The Skilling Australia Fund has been passed – a SAF note to Australian automotive businesses

Here it is Australian automotive managers: the Skilling Australia Fund (SAF) has finally passed the Australian Senate, and will very shortly be passed into law after receiving royal ascent. On currently available information, this means that the SAF levy – payable in big, nasty chunks whenever a technician is sponsored for a temporary or permanent visa – will go live imminently.

This introduction of the SAF levy will challenge the way Australian automotive businesses view international recruitment, and we’ll all need a bit of time to get our heads around the changes. After the initial burst of attention this proposed bill got earlier in the year when it was first heard in the Senate, we thought we’d take this opportunity to refresh everyone on what the SAF is, how we got here, and to discuss the implications.

Image sourced from Gippsland Times

 

What is SAF?

Essentially, the Australian government has now formally decided to place a non-transferable tax on all businesses that choose to sponsor foreign workers for temporary visas (like the new TSS 482 visa, a reformed replacement for the abolished 457), or for employer sponsored permanent residency visas. This tax will be collected in the name of training Australians to fill these same skills shortages in coming years in a bid to reduce our use of foreign labour, though the impact this might have in the automotive sector seems highly questionable.

As currently understood, the costs will be significant. A 4 year 482 visa is set to attract a $7200 SAF fee for most automotive businesses with annual revenues of more than $10 million, whilst employer sponsored permanent residency sponsorship will now require a further $5000 in SAF. It’s a brutal price hike.

 

How did this happen?

The Senate’s SAF committee report showed a strong thread of dissent for the bill from various sources, though none of them automotive. No one from our industry, which will be heavily impacted by this levy for our enduring (and unavoidable) reliance on foreign technicians, was able to muster a serious or sustained argument against this legislation.

The government has blithely pushed past well-founded concerns expressed by others that the proceeds of this levy are unlikely to be distributed and used in the manner intended. They have given scant regard to the seemingly obvious conceptual flaw in their plan, where businesses lodging less visas as a result of this price rise will erode the funding base for vocational education. This education is of increasingly questionable relevance to automotive in any case as more and more businesses turn to private organisations to help train their apprentices.

Perhaps most gratingly, they see no ethical conflict in slugging the SAF levy where Australian automotive businesses are already training apprentices. This despite the MTAA’s reported shortfall of approximately 20,000 technicians across the country at present, a massive failing of the local labour market for which private enterprise is now to be further penalised.

 

Dealing with it

It’s here now, and we’ll have to deal with it together. The SAF poses obvious challenges for Techs On The Move, which has always focused exclusively on bringing skilled automotive workers from overseas. We are set to roll out in the next few months a new business structure that will improve the quality of our services to our clients and give them more control, but will also reduce the expenses traditionally associated with international recruitment.

In the meantime, it’s worth mulling over what SAF means if your first thought was “well, that puts an end to us sponsoring any techs!”. Understandable as that impulse certainly is, we all know the cost of not resourcing from overseas is potentially huge when you’ve exhausted your search for local techs, spending thousands of dollars on jobs boards to get back very little in the process. No matter the size of your organisation, or the type or brand of vehicles you trade in, if one of your hoists stays empty you’re forfeiting income against the bottom line hand over fist. No one should accept that.

For forwarding-thinking businesses, the challenge then should lie not in justifying sponsorship in light of the introduction of SAF, but rather making sure that the technician you sponsor is worth the investment and will reward your boldness.

 

Hit us up

If you’ve got questions, or if you’d like to talk some more about SAF and what it means for your business as you continue to reach for targets, we’d love to hear from you.

How Should We Reward Technicians in a Modern Workshop?

So you’ll no doubt have seen there was much discussion on our previous post ‘what’s a diagnostic technician worth’ therefore we wanted to go a step further.

This week, let’s look at bonus structures and if they can work in a modern workshop. Now straight away we can hear all the diagnostic guys amongst you say, here we go, another money spinner for the express service guys. But hold on; surely we’re smarter than that?

In a football team, you spread your skill across the field, having a strategy built around defence, midfielders and forwards(For our Australian readers, please humour us and insert the word soccer where football is). So why can’t we apply the same rules in our workshops.

We’re always going to have the express service guys, who’ll rip through the work and sell the most hours (Let’s call them the forwards). Then you’ve got your midfielders, these guys might be able to fix whatever you throw at them, whether it’s stripping an engine toits block and pistons, or replacing a clutch kit in record time. Now of course these guys see an array of work, which will mean their labour recovered will fluctuate, unlike that of the express service team. These guys are certainly a different animal to your express service guys, but the team needs diversity. In defence we have the diagnostic guys, they’re undoubtedly not the most efficient, and they’re likely to get the most warranty work too, however they’re also the guys who save your bacon. These are the guys who you give the jobs that need to be fixed right first time. These are the guys who get you out of jail. So the question is, should these guys all be paid on hours sold?

Our answer is yes…but before you start slinging mud, hear us out. The purpose of a football game is to score the most goals. Just like the purpose of a service department is to sell hours (in the economic sense that is). Now sure, there’s much more to consider than short-term profit alone, since we need to ensure that the work is done correctly, to ensure the customer is satisfied, and so hopefully they’ll return and become a customer for life in the long-term. But whenever we look at the service department’s profitability, we must look at hours sold, it just can’t be ignored, and if you think we can waltz around focusing on just fixing the car no matter how long it takes, then it’s likely you’ll go out of business, or overcharge your customers if you’re simply charging time taken and not manufacturer times.

So how do we manage a modern workshop, and ensure we maintain a focus on selling hours, whilst ensuring we’re acting in the customer’s best interests, and fixing the cars right first time? Impossible we hear you say. We challenge it’s not. But the way we reward our technicians should be carefully considered if we want all the players to get along harmoniously.

So let’s look revisit those forwards, what’s a reasonable amount of labour recovery to expect from them if they’re spinning filters all day? 105%, 110%, or even 120%, it will almost certainly vary according to which brand you’re representing, and the associated standard times. We’d suggest service and workshop managers should apply their experience and judgement in determining this figure; remembering this relates to the forwards only. Let’s then call this a qualifying benchmark.

Now let’s do the same for the midfielders, with consideration of the work they get, perhaps service managers will consider this should be 80%, 85% or even 90%. Whatever it is, again apply a judgement and make this the midfielders qualifying benchmark.

Then do the same for the diagnostic team, this time, you’re likely around 60%, 65% or perhaps 70% if you’re doing well.

Now you need to work out how many players you’ve got in each position, then you can apply a weighted average of your benchmarks according to your team consistency.

Once you’ve worked this out, you should have reached an overall, and realistic hourly recovery target for your team.

But as we alluded to previously, it shouldn’t just be about hours sold. Nowadays most manufacturers reward on customer satisfaction scores, or fixed right first time results. Accordingly, shouldn’t we link this to those conducting the work, if we wish for them to show an interest in doing the job properly? Perhaps the collective bonus funds are multiplied where we achieve the customer satisfaction results we’re aiming for, but vice versa, the bonus funds are reduced where we fall short.

In doing this, it is critical that the workshop is then attaining accurate information from the customer, although this opens up an entirely separate issue that perhaps we’ll discuss another week.

Whether playing a game of football, or running a modern workshop, we must apply a strategy that supports the diversity of the team. One rule fits all no longer works as vehicles become more complex and the array of skills become more specialised. If you don’t embrace this you’ll likely alienate more than half the team, which might explain why we’re seeing so many highly skilled automotive tradespeople becoming despondent and leaving the trade.

At Techs On The Move, we don’t just source and assist highly skilled tradespeople to find jobs in Australia. We also take a genuine interest in the workshops where we place you. All our recruiters are ex-industry tradespeople, so we understand the challenges you face every day in modern workshops. We’re also pretty selective in who we choose to work with, this way we minimise the risk for all concerned.

If you’d like to find out more about how we can assist you, whether you’re a service manager struggling to find highly skilled tradespersons, or if you’re a tradesperson and would like to know more about how you could find work in Australia, please contact us using the form below.

Read our next post: So just how bad are our skills shortages?

So Just How Bad Are Our Skills Shortages?

It’s a constant source of frustration for most automotive workshop managers and business owners we speak to around the country – the availability of experienced and dependable staff.

The overwhelming majority of our clients are used to posting ads online looking for the right people only to have really disappointing returns. They might find the odd qualified candidate, but more often than not those that respond are either way off the mark, or contacting from all corners of the world with uncertain credentials and no clear pathway to Australia.

Just how bad are our skills shortages though? It’s a tough question to answer, as reliable sources are hard to come by. Most recently, a report by the MTAA suggests that the national shortage of passenger vehicle technicians is approaching 20,000 people, which is a stark figure considering a total number of less than 100,000 employed across the country in this role. That doesn’t even account for diesel techs and panel/paint technicians.

Even if you look at this report with scepticism though, our travels suggest that just about every workshop, be it dealer or independent, could use a person with the right skills. Even if this was just the one motor mechanic, diesel mechanic, panel beater or vehicle painter in each of these businesses (and it’s often multiples), that’s going to be a very big number! That’s a hell of a lot of missing profit against the bottom line of hundreds (if not thousands) of businesses.

Here’s yet another way of looking at it: how many of these workshops are tolerating an employee that management would love to replace with someone more focused and productive, but cannot for lack of options on the local labour market? That could be an even bigger number, tied to yet more inefficiency and lost income for Australian automotive employers. This is even more pressing for car dealer-based workshops as sales profits edge closer to zero. If you’re only making money in the backend and you’re selling cars just to service them, your techs better be good.

Our business is dedicated to sourcing high quality automotive tradespeople from abroad to help local workshops navigate these challenges, as well as providing specialist migration services for those that have found their own. That’s all we do, and our track record is made up of clients all over the country that plan and strategise to minimise the impact of local labour shortages.

Our clients know how to look ahead, and they have to, as most are surprised at the low number of foreign automotive tradespeople entering the country on sponsored visas every year. The Australian Bureau of Statistics shows that across motor mechanics, diesel mechanics and panel beaters, yearly totals have been around 1000 people per year for some time. Only 150-odd of these are British, where the skills and communication abilities are most akin to our own.

This means that if you’re going to hire from overseas, you’ve got to be paying close attention and thinking ahead. The best way to do that is with Techs On The Move’s digital Candidate Pool, where fully vetted and prepared automotive tradespeople from overseas are waiting to be contacted. Better yet, our subscription-based service offsets a good chunk of the dreaded Skilling Australia Fund levy, making it both cheaper and more efficient to source good staff with us than ever before. Find our more here:

https://app-au.techsonthemove.com/our-candidate-pool/employers/

What’s a Diagnostic Technician worth?

All too often I hear service managers complaining they can no longer find decent technicians, and yet the truth is that the skills shortage hasn’t simply appeared out of nowhere.

Let’s look at a dealership’s investment necessary to develop such professionals.

Take your best Technician who has at least ten years’ brand experience and consider the investment you’ve made in them. This may be through an apprenticeship scheme, and then ongoing participation in manufacturer training courses. With all this investment, you’d like to think that these guys will yield the highest monthly labour gross profit, but perhaps not. We usually find it’s the guys doing efficient maintenance work spinning the filters who achieve the greatest returns, meanwhile your most decorated techs are typically conducting the more complex diagnostic work, which can often be more difficult to recover labour, and all too often at a reduced manufacturer’s warranty labour rate.

This becomes a vicious circle, as we start falling into the trap of getting the apprentices to spin the filters to achieve the desired labour gross profit benchmarks we’re chasing, meanwhile we’re not developing them to keep up-to-date with the latest technologies. These guys then lose interest due to the monotony of service work, whilst you become more dependent on the few guys who have the diagnostic skills necessary to fix the more complex jobs. Apprentice retention rates will likely fall off as a result and the flow-on effect being that at some point you find you don’t have sufficient resources with diagnostic capability to ensure all vehicles flowing through the workshop are diagnosed correctly in the first instance. Ultimately your limited diagnostic resources become stretched, and you start seeing your fixed-right-first-time scores heading south. This obviously has a flow on effect to the bottom line as manufacturers now remunerate dealers according to how well you service your customers.

So how can we combat this?

Techs On The Move understands the challenges faced by today’s service managers. Indeed, the biggest challenge we face is finding highly skilled and experienced automotive technicians, just like you. They are out there, and Australia is still a pretty big drawcard offering the second highest quality of living in the world after Norway according to United Nation’s Human Development Index

However, the days of trying to acquire these professionals for a measly hourly rate are gone. Unfortunately promises of palm trees and our laid back lifestyle are no longer sufficient to entice the ever dwindling resource pool of highly skilled automotive technicians.

What’s the true value of your most experienced home-grown technicians, who know your product from bumper to bumper? (All things being equal, assuming they have a good attitude and are intrinsically motivated in doing their job). If you don’t know it now, then consider this. If they left tomorrow, could you replace them? If so, where would you get them from, what would be the costs associated with finding them? What would be the impact on the business (CSI scores etc.)? How long will it take you to bring another tradesman up to speed from another brand?

Techs On The Move’s sole purpose is finding highly experienced automotive tradespeople with experience and training at the highest level from other international markets. We don’t recruit locally, as we’re actively working to combat Australia’s skills shortages whilst assisting motivated individuals who are keen to experience working in Australia. All our tradespeople are what we like to call, ‘Plug and Play’, that is they’ll hit the ground running, know your product, and already possess the manufacturer training and experience you desire.

A skilled labour force are the foundations of any service department. If you have high staff turnover, then it’s likely you’ll be amongst the lower echelons of the CSI rankings. If you’re CSI scores are poor, then chances are your bottom line financials will be too. Don’t wait for your labour force to leave before assessing their value. Technology advances faster every day, and having strong diagnostic skills are critical to the efficient operation of any modern dealership.

Read more about migrating to Australia

Why do we Accept Inefficiency in our Workshops

Photo Credit: Ford UK.

Why is it that some Service Managers focus on how little they can pay their technicians, yet rarely look at the opportunity cost associated with them standing at the back counter waiting for parts or fumbling around in a congested car park.

Regrettably many dealerships accept inefficient work practices, and have previously relied on increasing their labour rates, or upselling add-ons to attain their budgets.

With most manufacturers now moving towards capped price servicing, and focusing on fixed-right-first-time scores, such practices are no longer feasible, and as a result, many dealer’s bottom lines are suffering.

I recently visited a mainstream dealership and listened to a service advisor attempting to upsell a rotate and balance and a wheel alignment. Meanwhile, in the workshop I noticed a social gathering of technicians at the parts back counter, presumably waiting on their quotes for additional spare parts, or the indeed the parts themselves. Outside there was a congested car park, where I witnessed a technician wandering around clutching a remote key, holding it in the air and repeatedly pressing the remote in the hope they could identify the vehicle. Once found, they then had to return to service reception to find the keys for the two cars blocking this one in. All up, this technician spent around 15 mins getting their vehicle from the car park, to their work-bay, and then spent another 10 minutes at the parts back counter waiting for their parts.

I did some very quick mathematics and my findings were startling. If we consider conservatively that each technician spends 15 mins per job procuring the vehicle and the parts, and works on say four vehicles per day, then an hour of their day is wasted in time that could otherwise have been charged out at upwards of $135, or thereabouts. Then consider that there are 15 technicians working at this dealership, and all of a sudden, we’ve squandered $2,025 of labour that day, or $42,525 for the month. Granted, it’s unlikely we can eliminate this non-value added time altogether, but what if we could reduce it? Furthermore, what about the additional parts we sell, for every extra hour of labour we sell? This incremental labour isn’t a gross sales figure, it actually goes straight to the bottom line, since you’re already paying the technician’s wages.

Are manufacturers standard repair times unrealistic, or have we just accepted hundreds of inefficiencies associated with our current practices? The shrewd service manager will have already realized that survival means reducing every ounce of non-value added time from their workshop. This might mean employing parts runners to deliver parts to the technician’s bay, or vehicle-jockey’s to maintain an orderly carpark. It may include educating and training all involved in the importance of labour efficiency and recovery. Identifying any activity that acts as a road block and slows your technicians down. It’s also critical you employ technicians who understand your product, and can apply their experience in ensuring the most efficient rectification possible.

Extended service intervals mean less maintenance work and technological advancements mean more diagnostic work.When combined, efficient work practices and employment of highly skilled technicians has never been more important than it is today. Techs On The Move source technicians who are simply, ‘Plug and Play’, that is they’ll hit the ground running, know your product, and already possess the manufacturer training and experience you desire.

Now none of what I’ve written is rocket science, and most of this has been known since Adam was a boy, so why is it then that inefficient practices remain? I believe it comes down to the fact that having an efficient workshop is a culture, it takes years to cultivate, and requires that everyone is committed to it. There is no one silver bullet, but rather, a hundred small initiatives which when accumulated make the difference between those that will survive, and those dinosaurs who will become extinct, blaming the manufacturers for their unrealistic standard repair times, or capped price service initiatives.

Read our next post: How can I use my skills to find work in Australia?

What’s a Diagnostic Technician worth?

All too often I hear service managers complaining they can no longer find decent
technicians, and yet the truth is that the skills shortage hasn’t simply appeared out of
nowhere.

The truth is more confronting, and so most don’t wish to face it. The truth is that the skills
shortages we face today are a direct result of short sighted management over the past 20-
30 years or so within our industry.

Let’s look at a dealership’s investment necessary to develop such professionals.

Take your best Technician who has at least ten years’ brand experience and consider the
investment you’ve made in them. This may be through an apprenticeship scheme, and then
ongoing participation in manufacturer training courses. With all this investment, you’d like
to think that these guys will yield the highest monthly labour GP, but perhaps not anymore.
These days it’s the guys doing efficient maintenance work spinning the filters who achieve
the greatest returns, meanwhile your most decorated techs are typically conducting the
more complex diagnostic work, which can often be more difficult to recover labour, and all
too often at a reduced manufacturer’s warranty labour rate.

This becomes a vicious circle, as we start falling into the trap of getting the apprentices to
spin the filters to achieve the desired labour GP benchmarks we’re chasing, meanwhile
we’re not developing them to keep up-to-date with the latest technologies. These guys then
lose interest due to the monotony of service work, whilst you become more dependent on
the few guys who have the diagnostic skills necessary to fix the more complex jobs.

Apprentice retention rates will likely fall off as a result and the flow-on effect being that at
some point you find you don’t have sufficient resources with diagnostic capability to ensure
all vehicles flowing through the workshop are diagnosed correctly in the first instance.
Ultimately your limited diagnostic resources become stretched, and you start seeing your
fixed right first visit scores heading south. This obviously has a flow on effect to the bottom
line as manufacturers now remunerate dealers according to how well you service your
customers.

Perhaps it’s time we started looking at the indirect bonuses paid to dealerships through
customer satisfaction programmes. Surely we should attribute some of the monies paid
through such programmes to the efforts of the more experienced guys who play a key role
in ensuring the vehicle is diagnosed correctly the first time. Perhaps the metric of labour GP,
should be assessed in conjunction with fixed right first visit statistics.

What’s the true value of your most experienced home-grown technicians, who know your
product from bumper to bumper? (All things being equal, assuming they have a good
attitude and are intrinsically motivated in doing their job). If you don’t know it now, then
consider this. If they left tomorrow, could you replace them? If so, where would you get
them from, what would be the costs associated with finding them? What would be the
impact on the business (CSI scores etc.)? How long will it take you to bring another
tradesman up to speed from another brand?

A skilled labour force are the foundations of any service department. If you have high staff
turnover, then it’s likely you’ll be amongst the lower echelons of the CSI rankings. If you’re
CSI scores are poor, then chances are your bottom line financials will be too. Don’t wait for
your labour force to leave before assessing their value. Technology advances faster every
day, and having strong diagnostic skills are critical to the efficient operation of any modern
dealership.