or other insurance) would pay us $3000 to $6000 for those repairs. Even with our Collateral Protection Insurance we could do a few thousand a month in repairs in house that is money from the customers they paid into the reserve.

I want to always have my own shop in BHPH but it is work to manage. It may seem easier to sublet but I have found that is as much work (just different) and more a negative direct effect on the customers.

Gene Daughtry has almost 30 years of BHPH experience. He setup and operated 4 different dealerships, all with full service operations. Currently Gene represents Jilcat Proline and their super lubricant line of products, does training with Auto Master Systems, provides Service Consulting and capital help for dealers through or call his mobile 479-970-4049