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Qualified Techs A Top Dealer Concern in 2020

By JOANI WOELFEL

A dealer outlook survey ranked recruiting and retaining qualified labor as a critical priority in the new year.

“As the business of equipment dealerships grows more sophisticated, and in some cases complex, the need to recruit and retain talented people throughout the business is also stressing dealers,” Ag Equipment Intelligence reported in its 2020 Dealer Outlook and Trends Survey. Dealers in the Pacific/Mountain region covering FWEDA’s territory represented just 10 percent of survey respondents.

Sluggish sales of whole goods that shift focus to aftermarket sales, combined with technology and innovation, has dealers forecasting 75 percent of their hiring to be service technicians. Nearly half their spending is earmarked for mobile service vehicles, the report shows. “With the growing demand for service, no other area of dealership operations is [in] need for an infusion of more talented staff.”

The U.S. Bureau of Labor Statistics shows 34,300 machinery and service technicians work in these jobs across the country based on available statistics. The median income for these positions is $40,630 with 90 percent of techs making more than $60,000 annually. States paying top wages for these jobs within FWEDA territories include California, Arizona, Wyoming, Colorado and Nevada.

Sluggish sales of whole goods that shift focus to aftermarket sales, combined with technology and innovation, has dealers forecasting 75 percent of their hiring to be service technicians. — Ag Equipment Intelligence

Yet the equipment industry cannot fill positions. With a strong economy driving competition for qualified labor and rising business costs, dealers find challenges at every turn.

“Most dealers struggle with getting good, competent technicians, it’s been an issue for 50 years, probably even since the plow was invented,” said John Miller, CEO of Valley Truck & Tractor Co. based in Chico, Calif., who has nine John Deere dealership locations. He acknowledges the industry suffers from stereotypes. “Frankly, the industry has come a long way. A lot of people would think of a mechanic as a guy in greasy coveralls with a wrench in his hand and a corn-cob pipe sticking out of his mouth.

“That’s not the case anymore, these tractors are as or more sophisticated than the cars you drive today,” Miller said. “They are technologically and electronically far superior in many ways to other modes of transportation. It takes a higher level of education and competency for technicians today than it did 20, 30 or 40 years ago.”

And compensation has followed this trend as it’s no longer considered a low-paying job. Some techs are making six figures “because they can command that for the skills they bring to the business,” he said.

Skills Gap and Knowledge Transfer

Demographics in the agriculture and equipment industry are changing along with the rural and urban landscape. The equipment industry reflects a trend from the 2017 Census of Ag released last year showing the average age of producers increased to 57.5. Many dealers say it’s increasingly difficult to attract qualified prospects to rural areas.

Add to this a significant drop in trade school programs in the past decades as young people pursue four-year degrees in other fields. Even with education, candidates are missing the necessary skills. At the Equipment Dealers Association’s October 2019 Workforce Summit in Louisville, Ky., Debby Hughes of Entangled Solutions told dealers that 7 million U.S. manufacturing jobs remained unfilled at the start of 2019 as a result of a skills gap. With 4.6 million of those jobs to fill from 2018-2028, only 2.2 million are likely to be filled, she said.

Hughes shared how employers ranked the following STEM skills as the most problematic to find:

• 97 percent – Cybersecurity knowledge

• 95 percent – Data science & analytics

• 83 percent – Critical thinking & problem solving

• 79 percent – Design/systems thinking

• 79 percent – Innovation & creativity

• 78 percent – Global perspective

• 78 percent – Cognitive flexibility

• 74 percent – Cross-disciplinary ability

While educators say only 23 percent of graduates will have data science and analytic skills, 69 percent of employers say those are the preferred skills they need from candidates.

“Recruiting for most positions isn’t difficult, but skilled labor is tough,” said Jason Orton of Ortons Equipment, a single-store Case IH/New Holland dealer in Stratford, Calif. Like other dealerships, Ortons is working with an area community college to get a diesel tech program off the ground.

“You have to have skilled people,” he said. “To diagnose the problems, it’s challenging, they have to be able to use the service tools and plug into computers to be able to follow schematics. It’s hard to teach those skills.”

Dealers attending the EDA Summit shared their frustration about the lack of suitable hard and soft skills, including critical thinking skills and a sense of urgency.

“Recruiting for most positions isn’t difficult, but skilled labor is tough.” — Jason Orton

“They don’t understand why the customer needs equipment back in the field today,” one dealer said. “They don’t understand the whole farming aspect and why it’s important to get the hay baled before the rain comes. Those are all skills that are having to be taught that in the past were just understood.”

Another dealer said he was surprised how much negative feedback they receive about customer service and simply, “how to treat other people, from your language to your body language, just the attitude you present can have a positive or negative impact on the way a customer views your business. ”

A panel of service managers and a recruiter also observed how difficult it can be to integrate less experienced technicians into their service departments with seasoned master techs, especially if they don’t have any type of formal mentorship program, which the panelists acknowledged their dealerships did not.

The interaction between a novice and a master tech often determines the success of that new technician, especially if that individual cannot develop the confidence to work alongside a more experienced technician, said Richard Dugan, an Ag Technician and Recruiter at KanEquip of Wamego, Kansas.

“There are intergenerational challenges,” Orton said. “We as a society have tainted the idea of working in the trades and at the school level we don’t encourage the trades like we used to.” Career choices now center around college degrees. “The problem is a lot of those jobs don’t pay very well.”

“What’s hurt trade work and farm work is kids not being exposed to manual labor as much. Things take time to learn. Dealerships can’t do that, it’s a safety issue and there’s chemical exposure,” he said. “We hire trainees, and with some we start to see they’re unhappy. It’s problem-solving, not what they expected. It doesn’t hurt to expose them to it early so they know what to expect."

“There’s good money in the trades,” he added. “You have to continually train and refine your skills. Some people don’t want to do that but technology is always changing. In any trade you have to work on your skills, you have to get better. It takes time and some people don’t have the patience.”

Top management is accountable for taking an active role in retaining employees, their success depends on it. — Ron Nilson Ground Force Worldwide

INVESTING IN EMPLOYEES

Most FWEDA dealers advance technical training and education incentives to prospects and employees.

“A good technician is a monetary investment in the future of a dealership because we spend lots of time and money training people,” VTTCO’s Miller said. “We send them to schools to learn how to operate and repair equipment. Those are skills that individual takes wherever he goes. It’s incumbent on dealers for those techs to stay with them, if that tech leaves that dealership, he takes that investment with him.”

Ron Nilson, CEO and founder of Ground Force Worldwide, a heavy equipment manufacturer that works with companies like Caterpillar and exports 70 percent of its inventory overseas, shared with 2019 FWEDA Conference attendees how his company has been successful recruiting talent and maintaining a 98-percent retention rate by conveying the ways they invest in their people.

Nilson, who received a standing ovation at the conclusion of his presentation, has been instrumental in the development of a technical trade school in Idaho where his company is based. He said the school graduates 100 percent of its students with a 99.5-percent placement rate.

Compensation is among a business’ highest expenses so Nilson’s company is vigilant about educating candidates and employees at risk of leaving about their value proposition. “They think of it as purely a paycheck,” he said. “We spend the extra time to get to know the person and quantify the benefits package.”

New hires or those considering other offers will leave for 50 cents to $1 an hour pay increase, Nilson said, adding a comprehensive review of their role, potential in the organization and complete compensation – salary and benefits including medical and retirement – is key to effective recruitment and retention.

“We treat them with love and respect. We make sure they know we’re tracking their progress,” Nilson said. “We survey and recognize our employees.” Top management is accountable for taking an active role in retaining employees, their success depends on it, he said.

MARKET FORCES, REGULATION CHALLENGE DEALERS

Despite their best efforts, dealers are keenly aware the market frequently works against them, especially when it comes to trade and legislative and regulatory compliance related to labor. Like their producer counterparts, the recent trade war has taken a toll on the equipment industry, softening optimism heading into the new year.

The costly impact of rules and regulations as minimum wage increases, Right to Repair, Wayfair and other tax initiatives, and in California — where the USBLS shows the highest employment levels of equipment mechanics and service techs at more than 2,800 — wage rules, pending outdoor heat regulations, stringent emissions standards for commercial fleets, potential elimination of tax incentives, the Private Attorneys General Act (PAGA) and a host of other regulations — heavily burden dealer businesses.

California’s Wage Order 7 creates equity conflicts in hiring across businesses extending into other states as dealers must determine whether to compensate less experienced techs at the higher rate to legally protect themselves while longtime employees with superior skills may not be proportionately compensated.

“In the State of California regulation is our way of life,” Brian Potter, GM of Tulare, Calif.-based Quality Machinery Center said. “Anything in regards to water impacts our business and the lives of all Californians. Not allowing the construction of dams and reservoirs because of environmental concerns will jeopardize the future of farming.”

Minimum wage increases at the state and national level have a significant impact on dealership recruitment and retention. California’s Wage Order 7 provides that tools or equipment required by the employer or necessary to perform a job will be provided and maintained by the employer unless an employer pays service techs twice the minimum wage. At as much as $3,500 a tool set, dealers are feeling the pain.

“In general, the wage and hour laws in California have created a costly HR nightmare that is potentially significant,” said Bill Garton, a principal at Garton Tractor based in Turlock, Calif., with 10 locations across Northern California. Garton’s dealership provides tools to any tech making less than $26 an hour regardless of whether they bring their own.

The wage order also creates equity conflicts in hiring across their business extending into other states as dealers must determine whether to compensate less experienced techs at the higher rate to legally protect themselves while longtime employees with superior skills may not be proportionately compensated. As of Jan. 1, California’s minimum wage hike could mean less experienced tech compensation of $24 to $26 an hour depending on the size of the dealership.

“I struggle with the annual minimum wage increases heading to $15/hour in 2023,” Nathan Green, principal of Belkorp Ag, a Modesto, Calif.-based John Deere dealer with seven locations. “We are having to buy more and more tools each year and asking more techs to take their own tools home, which is not an easy conversation.”

The minimum wage increased in Arizona, California and Colorado effective Jan. 1, 2020.

“Court cases change HR law in California in a heartbeat and if you don’t keep up you fall behind,” said Orton, a one-location dealer who doesn’t have an HR department like larger operations with multiple locations. “When I started (1997), I think less than 10 percent of my time was spent on laws and regulations, now it’s probably closer to 30 percent of my time, compliance and regulatory issues, everything from environmental to employment, everything under the sun to keep up.”