Technician Trainee/Apprentice Pay Alternatives – Part 1

David Dietrich NewsletterThis is Part 1 in a three-part article. Be sure to check back next week for Part 2.

I. Background

One of the biggest challenges facing the automobile repair industry is the severe shortage of trained service and collision center technicians. Technicians are in abundance in very few marketplaces in the country.

Some manufacturers have pitched in to address this problem with a number of outstanding programs, such as the General Motors ASEP program, the Ford ASSET program and the Toyota T-10 program. However, simply not enough talented people are entering the field as in the past.

Years ago, it was very common to see a mechanic’s son grow up to be a mechanic. The trade was passed from one generation to the next. Working on cars did not require any type of advanced education, and even people without a high school diploma could learn and do well in the trade. But ask a seasoned technician today if he would like for his children to follow in his footsteps and the answer will most likely be an emotional, “Over my dead body!” The reasons for this situation are readily apparent and real:

Over the last 20 years, we have experienced a “Technological Revolution” which has resulted in sweeping changes affecting nearly every aspect of our lives—work, leisure activities and society as a whole. This revolution has opened up a multitude of opportunities for young, technically-minded people that offer better working conditions, better pay, growth potential, and higher social status than automobile repair trades.

In addition, the job of fixing cars has not gotten any better. Some say it has become worse. The product has become so unbelievably complex that problems are often extremely difficult and time consuming to diagnose and repair properly. The change to smaller, more compact vehicles has made working on many of them more physically demanding. A good technical education is now an absolute requirement, but actually does little in preparing a student for a productivity environment.

MOST SERVICE DEPARTMENT and body shop managers will agree that the best way to deal with the problem is to continuously look for young talent and to “grow your own technicians.” When a service department or body shop is fortunate enough to hire a qualified and eager trainee, a manager’s problems are far from over—a new list of perplexing problems quickly appears. Now the manager has to ask:

  1. How will I keep the new employee motivated in a potentially negative environment?
  2. How will I ensure and monitor their development?
  3. Who can I trust to lead them in a positive direction?
  4. How will I pay the new employee in a way that benefits the trainee, the technicians who help the trainee, and the dealership while they learn the trade?

THE COMPENSATION ISSUE has grown in complexity and scope because of a number of major socioeconomic changes over the last two decades. One important fact is that wages for entry-level positions have not kept pace with the most basic cost of living. Everyone has felt the pinch, but the emerging worker faces financial challenges that were much easier to handle 20 years ago.

Consider the basics alone. A serviceable automobile costs nearly five to ten times what it did in 1970. Basic insurance costs for both automobiles and medical coverage are many times what they were only a short time ago. Today, the basic costs for just these three items could exceed 60% of a trainee’s monthly take home pay. This does not leave much for food, shelter, vehicle operating expenses, clothing, and entertainment.

The simple challenges of meeting the cost of living have also been compromised by a trend where young people want things NOW! This has resulted in a shift from the conservative “pay-as-you-go” lifestyle of our parents to one of self-satisfaction via easy credit. Many young people have acquired consumer debts that their parents would never have assumed at a young age. Add the burdens of a young family and the scope of the problem takes on frightening proportions for even the most responsible young person.

Although the financial burdens for simple survival have grown for people starting a career, the ability of trained technicians to improve their lifestyles has also been seriously jeopardized. It is not uncommon for M5 consultants to review technician pay histories for productive, responsible, and talented people, with the number of such technicians showing a significant decline over the past several years.

The reasons are clear. The product has become extremely complex, and in many cases, backbreaking to repair. Extended warranties have made warranty jobs out of those previously lucrative customer-paid jobs. And, the better a technician gets, the more they get stuck with the impossible-to-repair jobs that do not pay fairly.

Technician wages have not kept pace with the other costs of the business. Years ago, it was not unusual for a technician to make 50% of the labor sales he produced. Now he is lucky to keep 30% of sales. The other expenses of service and body shop operation have increased at so fast a rate that dealerships have had no other choice but to contain the cost of labor. In light of slow or no growth in experienced technician wages, it is no surprise that many technicians are unwilling to compromise their earning power by helping trainee technicians.

THE DEALERSHIP IS truly caught in the middle. Who would have dreamed that garage-owner’s liability insurance would cost what it does now? The increase in the overall expense of running a service department and/or body shop is truly shocking compared to 10 or 20 years ago. The raw costs for EPA and OSHA compliance, employee benefit packages, computers, equipment, and other essentials have put a tremendous financial strain on dealership fixed operations. Under these conditions, the need for trainee pay plans that do not further jeopardize the viability of the business have never been more important.

OF THE HUNDREDS of trainee pay plans currently in use, rarely do trainees, technicians, and the dealership equitably share the burdens and benefits of “growing your own technicians.” The problems normally encountered when trainee technicians find themselves in a production environment include:

  1. The trainee’s production reduces the earning potential of other commissioned technicians.
  2. Other technicians show little interest in helping trainees because it takes too much time away from their own work.
  3. Trainees assigned to be technician helpers are used as “go-fers” and learn only as much as their training technician wants them to learn.
  4. Technicians who are assigned trainees often benefit from the trainee’s production in a manner that is financially detrimental to the department.
  5. There are often no firm management plans for a trainee’s development.
  6. Trainees are often assigned to “dead-end” jobs that break their spirit before they have the opportunity to become competent technicians.
  7. Trainee wages often do not keep pace with the development of their skills.

In essence, what generally takes place is that there is no game plan to train or review the progress of a trainee. Lack of a plan leads to a high turnover level in this position, which often leads to high levels of frustration.

The expense of this position could be higher than what may appear on the surface. In some cases, what the trainee produces is given to his alleged trainer, which can affect your cost-of-sales.

For example, the trainee is paid an hourly rate of $7, which results in a weekly expense of $280 when multiplied by 40 weekly clock hours. In addition, the trainee produces 15 hours per week, which results in another weekly expense of $225 when multiplied by the $15 hourly rate of the trainer technician receiving benefit of those hours.

$280.00 (weekly expense of trainee) + $225.00 (weekly additional cost to trainer) = $505 (total weekly training expense)

$505.00 (total weekly training expense) x 52 (weeks per year) = $26,260 (total yearly training expense)

Continued next week in Part 2!

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