Learning Without Scars
From Machinist to Executive: Technician Training, Retention, and Industry Evolution
Ever wondered what it takes to rise from a machinist to an executive in the heavy equipment industry? Join us as we chat with Jim Dettore, whose career journey from off-road truck customization to executive management is nothing short of inspiring. Jim shares his insights on the evolving landscape of technician training, recounting his experiences with Caterpillar dealers and his acquisition of Fault Analysis Services. Learn how his initial foray into training at Hawthorne Machinery set the stage for his later success.
Tune in as we address the pressing issues of technician retention and training in today's competitive market. Jim shares candid reflections on the past, where training was scarce and growth opportunities were minimal, contrasting it with the current success stories of dealerships that prioritize continuous improvement and professional development. Discover why reintroducing vocational classes in schools and maintaining clean, well-organized shops are pivotal in attracting new talent, and how the industry consolidation over the past two decades has shaped today’s dealership landscape.
In our conversation, we dive into the shifting priorities of younger technicians who seek work-life balance and a supportive workplace culture. Drawing from experiences at places like Home Depot and structured apprentice programs at dealerships, Jim offers valuable tips on creating a favorable work environment and incentivizing training and retention. Explore the innovative approach of platforms like Heave and the critical role of mentorship in fostering growth and understanding. Don’t miss out on this engaging episode filled with practical advice and heartfelt gratitude for the mentors who make a difference.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Ever wondered what it takes to rise from a machinist to an executive in the heavy equipment industry? Join us as we chat with Jim Dettore, whose career journey from off-road truck customization to executive management is nothing short of inspiring. Jim shares his insights on the evolving landscape of technician training, recounting his experiences with Caterpillar dealers and his acquisition of Fault Analysis Services. Learn how his initial foray into training at Hawthorne Machinery set the stage for his later success.
Tune in as we address the pressing issues of technician retention and training in today's competitive market. Jim shares candid reflections on the past, where training was scarce and growth opportunities were minimal, contrasting it with the current success stories of dealerships that prioritize continuous improvement and professional development. Discover why reintroducing vocational classes in schools and maintaining clean, well-organized shops are pivotal in attracting new talent, and how the industry consolidation over the past two decades has shaped today’s dealership landscape.
In our conversation, we dive into the shifting priorities of younger technicians who seek work-life balance and a supportive workplace culture. Drawing from experiences at places like Home Depot and structured apprentice programs at dealerships, Jim offers valuable tips on creating a favorable work environment and incentivizing training and retention. Explore the innovative approach of platforms like Heave and the critical role of mentorship in fostering growth and understanding. Don’t miss out on this engaging episode filled with practical advice and heartfelt gratitude for the mentors who make a difference.
Visit us at LearningWithoutScars.org for more training solutions for Equipment Dealerships - Construction, Mining, Agriculture, Cranes, Trucks and Trailers.
We provide comprehensive online learning programs for employees starting with an individualized skills assessment to a personalized employee development program designed for their skill level.
Aloha and welcome to another podcast with Learning Without Scars. This is one of the podcasts that we do in a series called the Clouds Are Upside Down, and that's trying to characterize that we want to look at a particular area from a different perspective. And today we're joined by Jim DeTore, who's a very significant expert in the world of technicians, having been one himself for a long time, but he runs a business called FAS I think FAS Technology or Services I'm getting it wrong, but that's fault analysis services, which is a very specific kind of education. So I'd like to have Jim, who's straddled both worlds, get into a discussion with me about where it's been and the challenges with that model and what Jim sees the future looking like from his perspective. It'll be different than everybody, but please, as with every other of these where we're looking at things in a different manner, have an open mind and think about it. Jim, welcome, my friend.
Speaker 2:Thanks, ron, good to be on again. Appreciate you having me.
Speaker 1:This is going to be a fun fun. When did you start in this world, in the world of equipment dealerships?
Speaker 2:ron, I'm going to say it was probably 84 85 around there okay, so basically just under 50 years um, yeah, closer to 40 okay, say 40 on arithmetic that's okay and and what.
Speaker 1:Who did you start with and what was your job when you started?
Speaker 2:well, I was working at a, an off-road center rough country off-road center in alcohol in california and uh, I was lifting trucks and customizing trucks. And I had a roommate that was a heavy equipment mechanic for a large general contractor in Southern California TC Construction is the name of it and he said they were looking for mechanics, looking for technicians. I had some tools. I didn't have any heavy equipment experience and had some mechanical aptitude. So I went over there and applied and they hired me and I started off right away as a kind of an apprentice, if you will. They didn't have any type of apprenticeship program or formal training or anything like that, but working with senior mechanics doing repairs and learning to service equipment and maintain it and eventually troubleshoot it, always had a pretty strong machining background from years and years of metal shop and junior high and high school. So I did a lot of machine work as well and that kind of got me kicked off.
Speaker 2:I worked there for I don't know around two and a half three years maybe, before I went to another contractor just across the there was a airport that separates the two of them, gillespie field in San Diego and uh, they were a different type of contractor.
Speaker 2:The first one was underground utilities, so sewer water and storm drain, so mostly excavators, wheel loaders, backhoes, trenchers, trucks and things like that.
Speaker 2:And then the other company was Cass Construction and Cass was uh was primarily a dirt mover, so they had scrapers and big trucks and big dozers and so uh kind of got to get my feet wet on on both ends of the construction equipment a spectrum, if you will and I worked for Cass for uh again for about two, two and a half years before I was approached um by a close friend and mentor, bob Bowman, and Bob said man, you need to come to work for the Caterpillar dealer. So I kind of got things in play and in motion and ended up interviewing with him and hired on at the Caterpillar dealer in San Diego, hawthorne Machinery, as a machinist in the hydraulic shop. That's kind of where I got my start in the Caterpillar world and spent about 25 years with five different dealers working different dealers across the US at all different levels, from machinist to service technician to field service to service management, technical services management and then finishing out at a dealer in Chicago with the executive management. So kind of how all that played out.
Speaker 1:And when did you start FAS or when did you get involved with FAS? Let me say it that way so the original owner and founder.
Speaker 2:He founded it in 02 and taught for 10 years and was teaching in Ghana, West Africa, at 72 years old.
Speaker 1:Wow.
Speaker 2:And had a heart attack and didn't make it home. So at that point his widow, Candy Davis, was trying to sell the business, but there were some problems with being able to sell it Court issues, copyright things, things like that, Previous marriage family members and things but we ended up purchasing it in late 2014. So just about coming up on 10 years ago now.
Speaker 1:So, of the 40 years, 10 years has been in training and 30 years was in various functions in different locations, as a technician or involved in repair and maintenance of equipment.
Speaker 2:So it's funny. It's funny you ask that because the training, I think, actually started, ron, when I was with Hawthorne. What first got me in a field service truck was they had taken on the Grove crane line from Johnson tractor in Riverside and, uh, I ended up becoming the crane guy and they took on that, that Grove crane distributorship and the guy that they had heading everything up, real tall guy I think, it was like six, eight or six, nine. His name was Scott Sim and uh, say that again. So he, uh, he asked me if I wouldn't mind. You know I was interested in the cranes. They were new and exciting. Nobody else wanted anything to do with them, you know.
Speaker 2:So they trained me up real, real heavily on that, went back to uh, to shady Grove, pa, several times for classes and and what it ended up being was he couldn't, it was difficult to sell the cranes outright. So what his strategy was was to rent them, release them, rent them down and then potentially convert to a sale. But, uh, but the cranes. Then they started having some pretty sophisticated what they call load moment indicator systems in them that show you the weight and the radius and the boom angle and things like that, and the load charts had changed significantly. From the cranes of old that were real heavy duty, an operator could tell when it started getting light or started tipping, and now they're mostly based on structural strength and you can't tell when it's going to break before it tips.
Speaker 2:So I ended up, um, he asked me multiple times hey, I've got a crane rental. We need you to go out in the field and teach this customer how to set this crane up, how to operate the LMI. And I did that oh, I don't know 75, 80 different times. Um, sometimes it took me to some really cool places and met some really neat people and saw some really interesting things, but it was always a group of people, never just one operator, that I would train. So that's kind of where the training started. And then, um, when I got out of a truck in, uh, in about I think it was 98, I took a technical trainer job with Michigan cat and that's where I first started getting into training and learning all the aspects of it.
Speaker 1:So well, let me, let me stop there. So at hawthorne, before the grove crane came in was roughly how many years?
Speaker 2:with hawthorne before the grove distributorship was probably four to five years in that area.
Speaker 1:there probably Okay, so let me say 10,000 hours, just to get a little bit picky.
Speaker 2:Okay.
Speaker 1:Did you go to any technical schools during that term?
Speaker 2:My time with Hawthorne. Oh, they trained the living daylights out of me, but I was also a squeaky wheel. They made the mistake of no, no.
Speaker 1:But how many weeks or how many hours? We got 10,000 hours. We got 250 weeks. How many weeks would you say you had been trained at Hawthorne in that five years?
Speaker 2:Well, I could say, hours wise, it was 120 hours a year minimum.
Speaker 1:Okay, so 500 hours of training in 10,000 hours of time, that's 2,000 hours a year for five years, excluding overtime, taking out vacations, that kind of stuff. I'm just trying to put into context. Training, what do you think it is today?
Speaker 2:I think it's a whole lot lower than that.
Speaker 1:I agree, I agree. So there's the first perspective that how did we get to the place? That we think somehow technicians can walk into a shop and, by breathing the air and talking with the other guys, get to the level of skill that you were at? With 500 hours of training over five years, I think that's impossible.
Speaker 2:It's uh, it takes a certain type of individual to make that technician really something special with that little amount of training.
Speaker 1:So what you're pointing out there? The first thing is the leadership on the floor of shop technicians is critical.
Speaker 2:Absolutely.
Speaker 1:Has that always been the case?
Speaker 2:I believe so. But let me preface it with this though, ron, when I worked at Hawthorne, that training that I got when they interviewed me they told me we're going to train you, we'll give you lots of training. The reality was that most everybody at the dealership they were lucky if they got one class a year. So those guys stayed in those positions without much personal growth for years, decades sometimes. Much personal growth for years, decades sometimes. So now we see some dealerships with robust training programs and the ones that are more robust, they recognize several things Technician retention, advancement opportunities as well because they're growth-oriented and continuous improvement-oriented and they pass that on to the technicians.
Speaker 1:One of the things. That's interesting. I knew Tom Hawthorne quite well and prior to you being in the dealership, tom was to me one of the most farsighted individuals in dealerships in that generation I'm talking about the 60s and the 70s and there were very few men like Tom. He was very special. So I'm going to translate that now today. So I'm going to translate that now today.
Speaker 1:The generation of leaders in the equipment world that we have today. Many cases they're second generation and in some cases they're third generation. In almost all cases the leadership transition, the transfer of leadership from one generation to another, has been delayed. We've got a lot more executives that are in their 70s still running things, some in their 80s, and that used to be very rare in the old days. It's very common today. So what I'm trying to lead up to is if I'm coming out of high school or I'm in high school. First of all, you talked about having shop in your high school. They don't have shop today in high school. That's sad. Oh, it's horrible. They don't have like I had. We had health and we had home cooking and all kinds of different things.
Speaker 1:Those are, those are gone home economics yes, the big one yeah, exactly, I wish the hell I'd had typing with the way that the world has turned out. But so the the young people coming out of high school don't know much about our industry.
Speaker 2:I agree.
Speaker 1:And I don't know that. There's many dealerships that go into high school career day or work with the human resources people advisors to students as to what their careers could be and they've got some very good advisors now. But if they don't know what the job is or they don't know the company, that's nuts.
Speaker 2:Is that something?
Speaker 1:that we need to do more. I mean go younger to try and attract people to us.
Speaker 2:Well, Ron, a lot of it starts with putting those classes and that curricula back in junior high and high schools. I mean, I was running a lathe in second semester of seventh grade. I was 12 and a half, 13 years old.
Speaker 1:Yeah, that stuff isn't out there at all anymore.
Speaker 2:For the most part it's not. We train for multiple construction equipment dealerships, multiple brands, across the entire US. The ones that we see that tend to do the best in pretty much all of their service-related metrics are the ones that have robust training programs. But they're also the ones that have recruiters on staff that go to the career days and invite the high school students to come in and and walk through the shops and kind of see what it's all about.
Speaker 2:The thing is is that when you walk through a heavy equipment shop, if you're a kid, not in the know at all, and uh, and it's a dirty, cluttered shop and oil spills and stinky, they don't smell great. You're not terribly impressed by it, am I right? Yep, I mean, yeah, when you walk into a, a into a facility that is, that is very clean and there's a sense of pride and it looks good, it smells good. Um, everyone in there is very professional and up on their game. You can tell that that there's been some considerable training going on for quite a long period of time, and those are the dealerships that we see that tend to have the better training programs, the more qualified technicians they happen to. You know, I'm happy and proud to say that they're the ones that we train for, and we don't just train a few of their technicians, we train all of their technicians.
Speaker 1:So, just as a ratio, with all of the dealers that you see and all the manufacturers that you're involved in, which is just about every OEM brand there is of significance today, what percentage would you say are the leading edge, the guys that are out front of everybody? Half a quarter, 10%.
Speaker 2:It's a low number 20% comes to mind, maybe 25.
Speaker 1:20%. It's a low number. It's 20% comes to mind, maybe 25. Okay, so let's go backwards over the last 25 years, because these numbers are relatively fresh in my head. In the year 2000, imagine that there were 200 dealers. In the year 2010, that number of dealers shrank by 50% to 100. To 2020, the consolidation and the bankruptcies and walking away considered again to come down in half. So now we got 50. We're at 2024 and it's getting closer to 25. It's accelerated because of the amount of money that's necessary. It's accelerated because of the amount of money that's necessary.
Speaker 1:So most dealers look at sales revenue as a measure as to whether we're okay or not and they say, well, this sales revenue is going up, everything's fine. At which point I talk about this Well, it better be going up. You're you're not competing with 75% of the people you were competing with 20 years ago. If it doesn't go up, you've got a real serious problem. You're next to the door and they look at me stunned because they had never thought of it that way. So if you're now saying that 25 that's left from the 200 has five that are prepared for the future, that's pretty damn scary.
Speaker 2:I would agree. You would also think that you know, using numbers like that which you're not far off, that we would have a surplus of people ready to roll into technician positions and foreman and service management roles. But it's just the opposite there's a tremendous shortage.
Speaker 1:Why is that?
Speaker 2:Ooh, that's a tough question to answer.
Speaker 1:Well, you got two. You got two avenues that you can take. One is the inbound and the other is the outbound. Are we seeing more men and women leave as technicians than ever before?
Speaker 2:So I I hear people say this and I hate to coin the phrase, but since the COVID we've seen just a tremendous drop, it seems, at all levels of product support, not just technicians, but so many people got used to working from home they don't want to go back to work at the facility. You know dealerships, they want them to work at the facility. Some of them are okay with the offsite employee, but for the most part most of them want everybody back engaged at the facility. I think some of it is that Some of it is probably retirement, natural attrition at the dealerships, but a lot of it is. There just hasn't been anything driving the engagement of young people or younger people wanting to come into the industry.
Speaker 2:You know you've got you've got some advocates out there like the Mike Rose of the world, if you will, and Mike does a fantastic job. But he's one guy and you know he's got a strong presence as being an advocate for the trades. He's done some stuff, I know, with Caterpillar in the past. But you know Caterpillar is one manufacturer of a dozen different ones that we have that make construction equipment nowadays, manufacturer of a dozen different ones that we have that make construction equipment nowadays, and they all need service technicians, they all need support people. So, um so, how we fill that gap, that's a tough road to hoe.
Speaker 1:Mr Slee, that's a tough road to hoe. You mentioned Mike and I agree with you. Any idea how long Mike's been doing this.
Speaker 2:So, if I remember correctly, I think it's getting coming up on 30 years now.
Speaker 1:Yeah, and how long has he been prominent in society that everybody knows who the heck he is?
Speaker 2:Probably since the dirty jobs role, huh, and I don't know when he started that.
Speaker 1:And that's. That's maybe three to five years. Go crazy Say it's five. The moral of the story is I'd like to have a whole bunch of advocates like that, I'd like to have 100 of them, but I haven't got 30 years to wait to get them to be prominent in society. Sure, and you know, this is a nasty problem and COVID is a good trigger point.
Speaker 2:Jim.
Speaker 1:But it's not just our, it's every industry.
Speaker 2:Agreed.
Speaker 1:I think a lot of people and my grandkids are 23 and 19. There's no way in the world they're going to work like I did, my daughter's a bridge. So I'm going to say this is an exponential curve where my daughter's 30 years younger than I am and her children are almost 30 years younger than well, 25 years younger than she is. So we're spanning a typical three-generation deal. My parents were war and depression experienced. I'm from the 60s. If it feels good, do it. Whatever piece of grass you want to get interested in, go for it. My daughter's crowd I don't know how to characterize the quote millennials. I don't even know that. That's the generation she's in. But this younger generation is they call it the alpha generation. Do you know what they're calling the next generation? I?
Speaker 2:don't.
Speaker 1:NEETs N-E-E-T, not in employment, in education or in training.
Speaker 2:Wow, that's interesting.
Speaker 1:And that percentage is broaching 10% of the workforce. That's a very difficult time. So, going to the two ends of the tunnel getting people to come into the trade, we can do something about that but nobody seems to be doing it. Get out with job fairs, career days at high school. Get to know every damn counselor that their human resources counselor at a high school that there is Hire kids in high school. Have them come in one night a week for two hours, saturday morning for three or four hours, the old fashioned way. Is anybody out there doing that kind of thing that you can see?
Speaker 2:old-fashioned way. Is anybody out there doing that kind of thing that you can see? Well, you know, it's funny. You say that I? Uh.
Speaker 2:Just locally, on a personal level, where we live, I have a family that comes to help us out with our property, our yard and clean up and things like that. And uh, each time that they come, they bring their two children with them to help out. And one of them, and uh, each time that they come, they bring their two children with them to help out, and one of them, I think is uh is 12 or 13,. Uh, the boy, and then the daughter, I think she's, uh, she's 15 or 16. And every time they say you know, we bring our kids along because we're trying to instill work ethic in them right by by showing them, uh, you know, the benefits of it, of hard work. And uh, sometimes, with what you see, with with social media and the so-called influencers that you have nowadays, you know work, work for them is is. Hey, I need to get you know 200,000 followers on Instagram by standing here with my fake eyelashes and you know, and showing a lot of skin and things like that. Um, that is very impressionable on young people, it's, and they think that it's easy to do. The reality is is that that takes a lot of work. Also, you have to have that work ethic. You have to have that drive.
Speaker 2:I use my daughter as an example. So she's 30 years old, so she is part of Generation Y I just had to look that up. So Gen Y and, as I told you before, she's worked for Costco. She started pushing carts at Costco 12 years ago and two and a half years ago she got a promotion to like I think senior staff level is the position title in uh, where, where you are in Hawaii and she moved over there all on her own, all by herself, did it all herself, was so proud of her. And uh, and then, about four months ago, ron, she got the next step up. She's back in Loomis, california and she's assistant general manager of the Loomis Costco warehouse. I'm so incredibly proud of her. The only thing that scares me is is I feel like she works too much, which she would probably say about her dad.
Speaker 1:Well, you know, the, the, the, the old thing, the acorn or the apple doesn't fall apart from the tree. But you know, when you and I've talked about her, the store that she was at in Honolulu was the busiest Costco in the state not without any comparison and it it was amazing and I they. They've got a nice structure. They also have an employee development program. That's very clean and clear. Similarly Amazon. Similarly Walmart. Similarly Amazon, similarly Walmart. Any idea why that doesn't exist with us in the construction world?
Speaker 2:in the equipment world Boy Ron, I'm not sure that I have an answer for that. I see different company cultures and different structures, such as one of the customers that we work very closely with is SRC Lexington that Springfield Remanufacturing Company or Corporation I think it is and they have a facility in Lexington, kentucky, and when you go in there, the culture man you can just feel it as soon as you walk in the door, the first person that you engage with. It's like dealing with somebody at Costco friendly, helpful, get your questions answered expediently, get you taken care of, won't leave you until you feel satisfied, and they're an employee-owned company. So everybody's got a little skin in the game at that point and I think that when you're an employee-owned company like that, that if one employee is having a tough time, I think the others rally for that person to try to help them through it.
Speaker 2:Now, granted, I'm sure that they have their challenges, like different companies and corporations do with employee retention and things like that, but that's one model that I think they're very successful with that they do very well at employee retention and people being interested in their work, what they do, growing in their jobs. They've got a pretty robust training program as well, which, again, that's part of it. So to get dealers to replicate that, well, I think it's going to be tough that you'll see an employee-owned dealership per se. However, there isn't any reason that you can't drive that type of culture, I believe.
Speaker 1:Yeah, I agree with you. I've worked with an employee-owned too employee-owned companies. They were ESOPs type of thing, you know, employee stock ownership programs and those kind of lost favor because they were good for the owner, it wasn't as good for the employees. They, you know the owner has to get looked after before anybody else. Culture is the whole thing and you know, home Depot has been one of my clients over the years and every morning before they started they would get together in a circle and talk to each other about anything that was going on in their lives or anything that was going on in the company and they'd spend 15, 30 minutes and then they do some stretching exercises, the old Japanese approach to life. And you know I, being the idiot that I am, I asked every single one of them. I said is that necessary? Without question, yes, you feel embarrassed at times sharing stuff. No, not at all. This is my family, away from my family, and you can't beat that culture.
Speaker 2:You can't, I would agree, and you spend more time with those people than you do with your family.
Speaker 1:Most people don't recognize that. Yeah, it's really really quite stunning. So the dealership I started with, we had three apprentice programs going in the course of a year, each one of them between 18 and 24 students. We had, in those days, five stores. When I left, we had rigged as a school that we took around and trained customers in their yard, job sites, all kinds of stuff, not to do repairs but to do things that we didn't want to do, and we had graduation parties and we made a big deal out of this.
Speaker 1:Everybody knew the guy that ended up being the president of the company was a bush pilot and a mechanic. He fired me half a dozen times. One time I actually got home. He was so passionate about what he did. He wanted things done properly.
Speaker 1:So when you talked about going in with students in a shop, our shops were squeegeed every day. With students in a shop, our shops were squeegeed every day. We had the shop floor built that had a central drain and every bay had a drain. The way it was done was proper. We're in Canada, we've got winter, we've got snow, we've got all kinds of corruption that can come in, so we had a completely protected area. We had students come in on the weekends and tours and we had people at stations to tell them what we went and did. I mean, it was a full court press.
Speaker 1:And then at one of the graduation parties one of the students got drunk and drove himself into a foam pole and died. That was the last graduation party we ever had and the apprentice program dissipated because the owners were concerned rightfully so about the liability. So all of that good stuff went away. I used to teach at technical schools because we wanted to have the cream of the crop, I wanted to see who the best students were, you know, and I would do that as a matter of course, and I wasn't the only one. We were there, we really. And boy oh boy, that dealership grew like a maniac when the son of the owner that started it, when he sold it. He sold the Caterpillar dealer next door for about a million billion four with a B, and that's not bad.
Speaker 2:Not at all.
Speaker 1:So we got the. You know, we got some suggestions on how we bring people in. If people don't have that culture and if people don't train and develop their employees, what do you think the probability of them being here in 10 years is?
Speaker 2:Oh boy. So the technician in the technician world, I feel like a lot of it's going to be non-existent. It's going to be so tough to find people and to retain people, unless there's just a tremendous shift. I'm not exactly sure what that shift is or what it looks like. I have some ideas. What makes a work environment attractive to a young person?
Speaker 2:You hear a lot of people say all they want to do is play video games. Well, that's not accurate, because I train. A lot of people say, oh, all they want to do is play video games. Well, that's not accurate, because I, I, I train a lot of technicians all over the United States, all sorts of different cultures, and, uh, we see a lot of them that that they, they pride themselves on their work but they don't want to kill themselves Like I did back in the day. You know I'm working 72 hours, 80 hours a week. You know that's how I made my money with the overtime.
Speaker 2:To them now it's more important to have their time to go hunting and fishing and spend with their friends four-wheeling and things like that, or playing video games, whatever the case may be. So you have that aspect. The other flip side of that is, yeah, they're earning a higher initial wage. What we pay technicians nowadays we see a lot of places well, hell, you can get $14, $15 an hour washing dishes at a restaurant. Now that was unheard of back then.
Speaker 2:But with what we see in paying technicians I think it still makes it very difficult for them to achieve the American dream the nuclear family, uh, own, owning a property or owning their own home.
Speaker 2:A lot of them don't have a lot of interest in that nowadays, but a lot of them still live at home with their parents as well. So you know, for me I was on kind of the 18-30 plan, you know, at home when you hit 18, you got 30 days to get your stuff together and get out kind of deal, where it seems to be fairly common for kids to stay at home up to 25 years old. Now, in fact, I think a lot of insurance companies will continue to maintain the parents' insurance for children up to 25 years if they live at home. So you've got that whole aspect of it and them seeing their parents work so hard for so many years to make ends meet, food on the table, make a mortgage payment, keep a home, have that type of security. I just don't know that that's as meaningful to newer generations as it was to us. Ron, not all of them.
Speaker 1:I stayed at home until I got married. Yeah, everybody said, ron, what the hell's the matter with you? I said you got it wrong. They stayed with me. It was my house. Funny, yeah, you know, it's, you know. But you know, everything's everything's perspective, and I really agree with having a better balance in life. And at my age, the community of people that I grew up with, I started with a crowd of about 30 people between the ages of three and four. There's three left and my circle of friends is shrinking.
Speaker 1:Sure, and it's just a course, it's a transition in life, it's natural. It's what they call the dash On your tombstone. You've got your birth year, you've got your death year and in the middle you've got this funny little dash that represents 60 years or 80 years or whatever of your life. What am I supposed to do about that? Or 80 years or whatever of your life you're supposed to, what am I supposed to do about that? But I think it's, I hope, that number one, that people can do something they're passionate about. If they like what they do, if they love what they do, they're not going to be looking at the clock, but that gives them a choice of whether they want to do the 70 hours or they want to do 40 and have another piece of their life that has balance, and I don't think that my generation, which is slightly older than your generation, we didn't really think about it that way. You finish school, whatever age it was, you got a job. That was the beginning and that was the end.
Speaker 2:And if you wanted to make money you worked harder, you worked longer.
Speaker 1:You know you had two jobs In Hawaii. Hell, most of the people here in this tourist is you got to have two jobs to live in this damn place, sure, sure. So that whole thing comes. But I see the dealership in the supply chain going away in the supply chain going away. I think that partly what we're seeing with the numbers of people in the dealership. I think there's too many dealers that are putting profit ahead of customers, of people, and we have too few people doing too much work anymore. It's at every level of job Costco, your daughter.
Speaker 1:So if you're prepared to step to the line and put the hours in, you will be recognized if you've got talent, and that's exactly what's happening. But it's self-correcting. So let me give you the statistics that I see from an education point of view. 10% that book, the student that we were talking about before by the president of West Lytton view. 10% that book, the student that we were talking about before by the president of West Lytton University. 10% of the students and people in America are fine. We don't need to worry about them. They think they work hard, they're disciplined, they got brains. Here we go.
Speaker 1:The statistic I last saw was that 72% of the American population call it 70, is going from paycheck to paycheck. If anything out of line happens, they're dead meat. So those folks they have I call their work a four-letter word. They don't have any choice. They're doing something because they got to do it to live. Then we got 20% in the middle and they don't know what to do. They can drop into the 70% or they can get up to the 10% In the 100% of the cases.
Speaker 1:It's not a question of talent. Everybody's born with capacity. Everybody's born with potential. It's what you do with it that gets you know. You've heard me say this. My purpose is to help people identify their potential and then give them tools to help them achieve it.
Speaker 1:That's not an easy job. That's not an easy pursuit. You know, I tease my granddaughter who lives in Hawaii and goes to school here. I tease her. I said I'm trying to figure out what I want to do when I grow up and I'm nearly 80. And she looks at me and she says don't you know yet? I said, of course not, you know. That's great, and the younger people today have so many choices.
Speaker 1:Jim, if we don't present an accurate, worthwhile, self-worth type of task. We're dead meat and I don't think that's going to happen. So I see the dealer going away. And then in the world of technicians, you know the market share Dealers get less than 95% of the. They get less than 5% of the market on maintenance. 95% of the maintenance is done by somebody other than the dealer. Well, that's a heck of a lot of technical hours in a year. And then if you look at surveys on market share for repair, best in class is 30. So 70% of the repairs are done by somebody else. You know, in our dealership world we're losing them. But who are we losing them? To? People that are doing the same job, but for themselves people are doing the same job. Or like where you started with a contractor the contract in that, in that they have their freedom.
Speaker 2:I'm sorry, in that they have. They have their freedom. Yeah, when they want, yeah, charge what they feel they can get. Um, some tax better, probably some better tax write-offs, especially if they have a little bit of business savvy and with the, you know, the use of the internet nowadays, that's really easy to to attain. But I, I look at it, I I try to look at it from multiple perspectives. One statement that you made a minute ago about, uh, dealerships being so profit oriented, profit driven, and I understand that and I get it. However, however, follow me on this perspective for a second.
Speaker 2:So a dealership has 30 technicians working in its shop. Its shop is in, let's say, it's in the southeastern United States, where it's hot and humid during the summer. They have to keep the doors open all day. So they can't keep the shop clean because wind's blowing, dirt's blowing, stuff like that, right, they tell the guys to clean the shop. The guys see the dust blowing in.
Speaker 2:They know it's a futile attempt, right? So they get a little bit of training. They're working in the heat, you know they're making okay money. The guy down the street says hey, you know, I'll pay a75, $2 more an hour and my shop's air-conditioned. Now that's affecting his profit, but he just hired the dealership's technician that the dealership spent a few years training up. I don't understand why you don't make an attempt to create the best possible work environment for those people, even if it affects your profit a little bit, because it's going to make you more sustainable in your service operations in the future. Otherwise, you're going to keep getting the turnover guys that are, you know, not highly trained. You're training them so they can go someplace else, make more money, have better work environment.
Speaker 1:So go even further. We say we got a shortage of technicians. So I deal with a lot of dealer principals, a lot of different dealers, and and say who's who's your most profitable employee? And everybody invariably says the equipment salesman employee. And everybody invariably says the equipment salesman. He sells $5 million a year and he gives me parts and service business and all the rest of this stuff. And those territories now are getting closer to $8 and $10 and $12 million Because the gross margin has gone down, the commission payments goes down and the salesmen need to have a bigger number of customers.
Speaker 1:It's hard to hold on to market share. So if we look at market share and equipment, there's two major brands that get between 60% and 70% of the market. The second two get between 10% and 20% of the market. So you put that all together there's 15% left that about 10 people are fighting for. So I got to play with four and if I look at those four, best in class of that four is Caterpillar and John Deere. Best next in class is Komatsu and Poldo. You look at their service departments.
Speaker 1:If you look at labor, now we start looking at the kind of machine and what generates the labor. But typically and let me be really easy for math. Say I charge 100 bucks an hour for a technician. I don't have any overtime and he works 2,000 hours a year. So I'm going to generate $200,000 worth of labor. And let's say I'm going to generate a gross profit of 50% very low, so it's $100,000 worth of gross profit. Well, depending on the brand, I'm going to sell between $1 and $5 of parts for every dollar of labor. So my parts that are generated by that one technician are going to be $200,000 to $500,000. So that technician you put it all together, is going to generate between $300,000 and $700,000 a year of revenue. This is really good. And I say well, you know, I'll give you more technicians, but tell me where they're going to work, because the bays are all full today.
Speaker 1:Oh no, they can work outside. Your comment I've heard. You have no idea how many guys tell me this. They said you know, and these guys are in their 70s now. I said, okay, let's you and I go sit at a table out there and play cards for four hours and see what you feel like Not doing work. Just go out in the heat or the cold.
Speaker 1:I had a cousin who was a mechanic for the Caterpillar dealer up in Canada. He had rheumatoid arthritis from being on the ground underneath machines for so many damn years. It's a tough damn job, but the technicians generate more company profit than any equipment salesman out there. Period, absolutely, Absolutely Not even close. So if I'm going to hire anybody, I'm going to hire technicians. So here comes Alex Kraft and a little company called Heave. That's an Uber for technicians. A customer puts online that he needs a repair or he needs a maintenance service and technicians tell them well, I can be there tomorrow at 10 o'clock and they consummate the deal and they get the repair done and everything's fine. They give them invoices and here we go. That's going to grow like a desert, a grass fire in the plains. So how does a dealership compete with that?
Speaker 2:That's an interesting concept. The first thought that comes to mind is you never know what you're going to get, as far as that Uber technician. If you will, you just don't know what you're going to get because you lose some sense of job control at that point right.
Speaker 1:Okay, so stay there for a second. What control does a customer have of the quality of the technician that comes from the dealership?
Speaker 2:Good point, yeah, good point. They hope that through the relationship that they have with the dealership, that they're going to have qualified technicians perform repairs. But I've worked with too many dealerships that once a machine leaves the shop, three hours later you're getting a phone call and you're having to send a field truck out after it.
Speaker 1:Well, I used to tease. I've stood in as a service manager in hundreds of dealerships around the world for a long time and I tease most of them. They have taillight warranty. Once the trailer carrying the machine is, I can't see the taillight anymore. The warranty is done, sure, and and what I like to say to people is okay, I'm going to give the guy on a repair a one-year warranty, except for defects in material and workmanship. And everybody says you can't do that. And so tell me, jim, if you're going to have a failure on a machine that you've repaired in your shop, what's the probability it's going to happen in the first 30 days?
Speaker 2:I would hope that that would be pretty low. And if there is a failure.
Speaker 1:When's it going to happen? Is it going to take 30 days or longer?
Speaker 2:So that's tough for me to put a number on, ron, because it just depends on, you know, on the customer's specific application and utilization of the equipment. But the reality is is that if the repairs were performed in the most durable manner, then it should take much longer. You should never have to honor that warranty. You should never have to enter that realm.
Speaker 1:I agree with you. The trouble is the statistics are more than 95% of the failures are within the first 30 days. Ouch, yeah, there's again. Because we don't necessarily have a good definition of warranty. I get guys that and you're going to see. You've seen this, god. The machine failed, it should have been in warranty and the salesman gets involved and the boss gets involved and all of a sudden it's warranty. It never was. I can give a lifetime warranty.
Speaker 2:Policy or goodwill.
Speaker 1:Yeah, I can Well. Yeah, but it's called warranty, it ain't. Or. Goodwill, yeah, I can Well. Yeah, but it's called warranty, it ain't called goodwill. Agreed, yeah, I can give a lifetime warranty on a machine against defects and worksmanship and material period, and I could do that all day long. So in America on warranty, there's a number of states say 10 out of the 50, that require by law that warranties done at retail prices reimbursed to the dealer at retail prices. There's only one manufacturer that works within that law and has done for a number of years. You know who it is.
Speaker 2:I don't. I have a pretty good idea which ones it's not.
Speaker 1:It's Caterpillar Interesting. You know why. Their warranty is a percentage of the machine cost.
Speaker 2:Sure, that's understandable.
Speaker 1:Every other one pays a percentage of the labor and parts. So John Deere is an example. I'll give you 1.33 of the labor at their standard time at retail price. They give you 10% on parts. So every dealer that has a failure, every customer that has a failure in warranty, is subsidizing the manufacturer's quality.
Speaker 2:Interesting.
Speaker 1:Again. There's so many things in the service arena, which is the perspective change that dealer leadership isn't paying very few of them or paying any attention to it Training of employees, working conditions, benefits what about maternity leave for men, paternity leave with the birth of a child, like a lot of European countries? There's so many things that are at play right now that the younger generations are thinking about, talking about and requiring that our generations didn't even that wasn't even on our radar, was it?
Speaker 2:No. So let's talk about the training for a second, and the technician shortage. So it makes sense to me, having been in the industry for a second and the technician shortage. So it makes sense to me, having been in the industry for a number of decades and being involved in the training realm, that if you've got a technician shortage, why wouldn't you want, if you were a service manager and you had a certain number of technicians, why wouldn't you want your technicians that worked in your service shop to have the greatest amount of training and have the greatest amount of ability to diagnose quickly, repair durably, follow up with the customer, whatever is needed, all of those skills and abilities being at the highest level that they could possibly be, knowing that you're not going to be able to easily replace those people. So, a you're stimulating them constantly. B your rework is going down, hopefully, right. Your customer satisfaction is increasing, hopefully, since you're continually stimulating them with training and other benefits as well work environment and things, other benefits, like you mentioned.
Speaker 2:Why wouldn't you want your technicians to be the highest trained? But what we see is and we just see it run rampant still to this day is we book a class, we've got five or six people that aren't in the class because, oh, the service manager pulled them out because they're too busy. That does a couple of things. You know, cognitively in the technician's mind is oh, you know, I was looking forward to going to that training class. You know it was going to help me out, and you know, now I don't have any say in it and my boss just pulled me out of it because I need to get this job done. Well, somebody else could have done the job, you know, so that that plants the mustard seed of uh, I'll just. I use the word deceit because when that happens over and over and over again, now that guy is telling his coworkers at lunchtime where it break time. You know, I was supposed to be in training this week but they pulled me from the class again and you wonder why that guy's walking out the door a year or two down the road, little things like that.
Speaker 2:Why wouldn't, if you owned a service operation, why wouldn't you want to have your people as highly trained as possible and make amends to be able to fill the slots, whether it's, you know, taking, taking a foreman and having the foreman, you know, help help make up for some of that technician loss for the time that they're in training, but continue to train your staff, get them up to a very high level. So it's not just one guy that can work on one particular system or one particular machine, which we see is the case in a lot of shops. Well, not everybody can do air conditioning. We only have one air conditioning guy. He's specialized, right. The whole specialized thing in my mind needs to go away. It needs to be generalized. Everybody needs to understand how to work on the different systems. That way, if you're out, if I'm out, somebody can easily come in and fill the void while you're out getting training, while I'm out getting training, while I'm on paternity leave or whatever the case may be you know you're preaching to the choir, but the spectators aren't there.
Speaker 1:This, this isn't a Taylor Swift concert. They're jammed. What you're saying is absolute truth. So one of the things that I like to do is create an incentive program for technicians. I'll have a shop that works on standard times that we all agree on. I'll have a shop that works on standard times that we all agree on, and I'll have shops that work on quality measures. So I got labor efficiency on one side and I got quality on the other side.
Speaker 1:If your efficiency is 90% or lower, you're not getting any incentive. If your redo or failure rate is greater than 99%, you're getting nothing. If you get 95% labor efficiency, I'm going to give you 50% of the incentive. So 90 to 95 will give you. If you get 96, I'll give you 100% of the incentive. On the quality side, if it's 99 to 99.5, I'll give you half. If it's 99.6 and up, I'll give you all of it and I'll give you 50% of your hourly wage as your incentive. So if you get 40 bucks an hour in a month you work 40 hours, 160 hours. That's going to be 6,400 or whatever the hell the number is. I'm going to give you half of that as an incentive on a monthly basis. I'll give you the check this month. Right now I've got a bunch of dealers that do it.
Speaker 2:Sure, and I bet they have. I don't bet they don't have issues with retention.
Speaker 1:Well, what we the way we sneak up on it is say okay, I'm going to give everybody eight hours of labor on standard time that we've all agreed on, and if you finish earlier you can go home, or you finish after six hours, I'll give you two hours worth of work and I'll pay you for 10 hours instead of the eight, and I'll pay you for 10 hours instead of the eight.
Speaker 2:Huh, interesting, they like that Sure.
Speaker 1:Sure, but what's also interesting is that's Thursday night. I'm going to take my wife to dinner. I'm going to leave at three, I'm finished, I'm gone. And you know what happens to good guys leave early. The guys that aren't so good as Jesus. I'd like to be like that when I grow up. Now they've got an incentive. Now they've got a model. Now they've got a target. Now they've got a purpose. And a lot of guys say, oh bull keep it going.
Speaker 1:So a typical approach on a shop floor. I give a guy eight hours of labor. I check with him. At the end of the day it's six hours of the day's gone by. You got two hours left. I have a very simple question Will you finish everything I gave you to do today? And there's two options. Yes, and in that case my quote's good, my schedule's good, everything's good. No, okay, so I'm in the front of a class.
Speaker 1:Jim and I got 20, 30 service managers there. I said what's the first question you ask the guy who says no, what happened? That's not the right question, is it Right question is how much longer is it going to take for you to finish it? And 90% of the guys have no idea about this. And so now the training cascades down. The manufacturers do go to a big extent of having technical training for technicians. That's good. They do hardly anything in supervision.
Speaker 2:Agreed Supervision communication.
Speaker 1:Being a person, Doing a performance review. You know all of the stuff that is part of creating and maintaining a culture. We got big gaps there.
Speaker 2:Agreed.
Speaker 1:It's a serious problem. I'm not sure that it's going to be a problem 10 years from now. I think the dealer is going to be gone because they haven't looked after this properly. Is that too radical a thought?
Speaker 2:Well, I'm not going to say that it's out of the ballpark. It's definitely a possibility, especially with what we see, with technicians and people not wanting to come into this workforce, as with multiple trades. But on the heavy equipment dealership side of things, it's going to get really interesting and it's going to be tough to fill those positions, and not only to fill those positions but to get the people to want to stay. I'm guilty of that as well, ron. I worked for five different Caterpillar dealerships all across the US. The last one that I worked for I worked for the longest, which was probably a total of oh, maybe eight and a half, nine years, but the other ones were considerably less than that, because I would work five or six years and there wasn't an opportunity for advancement. Unfortunately, it's just my personality type I get bored easily. I need something to be stimulating me.
Speaker 2:When Hawthorne was training the living daylights out of me, man, I was stimulated all the time. I could learn new stuff, troubleshoot stuff, get better and better, and uh, you reach a certain level where, where that starts to taper off, and uh, in doing so, I had to look to other organizations to be able to get any advancement. That that I felt in my mind I was deserving of. I'd see a guy in a position that did a job maybe mediocre, but that wasn't a guy that was going to get replaced or move up.
Speaker 2:I had a mentor many, many years ago. Tell me that, look, when you're a manager, what you better be doing was you better be fostering and mentoring and training your replacement right. And some guys that's a difficult thought for them to even you know have because they don't want to think, oh, if I train somebody to replace me, then they can get rid of me. The reality is that you can't move up unless you've got somebody to fill your spot, right To backfill you. And another comment that he made was that you know how I can tell how well you do or do not manage your service operation is by how it runs when you're not around.
Speaker 1:I say it a different way, but it's the same end result In every job I had. I worked myself out of it nice yeah okay what you should do.
Speaker 1:Oh, that's just my perverse approach to life. So I, I did that and I go to my boss and I say I've got my job done in four hours. I, I don't need any more time and I've got it done. You need to give me more work. And he didn't. So I stopped going in. I'd leave at noon. That lasted two or three days before I was called into his office. I said what the hell are you doing? You're leaving at noon. We've worked till five here. I said no, I told you I only had four hours worth of work and you were going to get me more work or I was going to start going home. I guess we didn't understand each other. He says go back to work, Don't leave, I'll get you more work. He loaded me up, felt cocky about it.
Speaker 1:Six months later I went and did it again. He said get the hell out of here. I would love and I try and do that with everybody you know, and having performance reviews is an important part of it. All of this wraps up in a very nice little package that says we're people first. Damn it. Let's start acting that way Agreed, Help each other, get better. That's for the betterment of everybody and never forget the relationship between a dealer and a customer is built by the technicians, by the parts people, the people that touch the customers the most, and we pay the least amount of attention to those guys and gals Drives me crazy.
Speaker 2:That's an important component of our training class is communication. We use it to the effect like you could be the best failure analyst in the world, right, you can pinpoint the problem and know what it's going to take to correct it and prevent it from ever happening again. But if you can't effectively communicate that to the people that need to know, what good are you?
Speaker 1:Exactly.
Speaker 2:The answer is no, and we teach that and I've had that be a common comment. I don't know how many times. I've never been to a class before. That taught me how to talk to customers, and we do role playing in class because I can. I can step into whatever role I need to be and dealing with an upset customer, dealing with a happy customer, you know, um, teaching guys how to deal with such Well, what if they say this to you Okay, this, this is this is may sound like a canned response and quite frankly it is, but it's also very effective. So memorize it, write it down, try it, use it and see what type of reaction you get. My guess is that the body language you use and the tone of voice and the eye contact and the smile on your face is going to play a big part in that. But at the end of the day, when that customer feels that you've communicated very effectively with them, you've built some level of trust and that's the foundation of all your relationships.
Speaker 1:Yeah, that's a good place for us to stop on on this.
Speaker 2:I I think that, uh, we've covered a whole bunch of what I call pain points or fear points or or whatever, but thank you very much for your time and anything you want to say in wrapping this thing up well, ron, I man I'm so appreciative of of you having me on and taking the time, and, man, I got to tell you I wasn't sure I was going to get any more fantastic mentors in my life, being my age I'm almost 60. But you definitely knock it out of the park, bud.
Speaker 1:Oh, james, thank you, you didn't need to do that. That 100 books I sent you worked, didn't it?
Speaker 2:I appreciate your time and our conversations more than you know.
Speaker 1:Well, thank you, jim, and thank you everybody who's been out there listening to this candid conversation. I hope to see you at our next podcast, mahalo.