Auto Service World
Feature   December 1, 2003   by Bob Greenwood

Greenwood on Management: Memo

To: The Automotive Aftermarket Industry Subject: The Weakest Shops in Our CountryQuestion: "Do They Understand the Consequences of Their Actions?"


The Independent sector of the automotive aftermarket industry has many serious problems to contend with on a daily basis just to sustain a business existence. This appears to be the description of too many independent outlets across Canada, as they are buried in the forest of their daily activity.

Learning and understanding your individual business problems is one topic that must be addressed by each business owner, however, as in being a qualified “Master Technician” versus an “Apprentice Technician”, understanding the whole picture of the aftermarket “industry” is the true expertise and sign of a qualified professional shop owner today.

Consider the following:

– There is an acute shortage of competent technicians and competent people throughout our industry as we are not an industry promoted by the education, or government systems of our country, as a “stellar” career, yet today we require a huge number of the brightest minds, the sharpest individuals who comprise imagination, entrepreneurial spirit, mathematical, electronic, computer, and people chemistry skills.

– The average licensed technician earns less than $60,000 per year, must buy his/her own tools in after tax dollars that are not tax deductible, physically work a 44 hour week, then, on top of physical work hours, read and research after hours more than ever before, attend night training away from their home, and family, on a regular, and continuous basis ‘IF’ they are to remain at THE TOP of their “Profession”.

– The average counter person within the independent sector earns less than $45,000 per year but is expected to secure trustworthy relationships with the customer base coming through the door (always), manage the technician activity in the back shop to ensure the work is done on time, seemingly expected to know every part and understand every check engine diagnostic code of every vehicle on the road, understand all shop computer operating systems and sideline software programs, inside out, average a fictitious X dollars per work-order to prove he/she has any competency, often logs 50 to 60 hours per week, must act friendly, look presentable, speak with confidence…… and intelligently……in a empathetic tone of voice, and have an consistent, sincere, smile on their face all day long to an average consumer whom does not understand what they are driving.

Enter the industry dilemma:

The shop Owners/Manager who runs their business with tunnel vision; they think net profit is a dirty “rip-off” word; they focus only on their own day-to-day fires that they very most likely created by running a “price based, best deal around, special always, free services” type of business; they couldn’t care less about the industry (specifically our sector), or the situation they might put their independent peer located just down the street who happens to be trying to do his/her best to execute the right way; they treat the technicians of our industry as an untrustworthy species; they have a “grease pit” work ethic as displayed throughout their facility and very noticeably on their “uniform”; their facility is under equipped and understaffed; they run a business that has too much accounts receivable, and run with a philosophy of selling to anyone who walks through the door because car count is the only way they know how to run this business. They believe a sale, is a sale, is a sale. They do this every day they are open as they whine and complain how bad things are and its everyone’s else’s fault but most certainly never theirs.

These shops are the creators, and sustainers, of more damage to the future of the independent sector of the automotive aftermarket industry as a whole than any individual national company, or organization in Canada, could ever do.

By consistently running their business as described above, consider the over-all damage they do to our sector of the industry:

– The price focussed effort does not provide enough profit to hire and train a staff that pays a wage conducive to the talent required to execute professionally. As one client of mine said to me, “they only have, because that is all they can afford, dead-beat staff”. The focus on price is killing our industry because so much talent is required today, however, when the dollars are not around to attract, and be known as a company that pays exceptionally well, how do we expect to be known to the public, and the school systems of our country, as a “stellar profession”? The overall image sent to the consumer by these shops is “price is everything when choosing an outlet for vehicle maintenance and repairs” …for knowledge to fix the vehicle right the first time? Knowledge is not a commodity today …knowledge is competency!….. How can you discount competency?

– These shops promote a perception to the consumer (and understand what is promoted to the consumer is also what the education and government systems see, and understand, as well) the old stereo-type mechanical operation from the 50’s, 60’s, 70’s, and 80’s… “Turn a screw driver and it’s fixed”. These shops give out “free service” as it would be a waste of their time to them to take the time to educate the consumer the real skill level required today to understand these vehicles on the road. They don’t focus on Service/Quality/Value; they focus on “price” and “free service”. How will the consumer ever understand what is really at stake here based on this level of execution?

– The under-priced, poorly managed shop fights daily for hard goods pricing. They think, “that’s where the action is”. Professional business relationships do not exist as these shops don’t believe, or trust, anyone within the industry. If someone admits that they made a profit from these types of shops, the shop owner will change players fast. “Make your profit somewhere else, but not from me”. They shop 3 to 5 suppliers constantly. They can’t develop a personal business relationship with one chosen supplier because of their own personal insecurities. They are a “mechanic” first, who happened to stumble into an opportunity to own their business thinking “I was making $15 an hour; if I open my own shop and charge $50 to $60 per hour, I will make good money. If I stay busy, I’ll get rich. If I beat up my supplier at the same time for an extra 10 points off on my parts, I’m a hero”. These shops do not understand the difference to their businesses net income when comparing 10% off on parts or 10% increase in productivity. No one ever taught them the math of their own business. These shops now have debt loads that can’t possibly get paid off in a reasonable time frame, which in turn does not give them the additional profitability required to move their business forward.

By not being able to afford the right equipment to do the work accurately and efficiently, they end up sending the perception of incompetence to the consumer as they are on a “job” for 4 to 6 hours guessing at the solution. The Better Business Bureau states ” Buyer beware” to the consumer. The BBB are right, because unfortunately these shops stand out more frequently than the good to great shops in our country. These are the shops that get all the “free-press” in programs like W-5, or newspapers and magazines. Sensationalism from a journalist’s point of view is good for TV or magazine ratings, but the consequences to the better shops out there who have the real automotive service technicians, and our industry, is that it pulls our sector of the industry down. All this happens because Management of these shops wants to play old-style mechanic, instead of raising their stature to a modern, smart, professional, automotive service technician.

There is no doubt about it that the weak shops in this country do a lot of damage to the overall image of the Independent sector of the automotive aftermarket industry. No industry, of any nature, is immune to these types of businesses, however, the automotive aftermarket industry is just more vocal, and more visual, in ensuring “everyone out there” knows and sees it.

We must realize these types of very poorly run shops a
re like cockroaches that will survive even in a nuclear war. Unfortunately, they will always be there, no matter what! I just wished we could get our industry act together at every level and get past these guys, ensuring the education system can see the phenomenal future opportunity within our industry, lobby the governments to invest properly within this industry that is a major economic player. Then by all working together in unison, get the message to the consumer in a very professional, but continuous format that in essence states “we hate cockroaches too, and we are doing our very best to eliminate them.”

Robert (Bob) Greenwood is President and CEO of E. K. Williams & Co. (Ontario) Ltd. and Automotive Aftermarket E-Learning Centre Ltd. Bob has over 27 years of Business Management experience within the automotive industry, counseling individual shops in Ontario. E. K. Williams & Co. (Ontario) Ltd. offices specialize in the independent sector of the automotive industry, preparing analytical operating statements for Management purposes, personal and corporate tax return completion, Business Management consultation and Business Management and Employee Development Courses. Visit E. K. Williams & Co. on the Internet at www.ekw.ca and sign up for their FREE monthly management letter sent to you by E-mail. Automotive Aftermarket E-Learning Centre Ltd. is a company devoted to developing Automotive Shop Business Management skills through the E-Learning environment over the inter-net. Students learn at their own speed, and at a time, and place, that best suits their needs; available 7 days a week 24 hours a day. Visit Automotive Aftermarket E-Learning Centre Ltd. on the Internet at www.aaec.ca Bob can be reached at (613) 836-5130, 1-800-267-5497, FAX (613) 836-4637 or by E-mail; greenwood@ekw.ca or greenwood@aaec.ca


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