TECH TIP FOR APRIL, 2000

I GOT INTO A DISCUSSION WITH A FRIEND ABOUT THE "BIG BOX" PARTSSTORES, ONE OF WHICH IS COMING TO BRANTFORD, AND DID I THINK IT WOULD EFFECT ME. OF COURSE, IT WILL EFFECT ME, AND IT WILL EFFECT EVERY REPAIR STATION IN THE AREA. HOW MUCH IS UP TO THE INDIVIDUAL OWNER.

THE ADVANTAGE THE BOX STORES HAVE IS THAT THEY BUY FROM THE BIG MANUFACTURERS IN SUCH LARGE QUANTITIES THAT THEY GET THE ABSOLUTE BEST PRICE, AND THEN HAVING NO TRADITIONAL PRICING STRUCTURE TO ADHERE TO, THEY SELL TO THE CONSUMER AT PRICES WHICH MAKE THE AVERAGE REPAIR STATION AND/OR JOBBER TOO EXPENSIVE.

WITH NATIONAL BRAND NAME MERCHANDISE THERE IS NOT A QUALITY ISSUE, BUT WITH ELECTRICAL OR ANYTHING ELSE THEY BRAND UNDER THEIR OWN NAME, THESE PRODUCTS ARE PROBABLY MADE TO BE SOLD AT A PRICE, AND POSSIBLY THE QUALITY IS NOT THERE, BUT THEY WILL BE CHEAP!

THERE ARE TWO POSSIBLE ANSWERS TO THIS FOR THE AVERAGE REPAIR STATION. FIRST, REFUSE TO INSTALL PARTS YOU DON'T SUPPLY. BLUNTLY PUT IT IS UNLIKELY THAT YOU ARE MAKING ANY MONEY ON LABOUR SO WHY SHOULD YOU SUBSIDIZE THE CONSUMER'S DRIVING COST? SECOND, ADD 50% TO THE LABOUR CHARGE SO THAT YOU WILL MAKE SOME MONEY ON THE TRANSACTION. IF FLAT RATE IS 3hrs THE CHARGE 5 1/2hrs AND IMMEDIATELY PUT UP A HUGE SIGN AND HAVE A PLACE ON THE WORK ORDER FOR THE CUSTOMER TO SIGN, THAT IF THE CUSTOMER'S PART FAILS FOR ANY REASON YOU WILL NOT GUARANTEE ANYTHING INCLUDING THE LABOUR.

NOW SOME CUSTOMERS WILL TELL YOU THAT THEY ARE GOING ELSE WHERE,LET THEM, ARE YOU SUPPOSED TO LET THEM SAVE MONEY ON REPAIRS WHILE GOING BROKE YOURSELF? THE BOX STORE USUALLY HAVE SOME SERVICE BAYS BUT ARE SELDOM ABLE TO GET SUFFICIENT TECHNICIANS, OF ANY CALIBRE, TO MAN THEM.

THE BOX STORES ALSO CHARGE FOR EVERYTHING THEY DO, THERE ARE NO COURTESY FREE©BEES THERE, IF THE CUSTOMER JUST NEEDS THAT NOISE CHECK AND TO BE REASSURED THAT IT IS NOT A DRAMATIC FAILURE ABOUT TO HAPPEN, HE WILL SIGN A WORK ORDER AND BE CHARGED. NOW, I"M NOT SAYING THAT THIS IS WRONG, IF YOU SPEND THE TIME, YOU SHOULD BE PAID. BUT, WE ALL KNOW THAT WITH A GOOD CUSTOMER A QUICK CHECK IS PROBABLY FREE.

WHAT ABOUT PARTS COVERAGE? THE LARGE MANUFACTURERS ARE CONCERNED WITH INVENTORY TURNS, IF THEY DON'T SELL IT THREE TIME OR MORE WITHIN ONE YEAR THEY WON'T STOCK IT. MANY OF THE TRADITIONAL JOBBERS HOLD INVENTORY BASED ON WHAT IS ONE THE ROAD IN YOUR AREA, NOT ON WHAT SOME SUIT, IN GOD KNOWS WHERE, THINKS SHOULD HAPPEN, BASED ON NATIONAL STATISTICS.

IN THE AREA OF REBUILT ELECTRICAL, THE LARGE REBUILDERS NEED VOLUME TO KEEP THEIR PRICES DOWN. JUST TRY ASKING FOR SOMETHING LATE MODEL OR EXOTIC AND SEE WHAT THE PRICE AND DELIVERY QUOTE IS.

SO THE STRATEGY IS: DON'T INSTALL "BIG BOX" PARTS, DON'T WARRANTY ANYTHING CONCERNING THEM, AND ADD 50% TO YOUR LABOUR CHARGE IF YOU DECIDE TO INSTALL CUSTOMER SUPPLIED PARTS. I AM REALLY BIG ON THE LABOUR CHARGE PART OF THIS BECAUSE OF SEVERAL ARTICLES I HAVE BEEN READING IN TRADE PUBLICATIONS.

IN ONTARIO, IT COSTS ABOUT $2.50 PER HOUR MORE THAN YOU PAY THE TECHNICIAN, TO COVER DEDUCTIONS AND OTHER EXPENSES. THIS MEANS THAT IF THE TECH IS PAID $17.50/hr THEN HE ACTUALLY COSTS YOU $20.00/hr. THIS APPLIES ONLY IF YOU DO NOT HAVE A BENEFIT PACKAGE AND/OR UNIFORM PACKAGE. IF YOU DO, YOU NEED TO MAKE THAT CLOSER TO $3.50/hr. I WAS REALLY SURPRISED BY THIS, BEING AN EMPLOYER, I KNEW THERE WAS AN EXPENSE INVOLVED, BUT NOT HOW MUCH.

IF YOU TAKE LABOUR COSTS, RENT/MORTGAGE, HEAT, HYDRO, PROPERTY TAXES, BUSINESS TAXES, EQUIPMENT PURCHASE/ REPAIR, AND INSURANCES ALONG WITH ANY OTHER EXPENSE I'VE FORGOTTEN, THEN A CALCULATION I READ, RINGS TRUE. IN ORDER TO COVER ALL EXPENSES, LEAVE SOMETHING FOR RE INVESTMENT IN THE BUSINESS AND STILL HAVE SOME OF THE "P" WORD LEFT, YOUR FLOOR RATE NEEDS TO BE 3.7 TIMES THE RATE PAID TO YOUR HIGHEST PAID TECHNICIAN. THE "P" WORD IS PROFIT, I CAN'T FIGURE OUT WHY EVERYONE ELSE CAN MAKE THIS, BUT IF I DO IT'S NOT RIGHT. USING THIS FORMULA, IF OUR HIGHEST PAID TECH MAKES $17.50/hr, WE NEED A FLOOR RATE OF $65.00/hr TO JUSTIFY BEING OPEN.

I HAVE HEARD PEOPLE SAY "I DON'T NEED THAT MUCH BECAUSE I OWN MY BUILDING". THIS IS JUST PLAIN DUMB!  IF YOU SOLD THE BUILDING AND INVESTED THE MONEY, YOU WOULD HAVE INCOME, AND IF YOU RENTED THE BUILDING, YOU WOULD HAVE INCOME; SO BY KEEPING THE LABOUR RATE ARTIFICIALLY LOW, ALL YOU ARE DOING IS TAKING MONEY OUT OF YOUR POCKET AND GIVING TO YOUR CUSTOMERS. THIS IS VERY NICE FOR THEM, BUT NOT VERY SMART FOR YOU. I'M SURE THEY THROW YOU A THANK YOU PARTY EVER YEAR FOR BEING SO CHARITABLE, MAYBE EVEN NAME YOU CITIZEN OF THE YEAR.

THERE MAY BE A SILVER LINING IN THE COMING OF THE "BIG BOX" STORES, AND IT MAY BE THAT WE ARE DRAGGED, KICKING AND SCREAMING, INTO BEING BETTER BUSINESS PEOPLE.