If the early birds who filled the elegant Venetian Hotel Ballroom for a morning session on ``What Part of Parts, Accessories and Service Don't We Understand?'' thought they were in for light fare, they were as out of touch as a polyester suit.
This was hardly ``Chicken Soup for the Parts Man's Soul.''
What was served up at the Automotive Aftermarket Industry Association's (AAIA) Town Hall gathering on Nov. 2 in Las Vegas was a no-holds-barred wake-up call. Critically needed education-of customers, self, local school officials, employees/technicians and lawmakers- was the overriding message from the AAIA's quartet of aftermarket parts and service leaders.
Participants tackled tough questions from moderator Kathleen Schmatz, president and CEO of the AAIA. The panelists were Michael N. Coppola, president and COO of Advance Auto Parts Inc.; Tim Lee, AAIA treasurer and CEO of Certified Automotive and Lang Distributing and president of Lang Auto Parts in Chicago; Chris ``Chubby'' Frederick, president and CEO of Automotive Training Institute in Savage, Md.; and Van D. Kirk, president of Auto Tech Service Inc. in Lexington, Ky.
The foursome's insights ranged from shifting demographics to the scarcity of qualified technicians, to being ``locked out of the hood'' by auto dealerships that relentlessly go after repair, maintenance and accessories-the bread-and-butter of independent repair shops and aftermarket retailers.
What follows are highlights from the nearly two-hour ``Meet the Press''-type panel discussion. (The participants remarks have been edited somewhat for the sake of brevity.)
Ms. Schmatz: ``Consumer demographics have changed drastically from whatever we think of as the `good old days.' And part of the reason the parts business has been so very successful is having a sensitivity to those changes and the reality of how we serve the changing customer bases. Mike, can you tell us a little bit about what it means?''
Mr. Coppola: ``The population obviously is older-much more diverse.... We have a large segment of African Americans and females, but to that mix we've got a lot of Hispanics, Asians. At Advanced Auto Parts, we believe the key to success to serving this population base is to first create the employee base that reflects that diversity throughout our company.
``We think we provide value to the high-income clusters in quality and variety, and for the bit more financially challenged demographic customers, price savings and the depth to provide the goods and services that the customers want-not the goods and services that many of us would like to provide them.
``Rather than being a negative...the changing demographics and the diversity of the demographics are an opportunity for us to do more business and make more money.''
Ms. Schmatz: ``What are the most important things we need to catch up on in terms of running a successful business?''
Mr. Frederick: ``The biggest challenge is just trying to make it profitable. We're competing with car dealers (who) are astute businessmen and they're making big profits. The independents are going back to management school and trying to net 20 to 30 percent.
``Unfortunately, most of them net about 1 to 5 percent. That's been our experience; we do about 3,500 (profit and loss statements) a year. And they're working real hard on it, but the challenge they have is, most of the independents are working in their business; they're not working on it.
``Many of them know what to do, they just don't have the time to do it.
``Once they learn to get off the counter and become businessmen and be able to compete with all the competitors that are out there, then we teach them how to lead. They have to work on their leadership skills. Most of them know what to do. If you gave them a test, and asked them how they should perform, what should they do, how should they set their prices, they'd pass the test, but the problem is finding the time to take action to do all this.''
Ms. Schmatz: ``What's the responsibility of the warehouse distributor? I'm not sure that W-Ds have been as engaged as they should be.''
Mr. Lee: ``There are a great many of us (who) are engaged.... Information is power. We need technical information for the technicians. They have got to understand, they've got to have the access and the know-how to work on complex vehicles.
``At a business conference, we're learning that a 300-volt electrical system is coming out in vehicles that is capable of killing or seriously injuring a technician. We have to make certain that when these cars become as complex as they've become that we have technicians (who) are educated and are able to adjust.
``So when it comes to technology, the warehouse distributor, unfortunately, is the middleman, and we have to broker that strength from the manufacturer and developer of those systems down to the technicians (who) put their livelihoods and lives at risk installing those parts.''
Mr. Kirk: ``I'm a hands-on guy. I'm a mechanic. But I have had to raise myself from `What's wrong with that car?'' to `How will I run my business and make sure that my technicians are better than me when they're working on that car?'... How can I make my money?
``How can I take time off? Do I have to do that at 10 o'clock at night or can I do that on Tuesday and Wednesday morning and go to Las Vegas and learn 20 things up there that are going to make me more money? The guy who says, `I can't afford to do that' is working too hard. He's not working smart.''
Ms. Schmatz: ``About 62 percent of the independent repair shops have no training at all. 62 percent! They should be ashamed. We've got two challenges: We've got to change the perceptions of the driving public...that those guys (auto dealerships) have the smarts cornered. But even more importantly...why does the shop buy parts from the enemy?''
Mr. Kirk: ``If I go to a dealership and buy parts, maybe it's because I trust that part more specifically than one that's sold from another distributor. Why? Maybe I've had a bad experience with a particular kind of part. I need to be able to communicate that back to you-the parts people-so you can help us fix that.... When it comes to working head-to-head against the dealership, I love that challenge. I would much rather have a flexible, efficient organization working with me than...26 bosses telling me what you can do.''
Mr. Lee: ``The reason that most of our service installers go to the car dealers is because they're getting parts that look just like the parts that came off the car. So we constantly have to put pressure back on manufacturers to give us the exact look, the exact fit that came off the car.
``I have a couple of fears. One is pricing. We always pride ourselves in the aftermarket on being able to price our products at a much more favorable price point than the original equipment manufacturers and the car dealers. We're finding that's not the case anymore.... We also have to be putting pressure on the industry and manufacturers who are allowing design exclusives to be purchased by the car manufacturers. The manufacturer says, `Yes, I'm going to buy your fuel pump, Yes, I want you to design it for my vehicle, but no, I don't want you to sell that technology into the aftermarket.' Well, we've got a problem. That's when we start getting locked out of the hoods.''
Mr. Frederick: ``Margins are the big issues. If the independents don't make about 53-percent gross profit on their parts, there's absolutely no way they can make a bottom-line net profit. So they don't want to go to the car dealers, that's for sure.... As Tim (Lee) said, it's more of an emotional thing. A lot of these guys aren't money motivated, which is one of the problems with the whole independent service dealer. Most of these guys are recognition-dependent. (I)t's not always about the money. And again, that can always backfire because they don't have the money to take care of the image things. Then it always comes around full-circle.''
Ms. Schmatz: ``The Right to Repair legislation applies to DIY. The do-it-yourself market is far from dead. Research shows 75 percent of consumers have personally performed, or had a friend or relative perform, some kind of do-it-yourself repair in the last year.''
Mr. Coppola: ``The key is, obviously, we need to address the changing demographics that are taking place. Part of it is consumer education. Did we convince the customer, the general public, that they can do a lot of this stuff themselves?
``There's still a lot of regular maintenance and wear parts that DIY'ers can do and will continue to do in the future.... We need to keep the industry exciting, to continually bring in new products, display new products, bring in new parts that people want to put on their cars to keep the industry exciting.... There is less traffic coming into our stores, and we need to reverse that trend. We need to make our stores interesting in order to do that.''
Ms. Schmatz: ``The Department of Labor estimates we are about 100,000 technicians short this year. And yet there's a 13-percent increase every year in new technician jobs. The other reality is that half of today's technicians will retire in the next seven to 15 years. Chubby, where do your clients get good help?''
Mr. Frederick: ``It is quite a challenge. Unfortunately, the big issue is, what are we going to pay them? Can we give them great benefits and can we give them reasons never to leave? The very best shop owners in the U.S. have very little turnover-and have very little difficulty in attracting great technicians (who) stay there a long time.
``But when you look at the vast majority of the shop owners, there's not that many out there (who) can fill the business and pay the kind of benefits necessary to compete with the car dealers.
``And some independents believe that it's impossible to compete with the car dealers.
``It's really just a question of economics and quality of life. Today, unfortunately, the majority of the technicians aren't money-motivated, which is a big problem because if they were, you could just throw money at them.
``Many shop owners have realized that by giving them a raise, they actually work less.... Interestingly enough, quality of life has become a big factor. They can get a job anywhere.... Once everyone sees that these people become harder to find, and supply-and-demand happens, we're going to find there's going to be a lot more people wanting to get back into this business because the owners are providing a great work environment for them.
``A lot of shop owners aren't really big on aggressive recruiting. They are not expert at recruiting. It's really all about relationships. When technicians stay in one shop longer than another it's because they love the family, they love the environment, and they feel they have a great relationship with the owner. And in order to recruit techs, you're going to have to build relationships with them.''
Mr. Kirk: ``The first people we've got to touch are the parents and the educators because it starts young.... Shops should be doing what other real businesses have been doing: get involved, sponsor a sports team and get their names out.
``Go to the school and speak to the science department, go and speak to the electronics people, the math people. Show them what we do.... You've got to help people see what kind of person (technicians) can be in our industry instead of what your mom and dad thought they were. Once you win the parents and then win the teachers, you've got half the battle won.''
Mr. Lee: ``The migration of technicians from the car dealerships-from Ford, Chrysler, GM-into their own businesses has ceased. It's ceased because the car dealerships pay the techs so much money and charge you so much money in labor rates.... The technician is an auto surgeon. He's not a grease monkey!''