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Workforce had last time around; the same anecdotes – the same frustrations. We're starting to experience the technician shortage again, with its implications for dealer opera- tions and profitability. As our industry sector continues to slog through this slow recovery, those experiences will intensify. The AED Foundation has presented a number of articles in AED media about the importance and benefits of dealer engagement; working with local technical colleges and addressing technician recruitment issues to meet mutual needs. Let's look at it a different way here and ask a question: "What can happen when dealers are not involved?" When Dealers Don't Get Involved: Scenario 1 Let's assume that U.S. dealer shop rates average $89.22 per hour, the rate reported in AED's last workforce needs research survey. Let's also assume that to service customer demand, another full-time technician needs to be hired but cannot be found, no more overtime is available, and the customer is forced to go elsewhere. What is the lost "opportunity cost" in service revenue to the dealer? The box below shows that analysis and the lost business – $154 million in potential service revenue gone. How easy is that to tolerate? When You Have a Job Opening and Can't Find a Technician What Does It Cost You? To determine the lost opportunity cost to the dealer when enough technicians can't be hired to meet local market demand, assume an 80 percent recovery rate per week for a total of 36 hours that are billable. One technician at 80 percent efficiency (recovery rate) x 45 hours/week = 36 billable hours Therefore, 36 billable hours x $89.22 average U.S. retail shop rate = $3,212 billable Lost Per Week Extending this scenario further, After vacation, holidays, sick days, etc., the technician works 48 weeks, 48 weeks x $3,212 billable Lost Per Week = $154,176 in Service Revenue Opportunity Lost When Dealers Don't Get Involved: Scenario 2 As mentioned before, according to AED research, the No. 1 strategy for finding these scarce technicians is steal- ing from competitors. Now, maybe you can get one to jump ship for another $3 per hour; hopefully they know what they're doing and they're worth that. You hire this person. Now, what if your competitor offers $1.50 more per hour to get this tech back, or another competitor enters the bidding? This can turn into a vicious circle of technician job market churn, where the same technicians are moving employer to employer through a revolving door. Any good company-employee relationships become difficult to establish and maintain. The constant "learning curve" resulting from the revolving door has its own resulting dealer costs. Customers may perceive dealer instability when they see key contacts – in many cases the front-line technicians – changing all the time. In the end, it just drives up labor costs and doesn't really benefit any of the dealers. When Dealers Don't Get Involved: Scenario 3 All the time I hear stories from AED Accredited techni- cal colleges that sound something like this: "A dealer manager called me up and said he needed two to three technicians." Unfortunately, in many instances, the college program has to respond by saying all the graduat- ing students are spoken for. Dealers who sponsored or assisted the students in different ways are now hiring them. Even if there are some hiring candidates remain- ing, do you want to only be able to hire whoever's left? Unspoken in the conversation is what else the dealer missed out on: n The ability to observe the students when visiting the college and during internships and see who are the truly best candidates for employment at the dealership n The ability to develop relationships with the students and demonstrate to them how their dealership presents an excellent opportunity to start their careers and grow professionally n The ability to provide meaningful input about course and lab content, as well as subject area emphases such as diesel engine, hydraulics/hydrostatics, electric/electronics, power trains, A/C, heating – making sure dealer needs are met in course curriculum can be done through participa- tion and/or school advisory board membership When Dealers Get Involved: A Fresh Scenario When a dealer becomes involved with a technical college, everything doesn't just happen overnight. The process starts with student recruitment, proceeds through high school and/or college technical education, and continues through hiring and technician retention. The lead-time from starting student recruitment efforts to the dealer (continued on page 63) October 2012 | Construction Equipment Distribution | www.cedmag.com | 45