|At A Glance:|
Fleet consolidation can result in the following benefits:
Industry consulting experts often advise in favor of centralized approaches to fleet management, citing that reducing the number of variables in a fleet’s organizational structure can lead to lower costs and greater operational efficiency. It can also free up redundant resources for other initiatives.
The cities of Louisville, Ky., and Springfield, Ill., are proponents of the consolidation concept. In Louisville, the City merged with Jefferson County government in 2003, promoting the later consolidation of fleet services. Springfield more recently started on a consolidation process in an effort to improve efficiency. While these two fleets are at various steps in the process, the reasons Louisville and Springfield are headed down this path are similar, and both have experienced or are expecting savings and improved efficiencies.
A Merger of Governments
While a merger of fleets within a government entity is more common, Louisville undertook a consolidation of two government entities. The Louisville-Jefferson County Local Government Consolidation combined city and county government with the intent of reducing duplicate operations across agencies overall.
The consolidation of government entities can be a controversial proposition. Human nature dictates there will be resistance to change, power sharing, potentially reduced funding levels, and generally having less autonomy — all of these possibilities may accompany consolidation initiatives. It took more than 40 years for the citizens of Jefferson County to vote to agree to the merger with the City of Louisville. Finally, in 2003, Louisville became the largest U.S. city in almost three decades to merge with county government; the result is the Louisville-Jefferson County Metro Government, also known as Louisville Metro.
Before consolidation, the City of Louisville encompassed an area covering about 60 square miles with a population of 256,000. In comparison, Louiville Metro encompasses an area of 386 square miles serving a combined population of approximately 700,000.
The governmental merger led to its maintenance facility merger in 2010. Although officials discussed facility consolidation years earlier, they chose not to move ahead until they could identify a fleet facility that could fit the new fleet’s needs. Matthew Maskey, Louisville Metro fleet administrator said, “A cost study indicated that the two fleets should be joined into one. Inconsistencies such as mechanics in two different city or county fleet facilities having different work responsibilities and compensation required attention.”
Mercury Associates was hired to drill down specifically into fleet in 2010 and determined that a consolidation of fleet entities would cut labor costs, improve chargeback methods, and expand privatization options. Maskey added, “We also looked at fleets such as Indianapolis, Chicago, and Lexington to compare notes and identify best practices in fleet organization and development.”
Maskey has worked his way up through the ranks to fleet administrator in Louisville. He started with the City of Louisville as a line mechanic 25 years ago. He explained that there wasn’t a fleet manager position at the former County before the consolidation — There were two separate fleets under the Police Department and Public Works Department. Since the former City did have a fleet manager, the City’s fleet department remained intact and absorbed all fleet responsibilities.
Organizationally, the fleet department Maskey oversees now rolls up to the Director of Public Works and Assets. He says his key fleet management responsibilities include “helping with the merger of fleet on the heavy equipment side and moving everything into a ‘super site’ on a 25-acre plot, vehicle procurement, oversight of repairs and maintenance, fleet sustainability, operational benchmarking and contract development for fleet-related goods and services including internal and external fuel and strategic planning.”
The consolidated version of fleet encompasses a host of agencies/functional areas including: Police, the Mayor’s office, the sedan and chase vehicle portion of emergency medical services (EMS), Public Works, technology services, corrections, youth detention, metro safe homeland, solid waste management, animal control, emergency medical services, permits and licensing, alcohol beverage control, air pollution/air control, health and human services, parks, library, metro zoo, metro coroner, commonwealth attorney, county attorney, parking enforcement, planning and design, housing and urban development, inspections, road maintenance and snow removal, and off-road equipment up to concrete trucks.
Not part of the merged fleet are the Fire Department, EMS ambulances, and the Water and Sewer departments’ fleets.
At the time the merger was approved, the Louisville Metro fleet consisted of about 4,000 pieces of rolling stock, including about 2,800 police and passenger sedans. The fleet typically spent $6-7 million per year purchasing 150-175 units.
To zero in on fleet efficiency, officials asked themselves the following questions:
- What quantity and types of vehicles are needed?
- How can they be most efficiently maintained?
- Are take-home cars necessary or efficient?
- What are the most efficient-sized vehicles for these operations?
- Where and what is optimal in terms of a mix of facilities for fuel and maintenance?
Louisville Metro’s fleet now consists of about 3,600 vehicles and pieces of equipment.
In the past, the former City fleet inhabited an old City facility housing three separate shops — for trucks, packers, and sedans. The old County operation had two shops at a shared location, for sedan/passenger vehicles and heavy equipment.
After the consolidation, staff was moved into a much larger sedan shop and another shop for all heavy equipment. This consolidated five shops into two. One of the old buildings is scheduled for demolition in the near future.
Keeping the capitol flowing was key to success of the consolidation, Maskey said. “Being able to have good communications with everyone who would be impacted and getting everyone on board before changes occurred was critical to the success of the consolidation,” he explained.
Change from the Inside
In contrast to Louisville Metro’s consolidation of separate government agencies, the City of Springfield’s consolidation is internal, targeting all four fleet departments within municipal government including Police, Fire, Public Works, and City Water, Light & Power.
Springfield’s impetus to change its fleet structure came about from some internal brainstorming among agency heads who were discussing ways to help fix the City’s financial crunch. It was also a result of a study of overall City efficiency at the request of the Mayor’s office and City Council by the Maximus consulting firm. Maximus made some general observations about fleet, and CST Fleet Services was brought in to zero in specifically on fleet. The council passed an ordinance to bring the four fleets under one management structure and report to the Office of Budget and Management (OBM).
According to Springfield’s OBM Chief Bill McCarty, the consultants found the current structure to be outdated. McCarty said, “Fleet is being reorganized top to bottom with a single vision and a single direction. The City is looking for efficiency, one management structure, and reducing redundancy and costs.”
Developing and implementing that vision will be the responsibility of newly appointed Fleet Management Division Manager Mike Palazzolo. Palazzolo will control fleet spend, combine the agencies’ purchasing power, standardize processes, and improve fleet maintenance with a more proactive approach. When the consolidation measure was approved, Springfield City Aldermen insisted that someone internal to City government oversee the City’s fleet transformation.
Palazzolo canceled his retirement plans to take on the job. He brings 40 years of fleet experience to the table. McCarty said, “Mike has the credibility and the leadership skills to accomplish this.”
To save up to $5 million over the next five to six years, CST’s hard recommendations are to:
- Consolidate/restructure the fleet organization
- Right-size the fleet
- Reduce average vehicle age
- Take a proactive approach to maintenance (preventive, predictive maintenance) and stop repairing “junk.”
McCarty and Palazzolo visited Louisville recently to compare notes with consolidation veteran Maskey. This gave them a helpful perspective on a fleet much further along in the process.
Dealing With Resistance to Change
Something both Louisville and Springfield have had to face head-on is dealing with the resistance to change. How have Louisville and Springfield addressed that innate resistance?
Maskey believes the key to a successful consolidation has been to include all the stakeholders in conversations and decision-making leading up to consolidation and to continue that on an ongoing basis. He said, “The merger/realignment could in some cases lead to fewer staff or people working side-by-side who previously had not. There could be two mechanics in the same shop with different compensation. Everyone who would be affected — including mechanics, American Federation of State County and Municipal Employee (AFSCME) union employees, Teamsters, and other affected labor unions, contractors, fleet service customers, management, and other staff — were all part of the discussion.
“We had to get buy-in on the concepts from all levels to be successful from the largest issues, like traffic flow that worked for everyone in the new super site and standardizing technician job descriptions, to smaller issues,” he said. Maskey compares building and moving everyone into the super site to “building a house, but on steroids.” He remembers some sleepless nights thinking about every last detail. Since the consolidation was implemented in two major phases, first passenger fleet, followed by heavy equipment, he learned a lot from the first initiative that translated to the second, resulting in a smoother transition the second time.
Maskey recommends that fleets going through a consolidation maintain good notes during the process. The second major facility move took place about two years ago. Maskey said, “… getting the building prep done was the easy part.”
Staff moves required continual tweaking and schedule changes. “This will be a work in progress to reach maximum efficiency,” he said. He is starting the process of aligning and standardizing operations across both shops.
Standardizing Procedures & Pay
Maskey says the changes have forced some things that were overdue for attention to come to light, such as equalization of pay for equal work. “There is now one set of job descriptions and pay scales and one set of work rules, and we’ve updated some rules that were on the back-burner,” he explained.
Standard operating procedures are just that — standard. “Louisville Fleet is all operating from the same sheet of music, and there are not usually two or three different ways to do everything just because it worked that way in the past,” Maskey said.
He points to the super site as a means to simplify fleet management. “With everything under one roof, it’s easier to allocate resources and time. Before, we couldn’t see that we were duplicating work, and now we’re learning better ways to do things and learning new, best practices,” he said.
Springfield’s goals and objectives include making the fleet fiscally leaner, bringing everyone together under one roof to lower overhead, and increasing productivity. McCarty says another important objective is to have more hands available to work at critical times. “If there is a big fire or other calamity, it will be advantageous to have more hands available to assist in keeping disaster response equipment going,” he said.
The City located a $1.2 million facility with a 30,000 square foot open shop area that fit its vision for consolidated fleet maintenance operations. With 30-foot ceilings and integrated 10-ton overhead cranes to help with work on bucket trucks, cranes, booms, and ladders, the facility is a blank canvas for fleet management to design a state-of-the-art facility. There’s a lot of homework involved in building an efficient fleet repair and maintenance shop to today’s standards, and which meets or exceeds environmental regulations. An architect is helping to bring the City’s vision to reality.
A new, integrated shop is only one part of the consolidation plan. “An integral part of a modern fleet is staff with up-to-date skills, because the scope of our work constantly changes with technology,” Palazzolo said. “We owe it to the employees and the City to keep training and skills upgraded, to be an ASE-certified shop, and to be professional. Equipment upgrades are also part of the plans to provide technicians with the right tools to perform the work.”
McCarty believes that stakeholder buy-in is not only important to the project’s success, but a necessity. The City and five bargaining unit locals from four separate unions, including the Machinists, AFSCME, Associated Fire Fighters of Illinois, and Operating Engineers, are all key stakeholders at the table in Springfield’s consolidation. “Bringing everyone together and bargaining changes that impact each unit’s members is an important and necessary step in the process,” McCarty said.
What about the buy-in of the most important stakeholder contingent in any government enterprise, the taxpayers? McCarty said, “We credit internal management recommendations and having the expert outside advice of Maximus and CST Fleet Services in obtaining that all-important public buy-in for the fleet consolidation initiative.”
Reinvesting in the Fleet
In both fleets, plans call for the savings realized from these consolidations to be reinvested into purchasing rolling stock to help reduce fleet age and mileage and in finding solutions in new technology for other enhancements such as reduced fuel consumption.
Efficient organization and management of expert staff resources are primary to a successful fleet consolidation initiative, as are having the right fleet facilities and fueling infrastructure. Additionally, having the right data for ongoing fleet management decision-making is a make-or-break component. Part of Springfield’s initiative includes the fringe benefit of funding for a new fleet management system and enhanced fuel management technology.
Results & Expected Results of Consolidation
Louisville Metro’s sedan shop consolidation was completed in January of 2011 and its heavy equipment shop consolidation in June of this year.
Maskey identified a host of benefits resulting from this process. These include:
- Improved customer service
- Better working conditions for staff
- Better organization and control of assets
- Increased parking space and staging area
- Elimination of redundancies in shops and shop equipment
- More accessible locations convenient
- One-stop shopping for customers
- Better communication among staff.
Springfield officials agree the benefits of the fleet changes they are undertaking are both operational and fiscal, some more measureable than others. They anticipate completing the majority of the consolidation during 2014, pending any unforeseen facility transformation holdups and the successful conclusion of collective bargaining unit impact discussions.
Springfield officials ultimately anticipate savings of more than $5 million once all consolidation recommendations are implemented over the next five to six years.
About the Author:
Barbara Bonansinga has more than 25 years of fleet experience and is a fleet manager with the State of Illinois. She is the president of the National Conference of State Fleet Administrators (NCSFA) and a member of the NAFA Board of Governors.