Auto recyclers focus on their leadership skills at the latest gathering of ARA.
By Caryn Smith
The year 2022 has been a good one for automotive recyclers, which was reflected in the annual gathering of the industry at the 79th Annual ARA Convention & Expo in Orlando, FL. Energetic Agents of Change came to connect in record numbers, with the final tally of 1,000 attendees, including 90 exhibitors. Many report that due to new vehicle supply chain shortages, vehicle owners are turning to repairers to keep their vehicles moving. This, of course, presents good business conditions for automotive recyclers.
In fact, a Kelly Blue Book report from Sean Tucker in May 2022 says, “the average car on American roads was built in Barack Obama’s first term. It’s 12.2 years old. The figure comes from S&P Global Mobility Reports – formerly the automotive data team from IHS Markit. Analysts there combed through registrations nationwide to get the data. Our cars are aging. Last year, the same report found an average age of 12.1 years.” The report continues: “Despite the image of pickup trucks as bulletproof, tough immortals, Americans are more likely to hold onto a car than a truck. The average sedan or coupe, the report found, is 13.1 years old. The average truck or SUV is 11.6 years old.”
The report notes, “This is the fifth straight year the average vehicle age in the U.S. has risen.” With that said, those that are choosing to buy new are going electric:
The numbers of EVs sold jumped 40% in the past year.
With all that good news, auto recyclers were eager to discuss how to monetize the opportunity, and two main topics emerged: Strong leadership and certification.
Leading with Magnetism
In a time where questionable leadership is often the norm, keynote speaker Dave Leuhr made it clear that in business today, successful businesses are run by great leaders who surround themselves with like-minded people. He suggested that those who want to be great leaders gather with other leaders for accountability. “Who are your five that will help you accomplish your goals?”
Leuhr notes that to make a good accountability partnership work, you need a common defined purpose, structured meetings, accountability, chemistry, and vulnerability. “When you trust, you can open up and drop your ego,” he says.
In addition, he says that adaptive companies have three main traits: Attitude, culture, and mastermind mentality. “Rediscover what brought you into the industry in the first place,” he says. Build a magnetic culture in your business that attracts great workers and great customers. That is leveraging the mastermind theory.
This line of thinking lends itself for a gratuitous plug for the ARA Mentorship Program, which aims to provide accountability and guidance to owners looking to grow. Seasoned leaders offer perspective to mentees, and it has been quite beneficial for many. In their convention session, Marty Hollingshead, a mentor and program co-founder, said, “You can do it. It seems overwhelming, but you can do this. Opportunities are for all of us, and we are here to help. … I have learned as much or more from the people I have helped as they learned from me.”
Leading with Vulnerability
Continuing with this line of thought, keynote speaker Ryan Falco also spoke on aspects of leadership. “We have to be vulnerable; we have to show our employees we are human,” he says. Leadership is evolving as a person and allowing others to do the same. Empower employees to come up with the solution and trust them to do the work.
Things that kill a “magnetic” business are leaders that have attitude of superiority and playing favorites. “Your people will realize when you have favorites, and adapt an attitude of ‘why even try’ in response,” he says. Falco offered eight suggestions to altering a damaged culture.
• First, you must love people. “I am in the people business, not the parts business.” You have to treat people like they matter and have a seat at the table.
• You should guide, not control, your team. Coach them – then delegate and empower. “It all starts with empowerment.”
• Be adaptable. “We take apart wrecked cars, our business is built upon screw ups. Understand, in business, there is going to be a screw up. Things will never go as planned.”
• Don’t be afraid to delegate. “Nothing will erode trust quicker than NOT being able to delegate to the employees.”
• Very important – “Give credit, accept blame.”
• Practice risk acceptance. “If we are afraid to take a risk, we are afraid to grow.”
• “You are a forward-thinking auto recycler, but you have to also have faith. This motivates the forces.”
And, speaking of motivation – there is a difference between internal and external motivation. External is short lived. It is like offering a bonus, fleeting compliment, or a reward. While these are good things, they don’t produce lasting feelings for an employee. Internal motivation is what you should strive for, according to Falco. This kind of motivation is where you discover what makes a person tick. Once you have that information, you can build a better relationship on trust, which in turns, builds a better company.
Practice self-awareness at work, he suggests. “What other industry takes 20% back in returns? Salespeople must have a strong sense of self.” He continued with that thought, noting that there are five dysfunctions as a team to be aware:
• Absence of trust
• Fear of conflict in organization
• Lack of commitment
• Avoidance of accountability
• Inattention to details
But it all starts on a trust level.
Leading with Purpose
A standing-room only session dedicated to celebrating independent automotive recycling facilities and how to make the most of the business model, especially as family-
owned. Ron Wilbert shared his perspective on building Wilbert’s Inc. into a multigenerational and dual (full- and self-serve) recycling operation. “Independents have one great advantage, employment. We have more flexibility to hire, promote, recognize and build a passionate team,” he says. “Having an owner on site is an advantage.”
“I am a hands-on person,” he says. Decision-making, leadership, customer relations, all this makes a difference with my people.” He notes that morale and passion for your work cannot be bought, and an independent business can create the culture they want to build.
“What is your legacy going to be,” he asked. “A path for success leads to a passion for success. Providing a livelihood to your people and having control over your destiny and where your business is going,” to Wilbert, this is the core benefit of business ownership.
When working with your team, consultant Mike Kunkle spoke on setting expectations in his session on sales. “Set the tone, be clear on expectations, understand the whole process. Provide positive reinforcement every single day. When you must reprimand people, be sure to understand the entire event – be fast with feedback, both positive and corrective.”
“It’s not the end of the world with any of this,” he says. It is important for everyone to celebrate the wins.
Another point on culture and team success, he says, “It doesn’t cost extra to be nice to anyone. Be kind, be consistent, be discrete – but hold to accountability. Be gracious, be balanced.” He also suggests that sales meetings should be daily, not weekly, to stay approachable to your team, and manage expectations.
Leading with Vision
Auto recyclers who consistently work on the cutting edge of the industry, Pat Heusers and Mike Meyer, owners at PAM’s Auto in St. Cloud, MN led a well-attended session on what they have learned from attending ARA and industry events. They have always strived for excellence and provided a timeline of their business journey that illustrates they are not afraid to try new things, nor to end what isn’t working, such as:
• One of three auto recyclers on eBay in 1999, got off eBay in 2004, got back on in 2006;
• Got on Amazon in 2008, left after six months;
• 2015 NCF Certified, 2019 left NCF;
• ISO Certified for aftermarket parts only; now the whole facility is ISO certified with every major process documented … and more.
They have adopted new software, built new buildings and loading docks, use robots in the warehouse, and so on. The result of all their experimentation is an extremely progressive and highly successful, heavily certified facility. Pushing the envelope is the norm, and there is no fear now in trying new things. Their push for innovation has resulted in a system with documented processes and procedures, leaving little room for questions.
In fact, they welcome auditors who visit their facility and use the experience as a tool. “When you have an auditor in your facility, it’s a good thing. They talk and give you great ideas, because they visit all kinds of businesses.” The duo has adapted ideas of their quest for continual improvement to sales team training, customer relationships, leadership, people innovation, management systems, effective decision making and real data gathering.
Staffing is an area of focus at the moment. “Workers are returning to work with different expectations. They want more time off, more flexibility, and less social aspects to their work.” Cross training is more important than ever, and they are doing it at a higher level in the company. “It is making employees more well-rounded, and in reality, everyone has to step in when employees decide to leave. Also, employees are better able to collaborate when they understand the whole process. It increases retention, stabilizes the company, and provides a window into more opportunity for each position.”
Challenges include rising costs in buying cars, overhead, insurance, transportation, and shipping. “At one time, we had 7-8 trucks. Now we have 1. We went with contract LTL. We also standardized shipping from the shapes of boxes to the way the boxes are packed and labeled.”
Overall, they suggest you spend time advancing your company. “Everything is always changing; the current way may not be the best way. Change can be difficult, but also the most rewarding. Always be moving forward.”
Leading in the Future
We all know that the electric vehicle is a force to be reckoned with in the future. When exactly is still to be determined. Panelists on the EV Battery discussion called it the “Wild West,” citing issues with the supply chain, economics, geographics, and the lack of OEMs information sharing as reasons plaguing the industry.
In their second keynote, Pat Heusers and Mike Meyer of PAM’s noted the EV adoption numbers are “fairly dismal” citing these facts*:
• Less than 1% of the 250 million cars, SUVs and light-duty trucks on the road in the United States are electric. Getting drivers to switch from gas-powered to electric vehicles (EVs) is essential for the U.S. to be carbon-neutral by 2050.
• By 2035, about 45% of new car sales could be electric according to industry analysis IHS Markit. At this rate, (calculating adoption rates at current paces) only about half of the cars on the road would be electric by 2050.
Heusers and Meyer said, “If we wanted to meet the 2050 EV goals, 30 times the amount of lithium would be needed today.” They encouraged that auto recyclers do not ignore the marketplace, “There’s money to be made, be an early adopter.” The biggest revenue share for recyclers now is in hybrid vehicles. The pair said, “Hybrid gets us more parts to sell.”
From the Reuters report, hybrids remain the more popular option as consumers are reluctant to switch to the new electric technology. Manufacturers ultimately see the sale of hybrids and plug-in hybrids as a bridge to help transition consumers to battery electric EVs. Yet, transitioning the U.S. auto fleet is likely to be a slow process because modern cars last a long time, about 16 years on average.
Bottom line: It is anyone’s guess … but be prepared.