For the past several years, political subdivisions have been experiencing a shortfall in general tax revenues. For fleet operations this has meant an ongoing shortage of vehicle replacement money, which has caused fleet and equipment inventory to steadily age and maintenance resources to be stretched thin. Government fleets are being forced to make tough decisions as to what to repair and how much to spend as they find it difficult to replace vehicles in a timely and predictable manner. These budgetary difficulties were exacerbated this year as fleets were forced to stretch already tight budgets to compensate for the higher cost of fuel and the increased cost of steel, which has raised the cost of truck bodies and other upfits. While fleet managers are forced to keep costs down, end user departments are demanding higher levels of service. Fleets managers are forced to balance the need to maintain or enhance customer service levels and control costs, which are often in conflict with one another.
2. Recruitment & Retirement of Technicians
Not only is there a severe shortage of new technicians entering the work force, but there is also an impending exodus of veteran technicians, who are nearing retirement age. One fleet reports that 38 percent of its technicians will retire in the next five years. This is not an isolated situation. The coming deluge of retirements will result in a tremendous loss of institutional knowledge that will be difficult to replace with new hires. The tax revenue shortfalls have impacted operating budgets, resulting in hiring freezes, salary freezes, and the elimination of vacant positions in maintenance operations. Salary freezes, in particular, are helping auto dealers lure away many of the more qualified mechanics with better wages and more comparable compensation packages. In response to the technician shortage, public sector fleets are struggling to improve mechanic productivity by redoing technician job descriptions and basing promotions and pay increases on performance and not seniority.
3. Keeping Pace With Vehicle Technology
With new-vehicle technological changes occurring each model year, it is becoming harder for public sector fleets to keep pace with more complex repair issues and diagnostics. New-vehicle technology requires continual technician training, but fleet managers find that there is no budget to do so. This promises to become a greater issue in coming years as newer technologies such as 42-volt systems, hybrid powertrains, and more advanced electronics become widespread in mainstream fleet vehicles. Budget constraints mean that only the bare minimum is being spent on updating diagnostic tools, making it hard to stay up-to-date.
4. Privatization & the Role of Fleet Managers
The threat of privatization is ongoing and ever present. Fleet managers are constantly being required by their management to show that they are competitive with private sector suppliers. One factor driving privatization considerations are aging fleet operations facilities and the neglected investment in infrastructure. Budget limitations give consideration to outsourcing as a way to avoid major capital expenditures for new facilities or upgrades. There is also a perception that the role of the public sector fleet manager is diminishing. Several fleet managers have told me that the power they have to influence the future of their fleets is eroding. One fleet manager offers an anecdotal illustration by saying his section used to be called Fleet Management but it is now called Fleet Operations. He says it is a sign of the times and that a growing number of fleet managers feel they have less input as to how their fleets are managed. As governments seek to flatten their organizations, there is a trend to consolidate fleet manager functions. Whereas in the past, you may have had a police department fleet manager, a fire department fleet manager, and a public works fleet manager, there is a trend to consolidate those functions to a single municipal fleet manager, who manages all fleet operations. One benefit is that some fleet managers are assuming additional operational responsibilities, such as capital improvement management, sanitary/sewer operations, and facilities management.
5. Difficulty Complying With EPACT Mandates
A key difficulty is the OEM withdrawal from certain alt-fuel segments, such as CNG and electric vehicle production, while hybrids are ineligible for EPACT credits. Many governments invested large sums to create an electric or CNG refueling infrastructure, which may now be under-utilized. Let me know if there are any issues I might have missed. [email protected]
Originally posted on Automotive Fleet