Severe Skilled Technician Shortage Triggering Higher Shop Labor Rates

The vehicle maintenance and repair industries are experiencing a skilled labor shortage as technicians in the Baby Boomer demographic retire in greater numbers than those replacing them. The skilled labor shortage requires shops to pay more for skilled technicians, which translates into higher shop labor rates.

“The key differences impacting maintenance costs today are skilled labor shortages combined with advancements in vehicle technology. Employees with advanced technical skills are becoming more difficult to find in the job market as more experienced technicians retire and fewer young adults enter the automotive repair industry. In addition, new vehicle technology is improving vehicle safety and operating efficiency with each model-year, but requires advanced technician skills, more expensive shop equipment, and additional steps in many diagnostic and repair processes,” said Kelley Hatlee, CAFS, national service department technical support supervisor for Enterprise Fleet Management. “As a result, the need for technical skills is growing as the number of experienced technicians decreases, leading to very competitive wages among technicians. The increase in labor costs translates to higher shop labor rates. And as vehicles become more complex, the industry time standards for many repairs will increase.”

One consequence to today’s strong economy is the widespread labor shortage, especially among skilled workers, which is exacerbated by the large scale retirement of aging Baby Boomers.

“There is increased and intense competition from individual fleet organizations to acquire qualified technicians from a shrinking pool of retiring Baby-Boomers. In addition, there is a limited ability to hire qualified fleet management professionals, such as managers, supervisors, and data analysts, who have the capabilities to use the myriad of data produced by fleet management information systems, telematics, vendors, and ECMs,” said Steve Saltzgiver,  BSBM, MAOM, CAFS, director business development and marketing for Mercury Associates. “Not only is there a labor pool gap, but retiring Baby Boomers are also creating a significant gap in the loss of institutional knowledge dealing with perfunctory or hands-on skills. New fleet professionals will be better equipped in analysis, but won’t possess the practical aptitude to hold vendors and technicians accountable.”

Employees with advanced technical skills have become highly sought after as more experienced technicians retire and fewer young adults enter the automotive maintenance and repair industry.

“There is currently a talent drain in the fleet industry. Loss through retirement or outsourcing of long-tenured fleet professionals at many organizations is causing these positions to be filled with inexperienced and less dedicated personnel than previously there,” said John Brewington, CAFM, CEM, president of Brewington & Company, a fleet asset and management consultancy in Mount Airy, N.C.

This observation was seconded by Jonathan Culp, director, fleet and leasing sales at Dejana Truck and Utility Equipment. “When I look around the room at an OEM preview or say at AFLA, I don’t see a lot of people in their 20s and 30s, I see people that in five years could step down and take all of their tribal knowledge with them,” said Culp. “The same thing is true on the dealer side. I think the average age of a commercial account manager at a dealership is pretty close to 60. These are the people who know how to spec trucks but there doesn’t appear to be another generation rising behind them.”

While new-vehicle technology improves vehicle safety and operating efficiency, it also requires advanced technician skills, more expensive shop equipment, and performance of additional steps in many diagnostic and repair processes.

“Finding qualified technicians continues to be a problem, but it seems like the rapid pace of technology changes are really going to tax the skills of even our best techs, much less the ones that we are still trying to find and hire,” said Meisel at Quanta Services.

This is especially true for fleets with in-house maintenance operations, A commonly heard refrain from these fleet operations is the difficulty in finding and retaining qualified mechanics. The skilled labor shortage is being exacerbated by increased vehicle complexity, which is requiring a higher skillset by automotive technicians and, in turn, is putting upward pressure on salary packages offered to qualified technicians.

 “The shortage of qualified technicians is starting to put a strain on all companies that handle their vehicle maintenance in-house,” said Jim Bigelow, senior director, Enterprise Fleet at Cox Enterprises in Atlanta.

While there has been a longtime shortage in CDL drivers and automotive technicians, this labor shortage is expanding into other areas of the fleet industry, which previously did not have this problem. If a company is successful in recruiting employees, there is the subsequent issue in retaining these employees,

“Hiring qualified help and keeping them is becoming harder and harder. Every company is experiencing this problem, especially in the area where a specific trade or talent is required,” said Bob Martines, CEO for Corporate Claims Management in Ivyland, Pa.

With the generational transition from Baby Boomers to Millennials, there is a  shift in how different generations value longevity at a particular company.

“It is difficult to recruit and retain top talent in this environment. There is an attitude among millennials where there are no style points for sticking with a company for a number of years. Many of them have never faced a real bad economic downturn,” said Callahan of Donlen.

This observation was echoed by Meisel of Quanta Services. “Professional fleet managers/executives are becoming harder to find. More and more companies seem to be rotating people through those roles versus hiring or growing a professional in this space. I have seen this cycle three or four times over my career and it never seems to turn out well.”

The tight job market is prompting companies to look beyond their typical candidate pool. “One of the biggest problems is employee retention in a tough hiring environment. The job market is so tight, but we can’t hire felons, and require an initial drug screen,” said one sourcing manager at a Fortune 500 company.

Originally posted on Automotive Fleet