BUSINESS OPPORTUNITIES: Inside Job

Equipment is one of a landscape business owner’s greatest assets, depending on whether or not a contractor owns his or her facility. And it’s also one of their top direct costs, usually second to labor, says Dan Foley, president of D. Foley Landscape, based in South Walpole, Mass.

Although many contractors recognize the benefits of bringing equipment maintenance in-house, it can be difficult – financially and logistically – to implement. Many owners are hesitant to spend the money, others are bogged down by day-to-day tasks and some are simply inexperienced in maintenance and what it takes to add a shop. “It doesn’t take much for a contractor to have a fleet worth over a million dollars, but almost none of us have the experience to manage it,” Foley says.
 
D. Foley Landscape, a $3- to $4-million maintenance firm, first added in-house equipment maintenance by hiring a part-time mechanic in 1994. “It’s hard to do it well when you do it part way, but it’s hard to do it all the way when you’re small,” he says. “You might not have enough equipment to justify a full-time maintenance employee. There’s a point where you get stuck in the middle.”
 
That in-the-middle point is difficult to define, Foley says, based on a company’s type of work, equipment inventory, number of trucks, number of employees and dealer relationships, to name a few. However, Foley estimates the $2-million mark is a good size for a contractor to consider a full-time, in-house mechanic.

DECISIONS, DECISIONS. “You have to ask yourself, ‘Does it add value to your landscape customer to bring it in-house?’” Foley says.
 
His company’s philosophy is to keep production crews and account managers focused on adding value and servicing clients – not worrying about equipment. “For us it was very clear – with the speed that we were growing, with the level of our dealer relationships and our want to control our own destiny – that it was the right thing to do.”
 
However, Foley didn’t realize his company was slightly behind the curve until several dozen contractors toured his facility in 2002. At that time, D. Foley operated with a part-time mechanic, who worked nights repairing trucks and equipment, while crew leaders were still responsible for their equipment’s preventive maintenance and tasks such as changing oil and sharpening blades.
 
The reaction some of the tour participants had to Foley’s maintenance procedures spurred him to reassess the system. “People couldn’t believe we didn’t have a full-time mechanic,” Foley says. “Until then, I wasn’t conscious of the daily and preventive maintenance that wasn’t happening, as well as the distraction that fleet management had become to our management team whose primary role is to be totally focused on producing results for our clients.”

WHAT GOES OUT?

Bringing a mechanic on board doesn’t mean a contractor will never have to send out equipment to a dealer or repair shop again. At D. Foley Landscape, Fleet Supervisor Ron Greene considers the actual cost of an outsourced repair vs. the direct cost of doing it in-house, the shop’s current schedule and capacity, transporting costs and the need for any specialized equipment. D. Foley, for example, still outsources auto body work, painting and heavy truck repair, because it does not have the proper lift. “You have to do a cost/benefit analysis of each item. It may not always be less expensive, but you may get a better investment on time, money and resources,” Foley says, noting Greene manages a $160,000 annual budget that includes vehicle and trailer maintenance and accessories, equipment maintenance, supplies and fluids and shop labor.

Soon afterward, D. Foley promoted a crew leader with an interest in and a knack for automotive repair as his full-time mechanic. The company titled this newly created position fleet supervisor. “We call them this because we want them not just to turn wrenches and tighten bolts, but to be aware of the well being of the entire fleet,” Foley says.
 
Bringing maintenance in-house worked well initially, but Foley says the company did not have the experience or systems in place to be 100 percent effective from the beginning. “We just kind of let it evolve on its own,” Foley says.

A NEW HIRE. Last summer, when D. Foley’s first full-time mechanic left the company to pursue interests outside of the industry, management was forced to define what it was looking for in terms of a fleet supervisor’s skill set and procedures for success.
 
The company realized it needed a fleet supervisor who is flexible and diversified enough to maintain the company’s wide variety of equipment. To find such a candidate, Foley purposely looked outside of the industry. The company interviewed several candidates and eventually found Ron Greene, a 25-year veteran of a Ford dealership. “What he brought to us was experience in completing repairs and organizing a shop from an industry whose core business is to maintain and fix things,” Foley says.
 
During the interviewing stage, Foley asked probing questions to see if potential mechanics believed they were “above” the gritty, sometimes mundane, tasks vital to maintaining landscape equipment. To dig this deep, Foley explained to applicants what servicing a lawn mower entails (including sharpening blades and scraping grass clippings off mower decks), and waited for their replies. “Some candidates would say, ‘I thought I’d have a helper for that,’ or ‘Don’t the guys do that?’ You can just tell when talking to the mechanics who thought they were too good to be doing that. If you ask the right questions, you can discover a great deal of important information.”

PROCESS IMPROVEMENT. A revamped repair-tracking process also helped the shop run smoother than in years past. “We really lost focus there for a while because we didn’t have a system where there were clear responsibilities, the crews weren’t specifically held accountable and there was some poor communication,” Foley says. 
 
Before, crews submitted work orders directly to the mechanic, who was overwhelmed by requests and had no clear system for prioritization. “It can create chaos, with crewmembers simply leaving equipment in the shop, walking up to the mechanic saying ‘Hey, this is broken.’” Foley says. “He had too many bosses and internal customers.” Tension arose between the mechanic and the production crews.
 
“What we need is for our equipment operators to be our eyes and ears out in the field, letting us know when something’s not working right or needs to be looked at,” Foley says. “But if they’re given a hard time when they bring in something to be repaired, they’re not going to want to do it anymore.” The repercussions can be disastrous in terms of safety, productivity and further equipment damage.
 
To fix the flawed system, Foley appointed one manager as the head of the fleet department. Now, production employees submit repair orders to their managers at the end of the workday when they turn in their time sheets and receipts. This procedure keeps managers in the loop. In turn, the managers submit the repair orders to the fleet department manager.
Next, the fleet department manager enters the repair order (RO) into a shared spreadsheet and issues a number for each RO. For easy tracking, the first two digits are the year, the next two are the month and the final three are a unique number, specific to that piece of equipment.
 
Although the company’s accounting program has an equipment management function, Foley prefers using a spreadsheet for the quick, easy ability to sort by RO number, status, person requesting work, piece of equipment or any other field. “It’s as simple as a Word document for a repair order form that we fill out and an Excel spreadsheet,” Foley says. “You don’t have to spend a lot of money on this.”  

After the order is entered, it’s in the fleet supervisor’s hands. He tracks the status of the repair in the log and notes any hours or miles if applicable, which is helpful when repairing the equipment in the future. “What this did was create a paper trail – a public declaration of a problem,” Foley says. “And team members are rewarded for reporting problems by our making sure to thank them for caring.”

PIECES AND PARTS. Another lesson D. Foley Landscape learned during its in-house maintenance evolution was the importance of streamlining the parts inventory.
 
At one point D. Foley owned seven different brands of mowers. “Our solution was a one-brand initiative so we could stock fewer parts.”
 
In 2004, D. Foley invested $81,000 for a new batch of equipment, all from the same manufacturer. The company generated about $35,000 from the sale of all its existing equipment.
 
“Rather than stretch the process over several years, we bought it all at once,” Foley says. He recommends contractors take stock of what they own currently. “If you can simplify brands and models, I’d do that.”
 
Another parts-related tip Foley mentions is to minimize the mechanic’s time spent out of the shop searching for parts and supplies. Contractors should contact their vendors to request delivery. “Most of the time, if you commit to their business, they’ll commit to delivering to you,” Foley says, noting it’s worth paying a $10 delivery fee because a mechanic adds value when he’s servicing equipment, not out picking up supplies.

PREVENTIVE POINTER. Even with a full-time mechanic, ensuring maintenance equipment receives efficient, proper, routine preventive maintenance can be difficult. After grappling with this challenge for several years, the management at D. Foley came up with the idea of the service set – an extra, identical set of equipment that rotates among maintenance crews.
 
Each crew is assigned a service day, the morning of which they drop off their equipment at the service bay and pick up the service set. During the day, the fleet supervisor conducts preventive maintenance on the equipment, and the crew it belongs to retrieves it at the end of the day. This practice ensures that the mechanic touches every single piece of maintenance equipment once a week. The rotating service set, which Foley notes is not the same as a backup set, is then serviced during an evening or on a Saturday morning.
 
Foley calls the investment for the service set, approximately $18,500 (including four mowers, two string trimmers, one power edger, one backpack blower and one hand blower), a “no-brainer.”
 
“If we didn’t invest in an extra set, other challenges come, like hiring someone to service the equipment at night or having the guys do it,” Foley says. When his crew leaders serviced their own equipment it took them longer and they may not have been doing it properly. While the company does not track exact savings, Foley estimates a yearly savings of $4,500 to $5,100 in direct mechanic labor cost (including overtime and labor burden) – not counting the savings accrued from improved preventive maintenance, which also reduces future avoidable repairs and downtime.
 
“We finally got it figured out after 12 years and are enjoying the journey to continually get better,” Foley says. “It’s become part of our core strategy in the marketplace. We don’t want our production teams being distracted from delivering results for our clients. I don’t think we could live without it now due to our size, but even if we were smaller, it would allow us to be a better service provider to our clients.”