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Posts Tagged ‘HD Repair Forum’

What’s New In Heavy Duty Welding, Part 3

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Over the last couple of months, I-CAR has been discussing welding requirements for heavy duty collision repair. Brian Wasson, Welding Program Manager at I-CAR, presented ‘What’s New in Heavy Duty Welding’ at the HD Forum in Fort Worth, Texas. We have already discussed identifying materials, preparing your working environment and the welding process.

As you heard, the materials used to build vehicles have moved from the mild steel we all know to new construction methods such as High-Strength Steel, Ultra-High Strength Steel, Aluminum and more to come. GMA MAG (Metal Active Gas, commonly referred as MIG) welding has become the automotive industry standard for repairs. Thanks to the influx of new materials that require less heat, other attachment methods have been introduced like MIG brazing, spot welding, and rivet bonding.

How can you make sure you and your staff have the skills and knowledge to perform those repairs? I-CAR provides welding training for technicians that includes explanations of how welding has changed and hands-on instruction to develop the skills and methods for quality welds. In addition, I-CAR also provides specific hands-on course to address these other attachment methods too.

Welding background is provided through courses on hazardous materials, welding theory, and panel repair and replacement. Hands-on training includes work on Aluminum and Steel GMA methods, along with Rivet Bonding, MIG Brazing and Squeeze-Type Resistance Spot Welding. I-CAR works with many automotive manufacturers to help develop welding programs appropriate for their models.

Whether you are welding the frame or other parts of the vehicle, proper training will help you gain and apply the knowledge and skills to execute those welds with confidence. That confidence makes your work better and your customers safer.

Road to Green: The Future IS Promising

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The future for the Independent Heavy Duty sector looks very promising, and will prove to be an exceptionally profitable period over the next 5 to 7 years compared to the last 10 years BUT only for the HD shop owners who truly understand their client base, their business, and the HD industry.

The supply / demand economic equation will be clearly understood by most HD shop owners as the supply of competent technicians has dried up, but the demand is forever increasing throughout the industry, which will force wage levels to rise quite dramatically over the next two to three years. Already we have seen in various areas that competent technicians are receiving $28 to $45 per hour with a $1,000 signing bonus, proving this shortage is not confined to one area of North America. These levels of wage rates can add to the “brain-drain” situation that is affecting North America in every industry.

Finding competent technicians is certainly one issue, but what will happen to our industry and the independent heavy duty shop itself, under this financial scenario?

In the long run, this is excellent for our industry, as competent technicians finally become recognized by the industry, that they are working in a “profession” rather than a “trade” and that technicians are highly skilled individuals deserving of a professional income. In the short run, it could cause absolute financial ruin as most shop owners are not aware of all the detailed numbers of their business and how they contribute to the net income of the business, or, properly versed on how to pass on the right labor costs to their clients. They are running their business based mainly on “price”, trying to tell everyone they are the best, and at the same time, the cheapest. They have failed to educate their clients about the level of expertise that is now required to maintain today’s HD vehicles and trailers, and that competent expertise does have a price tag to go along with it. It is also about HD shop efficiencies which is an on-going learning curve the HD sector must learn as “efficiency” affects your true cost per billed hour.

Shop owners must change how they measure their labor revenue component.   Rather than measure by one labor revenue department, labor should be broken down into a minimum of three categories, namely, a maintenance/mechanical labor department, a diagnostic labor department and a re-flash labor department. Each labor department has different skill level of technicians. The maintenance mechanical labor door rate should be set at a minimum of 4.5 times the top mechanical technicians hourly wage, (i.e. $23 X 4.5 = $103.50) or 85% of your true cost per billed hour, the diagnostic labor rate should be set at a minimum of 5.35 times the diagnostic technicians wage, (i.e. $29 X 5.35 = $155.15 per hour) or 115% of your true cost per billed hour and the re-flash rate at 6.0 times the technicians hourly wage, (i.e $32 X 6.0 = $192.00) or 125% of your true cost per billed hour. These additional rates are known as tier rates. The higher multiplier rate factor is necessary not only to cover high tech equipment purchase costs, and their faster replacement costs, but also on-going software upgrades of said equipment, on-going high end HD training, subscription fees and also Management and Service Advisor time that must be spent with the client. Management’s and Service Advisor time is consumed by educating the client as to the diagnostic process to take place, as well as keeping the client informed, and ensuring client confidence in the shop is maintained during and after the process. Until the client

HD vehicle mix of the shop is measured and understood; (“If you can’t measure it, you can’t manage it”) an interim guideline of a minimum of 25% of the labor hours billed through the bays should be going out at the diagnostic rate.

When shop management understands who they are selling to, how to implement the new strategy and measure, document and sell these tier rates with client satisfaction, the contribution to gross profit of the shop can be tremendous. When gross profit is enhanced, net profit is enhanced. Management expertise now drives future growth of the heavy duty business and the future bottom line of the business.

Are you up-to-date in your Management expertise to embrace the new profit potential available in our heavy duty industry?

THE DEMYSTIFICATION OF M&A – PART 1

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 THE RULE OF THREES. Oftentimes, life gives us three choices. When we were kids, it was Rock, Paper, or Scissors on the playground. As we got older, perhaps it was Dribble, Pass or Shoot on the basketball court, or Call, Raise or Fold at the poker table. When owning a heavy duty collision repair company during a time of potential consolidation, the choices are Exit, Expand or Exist.

This article is the first installment of a step-by-step, hands-on guide to the first two choices (we’ll assume that simply existing doesn’t require a lot of coaching). Subsequent articles will explore some of the motivations fueling mergers & acquisitions (“M&A”), the typical M&A process and flow, and the best practices from both a seller’s perspective (i.e., “The Exit”) and the “Buy Side”. If you are contemplating the sale of your business, or are considering an acquisition-based growth strategy, you won’t want to miss this column.

As a passionate student and practitioner of investment banking and corporate finance for over 20 years, getting a platform to share my thoughts on heavy-duty collision repair M&A is both exciting and a big responsibility. The Wall Street Journal has at least one M&A headline in every edition. Numerous academics have studied the effectiveness of M&A. It’s even sexy enough to make movies about it – think Michael Douglas as Gordon Gekko or Richard Gere as Edward Lewis. My goal is to demystify M&A; I hope the following articles help you gain a solid understanding of M&A best practices and prepare you for a deal whether you’re growing your business through acquisitions or you are looking to monetize your retirement by selling your business to a larger operator or private equity group.

As you read through these articles, please feel free to send me feedback, ask questions or suggest future topics. Thank you in advance for your trust.

DEFINITIONS. Before we have a history lesson, let’s agree on some definitions (for the purists and deal attorneys, I acknowledge that some of the following definitions may be oversimplifications – but they are adequate for these columns).

The “A” in M&A – Acquisition – typically refers to one company (the “buyer”) buying substantially all of the assets or stock of another company (the “target”), such that the buyer takes full control and the seller has little or no continuing interest in the business.

Acquisitions of small companies (i.e., US$25M or less in enterprise value) frequently are “asset deals”, which refers to the purchase of a target’s tangible (i.e., equipment, land, computers, fixtures, inventory, receivables, work in process, etc.) and intangible (i.e., brands, patents & trademarks, websites, phone numbers, customer lists, and, as much as possible, the company’s reputation) assets. Because the company/corporation is effectively stripped of its assets, but the legal entity itself is not acquired, the seller will continue to own the legal entity that sold the assets. This is notable because the legal entity will continue to retain any assets that are not purchased, as well as all of the liabilities not assumed by the buyer.

The alternative, a stock deal, is easier to understand because the purchaser is simply buying the shares of the corporation (or in the case of a limited liability company, the member interests). In a stock deal, the buyer gets all of the company’s assets as well as all of its liabilities. It’s just like buying shares in 3M through your online stock broker – except you would need roughly $120 Billion to buy all of the approximately 600 million shares outstanding.

Typically, all of the target’s stock or assets are included in a transaction. It is not uncommon, however, for a buyer to take a partial interest in a target. These partial acquisitions of stock can be “controlling”, wherein the buyer has majority voting rights or influence over key operational and strategic decisions, or “non-controlling”, wherein the buyer does not have enough ownership to make decisions unilaterally. Oftentimes non-controlling acquisitions are made by “financial” buyers that provide capital (i.e., money) to a company to be used to fund growth (i.e., acquisitions), in exchange for a minority share of the company’s future profits. On the other side of the buyer coin are the “strategics”, which are companies that generally are considered competitors or peers of the target company.

Non-controlling deals also occur when a strategic takes a minority ownership stake in a smaller company in the same or adjacent industry. This will occur when the larger company wants to prevent one of its competitors from acquiring the target, while not wanting to acquire the entire target (perhaps due to lack of money, or uncertainty surrounding the target’s business model, or countless other reasons).

The ”M” or merger, on the other hand, refers to a combination of two companies, wherein the owners each contribute the assets and liabilities of their respective companies to a new legal entity (let’s call it “NEWCO”) and then each owner receives an ownership share in NEWCO in proportion to the value that each seller contributes to NEWCO. For example, if one company contributes $6 million of assets to NEWCO, and the other company contributes $4 million, then the first owner will own 60% (6/(6+4)) of NEWCO. In a typical merger, the companies are combined and the management teams meld together to run NEWCO, with the management team from the company with the highest ownership in NEWCO getting ultimate authority.

There are other types of business combinations, including ESOPs (wherein the employees own the company) and Joint Ventures (wherein two or more parties invest into an entity and share in its risks and rewards, but the investors maintain separate identities), as well as trendy terms such as “acquihires” (which occur when an acquired company’s assets are primarily employees).

HISTORY. M&A has been taking place as long as there have been companies. Notable mergers occurred as long ago as the 1700’s in India and Italy. In the United States, the first big merger wave hit during a 10-year period beginning in 1895 when over 1,800 companies were consolidated into others. In 1900, the value of all M&A equated to 20% of the United States’ Gross Domestic Product (compared to 3% in 1990).

Merger activity can be measured broadly (at the “macro” level), such as the above trends, as well as at the “micro” level (e.g., individual industries). At the macro level, M&A activity is influenced by governmental policy, economic trends, interest rates, demographic shifts, etc. At the micro level, it’s primarily strategic reasons that drive significant M&A. For example, industries that exhibit certain characteristics (e.g., profitable, sizeable, easy to understand, etc.) tend to get “consolidated” – wherein a couple of large, dominant players evolve as the result of numerous acquisitions of their smaller rivals or peers.

The next article will examine the motivations fueling M&A activity as well as provide a primer on the typical steps in an M&A deal. Until then, happy dealing!

Road to Green: Culture Change? You Can’t Make Anything Idiot-Proof Because Idiots are so Ingenious

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HD shop owners and managers are starting to realize that the reliability and quality of their products and service processes are vital to a successful business. Everyone is also realizing that today’s world is changing faster than ever before. Technology developments, restructuring and mergers, new ideas about management concepts are all putting pressure on owners to change and be agile. The HD industry is acknowledging that HD shop and parts supplier business owners clinging to same old structures will ultimately lose out.

Everyone is seemingly looking for the perfect solution with the right business processes to secure their future. Well the answer to that task is one single, make it right, solution does not exist.

Many studies have shown that the main causes of performance problems of staff and Management are actually in the business structures, systems and culture within which these people work. Seldom is the culture of the business properly examined by Management. It is a fact that if Management put good people in bad systems you will get poor performance, however, it is also a fact that 20% of the staff works against Management to implement change within their structure and system. They are very uncomfortable with the introduction of new ideas and new processes. They only know and want to remain within their comfort zone environment of “same old, same old”.   They just don’t realize that if we want things to stay as they are, things will have to change. So to tackle the problems of the HD shop or store, Management tries to make things “idiot-proof” hoping to improve the businesses overall performance by reorganizing or introducing new training and development programs. These moves create change, but when this is done without understanding the HD shop or store’s unique culture, owners will in fact solve one problem while without knowing it, create others. The stress level of the business actually increases and then Management in turn says the reorganization and new programs don’t work.

It must be clearly understood that within the HD aftermarket, we operate a very complex business. Management must acknowledge quick fixes don’t work, don’t exist and is totally unrealistic thinking. Business processes and change concepts must be tailored around the culture of the business itself. To achieve this takes time and if Management has ignored the business “change” required for years, or never understood the culture of the business they manage, he/she is going to be disappointed with any training or development programs they participate in. Implementing culture change and fine tuning business processes in the HD aftermarket takes on average 2 to 3 years and it is for this reason many HD aftermarket owners and managers are struggling today with their business. They failed to embrace change. They also failed to involve their staff and understand the Chinese Proverb “Tell me and I’ll forget, show me and I may remember, involve me and I’ll understand.”

The solution is not simple but it must start with ownership undertaking a complete “inventory” study of its personnel and management culture to determine what is going to be required to move their specific business forward. Once this is done, then and only then, the right training and development processes can be sought out. Slow down and really think about your business. What do you have now, what do you want it to be and whom are you going to involve?

Bob offers personal business coaching and on-going business development and training for Heavy Duty mechanical shops focusing in on building NET income. He can be reached toll free at 1-800-267-5497 or email him at  greenwood@aaec.ca   

What’s New in Heavy Duty Welding, Part 2

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Last month, I-CAR started a discussion of welding requirements for heavy duty collision repair. Brian Wasson, Welding Program Manager at I-CAR, presented ‘What’s New in Heavy Duty Welding’ at the HD Forum in Fort Worth, Texas. The first step is identifying the materials and preparing the working environment and tools. Next up is the actual welding process.

 

Preparation is key. Don’t forget to wear the proper safety gear, including a helmet with proper lens shade, respirator, heat-resistant jacket and pants, gloves, and boots. Did you know that inhalation of welding fumes can lead to Parkinson’s disease, and viewing the UV rays from a weld arc without proper shading causes “flash burn,” which is like a severe sunburn of the eyes?

 

Once the correct welding machine is identified and set up and the right electrode wire is selected to match the material being joined, you can move forward on the steps needed for a proper weld. First, perform test welds on the sample material; most use scrap from the part being removed. The tests must duplicate the actual weld you are going to perform in material, orientation and application. Inspection of test welds ensures the setup and method are correct. Tests typically include visual inspection and bend and break destructive tests. However, on certain weld joints it may be required to perform magnetic particle, X-ray, or dye penetrate inspections. These advanced tests are typically required where hazardous material is being transported; however, there may be other applications, too.

Documentation of test samples and results should be added to the repair file to demonstrate that proper steps have been taken. This one simple step can save headaches down the road.

How can you make sure you and your staff have the skills and knowledge to perform those repairs? We will discuss welding training options next month.

 

Road to Green: Is Your Business Too Big to Make Any Money?

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One of the critical elements that independent heavy duty shop owners must realize is that there are times when the shop can be too busy to make any money.  It becomes dangerous when this is a constant.  Management seems to concentrate more on getting more clients rather than concentrating on making “profit” from the clients it already has.  Everyone in the shop is running around trying to get the repair in and get it out, to insure the needed cash flow hits the bank account “today”.  This is a sure signal that the business is heading for trouble.

The most important profit on a sale comes from the billed labor component, consequently ensuring the correct number of labor hours billed per vehicle service, based on the manufacturers recommendations is critical to the shop’s bottom line.

You are in the “knowledge” business, not the “commodity/volume” business therefore your responsibilities to your clients go a lot further than just “repairing what they ask for today”.

Consider that the average client really is unenlightened regarding proper service and maintenance of their current vehicle because they are too busy keeping their rig working.

Consider that to properly advise and educate the client, the front counter person should be aware of how many miles are driven each year, how the vehicle is used (are they stuck in gridlock areas a lot, northern climate, southern climate usage), whether the client owns or leases the vehicle, what the client’s expectations are regarding the vehicle, and the service history of the vehicle.

Consider how many labor hours billed a year the vehicle needs to insure it is in safe, reliable and operating efficiently, at all times, throughout the year, for the client.

It is the front counter person’s job to slow down and clearly communicate to the customer/client the needs for the vehicle based on the manufacturers recommendations. Your heavy duty shop is the messenger of the news, not the maker of the news.  When the shop is “too busy”, everyone says there is no time for this.  It sounds like the shop is working hard and not necessarily smart.

Do this test to see how you are faring out.

1).  Take a random 5 to 10 of your client base that you have had for at least three years, where they still have the same vehicle, and examine the past two years work done on each client’s vehicle. Add up the total number of labor hours from the work-orders/invoices that was billed on each vehicle during those two years.

2). Calculate the total miles driven by each client over that service period (ie. 235,000 miles which works out to 117,500 per year) and record what mileage interval was the vehicle at when the vehicle came into the shop.

3). For the same period of time, look up the service requirements that were recommended by the manufacturer for the same mileage driven and service interval, and add up the total minimum labor hours the manufacturer recommended that should have been spent to ensure that vehicle was properly looked after.

How did you make out?  If you are in the ball park, (10% difference) well done it looks like your system is working and you have a good relationship with your clients.  However, if you are severely short in billed time (you did not get all the work), it may be time to slow down and examine your internal system of how you are dealing with your client base.  Do you counsel them, or do you sell them? Do you have a trustworthy relationship with them?  Is there room for improvement?        

Now move on to the second phase of the test.

Take the same vehicles and examine what the manufacturer recommends for the next two years coming up based on the miles the client is going to drive. (Use the history here).  Calculate the available labor hours to be billed.   Now be very aware of your progress with these clients when they come in.   SLOW DOWN.     Take the time to educate the client.  Show them what the manufacturer recommends by printing out the appropriate service intervals.  You are the messenger here, that’s all. Based on your expertise, and understanding of the client, are these service recommendations a good investment for the client to make?  If so, point out how the relatively small investment to maintain the vehicle makes sound financial sense to the client rather than spending a substantial amount of money, or increasing their debt load, to buy a new vehicle.  If it is not a good investment, counsel the client that it is time to replace the vehicle, and you would be happy to advise them based on their needs.

Your clients are usually too busy to look after their own vehicle. Set up the system to manage these high-tech machines for them. Many HD vehicles are outright abused by the client because of ignorance of the vehicle service/maintenance requirements the manufacturer recommends. Take the responsibility to insure your client base gets an excellent return on their investment.  When you do, I’m confident you will also see the bottom line grow.

When you accomplish the right level of labor service with these clients, now carry on and make it a system of doing business with the rest of your client base.

It’s up to management to make things happen.  It’s up to management to make sure the right system is in place. Take your time, and be patient with yourself to see this through. Give yourself a year of thorough dedication to make this happen.  If it was easy everyone would do it, but the best thing is that your clients will notice the personal attention you are giving them, and that makes you distinctly different in this heavy duty industry.  Being distinctly different gets people talking positively about your business.

Some people dream of success, while others wake up and work at it each day.

       

What’s New in Heavy Duty Welding?

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Whether you are repairing a bus or the latest high-performance car, a medium or heavy truck, the construction of that vehicle probably looks different from its counterpart from 20 or even five years ago. The materials used to build the frame have moved from the mild steel we all know to new construction like High-Strength Steel, Ultra-High Strength Steel, Aluminum and more to come. Thanks to the influx of new materials that require less heat, GMA MAG (Metal Active Gas, commonly referred as MIG) welding has become the automotive industry standard for repairs.

How can you make sure you and your staff have the skills and knowledge to perform those repairs? Organizations like I-CAR and equipment providers provide training for technicians to understand how welding has changed with the introduction of new materials. Brian Wasson, Welding Program Manager at I-CAR, recently presented ‘What’s New in Heavy Duty Welding’ at the HD Forum in Fort Worth, TX. We will cover the topics he discussed over the next few months.

The first key to a proper frame repair is knowing what you are repairing. Make sure you identify the material accurately before starting the repair. That information will help select the right tools and settings on your welder to ensure the best repair possible. These include:

  • Environment preparation
  • Welder selection
  • Electrode wire selection
  • Welder settings
  • Surface preparation
  • Test weld verification

Once your materials are identified and your preparation is complete, you can move on to the welding process. We will discuss that next month.

 

METTON® Makes a Difference in the Repair Process

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From metal and plastic repair, to sanding, paint finishing and truck clean-up, 3M has the products and repair processes for heavy duty truck repair. One of the materials commonly used in heavy duty trucks is METTON® LMR (Liquid Molding Resin), a tough and durable engineering plastic material used to produce large or thick molded parts.

However, identifying and repairing METTON® as a substrate requires a different approach than fiberglass (FRP) and sheet molded compound (SMC). 3M Automotive Aftermarket Division now offers Standard Operating Procedures (SOPs) for repairing this material.

 What is METTON® and Where Is It Used?

Light-weighting is a process that is a high priority for heavy duty truck manufacturers. Efforts to reduce vehicle weight are driven by Corporate Average Fuel Economy (CAFÉ) standards and competition among vehicle manufacturers. Innovative technologies and materials have contributed to the ultimate goal of delivering increased fuel efficiency to the heavy duty truck customer.

One area that has received significant attention has been the weight of exterior body panels. Body panels have gotten lighter due to design, material and manufacturing improvements over time. One material that has increased in use for exterior truck body panels is METTON® LMR. METTON® is produced using a closed mold process which helps deliver more consistent parts with tighter tolerances, improves manufacturing cycle times and enables increased design freedom compared to other materials and processes. This material is lighter than traditional fiberglass and SMC. Additionally, it’s more rigid and impact resistant, especially in colder climates, than many plastics such as thermal plastic olefin (TPO). Many exterior truck body panels today are being produced using METTON® including hoods, roof and chassis fairings, bumpers and fenders.

Identification of METTON®

METTON® is black in color and is more rigid when compared to other plastics like TPO. When grinding or sanding during the repair process, METTON® does not produce a cloud of airborne, itchy dust like FRP and SMC panels as it does not contain fiberglass fibers. METTON® will grind and sand more evenly compared to other plastic materials. For example, METTON® doesn’t smear and flow as much as TPO can during grinding and sanding operations. Another indication of working on METTON® is the very distinct, unique odor that is produced when grinding or sanding this material.

Repairing METTON®  

Now METTON® has been identified, how is this material repaired? 3M has developed a Standard Operating Procedure for a Backside Reinforcement Repair and a Cosmetic Repair for composite materials that includes FRP, SMC, and METTON®.   Repair procedures for METTON® are surprisingly similar to the repair processes body technicians use for SMC and other plastics. The most critical difference between repairing METTON® and SMC is the use of an adhesion promoter such as 3M™ Polyolefin Adhesion Promoter. Adhesion promoter is necessary to increase the bond strength between the repair adhesive and the surface of the METTON®. This should be a standard practice when using adhesives on other plastics such as TPO and Polypropylene (PP) as well.

To date, 3M AAD offers 37 Heavy Duty Truck Standard Operating Procedures (SOPs) online at www.3MCollision.com/HDTruck. From metal, plastic and composite repair, paint finishing and truck clean-up, 3M has effective systems, products and repair processes. There are, of course, many factors and variables that can affect an individual repair, so the technician and repair facility need to evaluate each specific application and repair process, including relevant vehicle, part and OEM guidelines, and determine what is appropriate for that repair. When repairing heavy duty trucks or commercial vehicles, repair professionals can feel confident their repair is done professionally and efficiently using the 3M AAD Standard Operating Procedures. These procedures will help consistently produce quality, time-proven results for any of collision repair needs.

For more Standard Operating Procedures, visit www.3MCollision.com/HDTruck.

3M Automotive Aftermarket Division Keeps the World Moving

3M automotive products keep the world on the move, with innovative solutions for building, repairing and maintaining vehicles. From the collision repair professional to the individual vehicle enthusiast, people around the world trust 3M products to protect, repair and keep their vehicles looking showroom new. And our commitment to this industry extends beyond product performance to a careful stewardship of the world’s resources and environment. Serving the needs of our customers has made 3M a trusted leader in vehicle care and repair, and we are dedicated to earning that trust each and every day.

For more information, contact 1-877-MMM-CARS, contact your local 3M Distributor or 3M Sales Representative or visit the website at www.3Mcollision.com. Follow 3M AAD on Facebook at

www.facebook.com/3MCollision and on twitter @3M_Collision and Instagram @3MCollision.

About 3M

At 3M, we apply science in collaborative ways to improve lives daily. With $30 billion in sales, our 90,000 employees connect with customers all around the world. Learn more about 3M’s creative solutions to the world’s problems at www.3M.com or on Twitter @3M or @3MNews.

Road to Green: Office Time Each Day is Necessary

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Heavy Duty shop owners are not spending at least 2 hours a day of uninterrupted time working in their office “on” the business. The main reason for this is because they are understaffed and owners are forced to work “in” the business. Management should prioritize to obtain the right staffing levels so the right amount of time each day can be spent “managing” the business in order to move it forward. The fact is you cannot maximize shop productivity and net profit of the shop when it is understaffed.

The question arises as to “what” the owner or manager should be doing in that office each day. Here are some guidelines for you to follow:

  • Calculate the average billed hours per invoice each day, each week and each month and compare to the objective. Come up with a plan to resolve any issues.
  • Calculate what the right labour rates that should be in place for maintenance,       diagnostic, re-flash, and fluid servicing. Check that the time is being captured properly on each job and it is billed accurately.
  • Calculate the total “site” efficiency number each day, week and month. Determine exactly what the issue is if the right site efficiency number is not a minimum of 75% with a target of 80% and draw up a plan to resolve this issue.
  • Calculate what the right HD vehicle count each day should be that is required for your operation to achieve the correct site efficiency percentage and the billed hour objectives.
  • Calculate the potential diagnostic hours available in your shop and review that the objective is being achieved and if not find out why.
  • Calculate weekly each technician’s hourly wages paid based on actual hours that were billed out on that technicians behalf. Draw up a plan to resolve any issues.

These are a few of the things that the HD shop owner or manager is responsible to measure and guide their team to achieve. All the items listed affect net income.

Are you working “on” the business or “in” the business?

Road to Green: Are You Focused on the Future?

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Everyone acknowledges the rapid changes taking place in the Heavy Duty Aftermarket but are you addressing the following?

  • The new business measurement which includes revenue breakdowns involving a minimum of 3 labor categories
  • Your shop site efficiency measurement weekly and monthly
  • Your average billed hours per R/O weekly, monthly and year to date
  • Your sales mix between aftermarket and dealer parts
  • The total hours of training completed for each tech for the year
  • The actual cost per billed hour for the shop on a monthly basis with a year to date average

Those are just some basics as the new aftermarket demands new awareness which in essence means many HD owners must relearn their business to maximize net income. It has been proven that the average HD shop is missing on average $35,000 net profit per bay per year out of the current business coming through the door. The question that must be asked is “where is it in your shop?”

The average HD has a lot of work to do to understand the new aftermarket that is rapidly arriving and how to implement the changes required and building a solid Team culture responsible for the implementation.

If you are an HD shop owner who is not addressing the future and determined to hold on to the methods used over the last 10 years thinking you will be OK then ask yourself this question: Do you take out a minimum of $150,000 per year for my immediate Family, having the highest paid technicians in the marketplace with exceptional benefits and the shop still nets a minimum of 10% of gross sales? Will that remain valid for the next 3 years? If so, good for you. If not then it is time to rediscover the business opportunities that are in front of you today. Enrol yourself and your manager together into an HD shop specific Business Course. Procrastination is not an option.