Excellent. I worked at the old Ford Foundry and it was far better run than any of the Big 3 today. Farley’s comments say it all. By the way, I worked at the foundry in the 1960’s.
Suggested readings for those who wish a realist description should read Soresen’s autobiography about his work at Ford’s as we natives called it. It’s on Amazon. Bob Lutz has several excellent books. I recommend AJ Baime’s story of Willow Run. More later
Your idea has proof of working. An auto shop has been using this formula for tech pay for at least a couple months. The mechanic/ biz owner posted a video about it and it has 170k likes and lots of positive comments. https://youtube.com/shorts/WrkF-Qsf1Bs?si=RHXYfsDhpvWNrbA5
"What? Treat a labor input unit as a human being? That's not "efficient"! We want our workers to absorb all the risks of business variability and the costs of the expertise needed while being available to maximize our opportunities when they arise. Workers need to get out of their little peabrains that they are important. They are labor input units and need to conform." Says big capital.
Removing Illegal alien workers, like removing slaves, puts free workers on an actual competitive marketplace for labor. The economy will have to adjust as the more physical labor work becomes properly valued. Some things will be more expensive, but more people will also be able to afford more expensive. Labor is woefully undervalued, management is grossly overvalued. True fact.
Yes. I was pretty disgusted when I read that article in the WSJ. These people apparently think the free market is broken if they don't get what they want for the price they want. Work must pay. If work doesn't pay, you'll have too few employees, lousy employees, or a combination of the two. This is an easy fix. Our education bureaucracy needs to play a constructive role in getting people into the pipeline for good jobs like this.
As a management consultant with (presumably) an MBA from a good school, you should know better than to write an article like this without mentioning *why* dealerships structure mechanical work the way they do. Unlike management consultants (one of which I used to be), whose work comes at very high margin for their employing firm, the market won't bear extremely high costs for car work. If Ford dealerships instituted the changes you're suggesting and independent repair shops didn't Ford would soon find itself doing no car repair because they'd be undercut on price by their competition. The only way around that is something like true sectoral union bargaining, but that's not going to happen in an America where the GOP controls Congress and the White House.
Are you going to take your $60,000 truck to an independent to have the transmission rebuilt? Many of us won't, because the dealer can back up their work, while the independent isn't going to eat their mistakes without a fight. Yes, there will be a small number of independents who can do an excellent job on complex work, but they will be hard-pressed to retain good workers if real pros can make more money at the dealership. Independents can always hang a new alternator or change your shocks for less than a dealer, but once you get into complex electrical work, transmissions, or engine tear-downs, you are rolling the dice.
Maybe. Another outcome might be that the Ford dealership is fully staffed with auto mechanics that can trade on the Ford name for work at a slightly higher price, while the independents, still placing all the upfront cost of the individual, find themselves short-staffed and losing jobs to the dealership. Maybe?
Mechanics advertise online, some will even come to your house and work on it there. Rates are much more competitive and the quality is better. The dealership pays it's help a flat rate that is horrible, no one works at a dealer for long. If auto dealers want good workers they need to pay for them.
Problem: The mechanics work for an independent dealership, not Ford. You are expecting thousands of independent dealers to "buy in" to this suggestion. I don't refute your solution, but find it ultimately unmanageable. Perhaps if Ford subsidized/demanded that their dealers change the employment scenario it might work, but don't discount that the same company just shoved thousands of unsaleable electric vehicles up their tutu over the past five years.
... my first job, lot boy at Toyota, mid-1970s, we had Chrysler, Porsche and Jaguar master mechanics who'd made the hop, because they'd make more money wrenching uncomplicated corollas, coronas and celicas, a cinch to work on. Most amazing thing I saw was the camaraderie, the bravado, each master mechanic outdoing the other by day's end, who went through the day the least greased and soiled. Ricardo, a Spaniard, master Porsche mechanic, every once on a while we'd have one of his wayward Porsche, Ferrari, Pantera guys stumble along, "... pleeeeez, just this once!", begging George, our Toyota manager, for service -
Great article. OTOH, I would guess that it was management consultants who decided that the current approach (very low starting wage, having to bankroll your own startup costs, etc.) was advantageous for Ford.
Are you suggesting we should go back to allowing GM and Ford to dump toxic waste into the environment and make it's employees work 80 hours a week with no overtime, unemployment insurance, or worker's compensation?
Technician compensation is dealer responsibility; full stop.
Neither Mr. Farley nor anyone else at Ford Motor Company, can change that.
Wages are regionally variable; starting pay in higher-cost regions is certainly not ten dollars an hour, and tech school graduates are very rarely able to perform complex diagnosis and repair, until they gain real-world experience.
Part of the problem is the autonomy required to do the work. When mistakes are made (and this is routine,) the dealership must absorb the cost. This is one side of the equation. The other side, has to do with wages as a percentage of billed hours.
Each dealership must calibrate its wage offerings to the effective labor rate, or go bankrupt, and likewise the sunk costs involved with training new hires.
That said, it's startling to observe how so many dealerships take the piecework compensation model (referred to as "flat rate,") as some sort of immutable law of nature.
Technicians are real human beings, with all of the personality variations that accrue to the species. Incentives matter in this context. Some technicians produce the same billable hours, whether they are paid "straight hourly" or by piecework. Others do not, and here again we are dealing with the autonomy factor.
There is no one answer to this; good management treats individuals as unique persons, tailoring compensation to the abilities and needs of the technician, and the needs of the dealership.
Being an automotive technician is demanding, and if anything, the author of this piece has understated the case. Along with the musculoskeletal physical cost over time, techs freeze in the winter and fry in the summer. There are other physical costs, too many to list in this venue. Added to that, the evermore complex electronic engineering that is part of today's vehicles, demands constant retraining.
There are a lot of technicians with the aptitude and ability to encompass the mechanical side of the work, but struggle with the electronic aspect, particularly because the percentage of intermittent, "ghost in the machine" automotive malfunction symptoms has risen dramatically over the past thirty-plus years.
It's easy to oversimplify or overcomplicate the issues, and what is required is to understand the contributing factors and contend with their results. It's a multivariate paradigm and incentives are at the core of it.
The "sweet spot" is where good management collaborates with good workers, but there is also the basic economics to consider. It costs a lot of money to keep a dealership's doors open, and when basic costs of living are as volatile as they've become, finding and keeping competent staff without going broke, is extremely challenging.
We're in a time of generational change, as well. The technician cohort that existed during the "fully-staffed years," has been aging-out in the same proportions that they entered the industry during the latter part of the "baby boom" era. Look to the dearth of shop classes, to see how what was an "aptitude sorting process" feeding viable candidates into the industry, has collapsed, to understand yet another nontrivial factor.
Mr. Farley is a smart man and a good leader, and he's not wrong in what he's saying, but there's more to the equation than his messaging has yet conveyed.
One aspect of the problem is that too many techs are component replacers; not problem identifiers and resolvers.
A good way to keep the educated tech whose education you funded is to loan them the money for the school and reduce the principal an agreed upon annual amount for every year they are in your employ.
Excellent. I worked at the old Ford Foundry and it was far better run than any of the Big 3 today. Farley’s comments say it all. By the way, I worked at the foundry in the 1960’s.
Suggested readings for those who wish a realist description should read Soresen’s autobiography about his work at Ford’s as we natives called it. It’s on Amazon. Bob Lutz has several excellent books. I recommend AJ Baime’s story of Willow Run. More later
Your idea has proof of working. An auto shop has been using this formula for tech pay for at least a couple months. The mechanic/ biz owner posted a video about it and it has 170k likes and lots of positive comments. https://youtube.com/shorts/WrkF-Qsf1Bs?si=RHXYfsDhpvWNrbA5
"What? Treat a labor input unit as a human being? That's not "efficient"! We want our workers to absorb all the risks of business variability and the costs of the expertise needed while being available to maximize our opportunities when they arise. Workers need to get out of their little peabrains that they are important. They are labor input units and need to conform." Says big capital.
Removing Illegal alien workers, like removing slaves, puts free workers on an actual competitive marketplace for labor. The economy will have to adjust as the more physical labor work becomes properly valued. Some things will be more expensive, but more people will also be able to afford more expensive. Labor is woefully undervalued, management is grossly overvalued. True fact.
Well done! Oh - this is the same company that makes extensive use of 'purchased services' engineers, these days (i.e. H-1B visa holders).
Excellent diagnosis and even more importantly reasonable solution
Amen! Won't happen though. Gotta keep those quarterly stock prices going up! Heaven forbid a company spends any money on the grunts.
Yes. I was pretty disgusted when I read that article in the WSJ. These people apparently think the free market is broken if they don't get what they want for the price they want. Work must pay. If work doesn't pay, you'll have too few employees, lousy employees, or a combination of the two. This is an easy fix. Our education bureaucracy needs to play a constructive role in getting people into the pipeline for good jobs like this.
As a management consultant with (presumably) an MBA from a good school, you should know better than to write an article like this without mentioning *why* dealerships structure mechanical work the way they do. Unlike management consultants (one of which I used to be), whose work comes at very high margin for their employing firm, the market won't bear extremely high costs for car work. If Ford dealerships instituted the changes you're suggesting and independent repair shops didn't Ford would soon find itself doing no car repair because they'd be undercut on price by their competition. The only way around that is something like true sectoral union bargaining, but that's not going to happen in an America where the GOP controls Congress and the White House.
Are you going to take your $60,000 truck to an independent to have the transmission rebuilt? Many of us won't, because the dealer can back up their work, while the independent isn't going to eat their mistakes without a fight. Yes, there will be a small number of independents who can do an excellent job on complex work, but they will be hard-pressed to retain good workers if real pros can make more money at the dealership. Independents can always hang a new alternator or change your shocks for less than a dealer, but once you get into complex electrical work, transmissions, or engine tear-downs, you are rolling the dice.
Maybe. Another outcome might be that the Ford dealership is fully staffed with auto mechanics that can trade on the Ford name for work at a slightly higher price, while the independents, still placing all the upfront cost of the individual, find themselves short-staffed and losing jobs to the dealership. Maybe?
Great points, I would only add that they might try making better vehicles that don't need as many repairs in the first place.
Mechanics advertise online, some will even come to your house and work on it there. Rates are much more competitive and the quality is better. The dealership pays it's help a flat rate that is horrible, no one works at a dealer for long. If auto dealers want good workers they need to pay for them.
Problem: The mechanics work for an independent dealership, not Ford. You are expecting thousands of independent dealers to "buy in" to this suggestion. I don't refute your solution, but find it ultimately unmanageable. Perhaps if Ford subsidized/demanded that their dealers change the employment scenario it might work, but don't discount that the same company just shoved thousands of unsaleable electric vehicles up their tutu over the past five years.
... my first job, lot boy at Toyota, mid-1970s, we had Chrysler, Porsche and Jaguar master mechanics who'd made the hop, because they'd make more money wrenching uncomplicated corollas, coronas and celicas, a cinch to work on. Most amazing thing I saw was the camaraderie, the bravado, each master mechanic outdoing the other by day's end, who went through the day the least greased and soiled. Ricardo, a Spaniard, master Porsche mechanic, every once on a while we'd have one of his wayward Porsche, Ferrari, Pantera guys stumble along, "... pleeeeez, just this once!", begging George, our Toyota manager, for service -
Great article. OTOH, I would guess that it was management consultants who decided that the current approach (very low starting wage, having to bankroll your own startup costs, etc.) was advantageous for Ford.
As things stand now, Chinese automakers would put Ford and GM out of business in short order if allowed to.
And they would deserve it.
Are you suggesting we should go back to allowing GM and Ford to dump toxic waste into the environment and make it's employees work 80 hours a week with no overtime, unemployment insurance, or worker's compensation?
Technician compensation is dealer responsibility; full stop.
Neither Mr. Farley nor anyone else at Ford Motor Company, can change that.
Wages are regionally variable; starting pay in higher-cost regions is certainly not ten dollars an hour, and tech school graduates are very rarely able to perform complex diagnosis and repair, until they gain real-world experience.
Part of the problem is the autonomy required to do the work. When mistakes are made (and this is routine,) the dealership must absorb the cost. This is one side of the equation. The other side, has to do with wages as a percentage of billed hours.
Each dealership must calibrate its wage offerings to the effective labor rate, or go bankrupt, and likewise the sunk costs involved with training new hires.
That said, it's startling to observe how so many dealerships take the piecework compensation model (referred to as "flat rate,") as some sort of immutable law of nature.
Technicians are real human beings, with all of the personality variations that accrue to the species. Incentives matter in this context. Some technicians produce the same billable hours, whether they are paid "straight hourly" or by piecework. Others do not, and here again we are dealing with the autonomy factor.
There is no one answer to this; good management treats individuals as unique persons, tailoring compensation to the abilities and needs of the technician, and the needs of the dealership.
Being an automotive technician is demanding, and if anything, the author of this piece has understated the case. Along with the musculoskeletal physical cost over time, techs freeze in the winter and fry in the summer. There are other physical costs, too many to list in this venue. Added to that, the evermore complex electronic engineering that is part of today's vehicles, demands constant retraining.
There are a lot of technicians with the aptitude and ability to encompass the mechanical side of the work, but struggle with the electronic aspect, particularly because the percentage of intermittent, "ghost in the machine" automotive malfunction symptoms has risen dramatically over the past thirty-plus years.
It's easy to oversimplify or overcomplicate the issues, and what is required is to understand the contributing factors and contend with their results. It's a multivariate paradigm and incentives are at the core of it.
The "sweet spot" is where good management collaborates with good workers, but there is also the basic economics to consider. It costs a lot of money to keep a dealership's doors open, and when basic costs of living are as volatile as they've become, finding and keeping competent staff without going broke, is extremely challenging.
We're in a time of generational change, as well. The technician cohort that existed during the "fully-staffed years," has been aging-out in the same proportions that they entered the industry during the latter part of the "baby boom" era. Look to the dearth of shop classes, to see how what was an "aptitude sorting process" feeding viable candidates into the industry, has collapsed, to understand yet another nontrivial factor.
Mr. Farley is a smart man and a good leader, and he's not wrong in what he's saying, but there's more to the equation than his messaging has yet conveyed.
One aspect of the problem is that too many techs are component replacers; not problem identifiers and resolvers.
A good way to keep the educated tech whose education you funded is to loan them the money for the school and reduce the principal an agreed upon annual amount for every year they are in your employ.