STRATEGIC
BUSINESS PLAN
UPDATED DECEMBER 2009
INDEX
Introduction 3
History of Organization 3
Description of Current Organization 4
Description of Physical Properties 5
Current Labor Situation 6
Background of Industry 7
Fuel 8
Mission, Vision, Values and Ongoing Goals 9
SWOT – Strengths, Weaknesses, Opportunities, Threats 10
Listing of Attachments 12
1 – Actual Spending Compared to Last Budget 13
2 – Fleet Asset Listing 16
3 – Vehicle Aging Report 19
4 – Fuel Consumption Report 21
5 – Expenditures for New Fleet Assets 23
6 – Service Rates 24
7 – Current Year Budget 25
8 – Customer Survey 27
9 – Major Accomplishments 32
10 – Goals and Initiatives (FY09-FY13) 36
11 – Organization Chart 41
I – INTRODUCTION
Bill Douglas, fleet director for Orange County, CA, has stated: “A business plan is a strategic document that evaluates opportunities, quantifies resources, and guides implementation of procedures. It can be used to guide the department, educate upper management, demonstrate the professionalism of the department’s employees, and provide benchmarks to measures against”.
A well formulated strategic business plan stimulates proactive and strategic thinking that helps create a roadmap that connects the operation of today with the model agency of tomorrow and will focus on those areas that will provide the greatest return on investment in both human and capital resources.
The City of Lynchburg Fleet Services business plan as described in this document will hopefully meet the standard described above. Our strategic business plan will always be a living document and one that will be updated annually to keep pace with changes in internal and external needs.
II – OVERALL DESCRIPTION OF THE BUSINESS
Lynchburg Fleet Services (LFS) is a separate department within the City of Lynchburg government that reports to the Deputy City Manager and operates under an internal services accounting plan. LFS is responsible for developing specifications to purchase new fleet assets; review bids and quotations received for the purchase of new assets and make recommendations to the Procurement Department regarding what company should be awarded the contract; manages repair facilities (garages) for the service and repair of fleet assets; manages the City owned fuel sites which includes the purchase of fuel products and the custody and care of the refueling equipment and structures; oversees the procurement of repair parts and supplies; manages the automated fleet management information system and the fuel management information system for security and accountability purposes; insures appropriate records are maintained accounting for all costs involved in acquiring and maintaining an automotive fleet; and coordinates the process for the disposal of retired fleet assets.
III – EXECUTIVE SUMMARY
A – History of the Organization
The business of managing a fleet of vehicles and equipment, better known as fleet assets, has been an ongoing function of city government since the City of Lynchburg began purchasing sedans, police patrol cars, trucks, snow plows, mowers, etc. The functions of fleet management and maintenance in the City of Lynchburg, like it is for many other municipal governments around the country, have generally fallen under the responsibility of the public works department. This process held true for the City of Lynchburg as well until the Year 2000 when the fleet management and maintenance responsibilities were handed off to a newly formed department called Lynchburg Fleet Services. How the city got to this point is described below.
In August 1996 David M. Griffith & Associates (DMG) was engaged by the city to evaluate the advantages of consolidating all fleet management and maintenance functions for the city’s entire inventory of fleet assets—the study would encompass the fleets managed by the Fire Department, Waste Management Department, City Schools and what was known at the time as City Central Shop.
DMG submitted its final report in June 1997 with several recommendations regarding how to eliminate duplicity and redundancy and bring about economies of scale regarding the management of the 602 fleet assets on the books at the time. The major recommendations were:
· Consolidate all fleet assets under the direction of a new fleet manager who would report directly to the City Manager’s Office
· Establish a centralized replacement fund for all city vehicle needs
· Use a fully burdened cost charge-back system to charge for services rendered
· Replace all fuel tanks at the various city sites to meet current EPA standards and upgrade sites to include a new state-of-art fuel management accounting system
· Replace the City Central garage with a new facility that would also include offices for the fleet management administrative employees
· Modernize fleet personnel job descriptions and require ASE certification for employment as a technician and implement an incentive pay plan to remunerate technicians who pass ASE tests
· Transfer the Small Engine Shop from Building & Grounds to the new centralized operation
· Consider privatizing the central stores operation to increase its cost effectiveness by reducing staff and other administrative and operating costs and by reducing the purchase price of parts and supplies
· Acquire a fully integrated fleet management information system to be used by the new central operation, Waste Management, Fire Department and Schools
As of the date of this report, all DMG recommendations have been implemented with the exception of the recommendation to establish a centralized fleet asset replacement fund—however, as shown in the series of attached financial reports, ample dollars have been expended for the purchase of new assets to reduce the average age of the City’s fleet of equipment.
B – Description of Current Organization
LFS currently maintains 595 fleet assets at the new central garage located at 1650 Memorial Avenue which is next to the railroad tracks in the lower basin of the Public Works facility on Memorial Avenue. In addition, the Fire Department garage at 2624 Lakeside Drive services 50 fleet pieces of fire apparatus and ambulances, another 25 assets are maintained at the Waste Management garage at 2525 Concord Turnpike, the Airport facility at 4308 Wards Road services 15 heavy duty airport vehicles and the Schools garage at 3525 John Capron Road performs maintenance for 129 fleet assets including all school buses. The total fleet count in the city is 715 including rolling (licensed) units and off-road equipment.
The city fleet consists of police cars, sedans, pickups, dump trucks, ambulances, heavy duty fire rescue apparatus, refuse trucks, mowers and sundry other miscellaneous equipment that is either titled and licensed or considered off-road equipment. The average age of the fleet is 65 months which is considered a fairly new fleet compared to other municipalities.
The facility at 1650 Memorial Avenue houses 12 full-time employees—one fleet director, one accountant/IT administrator, one administrative assistant, one facility supervisor and eight (8) technicians. There are 10 other technician positions scattered about the city at the other repair locations. Repair parts are stocked at all locations although none of the locations allocate city-paid staff to manage the inventory in a full-time role. Inventory at the LFS location and at Waste Management is managed by a local contractor (Barker Jennings Corp.) who is responsible for furnishing the staff and on-hand inventory of parts and supplies needed to facilitate the repairs to fleet assets. That is, LFS and Waste Management have a privatized parts operation.
The LFS FY2011budget for the above listed services is broken down as follows:
Salaries and benefits $ 673,000
Fuel $1,494,000
Repair parts $ 380,000
Sublet work $ 215,000
Fleet asset replacements $2,445,000
Other operating costs $ 184,000
Total budget $5,391,000
C – Physical Properties
The LFS offices and garage are located at 1650 Memorial Avenue. The facilities are relatively new and opened in February 2000. It is a current, state-of-the-art complex with adequate lighting, lifts, exhaust removal, overhead doors, heavy duty crane and many other ideal accoutrements that are needed to maintain and repair a large fleet of vehicles and other equipment. The facility houses the administrative personnel who manage the day-to-day aspects of the fleet including the fleet information management system and fuel management system. The facility has adequate parking for employees, fleet assets delivered to the operation for service, as well as equipment awaiting pick-up after servicing. In a nutshell, the facility is very modern operation.
The primary city fuel site is across the street from the fleet offices—exact address is 1801 Memorial Avenue—and like the garage is a state-of-the-art structure. It opened in October 1999 and has underground storage tanks with the capacity to hold 20,000 gallons diesel fuel and 20,000 gallons unleaded gasoline—the tanks are equipped with a leak detection system to insure a leak in a tank or dispenser does not go undetected. The site has a large canopy for overhead coverage from the elements with ample lighting. The majority of the city vehicles are equipped with a special fueling device that allow operators to dispense fuel without entering an odometer reading since the automated system uses radio frequencies to activate the pump and record the mileage information making the system very user friendly. The fuel management system was acquired at the same time the site was constructed in 1999.
The fleet information management system was acquired in 1999 and stores all information regarding a fleet asset such as acquisition date and cost and a detailed description of the asset. All maintenance and fueling information is stored in the system as well which includes parts, labor and any other cost record pertaining to a fleet asset.
D – Current Labor Situation
Generally, in today’s labor market management, administrative, clerical, accounting and IT personnel are not in short supply since they are white collar professions the young folks of today desire. However, service technicians are in short supply because young people today prefer a white collar position to a blue collar job such as plumber, electrician, technician, etc. Nationwide the population of vehicles is increasing about 3% a year but we currently face a nationwide shortage of 270,000 technicians to service these vehicles—or stated another way, for every 8 techs leaving the industry only one new tech enters!
LFS’s experience has been favorable in retaining technicians. Turnover has been low and the eight (8) technicians on staff have over 95 years accumulated experience with two having 25 years experience each. The organization promotes ASE certification and an individual must possess at least one certification to secure employment with Fleet Services. LFS pays an hourly incentive to employees who obtain certifications above the number required for their position which has helped retain qualified technicians. When the incentive program was introduced in 1999, the entire technician staff (including the facility supervisor) possessed a total of 28 certifications—the count today is 65.
Even though technicians have chosen to remain with LFS, much of their reasoning for staying (besides good benefits and time off) is due to their ability to earn additional income by successfully passing ASE exams. Unfortunately, the average pay for a Lynchburg technician (without ASE incentive pay) is only 85% of the average market scale which works to a disadvantage when attempting to lure a new employee from the very limited supply of qualified technicians. The city’s inability to grant employees a wage increase each of the last two fiscal years has only compounded the problem.
Fleet Services technicians have proven year after year to be highly effective in the work they perform. The mechanic to equipment ratio for the eight technicians is 89:1 and the industry best practice ratio is 50:1. Each technician bills out an average 1,670 labor hours a year or 80% and the industry norm is in the neighborhood of 70-75%. The fully burdened labor rate including overhead is currently $74 a figure much below the commercial shop labor rate in the area which ranges from $85 to $100 an hour. And, the last written customer survey taken in late 2009 gave the technicians and the maintenance operation a 48% Excellent rating which expands to 92% when the Good category is included with the Excellent rating—over 70% of the respondents gave the techs an Excellent rating in the category of Willingness to Assist You speaks highly of their personal customer skills.
IV—BACKGROUND OF INDUSTRY
A – Industry in General/Technician Shortage
Advanced technology has affected the automotive industry tremendously and
the ability today of a mechanic to repair almost any make or model of vehicle
is just not possible. What was known as the “shade tree mechanic” is
obsolete and no longer is the auto repairman called a mechanic but today is
referred to as a technician and rightfully so. The vehicles of today use on-board computers to regulate almost every function of the vehicle, has a very
sophisticated electrical system, several new breeds of engines and transmissions and assorted other special features such as GPS systems, ABS brakes, tire pressure monitoring systems, etc. The trend for advanced technology has exacerbated the aforementioned difficulty in finding skilled technicians and those who possess a high degree of computer skills migrate to the industries that pay the higher salaries.
In the automotive repair industry workers are generally required to furnish their own tools. Technological advancement has also affected the tool box of your normal technician and it’s not unusual for a technician to have a minimum investment of $10,000-$15,000 in good quality tools and a sturdy and secure tool box in which to store the tools. In general, the pay scale for quality technicians has not kept pace with the pay offered by other industries requiring strong computer skills. Other industries generally do not require an employee to make a personal investment in the tools needed to perform their work. Lack of sufficient pay and the requirement for technicians to make a substantial investment in personal tools are a couple of reasons why there is a shortage of qualified technicians today and the problem will continue to worsen as the current workforce “grays” and employees retire.
B – Competitors
Competition is generally not a pressing issue for a municipal garage because most cities will generally have their own garages to avoid having its vehicle operators compete with the cash-paying public for service at local dealers. This insures faster turnaround time for repairs and by owning its own facility the city fleet operation has only to worry about the competition between the various city departments for service.