Modern Tire Dealer

DEC 2018

Magazine for the professional tire industry

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M T D D e c e m b e r 2 0 1 8 78 B u s i n e s s I n s i g h t D oesn't it still feel like early 2018? Wow, this year has simply zipped by. A blur. At the end of the year it's good practice to reflect on the year's performance, major influencers, and celebrate successes and think about how to improve on opportuni- ties missed. December is also a good time to get serious about planning and doing your best to predict what you think 2019 will hold for your store and for the industry. 2018 started out a little choppy for the industry, and quickly we had to dig out of a shortfall in unit sales for most of the country while surprisingly, automotive repair remained solid to strong. But market demand for units climbed back close to the second quarter and by mid-year, the industry as a whole was about par with the prior year. Manufacturers were reporting an uptick in orders, and most predictions at this point in 2018 were indicating the industry would finish the year with modest growth. If you finished the year down in units, your competitors were stealing shares from you – and you should figure out why. e industry continues to see rapid consolidation at the corporate level in both independent dealer acquisition (Firestone, Monro, Pep Boys, Express Oil/Kaufman's among others). ose major players are quickly expanding their footprint. At the distribution level, we have also seen extraor- dinary activity, among them Michelin/ Sumitomo, Goodyear/Bridgestone, ATD, and other smaller acquisitions within the field. Regardless of your view on whether the impact for small business tire and automotive shops will be beneficial or harmful, the bottom line is the industry is indelibly going to be different in 2019 and beyond. Speaking of massive changes, we have officially entered the gully of the talent gap. About 10 years ago, fewer and fewer people were entering the trades, while they opted for a college degree instead. This effort was led largely by the U.S. government. The intention was to prepare America's youth for "jobs that require a degree." The unintended consequence was that trade jobs were devastated. We are now fully, I believe, in the lowest point of a lack of talent entering the industry (or at least staying, as turnover at lower skilled positions is extremely high). This has created two problems: 1) the average age of cars is growing again thanks to the effects of "Cash for Clunkers" being over, and that means vehicles will begin to need more repairs as the older a car is, the more complicated repairs tend to get, and 2) according to several reports, the average age of master certified technician is now over 50. And there are very few 30 to 40 year olds ready to replace them. at is the talent gap. When you get a gap that large, market forces are required to do one thing: raise wages considerably. e more unique your contribution to the market is, the more money you can command. If shops raise wages, they are going to be compelled to raise prices, they can't simply absorb them; the jump is going to be too much, too fast. Somewhat thankfully, as wages increase this way, that will attract young people to enter the workforce, but it will take years of educating and gaining experience to get Year-end review and a look at what's ahead NOW IS A GOOD TIME TO GET SERIOUS ABOUT PLANNING FOR 2019 Dennis McCarron By PHOTO: GETT Y IMAGES

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