UPDATED: 6/17/14 2:39 pm ET -- Correction
EDITOR'S NOTE: The chart below listed the median salary of service technicians at dealerships. It should have labeled it as the median salary of automotive service technicians and mechanics in general.
North Dakota dealer Elyse Puklich is holding her own against the oil industry in recruiting and retaining service technicians. But it isn't easy.
When the oil boom took off in 2009, several of her service technicians left for higher pay. That prompted Puklich to make significant changes, beyond pay hikes, to compete.
"We've been doing quite a bit of improvement on our work environment," says Puklich, owner of Puklich Chevrolet Inc. in Bismarck, N.D. "I can offer something the oil companies can't offer: a lifestyle, family and a community. Most of them offer long hours and shift work. The people in the dealerships can go home every night."
Puklich has not lost any service technicians in the last few years. But she needs to hire at least two more and is struggling to find them.
Most dealerships compete with other industries for staff. But the epicenter of the intense competition lies in the oil-patch states. In North Dakota, Texas, Alaska, Oklahoma and elsewhere, the energy industry's incredible growth since the mid-2000s has forced dealers to innovate to find and keep service technicians. Dealerships across the country can benefit from the lessons that oil-patch dealerships have learned in competing for talent.
"In California, we don't have anywhere near the competition of the energy industry for our technicians, but we have the competition from all other kinds of industry," says Ron Rhodes, DCH Automotive Group's Western Region fixed operations director, in Temecula, Calif.
In states where oil is big, dealers compete for technicians with strategies that include cash and noncash inducements, talent development and creative recruitment approaches.
|Dealerships in states with a booming oil industry have to compete for automotive service technicians and mechanics. Chart shows techs' median salaries.|
|AT DEALERSHIPS||IN OIL, GAS, MINING INDUSTRY|
Some dealers have had to raise prices to cover technicians' pay, even if that drove away some customers.
North Dakota's oil industry is a $40 billion a year business producing 1 million barrels of oil per day, says Ron Ness, president of the North Dakota Petroleum Council in Bismarck.
The oil boom has boosted the local economy, which led to higher revenue at many car dealerships. But the downside is that the dealerships and the oil companies must wrestle for workers.
"It's not bad for business," says Donovan Bertsch, owner of Theel Inc., a Chevrolet-Buick dealership in Bottineau, N.D. "The infrastructure had to improve. That gives us jobs. And the housing market goes up. That gives jobs. But it also creates more job opportunities" outside automotive.
There are "tens of thousands" of oil trucks and equipment that need constant repair to keep operating, Ness says. "We're all after the same guy: that North Dakota farm kid who can fix anything and is now a diesel mechanic."
Bertsch's dealership, in a small farming community, sells about 600 new and used cars a year. Yet he charges big city prices and says he "blew by" the minimum wage many years ago trying to compete with energy companies for technicians.
Bertsch pays a flat hourly rate of $25 for a starting technician, or about $50,000 a year for a 40-hour week. But an entry-level position driving a truck for an oil company pays about $80,000 a year for a 40-hour week and may come with a $5,000 signing bonus, he says.
Bertsch has raised customer prices 15 percent a year for the past three years to help offset labor costs, he says, losing some customers in the process.
"We can't continue to raise our prices to such a rate that we, out here in rural North Dakota, are charging more than some of my friends in New York do," Bertsch says. "Yet we can't compete."
The Automobile Dealers Association of North Dakota has hired two full-time recruiters since 2012 to help its members by introducing high school students to careers in automobile and diesel technology, says Matthew Larsgaard, president of the Fargo, N.D., association. The association also offers scholarships and student loan programs, he says.
In Texas, dealers are reminded often of what they're up against. A large billboard along Interstate 20 between Odessa and Midland recently touted a $5,000 signing bonus plus benefits for those taking oil-sector jobs, says Ken Erlan, director of fixed operations for Lithia Motors Inc.
"That's very aggressive," Erlan says. "It has forced us to solicit and look for technicians from all over the country. We do signing bonuses and relocation packages to get people" to move to Texas.
Lithia, the nation's eighth-largest dealership group, has seven dealerships in the Midland-Odessa market, out of about 90 nationwide. In the next 12 months, Lithia wants to hire 136 service technicians companywide, Erlan says.
Lithia offers finder's fees to employees who help recruit technicians, he says. In early May, Lithia hired Steve Hamre to a new, full-time position as a technician recruiter. "His sole focus is to go to career fairs and explore all avenues to find people," Erlan says.
Sonic Automotive Inc. gets its "hooks in" talent early, nurtures them and pays longevity bonuses to keep them, says Karen McKemie, a divisional vice president in Charlotte, N.C.
Sonic, the fourth-largest U.S. auto retailer with about 102 stores, has 20 dealerships in Texas. It has partnered with local high schools' technical programs to spot talent. Sonic makes its equipment available to the schools, and it invites entire classes to its dealerships for a job day to meet technicians and discuss careers. Sonic also offers six- to 12-month apprenticeship programs for technicians at nearly all of its dealerships.
Sonic's longevity bonuses are paid annually based on the technician's seniority and productivity, McKemie says. "It can be very lucrative," she says. Since implementing the bonuses in 2011, Sonic's service technician turnover rate has dropped about 6 percent, she says.
Larry H. Miller Chevrolet in Murray, Utah, is 120 miles from the nearest active oil and gas extraction sites. Even so, the oil industry "does take a lot of people," says Cort Johnson, service manager at the dealership. "The wages are high and it's really booming."
Johnson lost two entry-level service technicians to oil companies in the past four years. Both wanted to return; he rehired one. He can't top the oil industry's wages: His entry-level pay is $10 an hour vs. $60,000 to $80,000 a year at an energy company. So when he recruits, Johnson talks up the culture and career possibilities at Larry H. Miller Group of Cos., rather than wages. The dealership group has 53 stores and is the nation's 10th-largest auto retailer.
"Of my 14 technicians," Johnson tells potential recruits, "12 of them have been with us longer than 10 years."
Among the benefits Johnson touts that keep Larry H. Miller's employees from decamping: in some cases, the company pays for an entry-level technician's toolbox; there are scholarships for employees' children, and the company has a proven apprenticeship program.
When Johnson was a technician, he mentored a young Zach Kesler. Last year, Kesler was the highest paid technician. Johnson says top performers can see earnings in the $90,000 a year range.
Puklich promotes the family-friendly culture at her dealership and will soon use her community as a recruiting tool as well. Her advertising agency is creating a recruiting brochure that will showcase the benefits of living in Bismarck.
"We've always been a great place to work. But we didn't talk about it as openly as we do now," she says, "and we need to."