As you look into the market capture rates for an equipment dealership in the labor market you have to consider a wide array of items. First and foremost the various types of labor that needs to be performed on construction equipment; maintenance labor, minor repair labor, replacement of wear parts or broken parts, adjustments and tune ups, and major repair and warranty labor. Each of these labor types requires a different skill set to be performed properly. Replacement of wear parts or broken lights or batteries doesn’t require a skilled journeyman to do the work. Similarly scheduled maintenance doesn’t need a “repair” journeyman either. This is where the equipment dealership has gone astray.
The equipment dealer typically has one labor rate for all of the various repair categories – one rate that covers repairs and maintenance and replacement of wear parts. That is why many customers have their own mechanics. The replacement of a tip or cutting edge requires strength not technical skills and can be done by an individual with a considerably lower labor cost than the dealer labor rate. This is also true for maintenance work. Why has the equipment dealer stuck with this one labor rate, what I call peanut butter rate, when all signs point to a loss of the low skilled labor?
I submit to you it is because the equipment dealer service managers choose to operate with all journeymen qualified technicians. This makes their life easier in a whole range of ways but that is not the purpose of the job. You need to match the skills of the technician to the needs of the job. That will allow the dealership to position their services relative to the market prices more successfully.
The only reason that the customer has their own mechanics is that the dealer has either been too expensive or not responsive enough to meet the customer needs. . The time is now.