There is news that Ford CEO can't find dealership mechanics for $120k a year.
Something is completely wrong in that shit.
AFAIK, dealership mechanic get around $30 per hour (at least at GM, don't think it is much different for Ford). And that hour is not real hour, but hour from Service Bulletein or whatever corporation paper, where times for repairs and service set. This times are underestimated even for a new car, for used one real times will be times more, but mechanic still will be paid according to the corporation norms.
Let's take, say, water pump replacement. All operations will sum up to around a hour. So, $30 to mechanic. Pump itself is overpriced original for $100. But dealership will charge you something like $800.
So, in ideal impossible conditions, when all bolts and nuts come out easy and there are no any unforeseen problems usual when working on cars, with $30/hour mechanic and 8-hour 5 working days a week mechanic will get only 52 * 5 * 8 * 30 = $62.4k for 52 weeks a year working without vacations. Looks Ford ready to pay even twice more than average.
But that's not what attracted my attention.
Dealership with $800 check for $30 work and $100 spare part get $670. What the fuck? Where that money go, and why actual mechanic job is 22 times cheaper than money dealership take?
OK, let's imagine rent, taxes, electricity, consumables, other dealershp employees salaries and all other necessary things. But I can't imagine that they actually cost $670/hour per each car repair stand in dealership service. Especially when mechanic often have to buy normal tools himself to be able to do his work, because dealerships provide some cheap garbage that breaks and then mechanics charged by dealership for this broken tools. I could believe in something like $100/hour, even $200/hour max, but definitely not $670.
Either there is something completely broken, either there is some total scam with 200-300% profit is going on in automotive industry. Like drugs or weapons.
Dealerships cost way more, but either way, the mechanics I know all bill out at $75-100/hr., and that is in a very rural, lower cost of living, lower income area.
I don't know many parts that you can get for $100. I've got a new sensor on back-order for $450.
Everything is designed to be expensive and short-lived.
Also, $120k for an experienced, senior-level mechanic doesn't seem unreasonable to me based on current economics. I don't think entry-level mechanics are making anything close to that though.
Edit: but yes, it's all a racket. That part is obvious and true.
Even $100-200/hr looks reasonable. So what's with dealerships, if they pay less to mechanics but charge much more for service?
IDK, I order parts from rockauto.com from time to time for my US car, including original ones, they does not look that expensive. Not the best quality, unfortunately, sometimes aliexpress replica have better quality with cheaper price, but with that prices original parts are more than affordable, even taking in account current tricky way from US to Russia.
May be newest cars are very different, but $450 just for a sensor is still too much, if it is not integrated into some big sophisticated part and replaced alltogether.
Planned obsolescence is not new thing, it is in full power since late 1990s. Funny, that with modern 3D printing services sometimes ordering, say, thermostat cover from stainless steel or aluminium cost similar to new original part and saves tons of money spent on permanent replacement of original leaking plastic thermostat cover and solve problem forever. Wasn't that one of the reasons of decade old hype around 3D printers with that "printed guns" and other shit? :)
It is just around $60/hr for mechanic, it is even less than your rural mechanic charge. I estimate it is still too low for a skilled worker.
Car service is not a rocket science, really. All you need is to have basic school physics understanding of how things works and read manufacturer service manuals ( they are really helpful, much more than any YT videos - check f.e. here - https://habr.x1site.ru/ ). Skills will grow fast, especially if it is dealership, i.e. cars of single manufacturer.
Well, paint jobs need some real talent, not everybody could succeed, but everything else - just don't be ignorant, read manufacturer docs and don't shy to learn from more skilled colleagues.
Then where money go? Who get benefits? Automotive industry in decline, quality is not far from the bottom, but customer pays more and more. This stream of money have to end somewhere.
Dealerships are a money extraction operation. They pay employees as little as possible and charge customers as much as possible.
It's a sensor that is integrated into coolant tank, and the whole things is only sold as one unit.
It is probably too low, but that still puts you in probably top 20% of salaries currently.
No, but no matter the field there are those that care and try and do excellent work, those that do the bare minimum, and those that cut all kinds of corners. Building a reputation as the first takes time.
To the top. Executive level, markets, private equity, investment funds, and bureaucracies (unions, etc.).
My condolenses. They love to do that shit now. But still too much for plastic container with a float, magnet and a reed switch.
Do you have part number? Sometimes third-party manufacturers make and sell separate parts of such "unrepairable" assemblies.
So, just population money utilisation into nothing.
$100 is one car dollar.
Yeah, it’s called “whites aren’t allowed to be hired.”
Executive salaries.
Well, yeah. That’s pretty much what it has been for decades, just now we have the problem of an 8x increase in the total currency supply since 2008, plus all the competent whites have aged out of the industry.
Looks like whole picture is intentional destruction of wealth created by real labor in addition to inflation and at even bigger scale than inflation.
Got it in one, my friend.
Dealerships are typically not owned by the manufacturer. Selling new cars and trucks is typically not profitable for the dealership, only the manufacturer. The profit is made by the service department. Much of business in the US works by franchise or licensing agreements. It diversifies the risk and reward.
Yes, I know that dealerships usually a franchise, the thing I can't figure out is that huge difference between service cost for dealership and customer check.
If that difference is real average business expenses, than how could business in US be attractive for anyone.
If that somehow specific only to automotive business, then what's the real reason for such expenses - huge franchise payments to franchisor?
If neither - why so huge difference between cost of service and customer check? Dealerships make enormous profits on service?
Workman’s comp & liability insurance alone can cost a dealership over 2 million per year.
So dealership hire low wage mechanics and cover their low skill with expensive insurance? Very strange business model. Profiting insurance companies instead of profiting own business....
Lawsuits are insane here, and insane risk for businesses. So insurance is insane.
Your mechanics can sue you, your customers can sue you, your salespeople can sue you, hell, someone who runs off the road and crashes into your cars can sue YOU for having them “too close to the road was distracting”…
In addition to insurance for hail damage, tornadoes, fires, flooding, earthquakes etc.
Welcome to American business. Regulations require equipment to capture used petroleum products and lubricants (and I'm ok with that). Most businesses are top heavy with management in my opinion, many times due to regulations (it's how government creates jobs in the US). Most large companies have shareholders and have a fiduciary responsibility to maximize profits.
That's can't be that expensive. Even used AC refrigerant is easily captured by the same equipment used for recharging. And most works on the car is not even connected with draining fluids.
So, it is salaries of excessive management workers and/or regulation certification/audit taxes.
What is average dividents per share for automotive industry? I tried to find this data, but either I don't know what to search, either this information show the opposite.
Simple search shows "annual divident yeld" as 0.85% for GM and 4.5% for Ford. It is even lower than inflaton, so there is no any sense to use shares as investment for dividents and looks like main shareholders don't care about profits. IDK, but with such low dividents it is better to zero profits and spend that money on the company growth which is not the case for modern automotive industry - it is shrinking, not growing in terms of valuable real assets like new factories, assembly lines and all that stuff.
Check the shares of Auto Nation, they are one of the biggest dealerships in the country if not the biggest. If any company starts making large profits, the government will find a way to take some of it
Looks like Auto Nation have zero divident yeld.
Interesting. turns out that on average dividents or profit can't noticeably exceed inflation, or else "government will find a way to take some of it".
That's bigger shit than I thought.
It's probably a growth stock. Not all stocks yield a dividend. Business is a brutal game in the US.
If you wish to know who rules over you, simply find out who taxes you.
I bet he will have no trouble finding qualified candidates from India or China.
I sincerely doubt his claims of not finding enough qualified mechanics. I'm willing to bet that the CEOs of GM and Dodge will echo the same talking points in the next few months. Just a week ago, Donald Trump emphasized how dumb Americans are and can't be trained.
This is how they brainwash Americans into believing that we need foreign workers.
That wasn't replacement migration and Trump's BS that attdacted my attention. Just the math of that car service business with huge difference between customer payment and actual work cost.
Of course this thing will be used for whatever shit elites will think out, but it is consequences, not the reason.