Learning Without Scars
As a third-generation educator, it is easy to say that teaching and training are in the blood for Ron Slee. From his beginnings as a coach, through his time at McGill University, Ron developed a foundation for the work he does today. From working within dealerships, to operating a consulting company, creating a training business and running twenty groups, Ron has been directly involved in this Industry since 1969. Ron has been known as the industry expert for years, and has brought this expertise to bear through his training programs. Today, Ron provides specialized, job function based internet based subject specific classes, job function skills assessments, as well virtual seminars and webinars. These courses are designed for manufacturers and their dealers, as well as independent businesses in the construction equipment, light industrial, on-highway, engine, and agricultural industries through Learning Without Scars (www.LearningWithoutScars.com). This platform is a continuation of the work begun by Quest, Learning Centers which was established in 1996. This training is aimed at improving dealer parts and service operations through qualified people that are knowledgeable in using operational metrics and current market and operational best practice methods.
Learning Without Scars
The Vanishing Distribution Channel: A Candid Look at Dealer Challenges
Troy Ottmer brings a unique perspective to the equipment and commercial truck industry that few consultants can match. Having started as an automotive technician in 1987, Troy deliberately worked across every dealership department, developing a comprehensive understanding of how each function impacts the whole. This hands-on experience across automotive, construction equipment, forestry, ag, medium and heavy-duty trucks gives him insight that's increasingly rare in today's leadership landscape.
What makes this conversation particularly valuable is Troy's analysis of the fundamental shifts reshaping the distribution channel. He highlights how the medium-duty truck segment is booming while industry analysts remain fixated on Class 8 freight tonnage - a blind spot creating both challenges and opportunities. Troy's description of Amazon's strategy to place multiple distribution centers within minutes of population centers reveals how last-mile delivery is transforming logistics networks.
Perhaps most provocative is Troy's challenge to conventional industry metrics. While dealerships have traditionally targeted 100% absorption rates, Troy argues that return on assets (ROA) represents a more meaningful measure of business health. His benchmark of 50% ROA - achieved by turning assets five times annually - provides a revealing contrast with rental companies who consistently hit this target while many dealerships struggle.
The conversation takes a concerning turn when discussing workforce development. With reading comprehension at grade level for only 32% of fourth-graders and America facing a projected shortage of 3.8 million employees by 2033, the industry confronts a looming crisis that technological advances alone cannot solve. Troy's work with high schools and OEMs to develop vocational education programs represents an essential response to this challenge.
Whether you're a dealer principal, department manager, manufacturer representative, or customer, Troy's insights offer valuable perspective on navigating industry transformation. His practical experience combined with strategic vision provides a roadmap for those willing to evolve rather than cling to "we've always done it this way" thinking. How might your organization benefit from this kind of candid, experienced-based assessment?
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 Candid Conversation. We're joined today by one of my favorite men, troy Otmer. He's coming on for a second beating on a podcast which we call Candid Conversation. So I'm going to pass it to Troy pretty quickly, on the basis that he's been in the industry. He's worked at dealers, he's worked at customers, he's independent now as a consultant. And with that as the introduction, troy, why don't you tell people who the hell you are, where you came from, what you do, how you do and all of that? And we'll just see where this thing goes?
Speaker 2:and all of that and we'll just see where this thing goes. Well, thank you, ron, absolutely. So in a nutshell I'll give the short version today. Started out in the industry as an automotive technician all the way back in 1987. Took a couple, two or three years after high school to figure out the direction I was going, and initially it wasn't college, and that led me to the automotive vocational side of the world, which I participated in. That in high schools and maybe later, if we depend on where we end up.
Speaker 2:I'd like to mention some of the things that I'm working on today relative to vocational education at the local level, et cetera. However, 38 years in the industry approximately 12 of the 38 were on the customer side, as a mobile technician, a fleet manager, construction equipment ag, forestry and obviously automotive, but then medium duty and heavy duty truck, and also I got the wonderful opportunity to work on the alternative fuel side, working with the railroads taking cross ties out of service, repurposing them into alternative fuel source power boilers with paper mills or other co-gen facilities. And that's probably another podcast, ron. So we'll save that one for another day, but, excuse me, the motivation for me today, after working in the dealer world, on the automotive, construction equipment, forestry, ag, c&e, utility, commercial truck, heavy and medium duty. You know I've worked in every department and I wanted to do that. That was really by design. I would raise my hand for some of the craziest job tasks that would come along and people would scratch their head and go something's wrong with that boy for sure. But you know, the overall motivation for me was to learn as much as I could about the other department, because I really would. I want to know why that department does what that department does. Whether it's right, wrong, indifferent, doesn't matter.
Speaker 2:I wanted to understand what's going on behind the scenes and as I found my way into leadership over the years, it became abundantly clear that the successes, the failures, whatever of my own department but how would it impact the service or sales or rental departments? And, like most people that probably interact with your podcast, the vast majority of them come out of the equipment world where there's a rental department. So it's a four-legged stool instead of a three-legged stool. Maybe it's a bench in that case too, because sales and rental are on one end and parts and service on the other end. And I say it that way because I want to bring the parts and service together and then bring the sales and or rental departments together to be a cohesive unit.
Speaker 2:And spending time in those departments in the sales capacity, in the leadership capacity, working in the trenches has given me a well-rounded view of the world Not always right, but gives me an idea of what I think improving the employee and customer experiences is what that's really about and that, ultimately, is what led me into pursuing a consulting career.
Speaker 2:And you know, I want to be able to facilitate change in an effective manner. I want to be able to facilitate change in an effective manner and I feel, while I could do that and I just recently left Rush Enterprises, a great company, and I had the good fortune of learning from Marvin Rush and other people close to him, his sons and other founders that helped him, and a lot of people in today's world can't appreciate that opportunity to learn from some of the founding. You know members of these large companies and trucking dealerships and that's 60 years ago for them, and so you know, learning and adapting and then imparting that knowledge is really what's driving me today, and I'm talking with dealers and customers alike. I'm not trying to be a jack of all trades, you know. I'm trying to be very specific, very intentional, about who I work with and why I work with them.
Speaker 2:And I may not be the right consultant for everybody, ron, why I work with them and I may not be the right consultant for everybody, ron, either, and that's okay. That doesn't mean I don't like that dealer or they don't like me. At the end of the day it needs to be a good fit and it's a two-way street. And you know, it kind of leads me to some of the most recent projects I'm working on and it really involves more of the medium-duty truck marketplace, what it looks like, how that continues to evolve. Over the last five years to 10 years. In particular, covid was a game changer for the industry as a whole.
Speaker 2:The Class 8 freight market is upside down, Freight tonnages are down. It's a eight freight market is upside down, freight tonnages are down. It's a depressed freight market. Um, class eight products not moving as much, but regional, medium duty or intra-regional as I would call it, you know, in the major metros, minor metros and rural and that would stack up. For example, just to qualify that, a major metro is simply the greater Houston major market. Minor metros would be those contiguous cities that interact with greater Houston metro area and the rural markets would be the middle ground between greater Houston metro and minor metro and Dallas-Fort Worth or Austin and San Antonio, there's a lot of activity that doesn't populate, on the truck freight radar, for example.
Speaker 2:So when the industry, when I work with other consulting firms on fleet utilization and I'm looking at it from an analyst standpoint, like maybe someone on Wall Street or investment firms they often talk about freight tonnage and I have to remind them well, what you're reporting on is class eight. Centric doesn't include medium duty movement last mile right local regional hubs. Within where I live, I have six Amazon distribution centers. I can drive to all of them within five minutes. You ask yourself, how would they do that? Well, here's why they're stocking to be more local and cater to a major minor and rural marketplace. So I'll kind of stop there and see if I'm going the right way for you.
Speaker 1:Oh, that's perfect. And then let me try and come back on two specific things. Number one consulting. And in the consulting world, how long have you been dabbling in this now?
Speaker 2:I officially started dabbling at a very low level probably a decade ago where I would do small projects and kind of refining my skill, but I really didn't do anything substantial until last November I really jumped in. I went to the edge of the pool, took off my shoes and jumped in.
Speaker 1:Okay, so let's start with last November, and let's call that six months. It's not quite that close. How many consultants have you found in this space that people are able to use?
Speaker 2:Very few. Isn't that a surprise?
Speaker 2:It's very interesting because they look at me like I'm a three-headed hydra sitting across the table from them and they said your experience is interesting because you're bringing something to the table we didn't think about. And I get this a lot with private equity and venture capital that I'm talking with. So the PE and VC groups spend a lot of time working with those folks looking at the market segments that intersect with commercial truck, off-road equipment, et cetera, and there's a lot they don't understand very clearly. So I'm one of a handful and it's interesting because I was expecting there's more of us running around out there but there's not.
Speaker 1:So that's one track. The other track is how many people in your experience in the last 40 years have you run into that learned at the foot of a guy like Marvin Rush?
Speaker 2:Well, I would say, in 40 years earlier on, in that say, the first 10 or 20, I ran into a lot more.
Speaker 1:Okay, so that's exactly so. What's been happening is the detailed understanding of what the distribution channel does is lacking. We just continue to do what we've been doing the last 10, 20, 30, 40 years.
Speaker 2:And we don't know why we're doing it, we're just doing it.
Speaker 1:You ask the question. And well, because we've always done it that way, that's what I lovingly call a sacred cow, right, you know? So I don't have very many consultants, I don't have very many people that are in the industry that actually understand it. And then here's the third track, and let me throw it at the ages of 40 and down. That are the leaders in the industry, whether it's the OEM, whether it's the customer, whether it's the dealer, distributor, whatever jargon. They came out of school. They were taught how to do their job by schools. They don't have any damn dirty fingernails.
Speaker 1:They very rarely go outside of their office and they don't know what they're going to find when they go out there. They don't even know the questions to ask.
Speaker 2:True, right yeah.
Speaker 1:And that's scary, it's very scary.
Speaker 2:Well, and I'll give you a good example of that. And you, I would have placed, if we were betting when you and I first met, 26 some odd years ago, I would have bet money that I would have pursued a career Same path I went but I would have stuck myself in parts and service and never left that realm. And something told me not to do that. Something told me to learn the full spectrum of the dealer world and interact with dealer principals at every possible opportunity, whether it's Marvin Rush or Rusty or Robin Rush and so on and so on. And you know the Jerry Swanson's of Empire and Stripling and he, jerry, was a fabulous mentor to me as well and and I could think of many, many more, and including yourself. So. But I would have bet money that I would have been in parts and service. I would retire, probably, and maybe would have been a consultant. But where I'm finding myself today, it's not ignoring parts and service, it's actually helping dealers, dealer principals, understand the viability of their dealership centers around parts and service, absorption, etc. You know, the standard is still 100 hundred percent to be absorbed, fully absorbed Dealers. If you make a hundred, you're doing good. But I would, I would challenge that you better be 125% plus to be absorbed.
Speaker 2:In today's world, with the cyclical nature of the markets, with the interest rates and market share challenges and all the other variables that come with the business, and where I'm finding myself in these first six months, is an overwhelming demand for sales operation oversight, more of a general management view rather than a product support management view. Not dismissing that, I think it all goes hand in hand and I counsel accordingly. But the questions that are coming at me routinely and the cadence has increased because some people have figured out hey, talk to this Troy guy. And you know that's not a that's not an egotistical or arrogant statement. That's not an egotistical or arrogant statement. It's actually a compliment when I have some 25-year-old analyst sitting somewhere in a high-rise building that is querying me for my knowledge on why are dealer groups doing this.
Speaker 2:And you know, why are we seeing? Why are the OEMs doing this? What are the OEMs doing? What's the motivation behind that, you know? And what does that look like? And here's the most popular question lately is why are OEMs wanting to go direct at every possible opportunity? Right, and you know that thing is kind of never gone away, but they dabble in that, that they think they can go direct and they can do it better than a brick and mortar dealer, and that's a whole nother podcast. I'm sure groups or let me flip over to the customer side and put in parallel with a large dealer group, large national fleet or large regional fleets that have utilization problems or struggle with finding technicians or struggle with the same things dealers deal with in their large fleets, or they struggle with the dealer or the dealer struggles with them, and it's a whole laundry list.
Speaker 1:I had an occasion yesterday where I had to deal with a credit card which dealt me with a company that was with my late wife and I called them and I was on hold before I got my first response for 23 minutes and I heard they were apologetic about every 90 seconds and that person wasn't able to deal with the issue. So they transferred me to another number and I was on hold with that number another 31 minutes before I finally got a person and that takes me to and you heard me say this or write it we've put profits over people for the last 40 years Absolutely, which has taken us to a place that customers in America think that customer service sucks so bad they don't even complain anymore. Yeah, so I translate that and I no longer call it profits over people like I translate that and I no longer call it profits over people like I used to. Now I talk about it's transactions over data, so everybody's measuring, and you know Bill Blackie introduced absorption back in the 50s and I had the joy of offering to work for him and you know he thought that the time, the amount 500 bucks or whatever the hell it was a month was too much, but that absorption basis has been in place for 75 years, correct? I think we need another measure. I would agree, and the measure I want people to start thinking about is return on assets. And come up a little further in the helicopter with me.
Speaker 1:We've seen over the last 20 years, and then the last 40 years, an exponential curve of reductions of the number of supply points in the distribution channel. So, as an example, in Canada when I started with the Caterpillar dealer, there were 10 in let me call it, 1970. Now there's two In Canada. There used to be a multiplicity of dealers and I'll just stay with construction for a second. Now there's two In Canada. There used to be a multiplicity of dealers, and I'll just stay with construction for a second. Now there's one, volvo one, komatsu one, et cetera, et cetera, and then I think we get into a different place.
Speaker 1:I was given another one that really rattled me. I think we get into a different place. I was given another one that really rattled me that we've gotten ourselves into a position that we're more interested in short-term greed and that's the word that was given to me than we are in our grandchildren's future, which gets you right where you live. So the return on assets is why we've had the number of distributors disappear. Right, the number I want everybody to look to is I want you to have a 50% return on assets. That's all assets, fixed working capital, the whole smash. So let's look at net pre-tax, let's say 10%, and if I want 50% return on assets, I have to turn my assets five times.
Speaker 1:Now you get in a plane with me. We go around the country and we'll stop at 100 dealers. We won't find two that turn their assets four times and they don't even think about that asset. The rental companies that I work with none of them are below 50% return on asset, correct? So, being the devious guy that I am, I used to go into dealers and sit at the counter and just have a chat and a cup of coffee and I'd find out more in that 30 minutes than you can imagine. So, dealing with the rental companies, none of them that I work with are under 50% return on assets None. None of them that I work with are under 50% return on assets None. So that means we've got to reframe the business completely.
Speaker 1:So go back to where I started. How many people are there that learned at the master's knee like Marvin? How many consultants are out there that have dirty fingernails, that know how to operate, can pick up a phone and do a sales order, can go in and do an inspection, and who the hell is going to lead us to this promised land? So big circle on that Amazon. Everybody talks about Amazon as the largest retailer in the world, and look at how successful they are.
Speaker 1:And they're at the very beginning of having four or five distribution centers within five minutes of where you are. Interesting statistic though Walmart still has more product sales than any other company in the world, and they deliver in 24 hours in a manner that Amazon is trying to figure out how to do.
Speaker 1:That's true too, is trying to figure out how to do. That's true too. So this whole world is changing, and change scares everybody, absolutely, and there's very few people that are out there that are able to analyze a situation, to make a conclusion, to come to a conclusion, to make a suggestion, which is why I'm intrigued with you getting in the consulting business, because I think you're one of the few that can do that. Well, thank you. Well, it's not necessarily a compliment, it might be a burden.
Speaker 2:I know I think it's a little of both, but my dad raised me the right way to still say thank you, even if they just kicked you square in the back of the pants, right? So sometimes the best lessons are those hard and challenging ones. So, ron, one thing that I can't remember which of your recent podcasts, I can't remember which gentleman I listened to them all just to say because there's valuable information there, not only from yourself, but from your guests. Kevin Launders was the most recent one I listened to. He's another rarity. There are not enough of him or people like him to go around.
Speaker 2:My wife works in commercial insurance for a large global insurance brokerage, and everything you guys talked about about cybersecurity, the requirements to have a policy and the due diligence to do that everything he said was spot on. I can't go into the details that I overhear her talking about, but I can tell you that you guys are spot on and companies, dealers, whoever, that are not paying attention to their cyber side. That's an exposure and, coincidentally, you had mentioned you know people that are in the consulting space, like we're talking about, typically don't do that. Well, that is part of my book of business to talk about and I got the idea from my wife. She said you know, when you do these dealer reviews, you need to be asking them about cybersecurity. And I kind of ribbed her and I said, hey, are you trying to get me to sell some policies for you or what you know? And? But she goes. No, but she goes. They need to know that. They don't know that they're not doing that. They're hugely exposed. And you know the the FTC thing. Nobody talks about that either. And look, I'm not an expert in that particular field, but it does overlap into what I do on a daily basis from an operational mode of thinking.
Speaker 2:And and I take it a step further, going back to another recent podcast, you were talking about all the data points that dealers or any company for that matter but let's just stick with dealers they deal with. There's so many data points that none of us can keep up with them. It's this massive white noise all around us, so we're just picking and choosing the ones that are the hot buttons today and a reference was made by you or the other gentleman how you guys looked at this, and I've probably learned this from you at some point in the past. But when I look at a market review, even today I don't look.
Speaker 2:I don't really care about all the business system information other than I want to know transactions, I want to know who's buying from me, what they bought it for, what my profit margin was, when did they stop buying from me, when did they start, when did they fall off, and so on and so on. And I want to see that by department and I've used that methodology very successfully to take the operations large and small and, you know, to achieve high levels of absorption. You know we weren't calculating return on assets in the manner but I would venture to say that we were probably in those high-performing operations there was probably a tendency to be better at return on assets than not. But is it still where it needed to be relative to the standard you set?
Speaker 1:Well, the other side of that, one of the guys that you're probably referencing, his name is Nick Maverick has a company called Built Data. It was Nick. There you go. Yes, he talks about three clicks Right. And so go backwards. It's 1970.
Speaker 1:I'm kind of the parts manager in a Caterpillar dealer head office and Caterpillar used us as a prototype for product support, selling First ones in the world. And the primary prerequisite and I thought it was a scream was that the writing was neat. And the second criteria was we're going to pay commission on competitive items. Second criteria was we're going to pay commission on competitive items and none of the competitive items were items that Caterpillar manufactured, which I also found intriguing. And to put a circle on that thing, we'd interview people, we'd hire the people, we'd give them a customer list, we'd give them the keys to the truck and point them to the door. And we still do that and there's no real training. Don Buttrey does a great job for pillars. Xerox has had a program for years called Professional Selling Skills that does a good job, has had a program for years called Professional Selling Skills that does a good job, but nobody's telling a salesman how to manage their damn time. No, none of the salesmen put forward an objective by customer for next year, right. And then if it wasn't Nick and has built three cliques. And then if it wasn't Nick and his built three clicks.
Speaker 1:The salesman spends nights going over what they're going to do tomorrow. I used to for a while 20 or so years ago I'd do evaluations of salesmen. I'd get in a truck with the guy and we'd go around and they had the day all scoped out. But I'm sitting with their customer list and everything's fine until about the middle of the day. Then I say, well, we're close to this guy, why don't we go in there? And that's when it fell apart. Yep. So I'm doing a survey for a dealer in the northwest of the US and one of the customers was a woman.
Speaker 1:In the Northwest of the US and one of the customers was a woman and a dealer had created a product support salesman that was a woman and this boss of the customer had two comments. One your female salesman is taking my managers out at night and their wives are getting upset. Right, had not considered that for a minute. The other was that damn Napa truck delivery person with her shorts and tank top. Everybody in the shop stopped to go see what she's up to today. And then I'm talking to a guy. Last week this isn't my example of 23 or 18 minutes, whatever that I was waiting and this person said to me I called three or four suppliers, I got voicemail with everybody but one. I got a real person with one person. He said who do you think I did the business with? We've got this whole market coverage sales mystique. They're clerks, troy, yep, that's it.
Speaker 2:They're PR clerks. What can I do for you today? Hey, how'd you like that football game on Sunday? This is ridiculous and they don't have it. You ask them what are the alternatives to find something that is comparable, because my unit's down or whatever. And the answer is silence for the most part. Now, those companies that have robust e-commerce platforms they kind of fill the void there and AI is helping in a lot of areas do a lot of things. But even with AI and I know we're kind of deviating again, but this is good because this is an evolutionary conversation when you look at the human capital and let's talk about going back to your comment, return on assets let's talk about the human asset that you have in the dealership.
Speaker 2:Dealerships are running leaner than they've ever ran before and a lot of times and it's not just anyone. I've interacted with 30 different dealer groups over you know small, large over the last six months in conversations right, I'm out making cold calls, I'm selling who I am, what I am, why I am, and one thing I've noticed that pretty much every dealership is long lines of customers, phones ringing, not being answered and unhappy employees and a lot of dealers across everywhere. And it's interesting, and it's not just in commercial truck, it's everywhere.
Speaker 1:Let me interrupt for a second. At one point I was supervising the office and the counter in a parts department. Yes, sir, and I might have told you this story in the classroom because I tell it to everybody, and I might have told you this story in the classroom because I tell it to everybody. I'm in a cubicle that's looking at the front door of the dealership and to my right the left of the door. But to my right, looking at the door, is the receptionist, the telephone operator. There's a small table, a couple of comfortable chairs and a courtesy telephone. To my left is the parts counter and there's eight guys.
Speaker 1:Now, this is Hewitt Equipment and Bob was a wonderful guy, classy guy, a little bit of a side story. I'm out doing a physical inventory in the warehouse and I'm wearing jeans and a sweatshirt and I'm dirty and sweaty. And Bob comes out elegant in a three-piece suit and he puts his arm around my shoulder and looks me square in the eye and says I'm really disappointed in you, and you know the kind of guy I am. And my response to him was yeah, me too, bob. What's your disappointment? And you can see his whole body start to fall apart. He says talk about this. Later, when you get a moment, come see me.
Speaker 1:But what what it gets down to is, nobody really understands. They're putting the people that I call your heroes, the ones that build the relationship with your customers, the contact points. I don't care who they are it's a receptionist, a telephone person, a sales rental, I don't care but they're the ones that build the relationship and they're under unbelievable stress. So what I want to do and I'm talking to all kinds of people about this I want your personnel, your human resources. I want that on the balance sheet. And they look at me. Well, how the hell would we do that? It's pretty simple, goodness. You know how much you pay them. You know what the benefits are. Put it on the balance sheet. Well, what do you want me to do it? It an asset or a liability? It's an asset, oh, so how much do you pay these guys?
Speaker 1:Let's just take a number. Let's make it easy. Let's say we pay $120,000 a year. All in, it's too high, but let's use that because it makes the arithmetic easy.
Speaker 1:If my return on assets is going to be valid, that I want it to be 50%, and my assets are 10 grand on the balance sheet and there's nothing else, then I have to generate $20,000 every month of net income. If $20,000 a month of net income is my number and let's just say, for instance, I make 10% return on sales, which is strong, not very many dealers get there that means that I have to sell $200,000. With that one human asset every month, that means I need to sell $2.4 million worth of product every year. So I go down to the parts department and you might have a million dollars a year as a standard for a parts and service person on the counter. You might have $250,000 a year for a technician.
Speaker 1:How the hell do we get this done? Well, we don't. That's why the number of dealers is shrinking. And then let me just close it before you start. Internet's coming along, technology's coming along. We'll get in another plane. We'll go visit 100 dealers and I bet you we won't find two that have 20% of their personal service sales on the internet.
Speaker 1:Oh yeah, I can see that.
Speaker 2:Yeah, back then, right, even today, yeah, even now.
Speaker 1:Well, it may even be worse now I'm just being gentle, as I usually am right, or I try to be, but this whole world is so ripe for change. Artificial intelligence it was in a blog a while back, was at a Dartmouth conference in 1954. That's 70 years ago and hardly anybody uses it today. I'm talking to Joseph Albright, who's getting his doctorate this spring. He's doing lecture series for us on supply chain. He teaches classes at Bradley and Indiana University and I said what's the student like today? He said oh geez, you know, they're not even smart enough to use chat, gpt and understand when they submit the paper, that the grammar's wrong. That's a problem. We've got a problem. Fundamentally we do, and so that's why I wanted to kind of get you out into the public view, because there's so few of you and because I know what you can do and starting is a bit of a problem. I still remember that when I did it in 1980. Of course, I was 25 years younger than you are now, so I had a lot of time to make mistakes. Your medium-duty truck is a perfect example. Oh, absolutely. Yeah. Well, even just local delivery, for goodness sake, is a perfect example.
Speaker 1:I designed warehouses as a consultant early in my career with the railways in Canada and one of the trips that I was on was in Germany, was in Stuttgart at a Kodak distribution center for all of Europe, something like 1973. So it's a long time ago. And you walk in the door of this distribution center and the lights come on. There was nobody working there, it was all computerized. My chin hit the ground because we're looking at handing a guy a piece of paper.
Speaker 1:Every time an order comes in, there's three to five items on the piece of paper and say go pick it up. And we try to question the same, whether it's a field, a shop, a walk-in, a branch, whatever, it didn't matter, and I'm kind of taken aback. Then I go to Chicago and I got another distribution center and the men in the warehouse are given a full day's work when they arrive. So every item they were supposed to pick was given to them at 8 o'clock in the morning and the statement was when you finished it you can go home. So the productive guys were leaving in five hours and the slugs were leaving at 10 hours, right, but the slugs could see the prize at the end of the line and they were motivated to catch up. We have none of that today. Troy None.
Speaker 2:No, well, before I joined the automotive technician world I worked at a spring factory that made mattress springs and I worked in warehouse and distribution. Then I got a chance to actually in Texas. You could be union or not union. I was not union, but some were wire bend it X number of times.
Speaker 2:I take eight of them at a time and as fast as you could go, and you were paid your base rate hourly, but you were paid by the piece. Yep, that's right. And I'm like, wow, wow, I kind of, I kind of like this well, but like any unionized cyclical business there, there are challenges and and that really isn't what I wanted to do in my life, but but it did motivate me and yet some people that just would do their own thing, but I, you know, so you get this new kid. Now I'm ruffling feathers of union guys and I'm making more money than them and you know, and it wasn't my kind of thing, but at the end of the day it it taught me to hustle, and when I jumped into the automotive, world.
Speaker 2:It's the same thing. It's flat rate and technicians struggle in today's world with flat rate, in part because dealers may not be doing it right. I'll just say that in part. I don't think we've educated our incoming techs well enough to be able to adapt to a fast paced flat rate world. Right they're. They're expecting it to be an hourly payout and you know technicians can make a ton of money, ron, if you're highly skilled. I mean you could make $150,000, $250,000 a year if you pay attention and you're good and you hustle.
Speaker 1:You're absolutely right. But the other failure in that whole thing is we'll go and ask 100 people how they determine what the standard time should be for the job and I would submit to you. Maybe 90% of them will say it's the average Correct, and a man drowned in a river of average depth of six inches.
Speaker 1:It ain't the average at all. No, now I'm not going to. You know, one of my of my minor was statistics. I'm not going to get into heavy duty math, but what you're looking at is pick a time and then what's the standard deviation off that time? It's not average at all. It'll fall on your nose on average. So there's so many aspects of the business that are just screaming for somebody to provide exposure.
Speaker 1:When I started in the consulting business in 1980, there was hardly anybody doing what I was doing. I called myself a rental manager and I charged the same rate as a field service technician did. So my challenge to the dealer was you know, I can run your business better than you can and you're going to pay me to prove it, but I'm not going to charge you more than what you charge your customers for your technician. So they were going to be embarrassed if they were going to say no, because what the hell are they going to lose? Right, yeah, right. And son of a gun, the son of a, made money for me doing it that way. And, and he was right, yeah. And I had one guy who was the son of a caterpillar deer that got canceled because he didn't want to get in the rental business, who used to have me do personality profiles for every job that he wanted me to do. And it was kind of cute because I worked in a prison and I was taught how to do those things. I did it for criminals to determine treatment patterns.
Speaker 1:So Fred was the guy's name, that's all I'll go with, and he gave me this to hire me the first time. He said you're perfect, this is great. And about a year later he had another job. We'd worked seven or eight months together and he said do you know anybody? I said well, what are you looking for? He said well, you don't have those characteristics. So what are you looking for, he told me. I said, well, send me the questionnaire, the profile. I sent it back to him.
Speaker 1:The next thing was I got a phone call. I said how the hell do you do that? I said what he said. That was a completely different profile and it fit this job perfectly. How do you do that? My answer, little flip, was I'm not just a pretty face and you know, looking at me it ain't true. But we have to be able to find openness Right and that's another aspect of leadership. That's kind of interesting. We've got two assessments that we're putting on the site this week on leadership. One is called Reflect EF, which determines are you a strategy person, are you an implementation person, are you a doer? And the other one is called a tabletop exercise, and it's are you open minded or closed? Right. So that's six variables, and I look at everything like a sports team. The manager, the leader, never hits the field of play. They're on the sideline, and my metaphor for that is a conductor.
Speaker 1:The conductor is the only musician that has their back to the audience, to the customer absolutely right, and they're totally dependent on the people in front that have the instruments in their hands and he doesn't have, or she doesn't have, one anywhere near it.
Speaker 2:Well, you know, it's a struggle and that triggered a thought. I was in a conversation the other day with a group of people. People and I asked or asked a variety of questions and then I ultimately asked this may seem direct, maybe blunt, but I need to ask has anyone in this room asked this simple question Am I part of the problem? And I get some weird looks. And then I get silence and I say look, it's not meant to to be hurtful, but it is meant to make you think. And I said you know, that's one of the hard lessons I learned a long time ago when running operations.
Speaker 2:If, if I'm struggling, I damn well better be asking am I part of the problem or am I part of the solution? I may think I'm part of the solution, but my actions or inactions may be creating the problem. Or I'm giving my team too complex a process to where they can function properly, or not enough training, or the business system we have is antiquated, it's slow, it's cumbersome. You know it could be a lot of things, and so it's not really a personal attack on any particular person, but you got, you have to have that self-reflection, and a dealer review is exactly that. When you come in and you talk about that, you're forcing that dealer principal and their leadership team to look in the mirror, and oftentimes nobody asks that question because they don't want to know the answer.
Speaker 1:Oh, and they wouldn't know. They typically and I don't mean this as a smack Are you part of the problem, part of the solution? What are your pain points? What keeps you awake at night? Yeah, and then you know this methodology we use. You mentioned computer systems and that's a classic. I call it paper to glass. All we've done is we've taken a piece of paper and a manual process, put it on a computer and made it happen faster, right.
Speaker 1:And I always go back to what does the customer need and what does the customer want, and we don't ask those questions. So the customer calls in to the parts counter and wants to order parts, and I do this all the time, or I used to. I'm not on the road, as I used to be, but I pick up the phone and I put it out beside the guy's ear and I said what's that noise? And they'd look at me weird and I said you don't hear that noise, do you? What do you mean? Well, that's the dial tone. Do you ever pick up the phone and dial out? Or do you pick up the phone and there's somebody there? Oh, there's somebody there, correct?
Speaker 1:And then I say well, what's the first thing you ask the customer. Well, they got to tell me who they are and I said, yeah, that's kind of cool. So a customer's coming into you and you ask who they are. What do you think the question is? They want to ask Well, have you got it? How much is it? So all we did is we went from paper to glass. We didn't try and figure out what the base problem was or find a solution to it, and we continue to do that, and have been doing it my whole work life, which now, believe it or not, is 55 years. Right and before long I'll figure it out.
Speaker 2:Well, it's always good that you're motivated and well, you know it was a mutual friend of ours, miss Kim Phelan. You know she and I were having a conversation last week and one of the the as the conversation developed and, by the way, going back to the other conversation I mentioned when I asked them if they were part of the problem, it was we were discussing what their pain points were and they were. It was random, it was, it couldn't answer the question. Yeah, nobody. And these people all work in the same building, same group. They weren't even aligned with what their pain points really were, interdepartmentally or extradepartmentally. I mean, it was an interesting conversation, to say the least.
Speaker 1:But you can have that conversation, troy, with probably 80 or 90% of the distributors in this country, if not the world. Right, you know it's remarkable. So how do we know we're successful? Well, our financial statements. They come out every month. Gee, I didn't hit my goals this month. Well, that's last month. What the hell is that? You know? So now I spend my first week or two looking backwards to find out what I should have done differently. That caused that problem, and I make so now I'm. It's kind of like going on vacation for two weeks and nobody does your job, and you come back the first day, first week, you're catching up all of the stuff that should have been done by somebody else.
Speaker 2:it drives me crazy well, and, and it's, it goes back to, like the phone call you had you're on hold for 23 minutes. Finally get someone, you're back on hold, and so on and so on. And with what kim and I had mentioned the other day is it and I pulled up my notes it dealers don't get in business just because, hey, we're going to be a dealer today, we have the capital to do it, and we're going to open a branch and we're going to sell widgets, and everybody's going to buy widgets, just because we got the best widget in town not necessarily and cat dealers gone.
Speaker 2:They've gone through several iterations over the many decades that you know. They weren't always that favored, but people still favored them for a variety of reasons. But it was only because it was a preferred product. It wasn't that their dealers were necessarily respected. And there's still some struggling cat dealers out there, but there are some awesome ones too. Now and I call it here in my notes it's called understanding the customer demand and I'll quote demand is key to aligning the deep. Their demand, the customer, is key to aligning the dealer's processes and the use of data in a manner that's mutually beneficial to the dealer, the employee and the customer.
Speaker 2:Because if you get those three groups of people talking right, acting. Right now your market shares up, your absorption's up and the new KPI that you suggest, return on assets, is going that way. But oftentimes people don't want to have that conversation. And going back to one of what I opened with on the medium duty market relative to freight movement, everything's judged on class eight freight movement but nobody's talking about between here, Dallas is, depending on which part of Dallas, let's just say an even four-hour number San Antonio's three, Austin's three. There's so many medium-duty trucks now moving and you would think, well, why would they run medium duties back and forth? Because they can't haul as much, why not an 18-wheeler?
Speaker 1:Well, there's a lot of reasons.
Speaker 2:One of the primary reasons you can't find drivers. You can get a driver for a CDL, for a medium-duty truck, possibly, but if you keep it under 26,000 GBW, guess what you don't need a CDL. Now you can find more drivers, so a driver shortage contributes to some of these other things, as well, I'm going to take us off the table and into a completely different area.
Speaker 1:Now, in the year 2033, it's forecast that America is going to be short 3.8 million employees.
Speaker 2:Doesn't surprise me, to be honest with you.
Speaker 1:The current administration wants to bring more manufacturing back into America. That's not going to make 3.8 million, it's probably going to be 7.6 or 15 million or something else. So there's chapter A, chapter B the people that are going to be in the workforce in 2033, when this 3.8 million is shortage, are they are in grade four today. Yeah, the reading comprehension in grade four, at grade level, is 32% in America. The arithmetic comprehension is 37% in America. That means basically two-thirds of the people aren't even up to grade level, correct? Okay, we're going to be able, with technology and I'm not going to go through the iteration of all of the things, but it starts from a computer in the 40s and 50s, through telematics, through GPS, through all of this stuff, we're going to be able to eliminate through technology probably 50% of the workers. But because of that education level, we don't have brainpower to be able to take advantage of the work that they're going to have, the time they're going to have to be able to work in their head, correct? So here comes Ed Gordon, one of our contributors. We got some very smart people that write for us on blogs and podcasts and other things. Ed said he's got a PhD in economics and another PhD in history. You know, one isn't enough. He's on the board of the Federal Reserve in Chicago. He teaches at Northwestern.
Speaker 1:21 bestsellers in the New York Times. One of them was called Future Shock. In that he said in 2030, 50% of the workforce in America, that's about 75 million people it's a little higher than that, but make that number that way are going to be unemployable because they won't have the skills. So here's another stool. And we say, okay, we've spent hundreds of trillions of dollars in technology. How much have we spent on sociology?
Speaker 1:So what the hell is America, or any society for that matter? And America is the one that is most able because our economy is the best, with the mix of what we've got, with work, etc. Etc. Is better than any other country in the world, that is, except for China. I can force you to work or other places not many. How the hell do we get this done? And the fourth stool is I'm 78. Now A lot of my friends are running dealerships. They're the same age. They're protecting the status quo. They're making more money than they ever dreamt they would. They don't want to touch anything for fear it'll blow up, and they've held back a whole generation, the next generation of leaders, which should have a 10 or 15-year gap in the industry because they're not having the opportunity, right?
Speaker 1:We so desperately need people like you and what you're going to do to come in and start helping us fix this, and there's enough market out there for you to call up and say, yeah, and they understand what we're talking about. 60, 70% don't, but they're 30 or 40, you'll be fine, yep. This is a really difficult time and nobody realizes it.
Speaker 2:Well, it is scary. And I was in a meeting this morning with a client and we were having a very comprehensive conversation about how I can help them and what I bring to the table. And again, it's not trying to say Troy Otmer is all knowing, but I do bring a unique skill set in this particular case. This was a governmental centric conversation because I have an extensive background in governmental bid processes, which most people run from because you know it's a stack of paper on a bid, ron, and it makes me wonder why I didn't go to law school. But at the end of the day it is a challenge.
Speaker 2:It's a challenge for dealers or companies to work with governmental entities and this conversation was more leaning from the governmental side, asking for help how do we get more vendors to work with us? And that was what I was tasked with today in this conversation was how can you help us get more vendors? And I said well, you know that's a long conversation, but it starts here. You got to simplify the process and I'm not picking on any of the MWBE or the hub, the historically underutilized businesses or the minority women-owned businesses. All those things are workable and I can say that, coming from both a large privately held dealer group and a large publicly held dealer group you would think all those things I just mentioned are negatives.
Speaker 2:No, you just have to understand how they apply to your business and how you can interact with those right, and you know it's part of the whole process. But they're struggling to find subject matter experts that have the knowledge to be able to do this. And that was part of my sales pitch today, and it really wasn't a sales call in the traditional sense or no fancy presentation, but it was a conversation. I said what I want to do at 58 years old is, by the time I'm 78, I want to have helped that next generation get caught up for the gap that we have. And that's exactly how that conversation went. We have a gap in our industry, and it's not just our industry. This is a systemic problem, and then it's compounded by the fact that when someone gets old enough and gets out of high school, their reading level is maybe fifth or sixth grade level or comprehension. And maybe I'm being generous, maybe I'm being too harsh, but I don't think so. And maybe I'm being generous, maybe I'm being too harsh, but I don't think so. You know we have to do better in schools and that's what I mentioned earlier On the vocational side, one of the focuses that I've had for the last decade or so, and more so in the last couple of years.
Speaker 2:I was working with local high schools and OEMs to get junior and seniors in high school into their auto and diesel and welding tech programs where they're doing internships. They're coming out with an associate level possibly an associate degree or college courses similar to that, and you know some of your new products I got the wheels turning. Thinking about that's another conversation where Ron and Troy need to talk, and you know. But you know that's our future right there in vocational trades. You know I'm a product of that and I'm proud of that, you know. But I did go back to school at a later date only because I realized, hey, if I want to learn all this and be the best I can be, I need to add some more tools to my toolbox.
Speaker 1:So that's a perfect place to end this particular podcast, troy, because we have to get better at our game. Yes, I'm in workforce development, adult education, and I'm starting with the age of 16 and going to 76, because we're going to have to retool over our lifetime many times because of technology changes and business changes. But I think we've covered a lot of ground and we've got two or three or more. We should probably plan on one of these things a month for a while, maybe for the rest of the year, because there's enough for us to be gabbing about, sure. So I'd like to thank you and I'd like to thank the audience for listening. This has been a long podcast for us, but I think it's been a meaningful one. So mahalo to all of you. And but I think it's been a meaningful one. So mahalo to all of you and Chloe. I look forward to the next one and to all the rest of you out there. Have a great day, mahalo.
