In any business, it is necessary to continuously analyze the bottom line and implement cost cutting measures to ensure profitability. This is especially true in today’s difficult economic climate and within the competitive luxury ground transportation sector. When transportation companies seek to reduce costs, one area that often experiences cutbacks is personnel. Unfortunately, laying off personnel usually hits two of the most critical positions in the heart of a transportation company’s operations: fleet maintenance employees and dispatchers. Hiring less expensive, poorly screened drivers is another choice made by some companies in an attempt to cut costs. However, all of these practices end up costing these companies far more than they save up front.
CEOs and owners are often of the unfortunate opinion that the repair shop is a money pit that reduces the overall profitability of the company. Thus, when looking at the “bottom line,” management usually looks first to the mechanic shop when considering doing layoffs to control expenses. The average wage for a Class A certified mechanic ranges from $22.00 to $28.00 per hour. This Class A mechanic is responsible for maintaining the fleet of vehicles, with numerous tasks that include, but are not limited to, PM services, brake adjustments, brake jobs, vehicle inspections and tire replacement. Perhaps more importantly, certified mechanics are responsible for keeping up with and being aware of ever-changing laws, rules and regulations of the FMCSA and the USDOT. Federal and State agencies set forth the regulations for vehicle safety, but it is the responsibility of the mechanic to keep the vehicles operating safely and within these laws, rules and regulations.
Because the wage for uncertified mechanics can range from $12.00 to $15.00 per hour, many companies are replacing certified Class A mechanics with uncertified individuals, in an attempt to significantly cut payroll expenditures. Some companies opt to outsource their vehicle maintenance, but do not inquire if the contracted shop has trained, certified mechanics on staff who are familiar with the types of motor vehicles to be maintained. These companies compare price—not knowledge and certifications—which can result in improperly maintained vehicles. The failure of any major part of a vehicle can result in a catastrophic incident causing significant injury, and even death, to individuals on the roadway. In my experience, many of today’s serious motor vehicle accidents and crashes involve poor vehicle maintenance as a result of not having sufficiently trained mechanics. Equally unfortunate is that laying off mechanics often starts a snowball effect that quickly gets out of control and causes such serious problems that it sometimes leads to the complete collapse of entire companies.
Dispatchers are an equally important element of a transportation company’s safety department. The dispatcher controls drivers’ routes, hours of service and their cargo—whether it is household goods, HAZ-MAT or passengers. Having sufficiently trained dispatchers working and maintaining records for a transportation company can equate to an efficient, safe and profitable company with drivers and vehicles being operated in accordance with mandated laws, rules and regulations. Such operations are safer for the employees of the company, as well as the driving public in general.
Another cost cutting measure that ultimately can cost companies more in the end is hiring the “wrong” driver. This can include hiring a driver who will accept less money to be employed, likely because of a bad driving record, and also hiring someone without any background check (or with a background check that is incomplete) undertaken to ensure the driver has the proper qualifications. The irony is that the cost of the background check is so inconsequentially cheap compared to the ultimate costs of repairs, higher insurance, and lawsuits caused by these improperly qualified drivers.
Ultimately, all of the “cost saving measures” listed above can result in vehicles in need of repair, vehicles out of adjustment, and so on, and these vehicles, when inspected, could possibly be taken out of service by law enforcement officials or, even worse, involved in serious motor vehicle accidents. And, due to the shortsighted nature of management, these so-called “cost saving measures” eventually cost the company more than the proper maintenance and dispatch of such vehicles.
An example of how lack of maintenance and dispatching controls can result in a devastating accident is the much publicized catastrophic limousine fire on the San Mateo bridge near San Francisco, in which five passengers were killed. A three-month investigation revealed possible lapses in maintenance and improper operations of the vehicle, which may have caused the fire, including a rear suspension system failure and too many passengers for the vehicle. It was determined that the failure of the rear suspension system allowed the driveshaft to come into contact with the floor panel, but the specific reason for the failure could not be determined because the vehicle was too badly damaged. The failure ultimately led to a fire that completely engulfed the limousine so much that the five passengers were killed because they could not escape the burning vehicle.
Whether or not the tragic accident could have been prevented by proper maintenance and proper dispatch controls with respect to the number of passengers will never be known. What is clear is that proper preventative maintenance and ensuring the number of people in the vehicle did not exceed the vehicle’s passenger rating/load may have been beneficial, and in a tragedy as great as this, that may have made all the difference.
Today, many CEOs and owners think the laws of the FMCSA and the DOT are just regulations that needlessly cost companies money and sometimes put them out of business. But the reality is that such rules and regulations track all roadside inspections, accidents, and summons/violation data. This information is reviewed and analyzed, and results in regulations to protect owners, passengers and the motoring public. Every day, new failures, conditions and assessments of operations result in better regulations, based on data and information obtained by federal and state agencies. Examples of regulations which have made the transportation industry safer include recertification of driver medical cards, hours of service logs, the reduction in speeding over 15 mph of the posted speed limit, and aggressive driving and tailgating infractions—many of which result in a suspension of a CDL endorsement after a second infraction.
Owners sometimes put FMCSA regulations on the back burner. They do not update safety policies, maintain driver or maintenance files, track trending driver behavior or conduct root cause accident investigations. Only when the DOT comes knocking do these owners scramble to update and correct their files. The problem, however, is that a company may have two years of information to correct, two years of files to review, and so on. This type of reverse engineering is not only expensive, but time consuming and a waste of valuable resources. Additionally, files not maintained consistently and properly could result in fines, penalties, and in worst case scenarios, complete shutdowns pending corrective measures. However, if a company’s files and information are maintained on a consistent basis, the company has nothing to fear and will sail through a safety audit conducted by anyone. Once these policies are created and in place, they are easy and simple to maintain. A small amount of advanced planning and expenditure in creating a well-functioning system can yield significant savings in the future, not only in audits by the DOT, but in day-to-day operations as well.
As a retired law enforcement officer and a DOT Compliance consultant, I am often retained by transportation companies that have had unsatisfactory safety scores and are facing significant penalties and fines. After initially meeting with many owners it is clear that they do not understand why they find themselves in their predicament. Once I review their safety scores with them and explain that the low scores are in safety and maintenance, I ask them what, if anything, has changed in the past year. The answers, many times, include: “Our shop is shorthanded because of layoffs. Our drivers have been getting more tickets than usual—red light violations, speeding tickets, and out-of-hours and out-of-service violations.” These are typical, preventable actions. All of them. I explain to them that the money they saved will be a fraction of what it is going to take to get them back into compliance—not to mention paying higher insurance costs (insurance companies have access to your company’s information), higher maintenance costs to get vehicles back up to standards, costs for training not previously conducted, and so on.
Benjamin Franklin once said, “An ounce of prevention is worth a pound of cure,” meaning it is much easier to do something to prevent a problem than to deal with it after it has happened. Our industry can learn a lot from this man who could not have envisioned the complex transportation system that so many people take for granted today, but whose words were a prophecy for it nonetheless.
Remember: The money you save by cutting back on payroll and safety on Friday may cost you dearly on Monday after that preventable accident occurred on Saturday. //LD
Written by Greg W. Crescenzo