Tag: Management

Small adjustments can sometimes make a big impact. For those who work with utility trucks, details like properly placed steps, strategically placed handles, appropriately grippy surfaces and convenient storage can mean the difference between safety and injury. A careful eye toward work truck specs, then, can aid in ergonomics – and result in a happier, healthier workforce.

Chris Jolly, director of operations, fleet services, for Duke Energy Carolinas West Region, said that at one point, some of the utility’s trucks didn’t have appropriate storage locations for orange safety cones, and other storage locations weren’t working due to company-mandated changes in cone sizes. So, cones often were picked up and thrown in the bed of a truck. Workers who did this job after job, day after day, could have been exposed to stress injuries in the shoulder and back. But now all of the trucks have cone storage capabilities on or near the front bumpers, and the next generation of trucks will include further improvements.

Jolly also reported that as of late September, his entire region – including nine garage locations – has been injury-free for five years. That kind of accomplishment takes a decided focus on the company safety culture, and proper truck and equipment specs play a role as well.

Every year at Duke Energy, fleet services schedules a “Road Show.” These meetings, Jolly said, are intended to serve as places to gather ideas and improvement recommendations from customers, customer delivery (distribution), transmission, fleet services, health and safety, and OEM representatives. There’s classroom time, trucks on hand to inspect and touch, and opportunities for everyone to provide input. Jolly takes part to better understand what his customers are saying, and to be able to support them once trucks arrive and throughout the lives of the vehicles.

“We’ll go through line item by line item,” he said. “We get so many different ideas, and each idea is addressed and considered.”

Jolly has learned, for example, to consider the height of steps used to get in and out of a truck. Grab handles – including those for getting into and out of an aerial device – should allow operators and passengers to follow the three-points-of-contact rule, which states that with two hands and two feet, three of the four should be in contact with the ground or equipment until stability is established. Duke Energy has experimented with different surfaces on steps and the like, working to find solutions that are aggressive enough for boots to “stick” in adverse conditions but not so aggressive that they may catch pant legs and create a hazard.

Jolly also has gained a greater understanding of the importance of housekeeping in the backs of trucks – and around pedestals – with items properly stowed to avoid anyone tripping over them. In addition to helping prevent tripping, this allows technicians to better position themselves ergonomically when making repairs around the pedestals, torqueing bolts or making hydraulic repairs. One Road Show uncovered the importance of the truck’s toolbox configuration and placement to prevent line technicians from having to crawl under the boom or over material to access the toolbox, creating a safer overall work environment.

The Awareness Challenge
At Element Fleet Management (www.elementfleet.com), meanwhile, Ken Gillies, senior truck consultant, said that – in terms of ergonomics – he’s been hearing about reduced seat travel, the adjustment that allows for proper driver positioning and back support. Positioning and back support can be put at risk in certain circumstances, particularly when full-sized vans are replaced with smaller cargo vans.

“As the vans have gotten smaller, the driver compartment also has shrunk, especially when there’s a need for a partition in the vehicle,” Gillies said. “The problem with that is that a driver taller than 5’10” will be pretty cramped. The other challenge is that seats have gotten narrower along with the reduced seat travel. What you end up with there is that drivers have weight borne by the side of the seat rather than the cushion inside. That can lead to pinched nerves and numbness in the legs. I’ve had specific interactions with customers where this has been a problem.”

The good news is that Gillies is seeing more collaboration between company leadership and end users of equipment in general, including the use of on-site visits so that leaders can observe not just how a vehicle is being used, but also how the employee interacts with the vehicle.

“Awareness is a challenge for many fleet managers,” he said. “You can’t possibly know everything about everything. Some things just don’t hit their radar until they’re forced into it because of an unfortunate accident.”

In sharing what he’s seen work for others, however, clients have told Gillies they’re glad they’ve been made aware. In addition, input from the field “has to be taken to heart and analyzed,” he said. “Drivers may ask for the sun, moon and stars, but in my experience, they’re appreciative of someone taking an interest.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Reducing Injury Statistics
The U.S. Bureau of Labor Statistics reports that musculoskeletal disorders (MSDs) make up one in three cases of worker injury across the nation. The service sector – including the utility industry – accounts for one in for four work-related MSDs.

So, how can fleet work to reduce those statistics? Chris Jolly, director of operations, fleet services, for Duke Energy Carolinas West Region, said creating a safety culture requires making things “personal” with employees. “I always want to set the expectation that we work safely,” he said. “That’s our number one priority. But number two, we actively care about you as an employee. I want you to have that same philosophy for yourself, and that same caring attitude about your teammate. We want you to go home to your family every day the way you came in.”

Being a utility fleet manager today can be tough. How much tougher will it be tomorrow?

With the constant advancement of technology, the increasing need for communications savvy and leadership acumen, ever-decreasing budgets, and an aging workforce being replaced by a younger cohort lacking institutional knowledge and experience, it’s a nail-biter of a time.

So, how does a utility fleet manager prepare for the future?

Gary Lentsch, CAFM, fleet manager for the Eugene Water & Electric Board in Eugene, Oregon, said that people skills are huge, especially when it comes to the ability to “hold yourself accountable and focus on the things that matter most to the operation.”

Times have changed a lot since Lentsch started in fleet almost 40 years ago, and they’re only going to keep changing. It used to be that a fleet manager started as a mechanic and worked his or her way up. Today, however, with educational programs specifically aimed at the career and companies increasingly expecting relevant certifications and training, there can be additional emphasis on the “professional” side of being a fleet professional. That can mean higher-level presentations to management, greater participation with regard to company objectives and an elevated need to manage “up,” as well as manage down.

In addition, Lentsch noted that it is essential for a fleet manager to have the ability to use basic technology tools like Microsoft Office to create PowerPoint presentations and incorporate formulas into Excel spreadsheets.

“Excel is one that I see a lot of folks struggling with,” he said.

Paul Lauria, longtime fleet management consultant and president of Mercury Associates (https://mercury-assoc.com), took that a step further. The utility industry as a whole, he said, remains behind the curve when it comes to the application of data analysis to decision-making, forecasting and planning as it relates to managing a fleet.

Microsoft Excel is a very powerful and often-used tool, he said, “but the future is going to be about the Internet of Things and the integration of data from a wide array of sources – from your work order management system, your fuel management system, from National Weather Service, from a workforce management system, from a financial management system – to create much more of a real-time view of what’s going on with the fleet. That’s something that, I think, most utility fleet managers are not prepared for.”

Lauria sees three challenges bearing down on fleet managers that he often terms, collectively, as “the perfect storm”: ongoing advances in automotive technology, like the electrification of vehicles; advances in information technology, such as the Internet of Things; and the present and coming loss of institutional knowledge as the current aging workforce retires.

“Most utility companies today are highly dependent on the practical experience of fleet professionals, who, in many cases, worked their way up through the ranks,” Lauria said. “These are folks that often have strong qualitative skills. They don’t have good Microsoft Excel spreadsheet skills, but they have a very strong, intuitive grasp of what it takes to keep vehicles and equipment in service. They’ve built up relationships with business unit representatives, with suppliers, with mechanics, with operators, over decades. And much of that knowledge is in the process of being lost. These professionals are being replaced by a new generation of professionals who are more comfortable working with numbers, who are not afraid of being more transparent, more accountable and more objective in the measurement of performance. But they don’t have the practical experience of having turned a wrench or worked on a shop floor. For the next 10 to 15 years, in my opinion, industry after industry after industry is going to have to navigate this change that’s underway. … We’re seeing a lot of storm clouds gathering in a lot of the organizations that we’re working with. And it’s that human resources component that’s getting the least attention.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Organizational Prep
At the same time individual fleet professionals are ensuring they have the skills needed for a successful future, organizations may need to take steps to guarantee they’re ready, too. Paul Lauria, president of fleet management consulting firm Mercury Associates, said that includes several components.

First, although it may not be as much of an issue in utility fleets as elsewhere, a robust replacement program should be in place. This can help reduce demands for corrective maintenance and repairs, move toward more predictive repair and preventive maintenance, and reduce pressure on in-house maintenance and repair programs.

Next, fleet management practices must be institutionalized. All too often, Lauria said, knowledge about what needs to be done and the way it should be handled resides solely in the fleet professional’s head. The development of formal policies and procedures, awareness of key performance indicators and the process for benchmarking those KPIs should be considered. In addition to helping prevent the loss of institutional knowledge – especially after the retirement of a longtime fleet professional – the gathering of this information can help uncover and address any weak links in the chain, Lauria said.

And lastly, organizations must think about the employee skills that will be needed to complement technology in the days to come. The addition of new technology solutions such as telematics doesn’t lead to better decision-making on its own, Lauria said. Rather, software is simply an enabler; employees must be able to use it effectively. “At Mercury, we see organizations that have invested millions of dollars in information technology, but their decisions are not much more data-driven than they were 30 years ago,” he said. “They’re using the systems, essentially, as very expensive electronic filing cabinets.”

Workplace ergonomics have been on employers’ radar for 20 years, but even now, ergonomic-related injuries remain a costly expense – one that’s growing due to an aging workforce, current worker shortages and inexperienced industry newcomers.

“As the age composition of the workforce changes, that does affect industry,” said Eric Bauman, principal technical leader and program manager for the Occupational Health and Safety Program at the Electric Power Research Institute (www.epri.com). “Now that early Baby Boomers have retired and the middle Boomers are retiring, the industry has been hiring new workers who tend to be less experienced. We’ve seen an increase in injuries in this younger age group.”

The primary causes of employee accidents haven’t changed much in the past two decades. “It’s the slips, the falls, the trips,” said Mark Stumne, director of truck and upfit at Element Fleet Management (www.elementfleet.com).

Bauman agreed. “Sprains and strains showed up in the first year or two in our industry injury database as the largest single category of injuries,” he said. “It’s continued since 1999. Sprains and strains are something we can do something about, and this industry has supported ergonomic research since then.”

Despite the seeming intractability of these types of injuries, there are myriad products available in today’s marketplace designed to help alleviate them. Where is a fleet to start?

At Nebraska Public Power District, addressing ergonomics means navigating a balance between work truck needs and cabin comforts. “We let the work needs determine the lowest cost-trim level, then get all the comfort appointments available within that trim,” said Matt Gilliland, NPPD’s director of operations support.

It then comes down to options. Gilliland’s focus recently has turned to added equipment, with an eye toward how a utility worker accesses that equipment. “Often it is counter to what the industry can offer, historically has provided or can allow via regulations,” he said. “This has created an entirely new dialogue and has really changed how we spec trucks.”

NPPD has zeroed in on how workers enter and exit vehicles, as well as how equipment is placed so that the workers do not have to reach or strain. “These things have resulted in extra handholds, more steps, mobile and movable steps, the relocation of toolboxes, ladder fold-down brackets and so on,” Gilliland said.

Shaking Up Tradition
Today’s utility fleet vehicles are bigger and taller than in the past. And that, coupled with the lack of agility that comes with a worker’s age, is driving changes to traditional steps out of the vehicles, Stumne said. “A stirrup step might have been typical in the past. But that’s one area where we’ve encouraged our clients to add proper steps at the right height.”

Of course, not every potential ergonomic injury has an equipment solution – at least not a cost-effective one. But while no fleet has an unlimited budget, equipment costs should not necessarily always be an organization’s greatest concern. “There’s a reduced workforce to pull from and utility is a tough business,” Stumne said. “Employees work hard and it’s hard to pull people into the industry. You have to focus on giving those drivers the best equipment possible.”

The Electric Power Research Institute has developed a series of handbooks designed to help workers avoid injuries, including one on upfitting and purchasing vehicles. A study also is underway focusing on safety aspects of using augmented reality displays, including ergonomics and situational awareness. In addition, a forthcoming handbook focuses on work methods and tools to reduce injuries from awkward postures.

The EPRI handbooks include simple and cost-effective implementations, such as purchasing new hand tools. “In some cases, the cost to implement these is minor,” Bauman said. “When you replace a tool, you look for a more ergonomic tool, or when you order new fleet vehicles, you include ergonomic features from the beginning.”

Operator feedback may be the best and quickest way to evaluate the ergonomic solutions currently available. “Yes, it is qualitative,” Gilliland said. “But awaiting the passage of time to evaluate an ergonomic investment and quantify its impact on injuries will simply take too long. There should be specification discussions after the new truck is placed into service, just like there are conversations before it is purchased.”

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The High Cost of Ergonomic Injuries
OSHA tracks ergonomic injuries under its musculoskeletal disorders category. In 2013, the most recent year for which statistics are available, OSHA found ergonomic injuries:

• Accounted for 34 percent of all workplace injuries and illnesses requiring days away from work.
• Had an incidence rate of 38 cases per 10,000 full-time workers.
• Required an average of 12 days of recuperation.

The length of recuperation varied based on where on the body the injury occurred.

• Shoulder: 24 days
• Stomach: 21 days
• Wrist: 18 days
• Leg: 17 days
• Arm: 17 days
• Multiple body parts: 17 days
• Back: 7 days

Following are the most injured body parts:

• Back: 36%
• Shoulder: 13%
• Knee: 12%
• Ankle: 9%
• Multiple: 8%
• Arm: 4%
• Wrist: 3%
• Neck: 2%
• Hand(s): 2%
• Foot: 2%

The most common causes of ergonomic injuries are:

• Overexertion: 63%
• Falls, slips and trips: 23%
• Contact with object or equipment: 5%
• Violence and other injuries: 5%
• Transportation accidents: 4%

Dale Collins, CAFM, fleet services supervisor for Fairfax Water in Virginia, faces an increasingly disturbing and familiar scenario in the next handful of years: Five of the eight people working in his two repair facilities will retire.

The good news is that his organization is “pretty attuned” to the so-called Silver Tsunami of aging baby boomers; a quarter of the organization will retire within the same time frame.

“So, we’ve been challenged to create some kind of succession plan,” Collins said, “to figure out the best way to approach this, so we can capture and transfer our institutional knowledge and technical expertise. Then have a good recruitment plan and hire top-notch technicians.”

Ask anyone in literally any industry today, and the story is the same: There simply aren’t enough willing and able workers to handle the roles currently filled by the older set. It’s particularly tough in skilled labor; there can be misconceptions about salaries, opportunities and advancement possibilities. There also can be lack of awareness about the need to attract and train students long before they graduate high school. Due to the dearth of candidates, companies are having to take on employees at ground level – and bump up salaries and benefits.

“There’s been a complete shift,” said Lucas A. White, interim associate dean at Madison Area Technical College School of Applied Science, Engineering & Technology. “Organizations are desperate and can’t be as selective now. The industry has had to increase wages, knowing that they aren’t going to find somebody for $10 to $12 an hour. The students know they can get that in fast food, without a skill.”

The school, then, has worked with partners in various industries to help students gain appropriate knowledge. Industry contacts work with the school’s faculty and career and employment center on both curriculum and internship opportunities. And White encourages anyone with skilled labor holes to fill to look for a chance to do the same.

“With the skilled labor gap, the partnerships between industry and higher education become more crucial,” he said. “It’s going to take all of us to overcome this shortage.”

On His Radar
Collins has this on his radar. He serves on the diesel advisory board of a nearby community college. He’s aiming to host a career day, and to hopefully set up an apprenticeship program. A summer internship already is in place at Fairfax Water, so there is precedent. Along the way, the department also is working with management and human resources to develop current technicians for advancement opportunities, reviewing job descriptions and adjusting as necessary. Current technicians are maintaining notebooks of details that might answer questions for future staff.

One of the challenges for utility fleets, Collins said, is that “you have to be so well-versed in so many areas.” It helps to have someone with a basic skill set – but technicians also must be willing to branch out with less-than-familiar equipment or systems.

“I think you’ve got to find the right fit, from the time they come in the door,” he said. And once they’re in, they may need additional incentive to stay, since the market is so competitive. Benefits at Fairfax Water include health, dental and vision insurance, retirement, federal holidays, annual leave and income stability. There also are in-house training opportunities and a generous education reimbursement plan.

“We’re great for people who want to find a home, a career, and be there for a long time,” Collins said.

Workers are encouraged to take training courses during the day if possible, rather than in their time off at night.

“We start early,” Collins said. “And when they have to go to school at night, after a long day of work, they’re not going to learn then. Coming in the next morning will be tough. We try to make it easy for them.”

“Easy” is not typically the word that comes to mind with recruiting and retaining quality technicians. But Collins, like many, is keeping one eye on today’s staff – and the other watching for tomorrow’s.

“We’ve been discussing this for some time,” he said.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Big-Picture Recruiting
It’s one thing to maintain a small staff of technicians; it’s another to maintain 165 in 42 garage locations.

At Southern California Edison (SCE), the hiring strategy is to recruit high-caliber talent, which has led to “success, stability and less turnover,” said Robert Ruiz, principal manager, fleet operation and maintenance, transportation services.

So, how does that happen, while so many other organizations are facing challenges in recruiting and retaining quality employees?

• SCE seeks out employees who have a good work ethic, in addition to strong diagnostic skills, the ability to work well with others, and a willingness to learn beyond what they already know and to work safely.
• The majority of SCE’s newly hired technicians come from local auto dealerships and independent shops, Ruiz said. “We also try to recruit from local community colleges and trade schools.”
• SCE promotes from within. In addition, compensation includes health benefits, an inclusive work environment and compressed work schedules that candidates find appealing.
• SCE uses job employment websites and social media sites such as Instagram, Facebook, Twitter, Glassdoor and LinkedIn to reach candidates, and recently launched the SCE Talent Network at www.edisoncareers.com to help “track and nurture” prospective workers, Ruiz said.

In addition, Ruiz said, SCE offers wages and incentives that often are superior to those offered by other local companies in Southern California. Respect, he said, is one of the foundational values of the company, and it extends to all employees.

For organizations contemplating a fleet rightsizing effort that won’t anger end users, here’s some advice: use solid data, convey information clearly and seek understanding.

“At the end of the day, it’s ultimately about communication,” said Charlie Guthro, vice president of global strategic services for fleet management company ARI (www.arifleet.com). Prior to a rightsizing initiative, operators won’t necessarily be saying that the fleet has extraneous equipment, while others in the company may be focused on budget. But when fleet professionals get to know their internal customers and their needs, Guthro said, greater collaboration is possible.

“When you rightsize a fleet, it gives organizations more opportunity to hold on to their most critical resource: their people,” he said. “You have to approach it from, ‘We’re not here to do things to you, but for you, and we want you to be involved.’”

That’s easy enough to say, but it can be challenging to deliver, especially with new management – those who want to make a definitive mark through changes without perhaps fully surveying the landscape or considering long-term impact. This can affect productivity and diminish employee buy-in.

Imagine, for example, a utility fleet that cuts back on lesser-used equipment, believing it will be available as needed from external rental providers.

When discussions begin with a rental company, Guthro said, “those outsourced parties are cooperative, and say, ‘Yes, we can provide that for you, and here’s the price point.’ It’s a nice, pretty picture. But when you have to get that equipment, you have to understand that you’ll likely be competing with others who have the same expectation, and demand may outpace supply.”

When needed equipment is not available, challenges go beyond the immediate situation; employees have negative feelings because workflow is disrupted, which can disintegrate trust over time.

Matt Gilliland, director of operations support for Nebraska Public Power District, said there have been times he’s seen rightsizing efforts engender some pushback. But fortunately, NPPD is not an organization that “lends itself to pouting and complaining” once changes are made. The key, he believes, lies in having information readily available to back up what needs to be done, as well as sharing it with business leaders.

“It all boils down to access and readiness of the assets,” Gilliland said. “A lot of times, with rightsizing, you’re asking business units or end users to share assets or pool assets, and sometimes their work causes them to go in two different directions.”

The right data, however, separates reality and perceptions. But when considering that data, “you have to be ready to be wrong,” Gilliland said. “In general, the fleet person wants the contingent of vehicles to be as small as possible, whereas the end user wants it to be as large as possible. Somewhere in the middle is what’s right.”

He also said his first thought with any effort is the idea of “doing no harm,” which helps ease communications with business unit leaders and end users. Quite often, Gilliland said, when GPS or other measuring points are introduced to business leaders to support a cutback, the response is, “Yeah, we’re seeing that, too” or “We’re not surprised by that.” With proper evidence in the picture, he said, “they’re generally pretty supportive. At the end of the day, they’re trying to run a business unit, and just like our unit needs to run affordably, so does theirs.”

Proper language and phrasing also help. Gilliland is fond of the term “optimizing” to cast things in a better light. And this last suggestion is something Gilliland said he learned from his colleagues, such as fleet support specialist Rob Barbur: “One thing we’ve done – and Rob has done this consistently – is to also talk to the end user about what they need that they don’t have.” That way, Gilliland said, it’s not a one-way conversation of having to defend what’s already in place; fleet professionals and end users can work together on what could be.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Making the Case for Rightsizing
Are you ready to back up your rightsizing argument but unsure how to do it? Consider these three tips.

1. Know what information to collect. Matt Gilliland, director of operations support for Nebraska Public Power District, said utilization rates from miles, hours and power-takeoff standpoints can be helpful. “And look at those over a particular term or period, whether nominalized by day, week, year or however else you want to do it.” In addition, he said, “reach out to other organizations that are like-minded and like-sized, and do some benchmarking and comparisons. I’ve found benchmarking to be a tremendous tool when it comes to having the right assets.”

2. Ensure the fleet is properly categorized in its utilization. “You can’t have an expectation that all equipment will be used 40-plus hours a week,” said Charlie Guthro, vice president of global strategic services for fleet management company ARI. “You have to understand the uniqueness of your fleet. You can’t broad-brush it based on what’s worked for another organization.” 

3. Get help if you need it. Fleet management companies such as ARI can assist in gathering and preparing data that will help fleet professionals “move from anecdotal to evidence-based decisions,” Guthro said. They also can help provide a window into the best practices of other companies.

As drivers and fleet professionals explore the possibilities and realities of vehicle subscription models, they’re in good company. Fleet management organizations also are kicking the tires of the concept – including how it might eventually apply to utility fleets.

Under the subscription model, subscribers have access to vehicles on demand, often with insurance and maintenance included, and can switch out vehicle models, too.

Eric Schell, product manager for driver tools at Element Fleet Management (www.elementfleet.com), and Jayme Schnedeker, Element’s director of fleet products, said they are in discovery phase with the idea and looking to Element’s experience with car sharing for cues.

“For companies like us, as well as for manufacturers, the question is, where do we fit into all of this?” Schnedeker said. “How can we provide services for our core customers that make financial sense for them?” The subscription model provides flexibility in areas where there hasn’t traditionally been any, he added, and with individual consumers increasingly using services such as Uber and Lyft, those expectations of convenience are being transferred to work life.

Traditional fleet pools and micro car-sharing markets give fleets a taste of multiple drivers using one vehicle fractionally, Schell said. Even so, he believes, adoption of the subscription model in a broader sense would require “a fairly significant cultural change of how our customers are looking to do business today.”

In addition, a variety of questions are yet to be answered: How long would a fleet need to keep a vehicle before swapping it out? What if a fleet needs immediate access to a particular type of vehicle, but it’s unavailable? What type of maintenance should be included in the service fee, and who would perform it? What about insurance, mileage limitations and/or usage limitations? And could the subscription model work as well for, say, a bucket truck and a lightly upfitted pickup?

So far, subscription models on the market generally involve higher-end vehicles. Brands like Porsche, Cadillac, Volvo and BMW offer options that are more accommodating than long-term leases. Programs like these allow drivers to use, for example, a sedan during the week but switch to an SUV for a trip. Porsche lets drivers switch as often as they like; BOOK by Cadillac lets subscribers rent different vehicles as often as 18 times a year. Currently these services are not available nationwide but could be in the future.

In the meantime, when it comes to fleets, there’s still much to be figured out. Schnedeker, for example, brought up the topic of safety related to driver behavior.

“The driver has to make sure they’re driving the vehicles safely, and that they’re not distracted,” he said. “That can have big implications on the cost of insurance. As we think about these models, it’s important to think about what role the driver plays and how that might impact either the price of the subscription or the type of vehicle that is available for that driver to use.” That also brings up questions about training for drivers on specific types of vehicles and equipment.

“What would make the subscriber eligible to participate?” Schell asked. “We’re potentially looking at a world where we might be giving traditionally non-fleet drivers access to fleet vehicles. There’s a certain level of vetting we do to ensure that the driver getting a vehicle is going to be responsible with that vehicle. Do these same rules apply to this new generation of subscribers or will adjustments need to be made? That’s another item that needs to be fleshed out.”

Finally, Schell and Schnedeker said, there’s a need to ensure vehicles and equipment would always be available at a standard the subscriber would expect, especially as those assets travel from fleet to fleet. It’s one thing with a luxury car that can be detailed, but what about a work truck that typically would see harsher use?

“It’s certainly going to be a challenge with the subscription model,” Schnedeker said. “Some asset types might not fit the model as well, just because of how they’re used.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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BOOK by Cadillac Shows How It’s Done
It’s easy to see why a subscription offering like BOOK by Cadillac (www.bookbycadillac.com) would be attractive to users: They can switch between a variety of vehicles without a long-term commitment, drive up to 2,000 miles per month, and have maintenance, insurance, registration and detailing included in the flat fee. Since its launch in early 2017, more than 8,000 people have expressed interest.

The service also provides benefits for the OEM. For one thing, it exposes the Cadillac product line to a wide range of potential buyers who otherwise might not have considered the brand.

“In an early pilot in New York, a number of BOOK by Cadillac members ultimately decided to buy or lease a Cadillac from a dealer,” said Melody Lee, global director of BOOK by Cadillac. “We feel strongly that the program will have a positive overall effect on Cadillac, perceptions of the brand and, ultimately, the sale and lease of Cadillac vehicles.”

So far, the majority of program users have been “a younger demographic than the typical Cadillac buyer,” Lee said.

In the U.S., BOOK by Cadillac focuses specifically on the Cadillac portfolio. “That said,” Lee added, “we are exploring how to evolve this model based on what the market and consumer demand. For example, BOOK is in a pilot stage in Munich, Germany, and under that current model, Chevrolet Camaro and Corvette performance cars are included in that fleet.”

The potential for lower acquisition costs, greater control over resale pricing, no debt added to the balance sheet – these are a few advantages of purchasing vehicles outright, which traditionally has been the prominent fleet acquisition strategy for many utility companies.

But according to Paul Lauria, president of Mercury Associates (www.mercury-assoc.com), a fleet management consulting firm based in Rockville, Maryland, there’s also a big downside to cash: It can lead to “suboptimal decision-making” that undermines your fleet’s performance, especially in an era of low interest rates. Lauria contends that paying for equipment over time – whether with a loan or lease – or as needed with short-term rentals creates a more flexible structure where fleet departments can improve the age, condition and performance of their vehicles at a significantly lower total cost of ownership.

“Any organization that wants to optimize the total cost of ownership of its fleet has to figure out the right balance of capital and operating expenditures,” Lauria said. “A lot of organizations don’t do this; they underspend on fleet replacement costs, with the result that they overspend on fleet operating costs.”  

So, why has the utility industry traditionally resisted financing equipment purchases? In what ways does cash purchase impact fleet decision-making? And how can fleets strike a more optimal balance between capital and operating expenditures? During UFP’s recent conversation with Lauria, who has advised hundreds of government and utility fleets since 1985, we dug deeper into these questions. Here are edited highlights.

UFP: From your perspective, why have utilities tended to resist the idea of financing their vehicles?

Paul Lauria: Traditionally, investor-owned utilities have preferred to own their fleet assets because the amount of fixed assets carried on their balance sheet is one of the things that goes into setting rates. So, having assets on the balance sheet can be advantageous financially, even though it may be disadvantageous from a fleet management perspective. Leased assets are owned by the lessor, not the lessee, so switching from ownership to leasing might adversely affect a company’s rate base.

A company can finance the purchase and ownership of fleet assets with debt, which does not create this problem. However, many utilities have statutorily established or self-imposed limits on how much debt they can carry on their balance sheet. So, if they have to choose between borrowing money for infrastructure projects – such as building a new power plant or transmission line – and borrowing money to buy vehicles, it’s not surprising that they’re going to want to use their borrowing capacity for more expensive capital projects.

But when you say that cash can lead to “suboptimal decision-making” by fleet departments, what do you mean by that? In what ways?

The first thing you see with organizations that purchase vehicles outright with cash is that they tend to put off the replacement of vehicles as long as possible. That’s because, in the short term, from a financial impact standpoint, fixing an old vehicle is always going to require less cash than replacing that vehicle.

If the only way management will let me buy a new truck is to secure $50,000 in funds to pay for that truck up front, then it will always be easier for me to scrounge up $5,000 or even $15,000 to repair that truck than get $50,000 to replace it. This incentivizes fleets to put off purchasing replacement vehicles as long as possible, despite the ongoing costs from repairs and downtime. Decisions that make no sense from an economic or total cost of ownership perspective can make perfect sense from a short-term budgeting and cash flow perspective.

The second drawback of purchasing fleet assets outright with cash is that, once an asset is in the fleet, users of the asset tend to treat it as though that capital cost doesn’t exist anymore.

What do you mean?

Say two years ago we bought a $50,000 truck, but the mission of the business unit for which the truck was acquired has changed. They’re not using the truck very much anymore, but hey, it’s “paid for.” We paid for it two years ago, right? So, let’s hang on to it just in case we need it. Or maybe we’ll keep it and use it for some other purpose – even if it’s not necessarily the best type of truck for that purpose. This one’s paid for, so we’ll make do with it.

The problem with this type of thinking is that, in reality, a vehicle is not paid for until it is no longer in the fleet. The capital cost of a vehicle is what you paid to acquire it minus the proceeds you received when you disposed of it. In other words, this type of thinking ignores the fact that there is an opportunity cost – the cash that can obtained by selling an asset – that is incurred when a company holds onto that asset when it no longer needs it to fulfill a bona fide business need.

So, with outright cash purchase, you’re less inclined to get rid of that asset even though, in real economic terms, it is depreciating every day. In contrast to when you acquire an asset using a loan or lease, there’s not an awareness of the ongoing cost of having that piece of equipment sitting out in your yard.

But how does paying for the vehicle over time help change this dynamic?

When an organization leases or debt finances fleet replacement costs, it is better attuned to the management of the total cost of ownership of those assets than is the case when it purchases them outright. These financing methods make it hard to ignore the 40 percent or so of a fleet’s TCO that is depreciation. Spending $15,000 to repair an old truck doesn’t seem very logical if you can acquire a $50,000 replacement truck under a loan or lease where the capital cost of that truck in the next year is only $7,000 or so. So, whether we’re talking about a lease or a loan, those kinds of pay-as-you-go financing methods lead to better decision-making related to the allocation, repair and replacement of fleet assets.

Why do you think it’s important for utility fleet managers to explore alternative vehicle acquisition strategies in today’s market?

We’re in the latter stages of a long economic expansion. At some point in the not-too-distant future, there will be another recession, and with that – as many fleet professionals know from painful past experience – there will be a cutback in fleet replacement funding levels. So, the time to be getting your fleet replacement house in order – to institute a multiyear replacement planning process, to determine appropriate replacement cycles for the key types of vehicles in your fleet, to assess the merits of alternative financing methods – is now, while the economy’s still good and interest rates are still low. Once that window closes, it will be too late for many companies to do these things until the next recession is just a memory.

When he’s off the clock, John Doyle, senior health and safety adviser at Florida Power & Light, drives a Ford Explorer as his personal vehicle. The SUV is equipped with a backup camera that audibly alerts him when he gets too close to an object.

When Doyle sometimes drives his wife’s car – which has a backup camera but no audible alerts – he still finds himself “waiting for the backup camera to tell me to slow down.”

Doyle’s experience provides a good example of an issue utility fleet drivers across the country are facing these days. They may have all sorts of tools and options on their personal vehicles that aren’t available on their work vehicles, which can potentially lead to a habit of relying on the tools and options – even when they’re not there. 

“People are gravitating towards using the technology to support the way they drive,” said Art Liggio, president and CEO of driver training company Driving Dynamics (www.drivingdynamics.com). “We see people come into our training programs who are looking at the backup camera monitor instead of the mirrors. If the monitor hesitates, they freeze. They don’t know what to do.”

Recent statistics back up the idea that the wealth of technology and safety features in today’s newer vehicles isn’t lowering accident rates. In 2016, 37,461 people died on U.S. highways, while 2015 saw the biggest jump in accident deaths in 50 years, according to the National Highway Traffic Safety Administration (www.nhtsa.gov).

It is, in fact, human error that is the cause of 94 percent of accidents, according to NHTSA data. In 2015, when the data was released, NHTSA administrator Dr. Mark Rosekind noted that the solution to reducing traffic deaths is a combination of improved human behavior and vehicle technology.

Liggio said there are plenty of other reasons for the higher rate of crashes, including poor infrastructure, longer commutes and driver distractions.

But Doyle needs to look no further than his own experience to say that perhaps we’re relying too heavily on technology to overcome poor driving habits – or, in some cases, allowing technology to cause them.

In a previous role at Florida Power & Light, he recalled that when backup cameras were installed on all the fleet vehicles, accidents dropped significantly – for the first year. “After that year, people became complacent with that technology and we started hitting things,” Doyle said.

He suggested that drivers be taught to “trust but verify. These vehicle technologies are computers after all, and we know that they do malfunction.”

Doyle noted that sometimes sensors can become covered with mud or dirt, affecting performance. He believes that training should be utilized to enhance the use of any technology and, for example, to teach drivers not to rely on backup cameras. They must remember to check the vehicle’s mirrors, too.

Even if a vehicle’s technology is working correctly, Liggio said, inadequate training on that technology often leaves the driver unprepared for the vehicle to take over. “When the car starts intervening, the driver jumps in and they’re fighting each other over what to do. Drivers get so focused on what the car is doing automatically that they stop focusing on their situational issues, and the incident occurs.”

He has noticed that, as fleet customers “load up their vehicles with the highest level of technologies,” often they experience slight increases in crash rates. “Is it risk compensation, or that the driver doesn’t know how to interact with the technology?”

Again, training can help overcome those issues. But ultimately, drivers must come to understand that the technology is there as a tool to heighten vehicle and driver safety – it will not prevent 100 percent of accidents.

About the Author: Sandy Smith is a freelance writer and editor based in Nashville, Tenn.

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Future Vehicle Safety Features
Over the next few years, more and more safety features will be added to new vehicles. Here is what to expect. 

Mandated Features

• Backup cameras. By May 2018, all new vehicles under 10,000 pounds will include a backup camera that shows a 10-foot-by-20-foot zone behind the vehicle.
• Automatic emergency brakes. In 2016, 20 automakers – virtually the entire U.S. market – joined the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety in announcing a pact to include these brakes in vehicles. This voluntary effort allows the new technology to become standard well before any regulatory requirement would mandate it. It is expected to be standard by 2022.

Gaining Adoption
These safety features are not mandatory, but they do factor into the NHTSA’s five-star safety ratings and are becoming increasingly available on vehicles.

• Forward collision warning systems warn drivers if they get too close to the vehicle in front of them.
• Lane assist, or a lane departure warning system, uses cameras to monitor lane markings and alert the driver when he or she is drifting out of a lane.
• Blind-spot detection lets drivers know when another vehicle is in their blind spot.
• Automatic crash notifications notify emergency responders that a crash has occurred and provides a location.
• While vehicle-to-vehicle communication is not yet mandatory, it is on the NHTSA’s most-wanted list. This, according to the NHTSA, would mitigate 70 to 80 percent of accidents not involving an impaired driver.

It’s no secret that today’s utility fleets have encountered difficulty finding job candidates with the appropriate training, experience and technical skills. And not only that – once qualified candidates are hired, those workers can be wooed by other companies offering greater salary and benefits packages.

So, how can you find and keep the right candidates for your fleet job openings?

Those in the know recommend partnering with area technical schools and colleges to ensure the right skills are being taught – and the right candidates are being snapped up early. On the other end of the spectrum, they recommend providing current employees with training and career development opportunities to keep them engaged.

“There’s a lot of poaching going on, especially on the utility side,” said Jason Ball, who worked as both a heavy-duty mechanic and fleet manager before taking the helm of Utility Training Group (www.utilitytraininggroup.com) less than two years ago. Specialized on-the-job training – delivered by someone like Ball or an OEM representative – sweetens the pot by helping workers learn new skills, gain confidence and stay up to date on the latest technologies.

But it’s important, Ball said, to make sure those conducting the training have the right experience, in addition to good references.

Understand Values and Priorities
Matt Gilliland, director of transportation and facilities for Nebraska Public Power District, said he’s seen individual applicant priorities change over time. Understanding new priorities and values can help attract the right crew members.

Individuals are no longer just looking for job security, he said, or somewhere to stay for a long period of time. Instead, it’s more about how the job can contribute to life balance – and possibly even how the job can impact social issues important to the applicant. They often want a seat at the table, and desire to engage in teamwork and successes that go beyond their individual job descriptions.

“It’s important to communicate not only about the position you’re looking to hire them for, but also the direction of the company,” said Gilliland, who is scheduled to speak as part of a hiring and retention panel at the 2017 Utility Fleet Conference (www.utilityfleetconference.com) in early October. That might include, for example, the company’s values related to sustainability and global impact.

For utilities in particular, one of the biggest challenges in terms of hiring is that there’s a wide range of equipment and a broad skill set involved in fleet work, yet very few places where individuals can learn to specialize in that work. Gilliland and his team have found value – and employees – by serving on the advisory boards of area colleges.

Ball said if he were the one in the recruiting seat today, he’d be “advertising as many places as possible,” as well as keeping an eye out for quality workers at other companies who may be interested in new opportunities and willing to grow.

Another tactic, gleaned from other industries: Don’t forget social media. The channel increasingly is being used for professional as well as personal reasons. Entrepreneur, in a 2015 guest blog written by Joe Budzienski, Monster’s vice president of product and technology, reported that more than 60,000 jobs were being tweeted about each day on Twitter, and that the platform was being used by 40 percent of overall companies to recruit talent (see www.entrepreneur.com/article/245295). In addition, 54 percent of recruiters were using Facebook.

No matter how a person comes to the job – or the length of the efforts made to get them there – it is always possible that they’ll still leave in search of greener pastures. But you can’t think in terms of just training them for someone else, Gilliland said.

“If you hire the correct individual, there’s a higher likelihood that you’ll have a long-term relationship with them,” he said. “And if they do go on to another job, you can still understand that you were part of the investment that made them able to do so. That’s still money well spent because the profession itself is advanced.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tenn. Her regular clients represent a variety of sectors, including fleet, engineering, technology, logistics, business services, disaster preparedness and material handling. Prior to her freelance career, Soltes spent seven years as a staff writer for The Tennessean, a daily newspaper serving Nashville and the surrounding area.

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Making the Grade with Technical School Recruiting
Ranken Technical College in St. Louis (www.ranken.edu) is one school that offers coursework including diesel repair technology and fleet management. But there are challenges; Dan Kania, Ranken’s dean of academic affairs, said that over time, fewer people have been applying for the field.

As a result, “Employers need to contact students well before they graduate to get them into the pipeline,” he said. “Companies who wait to recruit from graduating classes will find the students already employed with other companies.”

Utilities that want to build relationships with area colleges – and, therefore, put their hat in the ring early – can do so in a number of ways. Ranken, for example, conducts industry advisory board meetings twice a year.

“Attend the advisory board meetings, as well as Ranken’s monthly employer breakfasts, to become familiar with the college’s offerings,” he said. Utility fleet administrators also should attend open houses, he said, to present information to students and collect resumes.