Plain Talk Structured Productivity Equals Profit COLUMN BY ROB BUKSAR Made a couple of shop visits recently which were both both interesting and enlightening. Both shops had humble beginnings yet grew , = “| and made some real big money over the years. No one in all honesty would dare to say anything other than both places have been successful. Although in these sluggish times one of these shops sure looks considerably better than the other. I wonder what the difference is? The fundamental difference between the two shops is a vanishing concept no longer taught in our school systems and not discussed much since World War Il—the concept is called ‘productivity.’ Shop A either didn’t know how to address the issue or wouldn’t address it. Shop B’s entire business is centered around structured productivity. Initially Rebuilder A worked full-time in an unrelated industry. Like many of us in this business he started by fixing starters and alternators in his garage part time. He didn’t have a format to follow or mentor to guide him. Trial and error and the school of hard knocks is where he received his basic training. Sound famil- iar? Rebuilder A began back in the day when the Big 3 American automakers controlled 98 percent of the U.S. market. This was when a domestic car owner could almost count on replacing either a starter or alternator every 18 months— maybe two starters depending on engine size and how many batteries it took to crank it! Let’s face it, domestic auto qual- ity really stunk in those days. The upside was it created an industry. Nevertheless, Rebuilder A continued to diligently work part-time in his very unstructured manner fixing units for friends and neighbors. He rapidly pros- pered and grew. It wasn’t too long before he outgrew his garage. It sure seems like buying one’s first vibratory cleaner and moving into the first rented building go hand in hand. During the same period, Rebuilder A quit his full-time job and hired a part- time guy to help tear down. Back in those days most rebuilders lived in a backorder situation. There seemed to be more work than qualified hands to do it, yet the cost of labor and basic overhead was dirt cheap by anyone’s standards. There was far more money made on the bench than gold mined during the rush. Back in these days you could change 60 percent of new OEM for an indepen- dent rebuilt. That adds up to a whole bunch of profit for not a whole lot of work. Business was easy, almost a no- brainer. Rebuilder A grew and prospered. Couldn’t help it or stop it. In spite of the fact that his thinking was still in the garage, business just flew into his shop. This would give almost anyone the illu- sion that everything he was doing was right. It’s May 2002, Rebuilder A’s shop doesn’t look anywhere near as exciting as it used to. Some might say the environ- ment is awfully uneasy these days. Rebuilder B had a considerably differ- ent background. Fifty years ago he actu- ally worked in one of the first major auto electrics in the Midwest. His employer had his roots in World War II generator production. Back in those days the U.S. was supplying the parts, munitions and equipment for almost the entire allied effort. Productivity was a major issue, not like it is in our so called ‘service econo- my. That meant it all began with the indi- vidual and what he was expected to pro- duce in an eight-hour day. If John Doe rebuilder couldn’t meet the requirements you didn’t lower the standard in order to keep him. He either achieved the level he needed to or was given his walking papers. I mean what the heck, business can’t survive on a grading curve! Rebuilder B learned decades ago that standards and quotas had to be in place and maintained in order to stay commer- cially healthy. There are lots of good rea- sons, Ill share a few: Employees know exactly what is expected. ¢ Standards and quotas are necessary to establish criteria for promotions, pay raises, bonuses, and wage scales. * Determining the criteria necessary to establish correct selling price. * Knowing what can be produced on any given day can help determine how much business can be accom- modated. * Knowing what needs to be produced to be profitable. The above format has been followed for over 40 years successfully by Rebuilder B. Furthermore, time and circumstance have proven his thinking successful in light of record-breaking business failure. Even in these slow times, Rebuilder B is a lean-mean- money-making machine. Because of the standards set and maintained, he will always get the best out of his employees. This will always translate into the best retum on investment (R.O.I.). By the way, if you haven’t looked at this from this perspective maybe it’s time. Your weekly labor expenditure is a weekly investment. I know enough of us have not been looking hard enough at what we’re getting in return for our labor dollars. If just covering your expenses is all you’re worried about then surely you will reap what you sow.