She’s the boss

Hannah Gordon tells us what is has been like becoming the boss in 2018 as she starts her own garage business

Published:  05 July, 2018

After learning the ropes and being on the tools for 14 years I decided 2018 was the year to bite the bullet and go it alone with starting a new workshop business.

For years I have been working for two or three different garages, enjoying a huge amount of variety and picking and choosing what days I work where. I have been extremely lucky with the people I have met along this incredible journey. Also, working for some real characters of the trade certainly doesn’t lead to a boring work life.

I have always worked for independent garages, the interaction you get with customers and the personal experience you are able to offer is for me what car repairs is all about. I love hearing how much people value their car, not financially but in a kind of ‘member of the family’ way and it fills me with a great sense of achievement when I can get their car back on the road in good working order.

Bright idea
It is not the obvious choice for a ‘young lady’ and I use that term in the lightest possible sense as I can hardly call myself a lady when things go wrong and the air turns blue, but that is another story for another issue. It isn’t a normal career choice but fixing cars is all I have ever enjoyed doing, it is the only thing I haven’t lost interest in and it is the only trade I ever want to be a part of.

So January 2018 came and I had the bright idea of starting up my own business in the village I grew up in. It has been nearly six months now and progress has been slow, trying to keep costs down I am distributing leaflets myself and offering incentives such as 10% off.

Best asset
A workshop business’s best asset is its reputation, and that takes time to build up. I am also finding out that being self-employed requires a million more hours than just turning up to a garage and working.
    
It is not that I am naive it’s just I am rubbish at paperwork, invoicing and doing all the other grown up things that a business needs. To say it is a massive learning curve is an understatement. Before January I didn’t have to bother with business plans and meetings with a bank manager, I didn’t have to spend hours at a computer trying to write down why I am worth investing in and what my plans for taking over the car repair world were.

Passionate
The car repair industry is something I feel hugely passionate about and I firmly believe that when starting a business you make sure it is an area you are knowledgeable in otherwise you will never strive to make it work. At the moment I feel slightly overwhelmed by paperwork and getting on the tools is always first priority but I am hugely excited about the future and what Spanner Tech Services has in the pipeline.

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  • clear view of the aftermarket 

    While many garage businesses in the sector probably have a pretty firm idea of what trends and changes are affecting their businesses, it is always helpful to be able to look at the whole picture and see where you fit in. This means you can see where you are, and gives you an idea of what to expect going forward.
        
    With this in mind, a recent report on the global automotive aftermarket from corporate finance house Clearwater International provides a useful view of the trends influencing the sector, taking in the local, regional and global landscape.  Overall, liberalisation of the market, changing technology and shifting consumer habits and expectations are identified as being the key drivers in the way the sector is moving.
        
    On liberalisation, the changes have a range of aspects. On one hand there is increasing penetration by OEMs looking to claw back market share in terms of supplying parts to the traditional garage sector. At the same time, OEMs are obliged to provide information about the exact identification of replacement parts, albeit on their own terms. The report pointed to ‘European automotive aftermarket landscape,’ a report from BCG, which observed that independents have been effective in broadening their market share at the expense of the manufacturers and their networks.
        
    OEMs are also looking to take back a piece of the market through the formation of aftersales networks. Another part of this trend has been the increasing ability consumers have had to use aftermarket providers to service and repair newer vehicles, as seen through the Block Exemption Regulation (BER).
        
    Changing technology in terms of the emergence of electric vehicles and hybrid drivetrains is having an impact. Back in the workshop, key drivers going forward, according to the report, include digitally enabled services, telematics, e-commerce and 3D printing. Remanufacturing is also seen as having a strong place in the future, with OEMs investing in the segment.
        
    The report found that the average age of cars in the EU is 11 years, an age that puts a major chunk of the transcontinental car parc firmly in independent garage territory, is certainly good news for garages.
        
    The picture looks bright in fact. The report cites a finding from Frost & Sullivan’s ‘Global automotive aftermarket outlook 2018’ that showed global automotive aftermarket demand was set to rise by 4.4% in 2018, a view shared by many sector analysts according to Clearwater’s report. Another forecast that the report pointed towards, ‘The changing aftermarket game’ from McKinsey, predicted that the market will have a worldwide worth of €1,200bn by 2030. On that basis, underlying global growth on a year-by-year basis would be 3%.
        
    Speaking to Aftermarket about the report, Tobias Schätzmüller, Partner and International Head of Automotive at Clearwater International said: “There are a lot of challenges out there for the aftermarket, as well as  opportunities. First of all, the liberalisation of the independent aftermarket. I think this gave it a boost. Also, technology-wise, there are new entrants. Some pose a threat but also offer many opportunities. Then, of course, there is the powertrain discussion, connected vehicle, and autonomous driving, which will all change the picture.”
        
    One of the aspects the report covered was the ongoing trend of mergers and acquisitions taking place in the sector. The report cited the ongoing purchase activities of LKQ Corporation and Euro Car Parts as an example. It also pointed out the purchase of The Parts Alliance by Uni-Select two years ago, as well as the acquisition of Borg Automotive by Denmark’s Schouw.
        
    Tobias thinks the smaller suppliers will continue to gravitate towards larger companies:  “We see from the M&A analysis that there are still a lot of small and medium-sized businesses around, in small units but with a relatively limited range of products. They are now trying to redefine themselves in terms of international reach, as well as in terms of covering additional markets, and product ranges. For some of them, they recognise it is not possible to gain scale on their own, so they are joining forces with others.”
        
    Expansion is the keyword: “There have been a host of cross-border transactions. In the report we have published a list of many of the deals that have been completed in recent years. Every month there are new deals going through. We are advising players to grow and refine their strategies, and they are bringing access to new product categories. We also advise those players to invest in technology, into automatic warehousing etc. That is the challenge, but for some of the players it is an opportunity to develop greater professional capability, and grow through investment.”
        
    Tobias then pointed out the key trends where businesses need to pay strongest attention: “On the environmental side, it is certainly the change in the drivetrain, with electric vehicles coming in. Nobody knows in the future when, or even if, this dramatic shift will happen but I think everyone still believes we are in a mixed period of combustion engines, hybrids, and electric vehicles. However, if you look 10 or 20 years into the future, the prevalence of electric vehicles will be much stronger. This will of course change the complexities of the engine, and the powertrain. This means less components and less moving parts which is a threat to the spare parts market, although the components in an electric vehicle might have a higher average value per unit. However, this would probably not compensate for the very complex engine that is now in use in combustion engines. There will be a reduction of complexity and, assuming that with the numbers driving there may be less accidents, which will also have an impact on the spare parts business.
      
    “On the exterior side, there will be pressure from OEMs because they now see an opportunity. While increasing liberalisation has seen the independent aftermarket gaining market share, with all the e-solutions in the car, it is possible for an OEM to be the first to provide pre-emptive maintenance. If the car has to go to the garage, they are the first to know that and can make use of this information. They are all desperately looking for alternative profit streams beyond the process of selling hardware, i.e selling a car, which is also a driving factor.”
        
    For the garage on the ground this may seem a long way off, but there is a way forward. “I think it is important to offer the whole spectrum of products, to be present everywhere and to reach a critical size so the parts can be sourced cheaply, and they have more marketing power. Additionally, they also need to increase their competencies, to be able to offer customers the wider range of products.”
        
    On the potential impact of Brexit on the aftermarket, Tobias said it was too early to be drawn on likely outcomes: “Parts supply either comes from the OEMs or tier one suppliers, or it is sourced in Asia. I don't know, looking at the UK market, whether they would have problems sourcing parts from abroad. It depends on what the regulations will be, but Brexit will probably have an impact.”
        
    On whether concern over Britain’s exit from the bloc is warranted, Tobias speculated: “I trust that they will find an economical and reasonable solution. Brexit concerns the UK most, but given the highly integrated automotive value chain, it will also affect the continent.”
        
    Looking ahead, Tobias concluded: “There will be continued consolidation in the market. In the independent aftermarket there is a lot of activity, with many M&A transactions coming up. We are actively tracking this. Companies will seek to be more international, aiming to cover more markets, and will get a broader cross-section of products. On the technological side, advancements in connectivity will mean more preventive maintenance, and overall professionalism within the market will increase. Transparency will also continue to increase thanks to the impact of the online world, and that will have an impact on price.”

  • Where next for MOT testing? 

    The UK Ministry of Transport Roadworthiness test (MOT test to you and I) has been in place since 1960 and has withstood some serious challenges in recent years – both from changes in European legislation that wanted to only allow dedicated test centres that were not directly connected to the repair of a vehicle to conduct the roadworthiness testing, but also from within the UK to try and change the frequency of the existing 3-1-1 test frequency.
        
    Thankfully, common sense triumphed in both cases and the UK MOT test soldiers serenely on.
        
    The original MOT test was a basic mechanical test and although many other elements have been added over the years, today it still predominately remains focused on the mechanical condition of the vehicle, plus exhaust emissions. However, ‘The Times They Are A-Changin', as Bob Dylan sang four years after the original MOT test was introduced.
        
    The future of the MOT test has drawn many diverging views and there are many who champion its continued format and frequency. At the other end of the spectrum there are those who see it as an unnecessary expense for the motorist, as well as being technically obsolete as automated systems and autonomous vehicles impose the mandatory testing  of their functionality. Effectively, in their view, the vehicle safety is self-tested every time it is driven. Somewhere in between are those who simply want to update the test to include an assessment of today’s electronic safety systems.
    However, the ‘self-test’ approach is being discussed at the UNECE level in Geneva, both as part of the autonomous vehicle requirements, but separately as how ‘periodic technical inspection’ (PTI) should be conducted. These discussions are not restricted to what the UK does, or even Europe, but includes all those countries who have signed the 1958 UNECE agreement to adopt what is agreed – which includes the UK who signed on 16  March 1963. This all comes under the snappy title of ‘Agreement Concerning the Adoption of Uniform Conditions of Approval and Reciprocal Recognition of Approval for Motor Vehicle Equipment and Parts, done at Geneva on 20 March 1958.‘

    There are now discussions to formalise the improvement needed to suit modern complex electronic systems and provide a solid health check for PTI. This may include how a system conducts functional plausibility, performance monitoring and self-healing abilities. This is a long way from today’s visual check of a vehicle! However, for the UK MOT there is also a timing issue to all of this. Although we know that automated systems are being introduced, there are many electronic systems which have been mandatorily fitted to vehicles for many years (e.g. ABS) and have yet to be included in the MOT test as an independent electronic check or functional test. This was the subject of a recent DVSA meeting which questioned what should be included in the future MOT test for systems that are already fitted to today’s vehicles, including how these electronically controlled systems should be tested, but also to consider the cost- benefit analysis to evaluate if there is a greater benefit than the costs involved to implement a specific test requirement. The simple proposal is to use a PTI scan tool connected via the OBD port and communicate with the vehicle and its safety related systems to detect if any faults have been detected. Is this going to provide a better test method and result than observing the malfunction indicator light (MIL) on the vehicle’s dashboard? The answer may be either a ‘yes’, but probably only if a deeper assessment of the system is made, bringing in the ‘cost-benefit’ question of the development of the PTI scan tool software, but also a ‘no’ if it can be shown that the vehicle is effective and accurate in identifying problems itself. However, this is also part of the problem. Where is the independence of the MOT if the vehicle manufacturers can create their own test methods? There is currently an ISO standard being developed that seeks to define what access to what data will be provided by the vehicle during a PTI test and from this, what test method will be possible. However, the data access is controlled through the use of a vehicle manufacturer’s electronic certificate and their intention is to provide the minimum data, probably related to the MIL activation, so this may restrict what test methods can be implemented unless legislation forces greater data access/functional control, which will also be subject to the cost/benefit analysis.

    Telematics
    Another angle is the ability to use the vehicle’s telematics system to remotely communicate with the vehicle and monitor its status and safety related functionality whenever it is being driven. If a fault is detected, then the vehicle manufacturer is able to assess the seriousness of the fault (effectively ‘advisory’, ‘failure’ or ‘dangerous’) and propose to the vehicle owner that a repair is necessary and direct them accordingly to a workshop of their choice, where the relevant spare parts would also be provided by the vehicle manufacturer. Unfortunately, this may signal one of the real issues here – the vehicle manufacturer is not only able to decide if a fault occurs and know when this happens, but then is also able to propose where it is repaired using their OEM parts. This is not a good scenario for either independent vehicle testing or for the competitive choice of where any MOT failures are repaired.
        
    So, although the communication to the vehicle might still be via the OBD connector, the testing of the electronic safety systems may still be controlled by the vehicle manufacturer and subsequently restrict what truly independent testing will still be possible. In the longer term, autonomous and connected vehicles will become much more capable of self-testing, but this still leaves how the choice of their repair being influenced by the vehicle manufacturer who becomes, judge, jury and executioner. If these vehicles are not tested in MOT centres, will the UK government return to enforcing vehicle safety via Traffic Police with the associated cost of police officers in patrol cars? I think not, so where will this leave independent roadworthiness testing and the test centres that conduct these tests?
        
    This may well come down to how the use of vehicles changes and the subsequent ‘mobility’ models of who is responsible for the vehicle, but this will also need a change in the law concerning who is responsible for the roadworthiness of a vehicle when it is being driven on the road. As I said at the beginning,  ‘The Times They Are A-Changin'.

    xenconsultancy.com

  • Perception is everything  

    School leavers are about to become ‘A Thing’ again. In May and June, GCSEs will be sat, and A Levels will be taking place too. There will also be the inevitable angst about how many are going to university, and how many are taking the vocational route.
        
    The automotive sector should be a good place to head instead of academia. It’s technical, it’s getting more technical in fact, and there is definitely a future in it. So, why is there still a dearth of good technicians? The answer possibly goes back decades.
        
    Back when the year 2019 was still seen as being far in the distant future, and we all (well, some of us) expected bio-engineered artificial human replicants to be doing all the heavy lifting by the time we arrived. There was also a push to put more and more young people down the academic career route. Why would anyone want one of those hands-on jobs when you could go off, get a degree, and end up in the big chair, calling the shots? Presumably the replicants would respond well to instruction from people with ‘a good education.’
        
    Well, a few decades later, here we are. Millions of young people heeded the call and trooped into all the universities, which had multiplied as the polytechnics found themselves elevated to a higher status. Can you guess what happens when more and more people acquire what is seen as being the top level of education? Yes that’s right, inflation, and the devaluing of qualifications. With untold numbers of people flooding into the job market clasping a degree, and the memory of the mortar board and gown from graduation still fresh in their minds, those neophytes found that they were not welcomed with open arms. In fact, if everyone has a degree, the competitive advantage it was supposed to give you vanishes. There you are, slogging towards finding a way to be a useful member of society along with everyone else. Of course, prior to the introduction of university tuition fees, it was all part of the learning curve. Then it got expensive. Now it is very expensive, and many young people (and their parents) are going to be looking at the risk-versus-reward equation a lot more closely. Your erstwhile Aftermarket Editor can attest to the fact that it was somewhat deflating to finish a three year degree in 1999, the hardest thing he had done up to that point, only to find his actual course name-checked on an episode of TV’s The Simpsons as a gag. He was lucky though as he was among the last intake to have tuition paid for. Nowadays, you want to make sure your course of study is not a comedy punchline. If not, the cost is high.
        
    If you are going to invest a large chunk of your life to become qualified in something, and you are going to do that thing for the rest of your life, and getting that qualification is going to cost you lots of money, you want to make sure that it is going to work for you.
        
    According to the Universities and Colleges Admissions Service (UCAS), the centralised body through which university applications are made, in 2018 there were 11,000 fewer university applications compared with 2017, an overall decline of 2%. While there were fewer 18-year olds in the population, the number of mature students applying was also down.  

    Rising costs
    Some observers have pointed at the rising cost of tuition fees and attendant long-term debt as the reason university applications have dropped, but perhaps there is more to it than that. Of course, the other assumption is that everyone wants to spend another three years, or perhaps more sitting in classrooms. Admittedly things are a bit more informal, but many people just want to get on with actually doing something.
        
    John Kerr, Operations Director at training provider Develop Training Ltd (DTL) recently observed: “Instead of racking up student debt, apprentices earn while they learn, and apprenticeships provide other ways of learning for those who aren’t suited to academia. Apprenticeships can also generate social mobility, even beyond what might be expected from gaining a practical qualification and a well-paid job.”
        
    This is a good point. Going out and getting a job gets you paid. Upping sticks for university and getting a degree means you have a useful qualification, in theory. Imagine if there was some sort of institution that combined these two things. Hang on…
        
    Apprenticeships offer a real and practical way to work towards a career for young people, one that does not involve huge amounts of debt. It also makes you actually employable. If you put this on a side of a bus, you might even get people to vote for it. Maybe it would help if apprenticeships could be accessed in a similar way to the UCAS model, where one applies for a number of positions at the same time, but that is a topic for another article. After all, in a world of rising university costs, a non-academic route should be an enticing alternative. This is also good for businesses providing the apprenticeships, as they get to hone the raw material that is the young person into something that resembles a useful employee. Also, thanks to the Apprenticeship Levy, there is ample funding available What’s not to like?
        
    Despite this the automotive aftermarket still faces a skills crisis. This is a serious, and large industry with lifelong learning opportunities. So why are there still not enough technicians?
        
    Then we get to the issue of the pitch being made to potential candidates. It’s all about the presentation.
        
    Has the automotive aftermarket presented itself well enough as a career option for young people in the past? Probably not. As an industry, it is somewhat diffuse, with thousands of individual outlets as opposed to large monolithic entities that parents can point at and say “This.”  The structure of the industry also went against it in funding terms, and between the collapse of traditional apprenticeships during the 1970s and moves to rebuild the route in the 1990s and later, getting an apprenticeship could be a dicey business, for employer and employee alike. Things are improving however. In the last few months, as covered in Aftermarket, the aforementioned Apprenticeship Levy has seen some reform that makes it more user-friendly.

    Development  
    Institute of the Motor Industry (IMI) Chief Executive Steve Nash observed: “With a decline of 24% in the number of people starting in-work training, an extra £90 million of government funding has been issued to give businesses the flexibility to take full advantage of the benefits of employing apprentices. The motor industry already recruits 12,500 apprentices each year, and the sector isn’t showing any sign of slowing down. Developments in new technology have meant new opportunities and careers have become available for young people – businesses must adapt to futureproofing their workplace by investing in this.”
        
    Of course, just having the facility to run apprenticeships is not enough. You need to attract young people towards the programme, and bring the parents along for the ride. They pay the bills after all. Careers advice is key in this area, so promoting the ongoing learning opportunities available will certainly help the situation.
        
    “The IMI’s research found careers advice and guidance about vocational learning opportunities is needed more than ever,” said Steve. “Just 5% of those surveyed on behalf of the IMI were aware that you could earn money while you study – a sharp drop compared to 20% in 2014.
        
    “There is also a huge gulf in parents’ perception of the career opportunities offered by the motor industry. Just over a quarter (27%) said they would be happy for their child to become a vehicle mechanic, compared to 59% of parents favouring a career in engineering. And 8% said they would be embarrassed to tell people that their child worked in the motor trade.
        
    “Careers advice in schools is worryingly inconsistent and, in many cases, far from effective, yet that is only part of the challenge.  We mustn't underestimate the importance of ensuring parents are equipped to provide knowledgeable and accurate careers guidance to their children because they are still the greatest influencers on the choices their children make. The excellent opportunities offered by the automotive industry are still very largely misunderstood by anyone who doesn't have direct experience or personal contacts within the business.”

    Opportunities
    It’s not just about apprenticeships though. The long-term journey that a young person will be embarking on needs to be clear, and the opportunities for further self-improvement need to be apparent from the beginning. This is where continuing professional development (CPD) comes into play, and this needs to be promoted as well.
        
    “The IMI is extremely proud to be the End-Point Assessment Organisation for the new Apprenticeship Standards that are being provided to the automotive sector,” commented Steve. “Working alongside manufacturers and employers across the industry, we have been able to create a suite of products that guarantee learners are being offered the very best training. Having a variety of new standards that range from customer service to technicians helps to make sure the sector’s training needs are met and businesses are fully prepared for when the old frameworks are discontinued in 2020.”
        
    In the end, what we need to know is can the sector offer people the chance of a successful career in a way that they will respond to?
        
    Steve thinks the industry is up to the challenge: “The government has made many changes to the apprenticeship system over the last few years, and as the professional body and an awarding organisation for the motor industry we want to ensure that the training for apprentices remains at a high quality. The IMI is continuing to support employers by offering advice and guidance to help them understand how best to use their Levy, whether that’s investing in new staff or upskilling their current workforce.”
        
    If we are talking about skills shortages, Brexit may make the situation even better for those looking for new roles, and a bit more challenging for employers. If EU members of staff decide to head south to the continent – assuming Brexit goes ‘well,’ – the sector will face even sharper skills shortages. It would it need to up its game in retaining and  pursuing talent. Steve mused: “The skills gap in the motor retail sector is already critical. Young blood is, therefore, vital as the rapid development of new technology around electric, autonomous and connected vehicles changes the face of motoring, opening up a world of exciting new career opportunities.”
        
    If the sector wants to attract the best, we need to show that it is a forward-looking industry that offers many potential avenues for ambitious young people. This is clearly the truth, but we need to make sure that message gets through to those who are supposed to be receiving it. That means working with sector bodies like the IMI and others. It also means working with schools and colleges to make sure that they understand what kind of industry it is. More than once in the past we have covered the issue of educational outlets having a view of the automotive sector that is not exactly favourable. We are not alone in this – many of the more practical industries are seen as a route for the less gifted. This is unfair on these industry, and on those who might gain most from them.
        
    GCSEs finish in about three months, and A Levels just before that. Of course, there is not just this year’s crop to think about. There are thousands of potential top-tier techs coming through the system every year. Let’s get the message out there.

  • The importance of continued training  

    By Andy Savva

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