The automotive industry fears Kiwis will increasingly drive unsafe cars, and that repair costs and delays will escalate because of a critical skilled-worker shortage, a plight that is costing the industry hundreds of millions of dollars in lost revenue. Jane Phare reports.
Paul McCurdy estimates that staff shortages in his Taranaki truck supply and repair business are costing the company $315,000 a month in lost revenue and “pissing off” his customers – truck owners who can’t wait weeks to have their vehicles fixed.
McCurdy, part-owner and manager of McCurdy Trucks in New Plymouth, has 18 mechanics on the service floor but needs at least four more just to keep up with work already booked. And he needs four engineers for the company’s fabrication workshop. He estimates that there is a shortage of at least 30 diesel technicians in Taranaki and 500across the country, not including those needed to work on cars and boats.
“Customers aren’t happy. This is a truck workshop, and trucks are people’s livelihoods,” he says. “People can’t wait weeks to get their truck fixed. They need to be on the road.”
What used to be a three-day wait for a service booking has stretched to 10. Repairs take longer than they should. McCurdy, like others in the industry, fears truck owners are stretching out service and inspection times because they can’t afford to be off the road.
McCurdy Trucks is no small business. It turns over about $22 million a year and employs nearly 60 staff selling trucks and trailers, spare parts, doing repairs and servicing, engineering and modifications, and selling engine lubricant. The company built a new workshop six months before Covid-19 hit and the border closed.
“We built the place to grow but we can’t,” McCurdy says. “So we’ve just been in maintain mode, trying to do our best with what we’ve got.”
He wants to see the border open now to address an urgent skills shortage.
“We’re not talking about bringing people in to lie on the beach, we’re talking about people who will help the economy.”
It’s a plight echoed by others in the automotive industry, from major nationwidedealerships to small workshops. The shortages are everywhere, from sales staff and auto electricians, to diesel mechanics, painters and panel beaters.
Before New Zealand’s border closed, McCurdy used to bring in three qualified technicians every year from overseas. So did other automotive businesses. Now the industry fears that with New Zealand’s border still closed to non-New Zealanders, those skilled workers will be snapped up by other countries, including the UK, Canada and Australia.
McCurdy has two South African mechanics lined up to come when the border reopens, but he says it’s been too long a wait already. Added to the border closure is the immigration setting for skilled workers, who currently have to earn at least 1.5 times the median wage of $27.33 an hour (in June 2021), or $56,846 based on a 40-hour week. One-and-a-half times that is $85,269 a year, a rate most workshops say they just can’t afford to pay.
McCurdy says high-end mechanics with 10 years’ experience might well earn that as a base rate but his company is after “ground-level” mechanics. The company has already increased its pay rates to keep and attract staff and as a result it has been forced to increase its hourly rate to clients, now $120 an hour for service and repairs.
But companies already charging that say there’s a risk the hourly charge-out rate will need to rise significantly if businesses are forced to pay high rates to get workers from overseas. They predict that Kiwis will delay getting their vehicles checked or fixed, choosing instead to work and travel in a car or truck that may not be safe.
McCurdy says the company may have to consider paying the $85,000 rate once the border reopens. “We’re that desperate.”
Throughout the country, businesses in the automotive industry report similar desperation. A survey carried out last month by automotive industry recruitment agency Muster Recruits makes sobering reading. Of the 29 businesses that responded, most said they had experienced significant losses in turnover as a result of being unable to find qualified mechanics and other staff to fill vacancies.
One nationwide dealership reported between 70 and 80 per cent of its network was struggling to find staff. Franchise dealers reported business “leakage” as frustrated customers went elsewhere to non-approved garages.
Businesses reported losses of between $10,000 and $20,000 a month, climbing to $80,000 and $100,000 in some cases. One Auckland company estimated losses at $224,000 a month. And a nationwide dealer put losses at $1 million a month, with expensive hoists sitting idle, parts and oil not being sold, staff hours not being charged out, and sales lost. Many reported waiting times for appointments of up to four weeks whereas ideally it would be four days.
A motorcycle dealership owner estimated losses at $16,000 a month and said his workshop was between two and four weeks behind in completing work. In addition, about $350,000 worth of traded-in motorbikes were waiting to be prepared for resale.
Muster Recruit’s managing director Matt Twiselton says from that relatively small groupof 29, businesses reported 200 vacancies for technicians and another 200 for supplementary automotive staff. He calculates the combined loss of revenue for those companies alone to be $96m a year.
Aside from financial losses, almost all those surveyed expressed concern about pressures on existing staff due to the overload of work.
“They are burnt out and considering other opportunities,” one respondent said. “This also affects people’s pay and commissions. If they cannot reach targets … [they] are struggling to survive and pay for basic needs and support their families.”
Some business owners said they were not performance managing staff and were putting up with sub-standard work because they could not afford to have workers leave. One summed up issues facing the business with this: “Mental wellbeing of current staff, resignations due to pressure of under-manned teams, loss of income for business, frustrated customers, inability to perform as per budgets, increased wages as employees being poached.”
One said service staff were working 10-hour days and were being paid more than double time for overtime to try to keep up with demand. Another reported having to use part-timers who were not efficient, “which we would not normally tolerate but have to suck it up”. Repeat repair work was four times the usual level as a result of a lowered skill level and stretched supervision of apprentices.
“We have apprentices completing tasks that we would not normally dream of one touching. We have been advertising for nine months and had two applicants from New Zealand who were not suitable.”
Business owners say they are spending hundreds of dollars a month advertising in newspapers, on Trade Me, Facebook, Seek and with agencies. Trade Me alone has more than 410 advertisements for automotive technicians/mechanics, with another 127 for diesel mechanics.
Greig Epps, advocacy and strategy manager for the Motor Trade Association (MTA), says industry shortages are compounded by an ageing workforce, with not enough young people in the pipeline to replace them. That includes shortages at vehicle inspection centres, which are often staffed by mechanics who have left careers in aworkshop.
Already, the industry is seeing rolling closures due to lack of staff, made worse by the Omicron factor, he says. Rural areas often have only one repair shop in the district and owners know how much locals can afford to pay.
“How is that business owner going to keep going and provide a service to the town without staff? It is getting to a really critical point here for automotive repair.”
He has heard reports of older workshop owners closing their businesses because they can’t find anyone to take over the work.
An MTA survey last year revealed that the owners of smaller businesses were working 10-hour days, six days a week in the workshop, unable to find time for administration, accounts or to grow the business. Almost all of the members who responded said they could not find workers to fill vacant positions.
“Find me a candidate,” one wrote. “We just don’t have people showing up.”
The dangers of an ageing fleet
As it is, about 40 per cent of New Zealand vehicles fail their warrant and for cars older than 15 years, 50 per cent fail. Between 2017 and 2019, 11 per cent of fatal road crashes were caused by vehicle defects. That figure dropped to 7 per cent in 2020, presumably because of changed travel patterns caused by lockdowns and more people working from home.
Safety will inevitably become an issue in New Zealand’s vehicle fleet, which has an average age of 14 years, Epps says. Add speed or alcohol to faulty brakes and the outcome won’t be good. The MTA fears people will drive without a warrant and that times between inspections and services will stretch.
“If people can’t afford to get their vehicle repaired they will make that decision to keep driving it.”
The MTA wants the Government to consider three solutions: open the border to working-visa immigrants sooner than indicated; reconsider the requirement for skilled migrants to earn 1.5 times the median wage or above; and extend the Apprenticeship Boost scheme, introduced as part of a Covid support package.
The apprenticeship scheme enables employers taking on apprentices to apply for subsidies for the first two years of training – $1000 a month for the first year and $500 a month for the second. It has worked well, Epps says, encouraging employers to take on apprentices knowing they will cost time and money to train.
But the Apprenticeship Boost scheme ends on August 4 and the MTA wants it to continue on a permanent basis. Epps wrote to the Minister of Education, Chris Hipkins, in September last year on behalf of the MTA, arguing that employers undertaking apprenticeship training were part of “the forgotten classroom” in the education system. He has yet to receive a reply and has this month sent the letter again, to Hipkins and associate Minister of Education Jan Tinetti.
Epps says the costs of apprentices trained within technical institutes and classrooms are covered by the education system, but employers have to bear the brunt of the training, including having senior technicians oversee the work.
“We fund schools and teachers and the materials they need. But there’s no funding for businesses who are teaching and there’s no guarantee that the apprentice will stay with that business.”
McCurdy says his company plays its part in training, spending around $200,000 on both apprenticeships, and extra skills and brand/franchise training, excluding the wages. He employs a training manager overseeing eight apprentices including two older men, aged 36 and 38, who he’s recently taken on. McCurdy prefers in-house training for four years rather than taking on apprentices coming through technical institutes.
“They’re trying to churn out apprentices faster. They’re putting the numbers through but at the end of the apprenticeship they’re only qualified on paper, they’re not practically qualified.”
The Apprenticeship Boost scheme helps, he says, because it is some time before businesses start to see returns from training apprentices, whereas qualified mechanics arriving from overseas can start earning from day one.
Pre-Covid, about 25 to 30 per cent of Muster Recruit’s business was bringing in automotive technicians/mechanics from overseas for petrol and diesel vehicles, marine, motorbikes and heavy trucks. The company would average 100 skilled workers a year from South Africa, the Middle East, the UK and some from Sri Lanka and the Philippines.
Twiselton says his clients also want to see the border open up more quickly. Ironically, the closed border meant Kiwis couldn’t travel, so they spent up large on new and good second-hand cars.
“That’s put tremendous pressure on the retailers and dealerships.”
Dealerships have all got vacancies across the board, he says, from sales staff and managers who work behind the scenes to mechanics and specialist franchise staff. The closed border has caused a sharp increase in poaching between companies and unrealistic pressure on existing staff.
“The industry is starting to lose people because the pressure’s too much.”
The apprenticeship scheme helps, he says, but it’s not a quick fix.
“To train someone to work on a new, modern vehicle takes four or five years.”
Electric vehicles are a case in point, Twiselton says. Who will train the technicians needed for that market? Although e-vehicles are a small percentage of the New Zealand market at the moment, they are growing in popularity. Last month the Tesla Model 3 was the second-highest selling model behind the Mitsubishi Outlander. And in 2021 it was the fifth-biggest among passenger cars and SUVs.
Epps points out that notwithstanding the move towards lower emissions and cleaner cars, people will still need those vehicles fixed. Climate Change Commission models show that in 2035, 60 per cent of New Zealand’s fleet will still be internal combustion engines.
“So we will still need automotive technician working on the millions of cars as well as the low-emission vehicles.”
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