There is a huge shortage, which effects franchises costs in labor, availability of labor and quality of workmanship. For instance 80,000 Americans are in Oil Lube Facilities alone and over 50% are franchised lube centers. Companies like; Jiffy Lube, Lube Pros, Grease Monkey, All-Tune and Lube, Oil Can Henry, etc.
Automotive maintenance franchise issues continue as technician shortages increase. We are seeing issues in the automotive aftermarket service sector, which makes it tough on Automotive repair and service franchises. This effects mobile auto service companies as much as fixed site operations. Mobile unit automobile repair teams, which require two technicians per unit on the road for personal cars and up to 4 technicians for fleet on-site oil changing and Heavy Equipment are feeling the pain as much or more than large automotive repair stations. Car Dealerships entering the auto lube business too are feeling the pinch and work hard to maintain enough mechanics on staff and still train them to the latest models and all their OEM idiosyncrasies. As a matter of fact Car Dealership franchises employee 265,000 Americans as technicians to repair warranty work and do routine services. And they soak up annually 35,000 new technicians per year and that is just to stay even with the attrition rates and expansion of the largest Car Dealership Consolidators.
Think about it; United Auto, Auto One, Lithia, CarMax, AutoNation, Sonics Automotive Group, alone account for thousands of dealerships and growing and they also want a piece of the oil change action as Manufacturers are going to specialized oil to help meet emissions rules from the EPA, thus branded oil such as BMW Oil, which is required in their operations manuals. And of course they do not sell this oil to Oil Change Companies not affiliated over their counters. Then there are many companies which do oil changing which also do other services companies like, Midas Muffler which is one of the oldest franchises still running in the US. And Minekie Muffler (SP? Silly name) as well as all the Tire Companies, which have added oil change services. And let’s not forget the Master Grand Daddy, largest company in the US accounting for 9% of the total GDP; Yes, I am speaking of Sam Walton’s creation, if you get a chance go read; “Made in America” the story of Wal*Mart and incase you think that is not some real competition, you might wish to know that they are now the largest automotive repair company now due to their auto service bays at the Super Wal-Marts.
All these issues make getting trained technicians tough and the gap widens, which effects your performance, customer service, increases risks of mistakes, raises your cost of labor and hurts your completed operations insurance costs. As if there is not enough costs with all the other regulations affecting your bottom line? It is a challenge to find labor which requires a skill such as an auto technician and yes unlike other parts of the auto sector such as overhaul and repair where there is the greatest shortage and body shops which requires knowledge and skill with an even bigger shortage of qualified technicians.
The oil change business is not without significant hardships in recruiting and maintaining labor as competition lowers costs and labor needs to be cut due to workmen’s compensation insurance and benefit costs and insurance and regulations and lawsuits concerning slip and fall and work place injuries. So where can you find the right people for the low cost necessary to stay in business with all these dramatic increases in costs and competition? Well ASE has some good advice if you are looking for technicians on their association website. Military Hobby Shops is another suggestion. As costs keep going up for quality and skilled labor, how much should you pay in your oil change franchised outlet facility? Here are some thoughts;
A recent survey by the Automotive Aftermarket Industry Association (AAIA) showed for every 10 who retire as auto technicians only 2-3 start. The attrition rate is dangerous. Similarly the military is soaking up many folks and even the US Navy is having difficulty staffing all the ships. When Motor Age Magazine took their survey they saw some shocking tell tale signs; 37% of automotive technicians across the board said they would not still be in this line of work in 5 years from now, which is not too un typical of the fact that Americans change their jobs every 3.2 years on average, 50% that is or that teachers only 50% stay with it over 5 years? Scary thoughts, but those statistics are real, Source: American Demographic Magazine. If you have a brand like Castrol, then they give scholarships and can assist in providing labor at entry level, but if you are paying under $8.00 per hour expect massive turnover. Under $15.00 per hour expect triple and five times less turn over, which is difficult still in that the average oil change worker is only four to seven months on the job? Starbucks with all it’s benefits is 50% per year, most Quick Service Restaurants are 75% per year.
With the increased insanity of over regulations and incessant frivolous and BS lawsuits from ambulance chasing legal terrorists, it is hard to say if this trend will stop. Unless we get some additional tort reform it will be a tough row to hoe. Due to the insurance costs and increased labor associated costs; then it will continue to be a challenge Oil Change Facilities with even the best demographic locations. If you are going into the oil change business; stay lean and mean, because theses challenges are threatening your profits, which could leave you with little chance of a reasonable ROI.