Stop Skinning The Cat And Start Serving Customers

The fastest way to lose the next generation of technicians is to make the job feel rigged. We sit down with longtime automotive leader Jim Centorbi to talk about what’s really happening in the workforce, why so many young people avoid the trades, and how outdated systems inside the dealership are pushing good talent away.

We get specific about technician compensation and the flat rate pay model: what it rewards, what it punishes, and why “uncontrollables” like scheduling chaos, parts delays, and inconsistent estimating land directly on the tech’s paycheck. From there we zoom out to the bigger operational issue: too many service departments and fixed operations teams run without a real handbook, clear job descriptions, or consistent training. When everyone improvises, customers wait longer, advisors guess more, and trust erodes.

Then we look forward. If direct-to-consumer vehicle sales and EV contracts keep moving the way they are, what happens to the traditional dealership? Where do technicians go? How do parts and service protect labor market share and parts market share when customers can buy everything with three clicks? We argue for a return to basics: mentoring, process, data-driven forecasting, and the golden rule as a competitive advantage.

If you care about dealership service, fixed absorption, customer experience, and the future of the automotive industry, this conversation is for you. Subscribe, share with a service leader or technician, and leave a review with the one change you’d make first.

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Transcript

Welcome And Setting The Scene

SPEAKER_02 0:02

Aloha and welcome to another candid conversation. This morning we're joined by a gentleman who's got really deep experience in the automotive industry. And I wanted us to just start out with a conversation about what we find with the is going on with the workforce today. Because it's big changes. So let me introduce you to Jim Turborby Centorbi. You've read a couple of his brogs. He's a very insightful man, very thoughtful man, a very experienced man. So with that as a build-up, I hope I didn't pump too much sunshine, Jim. Welcome aboard, man.

SPEAKER_00 0:39

Thank you, sir. Welcome. Nice to be here.

SPEAKER_02 0:42

Yeah, you've got a background that I should show, but I don't want to. That's that's right outside my window.

SPEAKER_00 0:50

Yeah, I know. That's why I chose it. Yeah, and I'm jealous.

SPEAKER_02 0:57

Well, it took me, don't forget, I'm almost 80 years old. It took me a long time to get here. You got plenty of time, man. But uh I I recommend it to anybody. It's it's phenomenal. Which island? Oahu. Yeah, now there have there's something you have to realize. There's only one island out of the five majors that has hospitals. Oh, every other island has urgent care, and that's fine, but they're not allowed to prescribe any antibiotics, they can just do generics, and if there's any surgery required, you're helicoptered over to here.

SPEAKER_00 1:32

Wow, I didn't realize that.

SPEAKER_02 1:34

Yeah, no, most people don't. So, and and I found out when I had to have my appendix taken out, and you don't want to hang around much, Ben. That's that's pretty painful.

SPEAKER_00 1:45

You don't want to wait for the helicopter, yeah.

SPEAKER_02 1:48

So looking at automotive, looking at the construction equipment trades, I see a a number of things. The first one that's obvious is anybody under 25 really doesn't want to work anymore. Um, anybody who comes out of university has an impression that they deserve the corner office almost right away without really

Workforce Shakeup In The Trades

SPEAKER_02 2:07

knowing the ins and out of the business. And the the last thing that's kind of happened with us, I don't know what's happened as much in automotive, is ownership or leadership has deferred leaving by about 10 years. So when they used to transition 55 to 60, now it's 65 to 70, and in some cases 75. What's it what's it look like in automotive?

SPEAKER_00 2:34

It's very similar. I I think we've spent a long time uh planting the seed in in children from an early age that you have to go to college to be successful, uh, which kind of downplays the the service industry. And uh it's unfortunate because uh we'll always need the service industry people. Um, so I I think you're you're spot on there with the the younger generation under 25 doesn't want to get their hands dirty because they were taught that that's not the way to be successful. Um but that that's not the case. Um and you know, I think in the automotive industry, what what hurts the reputation and and uh keeps a lot of people out of the automotive industry is is the pay plant. Uh frankly, flat rate in my mind is it was great in the 80s, but you know, times change. Uh so I I think that that needs there needs to be an in-depth look at the way that technicians are paid. Uh there's there's too many variables and too many uncontrollables that the the technicians have no control over. Uh but those things affect their pay. So, you know, uh flat rate it can be part of it, but I think, you know, if you're there for 40 hours, you should be paid for 40 hours.

SPEAKER_02 4:08

So and uh let me let me jump in there for a second, just to get yeah, I agree with you completely. And and the other thing that screwed up the 25 and down is COVID, because they got it started getting checks in 20 2020 and they didn't have to go to work.

SPEAKER_00 4:25

Yes.

SPEAKER_02 4:26

So what I did with my flat rate starting, I don't know, 20, 30 years ago, is I used standard hours, and there's a long, I mean, this is a subject for a podcast by itself. Everybody looks at flat rate as average, it isn't at all an average. So what I do is I add 15% to it. I mark up whatever the time is by 1.18, I set my schedule with the standard time, the average times, I quote with my flat rate 118 time, and I give the men the option, I'll pay them the 118 time. I don't care when they finish. And if they finish and instead of eight hours, they finish at six, I'll give them another, I'll give them the choice. You can I'll pay you another two hours, so today you'll get 10 hours pay, or you can leave now. And I you know, and this is a long time, it needs to be revisited, but something like that, Jen. Yes, and then let me flip it over to another place live golf and the PGA, or right now, the French Open, the players are getting a smaller and smaller piece of the puzzle. And the guy that changed that was Larry Ellison Ellison from Oracle. He bought the tennis tournament in Palm Springs, Indian Wells. And the first thing he did was he opened the field up to 96 people on both sides, the top 96 in the world, and he doubled the pay for the players, and he pissed off all excuse my language, but he pissed off all the majors because he outpaid them all. His deal was the people that are making us money here are the players. That's right, and the people that are making money in a dealership are the technicians. That's right. And too many of like the dealer principals and leaders, they're basically accountant and equipment guys, they don't understand the shop, they don't want to. So I don't I didn't mean to take your train of thought away, but I mean that it opens up so many doors because your comments are so on point.

SPEAKER_00 6:47

Sure. Well, look, well, let's take the example you just you just touched on the other end of the business. Look at the salespeople pay plans. You know, they're they're they're rewarding, uh, they're making money, but you you the technicians are are looked at like the unnecessary. Well, the whole back end is always looked at as a necessary evil. Uh I joke, I you know, the the the new name for fixed operations is the aftermarket department, but in actuality it's the afterthought department. Yeah.

SPEAKER_02 7:22

I I was lucky when I started in 1969. The guy who was still the chairman of Caterpillar was a man by the name of Bill Blackie. And he delivered milk behind a horse-drawn carriage in Peori, Illinois, to get his degree before in the 30s.

Handbooks Beat Guesswork Every Time

SPEAKER_02 7:41

Before World War II, every equipment dealer, there were seven of them, they were all about the same revenue. After World War II, Caterpillar was head and shoulders above everybody because they got the tank contract. So the mechanics that were in the Corps of Engineers and other, they got used to working with CAT. They come back, and here comes Blackie. He's an accountant. And he says, number one, the advantage Caterpillar has, and General Motors and others have the same advantage, is they all have the same chart of accounts. Because the brand they carry, GM, Forge, Dallanish, whatever, is the major brand in that dealership. Used to be. It's not so much to anymore. But what Blackie did was he created a book that he called Parts Gramps. And it had every process, procedure, report, everything in there, what to do, it follows the bouncing ball. He created another one called Service Gramps. So when I started, I was hired on a contract to fix a computer problem, so I never was really part of the deal. But I was always looking to solve a problem. So go to automotive. I traveled a lot. I bought a used Cadillac that was owned by the dealer principal, had about 3,000 miles on it. And I'm one of these jerks that I'll give the dealership all the repair and maintenance forever. I say, if anything goes wrong with it, it's yours because I'm not touching it. Nobody else's. So because I traveled so much, my wife and I take the car to the dealer, we'd sit down and have a cup of coffee. It only takes an hour, hour and a half, and we'd chat. It was wonderful. This one particular day, I get the car there at 7:30 when I'm supposed to be, and we go get the coffee. I asked, it's still about the same time. Yeah, about an hour, hour, hour and a half. So at about an hour, I go back to them and say, How are things going? Oh, well, we we ran into a snag, we got overloaded. It's it's gonna be at least an hour. I said, What do you mean? Well, we haven't started yet. I said, Well, how the hell do you manage your schedule? This is the wrong guy to do this to, right?

SPEAKER_01 9:53

Yeah.

SPEAKER_02 9:54

And I said, Well, okay, I we'll go back and have another cup of coffee, but come and tell me what's going on. 15 minutes later, the guy comes out from the shop, tells me the car is ready. So I go back, get the paperwork at the service office to pay. Actually, it's not the service office, it's the accounting group. They give me the bill. I said, Where's the service report? Well, there isn't one. So I can I take the so I take it back to the guys. I said, Who did this? The manager did. I said, Terrific. He comes out and he said, uh, I did a quick look. I didn't do the whole job. And I said, Well, how come you charge me for the whole job? And he knew it was the owner's car. And he knew I owned knew the owner. So what do you think happened next? The three of us are in the owner's office, and the owner's looking at him. He said, What the hell did you do? And the owner said, You know, Ron has been teaching this for 30 years. Jesus Christ. It's it's unbelievable, but but you know, today, a service manager, where's their job description? Right.

SPEAKER_00 11:12

And and you you you nail it on the head with the cat gentleman. That has been my experience through you know my 40 years of of work, whether it be in an automotive dealership or an OEM, is there is no handbooks, there is no training. There, the software has no manuals. It's you know, here's your pen, here's your here's your desk, here's your keyboard, have at it. Uh, the lack of training is is just unbelievable. And so, you know, that first six months you're you're left swimming and drinking from the fire hose, trying to learn everything. And it just it's you know, it's one of the things I talked about uh in one of my blogs is that what happens is you have everybody doing their own thing, yeah, because they're left to interpret it. There's you know, it's been my experience is that most people, uh, we as a people want direction. Uh, we want, you know, guidance, we want rules, we want guidelines to, you know, we want to our swim lanes. We and and we work best in those those lanes. And uh, you know, one thing I discovered early on was uh when I worked at a big dealership and we had multiple teams where and and different schedules where you know different teams would come in at different times, different advisors would come in at different times. And what was happening was you had people coming to pick up their cars or asking about their cars like you, but you know, the advisor didn't know anything about it because that was that another team's car. So, you know, it dawned on me that well, I took a look at a McDonald's or a Burger King or some franchise, how how they're all the same. Doesn't matter whether I go in, you know, my local McDonald's or I go in to one across the country or you know, in Europe. They're basically you can expect the same same process. So that's when when I realized that, that's when I started to become more process driven and did just like the gentleman you mentioned at cat was wherever I went, I would observe and develop a handbook, a step-by-step process for people to follow as they came in. And then everybody was on the same page, and you knew what to expect.

SPEAKER_02 13:52

You know, if you think if you think about how we evolve as people, the very first thing we're taught is obedience. Yes, and the parents do it in the way to protect us. Don't touch the stove, you're gonna burn yourself, look both ways, etc. Then we go to school, and we have to be obedient again on how we write. I don't know that they teach cursive anymore, but used to be, and the same thing with arithmetic.

SPEAKER_00 14:23

Well, do you think it's still the same as it was, though, Ron? Well, my daughter's a teacher. It's a lack of it now.

SPEAKER_02 14:29

Well, my daughter's a teacher, grades six through eight, that's middle school in California. She teaches English literature. They have seven periods a day, six of which are with children, a classroom. Her classroom

Schools, Testing, And COVID Fallout

SPEAKER_02 14:45

size averages 40, and 60 percent are English second language. Wow. And I say to her, her name's Caroline. I said, Caroline, how the hell does anybody learn anything? And she's got a master's in education, she's well educated, she's a wonderful teacher. I know I know I'm biased, but it's true. So this year in California, they moved from STEM, science, technology, engineering, mathematics, to STEAM. They added the arts, right? And guess who ended up running the arts?

SPEAKER_00 15:23

The wonderful.

SPEAKER_02 15:24

Yeah, so we have a family affliction. We don't know how to say no. Before that, there's another learning process, like you said, standard testing in America, grades four, eight, and twelve, English and arithmetic, plus or minus two points, are 30% at grade level, meaning 70% are not. And I'm not talking about them being on the high end, it's on the low end. So there's a process in California that was started in the 80s, not just California, it's spreading across the country, called avid advancement via individual determination, which is the missing element in almost every teaching piece. So that every class, every kid, student has to stand up once a week and give a 15-minute presentation on whatever the hell it was in that class that has made a difference in their life.

SPEAKER_00 16:21

Nice.

SPEAKER_02 16:22

So here comes critical thinking, here comes presentation skills, here comes overcoming fear, all that good stuff. And I say to Caroline, I said, Thank God I'm 80, I don't have to compete with these dudes in 20 years when they come out. I mean, that's a huge advantage, Jim.

SPEAKER_00 16:36

Wow, that's good. So the tide, the tide's turning.

SPEAKER_02 16:41

Well, it is, but here comes drama, and all of a sudden Caroline was doing 14 to 16 hours. This flat rate thing. And and let me give you another one that 60 English second language is obviously agricultural down the eastern end of Palm Valley. It's called the Imperial Valley, very, very rich ag country, but probably 80% of the workers are illegals. They don't have any money, they don't have computers at home. So here comes COVID, and the kids were sent home. So those kids didn't have any schooling for two or three years. And to make more interesting, the school board decided that teachers had to go to school and teach remotely from their classroom. You know, it some of these things are stranger than fiction. You can't you would never think to do these things. But it you know, what's what surprises me so much is how simple you and I are in how we think about it. Tell me what you want me to do, tell me what the job entails.

SPEAKER_00 17:48

Exactly.

SPEAKER_02 17:48

Help me be able to do that, train me, and then don't ignore me. Let's stay in touch with each other.

SPEAKER_00 17:57

Right.

SPEAKER_02 17:57

And they don't do that anymore.

SPEAKER_00 17:59

Yep.

SPEAKER_02 18:01

I it's it's been I I don't know that they ever did. I when I hired on a contract to fix the problem with the computer, I was blessed because I had the senior partner of the consulting company spend a day with me, eight hours, just me for four months. So I had 16 weeks, 16 hours of training with him. And I bad comment, but I probably knew inventory management at the end of that thing better than 99% of the people in the world. Because who the hell has that kind of intense training?

SPEAKER_00 18:33

Right, right. You don't see that, that's for sure.

SPEAKER_02 18:36

No, and and so that brings me to mentoring. We don't do that anymore. No, no. Why did that stop? Have you any conclusions you want to share?

SPEAKER_00 18:51

I I don't know. I I kind of think there there's

Mentoring, Legacy, And Fear Of Replacement

SPEAKER_00 18:55

a you know a fear amongst people, somebody taking over their job. Uh that seems like that was becoming more prevalent. Uh to me, it was more important. To me, that's my legacy, is the the people that I made successful. So, you know, I have advisors that I trained, you know, that I took from being a porter to an advisor that went on to be managers. That that to me is is important.

SPEAKER_02 19:32

I love that.

SPEAKER_00 19:33

Yes, that that's that to me is yeah, a win. Um that means I'm successful. Uh and and that's the thing I cherish the most. And I still talk to those people to this day. Uh to see them be successful is is just it's incredible. Uh, but you don't see that much anymore. I I've seen a lot of managers out there that want to keep everything close to the best, uh, for fear that they'll be replaced, I guess. Uh that's the only thing I could contribute to.

SPEAKER_02 20:12

You know, I another of the funny blessings that I had is I was a competitive swimmer in my teenage years. And I learned very quickly there's eight people in a race, you're up on the blocks. If I finished last, but I beat my best time, I won. Right. So from a very early age, I recognized that I the only person in the world I have to compete with is myself.

SPEAKER_00 20:40

Yep.

SPEAKER_02 20:42

And that takes away all kinds of BS relative to I'm gonna try and make you look bad so I get the next promotion or so I get the raise.

SPEAKER_00 20:52

There's so much of that, and then you see that, it's so disheartening to see that.

SPEAKER_02 20:56

Isn't it isn't it strange? Now, I I I guess I should have expected it. It because you know, the environment society today, and I I don't want to get into the man, man, woman, woman type of thing, but if you're husband and wife and you have a couple of kids, you're both probably working. If you've got a half decent amount of money, you'll have them go to a daycare after school. Otherwise, they're going home to an empty house, there's nobody there. You get home and you have dinner together, which used to be the time that everybody could talk to each other, and and and now they're so exhausted. Yep. And they, you know, so the dinner table, go go to look at a restaurant. I don't care if it's McDonald's or an expensive place, the kids are on tablets.

SPEAKER_00 21:41

Yep.

SPEAKER_02 21:42

It drives me nuts. So if you look at statistics, last year, 2025, four and a half hours a day, school aged children are on social media and bless you, 30 minutes a day, they're reading. Is that upside down or what? Jesus. Yeah, yes, sir.

SPEAKER_00 22:00

Yeah, that that uh the computers and the phones have not made our life simpler, that's for sure. Uh they've done the exact opposite. They've captured us and you know.

SPEAKER_02 22:12

I used to pick up the phone, Jim. I'd go to a counter, I'd pick up the phone, I'd put the receiver by the guy's ear, and I'd say, What's that noise? If it looks like I've thrown a horn or something. He says, What do you mean? I said, You hear that noise? He said, Yeah, what is it? The dog's home. Oh, okay. How often do you hear that? I said, I'll bet you every time you pick up the phone, there's somebody on the other end. True or false?

SPEAKER_01 22:36

Absolutely.

SPEAKER_02 22:40

I had I had a counter very early in my work clear, I hit a counter of eight guys. Telephone and counter sales. And my cubicle is looking at the front door. To my right is the receptionist for the company, a couple of comfortable chairs, a table, a phone. And to the left of the to the right of the door, to the left where I'm looking was my counter with eight guys. And the owner loved to look busy. So here's a Friday afternoon. It's about three o'clock. This is an absolute true story, as God is my witness. A guy walks in the front door. He looks over to the counter. It's packed. He turns to his left and goes and sits down and picks up the phone. He piles the phone. I can hear the receptionist answer the friggin' phone. She transfers it to the telephone counter area. The guys are all busy. I saw one guy look at his client, he's in front of, and say, Excuse me, I have to take that call. He leaves the customer, answers the phone, takes down an order. The last question, and I'm listening to all of this. Last question is, where do you want me to ship it to? The guy stands up and waves. He said, I'll pick it up. I'm over here. We trained our customers. That was 1970 or 69. We trained our customers, you have better service if you use the phone. I could kill to get the guy to come into the store now.

SPEAKER_00 24:06

Yeah.

SPEAKER_02 24:06

In-store merchandising. What the hell happened?

SPEAKER_00 24:09

Yep, you're absolutely right. It's definitely a different world. Now it's you get on your computer and and they ship it to your door, right? Uh there's there's no relationships. I and I think that's a that's uh a killer, is the relationships. But you know, just like you just mentioned, the kids don't really know how to have relationships anymore. Uh, you know, I heard a gentleman say one time, and and he was the vice president of the parts operations for an OEM, and and he said parts is not a relationship business. It you know, they're gonna go wherever the cheapest price is. And and that was never never my experience. It's it's a very relationship business. Uh, and to me, to this day, it still is.

SPEAKER_02 25:00

Um that gentleman's thinking is where we went astray.

SPEAKER_00 25:05

Yeah.

SPEAKER_02 25:06

What we've done since I'm gonna say since the 80s, is we've put profits ahead of people. Yes, sir. Volume has not gone down, but the headcount has. Yes, sir. And in 1980, I wrote three books for the Association of Equipment

Relationships Lost When Profit Leads

SPEAKER_02 25:26

Dealers. And one was called the Product Support Handbook, had every job description of a parts business, of a service business, of product support, parts and service sales and marketing. Standards of performance, prerequisite skills for every job. That's forty-something years ago. One of the the next book was about standards of performance, and sales per employee was one of the critical metrics. And in those days, the the percentage hasn't changed, but in seven percent of the sales of a parts business is the personnel expense. So if I have six million dollars of revenue, six hundred thousand was the sales per employee that worked, that's ten percent of the sales, and seven percent was the wages, that's forty-two grand, and in nineteen eighty, forty-two grand was reasonable. In twenty twenty-five, forty-two thousand is not reasonable.

SPEAKER_00 26:39

Well, but that's still about the pay.

SPEAKER_02 26:41

It it's it that's number one, but number two, the the sales per employee now are closer to two, two and a half, three million. And we wonder where the relationship's gone. Yep. There's we we've driven them away.

SPEAKER_01 26:58

Yep.

SPEAKER_02 26:59

It's you know, the guy that you you mentioned that we've got this internet and they're looking online at night. Who at the dealership calls them the next morning, say, hey Jim, I noticed you're looking at such and such for your car. You were looking at this part number, we had it available. You checked the price. I didn't see where you ordered it. Do you mind my asking? Did you order it last night? Start a discussion. Yep. Who the hell does that? Nobody. What in the hell's the the matter with us?

SPEAKER_00 27:28

Yeah, uh I'll tell you a story. I I worked at a uh a large suburban dealership, and when I first started there, you know, I'm still getting a feel of the place, and and then general manager would walk through the the drive in the morning on his way in, and first thing he'd say is, Where's the number? Where's the number? Yeah, and he and he where we at every day kept coming through there, and you know, the about the second we come there, what I noticed was that the sales department would give new customers, whether new or used car, give them first three oil changes free to get them to come back, which is that's fantastic, right? Well, I started noticing that they had they had loop techs, young kids, and you know, they would do the oil change, and and then they would wash the cars, and and it was taking generally literally two to three hours to get these oil changes done. So you got new customers sitting in your waiting room for two to three hours for an oil change, and all you're doing is is pissing them off, basically. Excuse my language. Uh so that I finally told them that. It's like, you know, that you got a bigger problem is then where's the number? You need to take care of the customer, and the number takes care of itself, and that's what I've always done is take care of the customer, you know, golden rule, right? Everybody forgot about that, you know. Treat others like you want to be treated. You know, would I want to go sit for two hours in a dealership? Everywhere I go, I'm a consumer, yep, right? And I have an expectation of how I want to be treated, whether it be the hardware store or or big box store or or or grocery store or or restaurant. I have expectations of how I want to be treated. So why wouldn't I treat my customers the same way? And and that's all I ever applied.

SPEAKER_02 29:38

Then you know everybody becomes numbers, and the guy that's asking where we at that's all the history. You can't do anything about that, right? What always I was after is what's our forward look? Have I got some work to keep everybody busy? And then okay, what backlog, because I want to have 100% utilization, what backlog do I need to have? And how far can I go before I piss off the customer? Right. So in in my world, I got field service. If somebody wants a technician to do a repair in the field, I might have a day. I gotta be out there the next day. If it comes into the shop, average length of a work order, now it gets fancy. How you know how many hours? So if you have a 20-hour work order as your average, I can have a technician do two a week. Right. I got 10 technicians, my capacity is 20. And I'm gonna say I got a backlog then of half a week, and the customer, that's okay. But if all of a sudden the backlog goes to two weeks, and instead of 20, I got 40. My probability of losing the customer goes from zero to almost 100%. Yes, sir. And I I don't know an automotive that I don't know that market share like you do, but in the construction trades, labor market share is somewhere between 10 and 20 percent, high performance 20 percent, lower, less than 10, but in that range, 10 to 20 percent. That means 80 to 90 percent of the labor on my car, my machine, is done by somebody else. And they don't have the training that my guys do, right? They don't offer the same warranty that my guys do. Right, I don't know what parts they you use, and I know what my guys do. Like all of this stuff, and we we just let it happen. Yep, yep, yep. If if I say to you, Jim, that in 10 years, let me get specific. Let's say 2040, so roughly 15 years from now, the the automotive dealer will not exist. It'll be direct sale from the manufacturer.

Customer Experience, Backlog, And Capacity

SPEAKER_02 31:55

You agree with that?

SPEAKER_00 31:56

Yes, sir.

SPEAKER_02 31:59

The contracts for the electric vehicles from Ford are already showing that. They're gonna the dealer will not have inventory, they ship directly from the factories. Yep. They'll give a trade-in value, true card, price, they'll give you a guaranteed value, they'll pick up the vehicle, take it away, give you a test drive for a month, all of this stuff. So, what does the dealer do in the future? Where do all those technicians go?

SPEAKER_00 32:22

Yep. They're they're gonna be independents, they're gonna be field service. Uh, that's that's the way it's gonna go. Uh, and and I think that has to do with the relationships that you know, we're leaving those relationships behind. And the irony of it is the sales department understands the relationships, right? That's what they do, right? Don't they they they're trained to build the relationship? I mean, you go into sales training, any sales training, well, they're gonna tell you about the consultative approach, do a needs assessment, learn the customer, learn their family, their commute, their budget, their plans. They send birthday cards, they ask for referrals. It's all about relationship. But then when they go to the back end, we forget about the whole relationship, you know. And the the thing that used to kill me in the service department industry, and and you know, you said you traveled a lot, so you probably went to a lot of different dealerships to have work done, and I'm sure this has happened to you. And and it's we killed our own industry because we had a lot of managers out there doing what I call skinning the cat. Okay, instead of being consistent with our with our labor and and and quoting and and doing being fair, like a lot of the aftermarkets are, you know, we try to take advantage, especially travelers. I mean, I I it was just sickening. It hurt me, you know, to think about how I would want my mother, my wife, my sister treated if she went in in the dealership. That's how I'm gonna treat every customer that comes to the door. Not, oh, I got this one. You know, I took over a dealership one time, and and I had a customer come in and he he was gone for a long time. And then he heard there was a new manager, and he came back and he said, Look, I am come here because you know, I had a car that needed a wheel bearing on the left front, and it was X amount of dollars. And then two months later, the right one went bad, and and it was $200 more. And when I asked for an explanation, I got some cockamami story as to why it was $200 more. So I did some research. I pulled the repair orders and and and looked at them, and I could see where the previous service manager he would just jot down from the top of his head the labor, you know, whatever the technician would tell him it was, instead of you know looking at a labor time guide, like you said earlier, and and using that that as a guideline. So he was all over the place, and and he got caught on that one, right? Because he didn't realize the guy was there several months earlier and already paid X amount of dollars for the same job on the left side. So, and and that's what we see. We see too much of that skinny in the cat. You could only do it once.

SPEAKER_02 35:27

There's a title for a blog.

SPEAKER_00 35:29

Exactly.

SPEAKER_02 35:30

There's there's probably half a dozen already. You know, one of the things that was interesting is Henry Ford in the 1800s when he started with his production line. You know what the first thing he did was raise the pay of everybody in the dealership, yeah, so that they could afford to buy a car.

SPEAKER_00 35:51

Yep.

SPEAKER_02 35:52

Where did that thinking go? I mean, dear lord, and and there's all kinds of books written about him. Yeah, Bill Blackie, I used to say, I still say, the machine is bait. I'll give the damn machine away because you you're not making any money on it anyway. Right. The net profit on equipment sales in the construction world. Don Feites, who was chairman, is closing tour of every dealer in the world. He told them, look, you're not going to make any money on new equipment anymore. It's a net zero game. You can make money on rental, on parts, on labor, and depending how you manage it, used cars. Yep. Not very many people have it. So here's the nist in our game in in the construction world, every 20 years for the last 40 years, the number of people competing in the supply chain has gone down by 50 percent. So in 1985, we have 100 dealers out there competing. In 2005, we have 50. In 2025, we have 25. In 2045, we'll have 12 and a half. Yep. So I talked to all kinds of dealers, you do too, and the thing they look at is revenue. They say, Ron, Jim, you know, I got nothing, my sales are going up, my revenue is going up. I said, Well, if it wasn't, I'd be worried. Well, what are you talking about? Well, you got half as many competitors. Yeah. When I started in Canada in in the Caterpillar dealer in 1969, there were 10 dealers. There's two today. Yep. There's one kamatsu dealer across the country up there. Yep. Unbelievable. And car dealers, I got a okay. So now we have in the car world, you can have six or eight or ten brands. The guy in Dallas that did the loyalty thing and and the the standards for General Motors, Carl Sewell.

SPEAKER_01 37:57

Yep.

SPEAKER_02 37:59

Great guy. Yep. He had uh his he he he put a restaurant in the middle of his shop so that the customer when they wake could have have a meal. Yep. I mean, talk about paying attention to the customer.

SPEAKER_00 38:14

Sure. Look at look at what Saturn did. Yes, Saturn set the bar. And then they went away. And then, well, yeah, because they thought it was not a good idea.

SPEAKER_02 38:24

Yeah, exactly. Some part expression, but and I don't I have a lot of respect for accountants, but the trouble with accountants is they're not good at looking at the future, right? Of course, nobody is.

SPEAKER_00 38:36

Yeah, then and that just goes back to to fix absorption. You know, how many dealers are actually looking at that? You know, you go back to 2008 to 2010, how many dealers went out of business because they were looking at fixed absorption? You you hit the nail on the head. I mean, you you don't make a lot of money selling a car, you know, there's there's not a lot of margin on the car. It's you gotta that back end is what's gonna sustain sustain you time and time again, but dealers just don't get it, and it has to be top down, it has to be top down.

SPEAKER_02 39:12

Well, the other thing is I I think most of the leaders in the businesses today don't understand the business that they're leading, right? And they it's cool. The point, you know, Yale has been ranked as the best business school in the country for years. The NBA there is ranked highest, and U.S. News and World Report is the one that does the rankings. And I'm I'm talking to a guy the other day about U.S. news. He said, you know, and he was part of the guy group that put that first college ranking together 30, 40, 50 years ago. He said, Today we've got about 300 different things that we measure to determine the benefit that a school has. I said, How the hell did you figure all that crap out? It's worse than our health case, you know, where you go to the doctor, you get blood work, and you know what's your blood pressure and heartbeat and all the rest of the crap. Well, we come to find that there's about 50 things that they're now measuring on our health. You know, I was at the doctor recently. I'm 80 years old. I say to the guy, how much longer do you think I'm gonna live? I've got a great gene pool. I've got an aunt who's in 99 years old. And he says, probably 20 years. I said, Terrific. What am I gonna do? Am I gonna be in a wheelchair or what? He said, That's up to you. So my aunt is in a rest home, she's 99, she's in Canada. My sister and I struggled for years to get her to go to home. She still was driving, Jim. She's dangerous, for God's sake. But she had a problem with her bladder that the doctors wouldn't give her pain medication, nor would they schedule a surgery because of her age.

SPEAKER_00 40:55

Yes.

SPEAKER_02 40:56

She gets in the rest home within 45 days. She has the operation instead of being awake every hour and a half, she's sleeping five, six hours a night. She's in heaven. So I go, I go, and this is it's off subject, but it's the same thing. I go for my colonoscopy. The guy says to me, Hey, and he's done me many times. He said, Ron, this is great. I said, Why? He said, This is your last one. I said, What are you talking about? Well, you're 80 years old. We don't need to have another one. I said, Bullshit, consider I'm 60. I'm gonna have another one in three years. There's there's there's the world's upside down. So every car when you hit life cycle statistics, we can predict when it's time to get rid of that vehicle. Yeah, but we don't. I should know for the month of June and dealer X, every single dealer, what vehicles, what brands, yeah, to whom I'm gonna sell it.

unknown 41:55

Yep.

SPEAKER_02 41:55

And if the transaction doesn't take place, I should give a a report every day to people whose buying habits have changed in store. Get in touch with the customer, find out what happened. Yep, we don't do any of that.

SPEAKER_00 42:10

No, and that data is out there, that pulp data is out there.

SPEAKER_02 42:13

So absolutely. I don't know if you've seen, but there's a guy by the name of Nick Maverick, who's a data analytics jerk, a nerd, and another one by the name of Steve Clegg is in toro. They both do data analytic forecasting

Data Forecasting And Parts Market Share

SPEAKER_02 42:29

that is unbelievably accurate. Yeah, it's it's it's it's a different world. So, how do we fix this?

SPEAKER_00 42:41

Yeah, that's that's the question. Uh uh I you know, I like where you're going there with the with the data, as is it's important, you know. I was always taught don't expect what you don't inspect. You know, uh, and and that goes with so many different things. If you're not looking at that data, uh if you're not, you know, monitoring what your people are doing. You can expect different results, uh, but uh I don't know.

SPEAKER_02 43:16

I don't know how we I a simple example is engine oil filters. That gets changed every time there's a maintenance interval.

SPEAKER_00 43:26

Yep.

SPEAKER_02 43:27

I know what my population is, you know what your automotive population is. Right. Probably within 1% accuracy. I've got GPS today on every vehicle, current vehicles. So I know how many miles or hours they're working. Right. That being true, if I'm in a car dealership territory that's got 10,000 cars out there in my brand, and I've got GPS, I know everybody who's going to have a 250, 500, 750,000, or 500, whatever the interval is. Next month. That means I know how many engine oil filters I'm gonna sell next month. What my potential is. Right. I also know what my actual is. So I know what my market share is. Anyone talk about what the market share is for engine oil filters at a car dealer? No. Who makes the damn engine oil filter? Fleet card.

SPEAKER_01 44:29

Yeah.

SPEAKER_02 44:30

Not GM, not Ford, etc. So, you know, back, I don't know, it was in the 50s. Have you heard this story where there was a dealership in California? The contract for every dealer in the world at that time was that you were allowed one location. There was a guy in California, he was a General Motors dealer. His brother-in-law did the preparation for delivery, the receipt of every vehicle from the factory directly at his location. So there were two. General Motors canceled him. He filed suit saying wrongful dismissal, anti-competitive, all the rest of the nonsense. He won. So now all of a sudden, every car manufacturer, every caterpillar, everybody had to be allowed to have two locations. What was General Motors' response? They created Genuine Parts, which was Napa dealers, which is replacement parts people that's owned by the Dan Car Companies. So for Gen, true story, for General Motors, General Electric, all of those guys own general parts. That's the parent company that trades on Wall Street. The average gross margin. All of this data is out there, 38.3%. Used to be the average gross margin at Genuine Parts. Car dealers have no clue what their gross margin is in parts. They have no clue what their market is in parts. You're right. That somebody starts trying to be assertive on behalf of the customer. And I don't see that happening.

SPEAKER_01 46:22

No.

SPEAKER_02 46:24

No. How much longer are you gonna work?

SPEAKER_00 46:31

I don't know. I I I enjoy working, uh, but I also see that there's a lot of things I could be doing. So, you know, as as I get older,

Leadership Lessons From Hard-Won Scars

SPEAKER_00 46:45

I'm I'm already at full retirement age or past full retirement age. And and I noticed that I used to be able to go on a weekend, you know, eight hours on a Saturday. You know, you work all week, so you can't do the honeydews. So they they pile up, and on the weekends, you that's what you do. Saturday and Sundays, it was eight hours apiece, right? Well, I can't do that physically anymore. So I I could see me uh putzing around all day getting those little things done throughout the week.

SPEAKER_02 47:15

But uh I who's gonna who's gonna take who are you gonna pass the torch to?

SPEAKER_00 47:22

Yeah, that's that's I don't know. I don't know.

SPEAKER_02 47:27

I started looking at that 20 something years ago, and I had a couple of guys, two guys that were in their early 50s. They both turned me down because they had four kids each and they didn't want to be away from their family. They were much smarter than me. Today we've got team zooms, this kind of thing, so I don't necessarily need to be in your face all the time. But I can't avoid pressing the flesh and and being with you at some regular interval. That's important, right? But I don't know who has the background anymore. Who's done the jobs like you've done, like I've done?

SPEAKER_00 48:14

Yeah.

SPEAKER_02 48:15

And and that's why as you know, that's why we call it with scars, you know. You don't get need to get the scars because I've got them. So I can tell, you know, I I'd start every class, Jim, with three definition of three words. I don't think you've heard this from him. I'd start with, okay, what's the definition of ignorance? And it's let's say it's a small class, there's 30 people, and they're all service manager or parts manager, they've all got the same job function. They don't know each other, they're at round tables, they don't know me. And who's this idiot? He's asking, what's the definition of ignorance? So it's pretty quiet. So I tell them ignorance is not knowing what to do. Oh, okay, we get that. I said, okay, what's the definition of stupidity? Now some of them are thinking, some of them are talking, and every now and again somebody comes up with the right answer. Stupidity is knowing what to do, but not doing it. And that's pretty straightforward, also. And then the last one, just to be a pain in the butt, is Einstein or or um you know Mark Twain. Insanity is continuing to do what you've always done, expecting different results.

SPEAKER_00 49:23

Exactly.

SPEAKER_02 49:24

So, like you started this whole thing. I say to them, terrific, at the end of this class, you're not gonna be ignorant because I'm gonna tell you what to do. So I'm gonna leave you a choice of being stupid or insane, and looking around the room, I don't see a pattern room in your future. So, how many of you want to leave here being stupid? Right, and you know, I'm I'm a teacher, so I run my mouth big time, but there's efficiency and effective are really important. Everybody in leadership seems to want people to be efficient, which means doing things faster. I want people to be effective, I want them to do the right thing, yeah, and only the right thing. The trouble is not very many people understand what doing the right thing is.

SPEAKER_00 50:15

Yep, that's what I said. The golden rule. I mean, we we knew it well, right? I mean, if you asked the 25-year-old what the golden rule is, how many would be able to give me the answer?

SPEAKER_02 50:25

Yeah, it's true.

SPEAKER_00 50:26

It's true. It's sad. Sad.

SPEAKER_02 50:30

What with my daughter, what I say is you know, the first day of school, let's imagine we're all 10 years old, and maybe 10-year-old should be in grade three. I don't know what it is, but you all go to school and you get assigned a grade three. You there's six of us, sixth grade. So, you know, some people in there are very smart to get bored, some people in there are very slow. It takes a while for them to learn. What I want to do is I want everybody to go to school the first day. We're all 10 years old, there's 300 of us, and I want to have a day with tests and interviews. Yes, and you go home. Yes, and the following Monday you come to school and you're assigned a grade, and you go into grade one through grade five. If you're not the quickest light bulb in the room, you're no different than the next person. Yeah, if you are smart like hell, you're no different than the next person. You have to work your ass up to keep up. Yeah, and I I think that'd be a wonderful my daughter and I agree on it. I said, terrific, make the change.

SPEAKER_00 51:32

Yeah, right.

SPEAKER_02 51:33

She says to me, Dad, the school board has not got one member that has ever taught in a classroom. Wow. And that's another indication, isn't it?

SPEAKER_00 51:44

Yeah.

SPEAKER_02 51:46

Wow. This makes any sense to have a podcast like this for people to listen to?

SPEAKER_00 51:52

Yeah, absolutely. Uh it does. Uh, you know, you at that point there, when I first started managing people, you know, I didn't I've never managed people in my life before that. And I started to realize that, you know, you can't manage everybody the same way. Not everybody responds. There is no, you know, structured way to do it. You have to find what makes that person tick. And you said, you know, it's the same way with teaching a child. You know, you may have a classroom, your daughter may have a classroom of 40, 40 people in there, 40 children in there. Not, you know, not two of them learn alike. You know, some of them may be hands-on learners, some may be visual learners, you know, and the and the problem with the education system is number one that is they're jamming 40 kids in there, so the teachers don't have a chance to do their craft because you know they're they're just trying to get through the day. But you're trying to make everybody learn at the same pace and learn the same way, and and that's not gonna happen, and that's why children are getting left behind. Yeah.

SPEAKER_02 53:08

I had I had a teacher in high school, his name was Fairburn. I'll never and we always remember the good teachers.

SPEAKER_00 53:14

Yes, yes.

SPEAKER_02 53:16

He he came into the classroom, and we had probably half of the football team. There was a bunch of athletes in the room. And he starts out, he said, I got a master's in English, and they have me teaching mathematics. So I had to learn this stuff. So I have a message to you guys. Everybody in here is gonna pass, but you're gonna do it on my terms. So every week we're gonna be testing. And if you don't, if you're not keeping up in the testing, the following week, every night you're gonna be with me until you catch up. That's awesome. It was terrific. Guess what they did to him? Two years later, he's on the board, he's not in the classroom. And you know, I I had had had another guy who was British, well, two, a British teacher from England that did exchanges in Canada, and she taught Latin. And grade nine is when you pick up Latin in Canada, and I did not want to memorize anything. If I don't understand it, I've tell with you. Geometry and Latin I had problems with. Her name was Morgan. I'll never forget it. In the first term, I got 38% in geometry too, but we'll just talk about Latin. My grandmother got a master's in 1915. She was smart like hell. She spoke Greek and and uh Latin fluently, and my parents both worked, so I was with my grandmother all day from seven in the morning till six at night while my parents worked. And I never heard her say no, Jim. It was always a discussion. So my sister's 27 months younger than I am. So my grandmother was too old to look after two kids running all over the place, so she took me to school. I hadn't yet turned four, and somehow she convinced the principal to let me start kindergarten. So I'm one of the few people you know that had to repeat kindergarten. And Granny was really different, and learning is really different. Patrick Glencioni, the first book he wrote, The Three Signs of a Miserable Job, Anonymity. Your boss doesn't know who the hell you are. Your family, your children, your sickness, or anything. Irrelevance, they don't understand where their job fits in the overall organization. Yep. And then finally, immeasurability, a word that doesn't exist. If you're working the floor, you have good job satisfactions. You know what you did today.

SPEAKER_00 56:00

Yep.

SPEAKER_02 56:01

If you're in an office, not the same thing.

SPEAKER_00 56:04

Yep.

SPEAKER_02 56:04

So, I mean, there's so many markers, so many places. You and I both need to have somebody who's going to pick up the torch for us. My daughter's taking over the first of July. You should try and do this. I'm going to try and broaden that pool. Yeah, good. We need to we need to probably be involved with every association, NADA, etc. But you know, now with NADA, you're going to interfere with what they view the world as and the standards. And if they felt the same way as you did, they would be doing the same things you want to do. Yes, sir. So to get them to change is going to be unbelievably difficult.

SPEAKER_00 56:47

Yep.

SPEAKER_02 56:48

You think they have any interest?

SPEAKER_00 56:50

I don't think so. I think their their goals are in the wrong place and they've been that way for a long, long time. Um yeah, they just they strayed away from again back to the golden rule. Yeah, just taking care of that customers. We've we've let so many customers walk out the door and lost the focus.

SPEAKER_02 57:16

Yeah, another of our contributors, his name is David Griffith. He's still the chairman of a heister dealer, a material handling dealer. He said, Today we're spending the legacy of our grandchildren. There'll be very little left for them. And and it I'm not so sure he's he's wrong. Let me let me just shift gears for a second before we wrap this thing up. My feeling is that I can buy every part for every car from at least three different people.

SPEAKER_00 57:52

Yes, sir.

SPEAKER_02 57:53

Am I right?

SPEAKER_00 57:54

Yes, sir.

SPEAKER_02 57:57

And that's three different clicks. Pardon? Three different clicks. Yep. And that our market share in parts in the I I mentioned labor 10 to 20 percent in construction world in parts, it's 20 to 35 percent. Am I far off on automotive?

unknown 58:17

No.

SPEAKER_00 58:18

Uh yeah, that's about right.

SPEAKER_02 58:22

So if we think about where I want to focus, I want to increase my labor market share because at least my technicians will buy my parts.

SPEAKER_00 58:32

Yeah.

SPEAKER_02 58:33

So let's say I got 10% labor market share. And let's say that that's maintenance and repairs and rebuilds. At the AED, the associative equipment, I'm sure NADA does the same thing. Maintenance market share in automotive has got to be less than 20% of the of the available. Sure. If that's true, they've lost 80% of the parts.

SPEAKER_00 59:01

They've walked away from maintenance, everything uh with the big push to into the maintenance free on everything, you know, trying to make the vehicles, you know, more appealing by getting away from the maintenance. Uh and and I think that was a a huge mistake back then when they did that. Uh, because there's no going back.

SPEAKER_02 59:26

Uh yeah, un unless you change the game, and they are they are they haven't considered doing that. I you know, I I I appreciate this time, Jim. I th I we've wandered all over, and I hope that the audience is. I'd like to provoke thinking with these things, and I think we've done that. Um, and I I I look forward to blogs from you and and and another podcast. And skinning

Back To Basics And The Golden Rule

SPEAKER_02 59:50

the cat's a wonderful title. And you you've got a whole bunch of them like that you can do. How how how how would you like to wrap this thing up?

SPEAKER_00 1:00:00

Well, yeah, uh, I just just hope that it it reaches the right audience. And uh, you know, uh for those that are 25 and younger to take a good look at the golden rule and and try to live like live by the golden rule. Um it's it's hard in any industry. Uh I see a change and a lot of people going away from that uh in any service industry. You know, I I use the example of McDonald's being, you know, familiar and comfortable, but it's it's hard to go into McDonald's anymore and get good service. So it's it's I think we just need to get back to the basics. I mean, any good football coach will tell you when their team is struggling, what do they do? Football, basketball, whatever it is, go back to the basics, right? And and that's what we need to do. And the basics are the golden rule is treat others like you want to be treated.

SPEAKER_02 1:01:04

I agree with you 100%. Thank you for your time, sir. And everybody who's been listening, thank you for your participation. I hope, we hope that we provoked your thinking and look forward to have you at another candid conversation in the near future. Mahalo.