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A Diagnostic of the Auto Service Technician Shortage

Posted by Joe Gargiulo on Wed, Mar 13, 2019 @ 07:48 AM

auto service technician shortage“Diagnostic equipment does not tell you what’s wrong,” said Gary Uyematsu, the national technical training manager at BMW of North America while discussing the auto service technician shortage. “It’s just a tool, and a diagnostician needs to interpret the messages.”

Similarly, most articles about the auto service technician shortage provide the tools for analysis, but few sources have interpreted the messaging. This analysis of the shortage connects the dots and finishes with a holistic solution.

Car and Driver summarized the sources of the shortage in April 2018.

auto dealership service department“The challenges facing the industry are numerous. Although pay can be competitive after a few years of turning wrenches and reading diagnostic scanners, the job requires a deep commitment to learning the necessary mechanical and digital skills. The tools of the trade are expensive. Plus, enticing today’s tech-oriented youth into a profession that requires getting their hands dirty can be difficult.”

What are the causes and effects, and more importantly, what are the strategies for talent acquisition?

This discussion begins with the statistics behind the shortage.

How Short is the Auto Service Technician Shortage?

The most recent data from the Bureau of Labor Statistics indicates that 749,900 people were working as automotive service technicians and mechanics in 2016 (266,000 or 36 percent are employed at new car dealerships).

The bureau estimates that 45,900 jobs will be added through 2026, representing an increase of 6 percent. Currently, however, over 50 percent of new positions remain unfilled because of a shortage that is expected to continue. These changes will result in a shortage of 20 – 25,000 qualified auto service technicians over the next several years.

young auto service techs

What are the Sources of the Auto Service Technician Shortage?

Experts cite a variety of reasons leading to the shortage.

“Everybody sees profitability in the service drive as the future,” said CEO Adam Robinson of Hireology, “but nobody has changed the strategy for talent.”

A major reason for the auto service technician shortage involves education at the secondary and post-secondary levels.

Education

Once a fixture of twentieth-century America, high-school auto shop programs are now a dying breed as secondary schools prepare students for career paths that require bachelor’s degrees.

In addition, secondary schools are also partially responsible for perpetuating the antiquated “greasy hands” stigma against the vocation. Realistically speaking, though, the stigma is a byproduct of the unified messaging auto shop schoolfrom a society committed to higher education. Consequently, we have become a society that discourages blue-collar careers.

A study by the TechForce Foundation stated that the number of post-secondary graduates from technical schools has been declining since 2013. The collision sector has been hit especially hard, but even diesel programs — where enrollment and completions have increased — can’t keep up the growing demand for new talent.

Private institutions have experienced the most significant losses. Community college programs have grown substantially, but have been unable to unilaterally close the gap on the shortage.

Exposure

There was a time when one could see people under the hood on Saturday mornings all over the United States. With the passing of the “shade tree” or DIY mechanic, few Americans are exposed to consumers working on their own automobiles. Most of that went by the wayside when cars became more sophisticated in the 1990s, requiring expensive diagnostic equipment and the knowledge to fix them.

The fallout is that young people have few auto-repair mentors or even the inspiration to work on their own vehicles. This void in exposure has reduced the spark for taking an amateur interest in servicing autos to a professional level.

Turnover

The 2017 Dealership Workforce Study by the National Automobile Dealers Association (NADA) states that the annual turnover rate for experienced service technicians was 27.2 percent in 2016, a rise of 2.1 percent from the 25.1 rate of turnover in 2015.

auto service tech OBD code readerA 2016 survey of 15,000 service tech conducted by Carlisle & Co. in cooperation with Automotive News determined these mechanics are 40 years old with 19 years of experience on average. Interestingly, the survey also stated that a majority of techs would not recommend the job to a friend.

According to the firm that conducts NADA’s annual workforce study, most techs leave their jobs for positions in other industries instead of retiring or moving to competing dealerships.

Income

Auto service technicians are paid modest wages.

The 2016 NADA study shows a median income of almost $70,000 for master service technicians and slightly less for service advisors. The average service tech needs to work 44 hours per week to earn that income.

Comparatively speaking, college graduates from the class of 2017 are earning starting salaries of $50,000 on average while those in computer science begin their careers near $73,000.

certified service department auto dealershipThere are some similarities and differences between service techs and computer science grads. Both groups have advanced computer skills, but the service techs spend two years in community college while the computer science majors must earn four-year degrees.

Compounding the challenges created by limited income potential, most dealerships require service technicians to purchase their own tools, an investment that can run into the thousands of dollars.

Some dealerships have devised incentive programs to purchase tools for mechanics who will own the equipment outright if they remain on the job for a minimum of two years.

Finally, most service technicians are paid by the job versus by the hour (i.e. they are paid for the time quoted in the service manual for completing specific tasks). This is a blessing for experienced mechanics who can complete the work faster than what is stated in the book. However, this approach to cost-cutting may discourage new recruits from entering the field.

In extreme situations, service managers are using fast workers’ ability against them by not assigning new tasks until the blocks of time quoted in the service manual have passed. These skilled workers finish ahead of schedule, but the waiting “penalties” do not allow them to increase their earnings.

What Are the Solutions to the Auto Service Technician Shortage?

Opinions vary about how to solve the auto service technician shortage.

They include grassroots recruiting efforts to create partnerships between the automotive industry and vocational programs on the secondary and post-secondary levels. The default approach entails automotive groups offering and or sponsoring educational programs with the hope of recruiting graduates into tech positions at auto dealerships or independent repair shops.

body shop bufferIn 2017, for example, the Inter-Industry Conference on Auto Collision Repair (I-CAR) enrolled 90,000 students in 200,000 of its courses. I-CAR also collaborated with 11,000 collision centers on tech education programs. The organization plans to work with 10,000 more body shops through 2023. At that point, this massive undertaking will have reached approximately two thirds of the collision centers in the country.

The National Institute of Automotive Service Excellence also has a recruiting program based on partnerships.

Furthermore, the Lincoln Technical Institute has partnered with Audi, BMW and Fiat Chrysler to help underwrite its vocational training in automotive technology.

Finally, some auto dealerships have added incentive programs, yearly bonuses and retirement plans to attract quality help.

Summary

Retail automotive has a vested interest in upping the recruitment of qualified service technicians to abate lost revenue in the highest profit center of dealerships — fixed operations (aka parts and service).

Fixed ops accounted for about 12 percent of retail automotive gross revenue in 2016 according to a NADA report, and that number could potentially be raised another 17 points with fully staffed service departments.

Furthermore, the aging fleet of American autos — 12 years old on average — spells even greater demand for well-qualified people to fix them.

A holistic solution to recruiting and retaining new service techs entails attacking it from every viable angle that makes business sense.

These include the approaches mentioned above (cooperative educational programs, tool-buying incentive programs and yearly bonuses) in conjunction with generous healthcare and vacation packages, retirement plans employee benefits packageor bonuses for recruits willing to sign employment contracts.

The educational angle can be expanded to include "learn while you earn" programs that combine paid apprenticeships with sponsored post-secondary certifications.

The educational programs sponsored by trade organizations and dealerships should also be promoted regularly on social media. For example, I-CAR continues to keep the shortage story alive via LinkedIn posts.

Related promotional tools include press releases announcing the launch of a new program, the start of a new semester, graduation and awards ceremonies, or the addition of new classes as well as media alerts plugging special workshops.

Support from CrossCheck

As the exclusive check guarantee provider for the largest auto dealership in the country, CrossCheck stands behind the industry as it addresses the auto service technician shortage.

CrossCheck also offers immediate assistance in the form of revenue-generating services. C.A.R.S. (CrossCheck's Auto Industry RDC Solution) helps dealerships fortify their bottom line and increase the lifetime value of customers in three specific ways:

  • Remote Deposit Capture (RDC) enables dealerships to accept, process and automatically deposit guaranteed checks into their business accounts (that are usually funded within 72 hours).
  • The Multiple Check premium (accepting up to four guaranteed checks for one sale or down payment) is a flexible option that gives consumers extra time to pay.
  • Check on Delivery guarantees the payment of delivered parts to independent shops in one fast-and-easy phone call.

Download our free guide to learn how C.A.R.S. can help your dealership increase sales and mitigate risk while saving time and money.

auto dealer remote deposit capture

Tags: Auto Dealerships