Automotive Franchise Issues Continue As Technician Shortages ...

Automotive Franchise Issues Continue As Technician Shortages Increase

From: Lance (Franchise Sector Study - OilChange and Quick Lube Labor Issues)
Remote Name: 65.88.106.1
Date: 18 Apr 2004
Time: 21:42:52

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Automotive Franchise Issues Continue As Technician Shortages Increase. Automotive Franchise Issues Continue As Technician Shortages Increase. We are seeing issues in the Automotive aftermarket service sector which makes it tough on Automotive repair and service franchises. There is a huge shortage, which effects franchises costs in labor, availability of labor and quality of workmanship. For instance 80,000 Americans are in Oil Lube Facilities alone and over 50% are franchised lube centers. Companies like; Jiffy Lube, Lube Pros, Grease Monkey, All-Tune and Lube, Oil Can Henry, etc. And just so I do not forget any of the many great companies, here is a previous set of surveys we had reviewed, this is a three part study done by our research Bravo Team, (That’s basically me): Part I; http://www.parthe.net/_oilchangeguys/0000002c.htm and Part II; http://www.parthe.net/_oilchangeguys/0000002d.htm and Part III; http://www.parthe.net/_oilchangeguys/0000002e.htm . And of course these fixed site offers do not really take into consideration the rise of the mobile oil change sector led by such companies as Oil Butler in NJ; http://www.OilButler.com , Location Lube; http://www.LocationLube.com , Lube on Location http://www.LubeonLocation.com and our franchise module; The Oil Change Guys; http://www.OilChangeGuys.com . Which require two technicians per unit on the road for personal cars and up to 4 technicians for fleet on-site oil changing and Heavy Equipment. Car Dealerships entering the auto lube business too: http://www.parthe.net/_oilchangeguys/0000005e.htm As a matter of fact Car Dealership franchises employee 265,000 Americans as technicians to repair warranty work and do routine services. And they soak up annually 35,000 new technicians just to stay even with the attrition rates and expansion of the largest Car Dealership Consolidators. Think about it; United Auto, Auto One, Lithia, CarMax, AutoNation, Sonics Automotive Group, these alone account for thousands of dealerships and growing and they also want a piece of the oil change action as Manufacturers are going to specialized oil to help meet emissions rules from the EPA, thus branded oil such as BMW Oil which is required in their operations manuals. And of course they do not sell this oil to Oil Change Companies not affiliated. Then there are many companies which do oil changing which also do other services companies like, Midas Muffler which is one of the oldest franchises still running in the US. And Minekie Muffler (SP? Silly name) as well as all the Tire Companies which have added oil change services. And hey let’s not forget the Master Grand Daddy, largest company in the US accounting for 9% of the total GDP; Yes, I am speaking of Sam Walton’s creation, if you get a chance go read; “Made in America” the story of Wal*Mart and incase you think that is not some real competition: http://www.parthe.net/_oilchangeguys/00000070.htm and http://www.parthe.net/_cwg1203/0000000b.htm and http://www.parthe.net/_cwg1003/0000004b.htm . All these issues make getting trained technicians tough and the gap widens, which effects your performance, customer service, increases risks of mistakes, raises your cost of labor and hurts your completed operations insurance costs. http://www.parthe.net/_cwg0503/00000060.htm . As if there is not enough costs with all the other regulations effecting your bottom line? http://www.parthe.net/_oilchangeguys/0000000f.htm and http://www.parthe.net/_cwg0703/0000004b.htm . It is a challenge to find labor which requires a skill such as an auto technician and yes unlike other parts of the auto sector such as overhaul and repair where there is the greatest shortage and body shops which requires knowledge and skill with an even bigger shortage of qualified technicians; the oil change business is not without significant hardships in recruiting and maintaining labor as competition lowers costs and labor needs to be cut due to workmen’s compensation insurance and benefit costs and insurance and regulations and lawsuits concerning slip and fall and work place injuries; (please read on this bulletin board below: “First We Kill All The Lawyers” and yes we are a little more than half serious). So where can you find the right people for the low cost necessary to stay in business with all these dramatic increases in costs and competition? Well ASE has some good advice if you are looking for technicians: http://www.parthe.net/_oilchange0104/00000011.htm . We had thought of Military Hobby Shops: http://www.parthe.net/_oilchange0104/0000000e.htm . As costs keep going up for quality and skilled labor, how much should you pay in your oil change franchised outlet facility? Here are some thoughts; http://www.parthe.net/_oilchangeguys/00000074.htm . A recent survey by the Automotive Aftermarket Industry Association (AAIA) showed for every 10 who retire as auto technicians only 2-3 start. The attrition rate is dangerous. Similarly the military is soaking up many folks and even the US Navy is having difficulty staffing all the ships. When Motor Age Magazine took their survey they saw some shocking tell tale signs; 37% of automotive technicians across the board said they would not still be in this line of work in 5 years from now, which is not too un typical of the fact that Americans change their jobs every 3.2 years on average, 50% that is or that teachers only 50% stay with it over 5 years? Scary thoughts, but those statistics are real, Source: American Demographic Magazine. If you have a brand like Castrol, then they give scholarships and can assist in providing labor at entry level, but if you are paying under $8.00 per hour expect massive turnover. Under $15.00 per hour expect triple and five times less turn over, which is difficult still in that the average oil change worker is only four to seven months on the job? Starbucks with all it’s benefits is 50% per year, most Quick Service Restaurants are 75% per year. With the increased insanity of over regulations and incessant frivolous and BS lawsuits from ambulance chasing legal terrorists, it is hard to say if this trend will stop. Unless we get some tort reform, insurance costs and increased labor associated costs are certain to challenge Oil Change Facilities with even the best demographic locations. If you are going into the oil change business pick a franchisor rather than doing it yourself and listen (opinion), stay lean and mean, because theses challenges are threatening your profits which could leave you with little chance of a reasonable ROI. Any comments or questions email me. Lance@carwashguys.com (CYA- we run the Oil Change Guys as a franchise model module as part of our WashGuys Systems.

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