Budget Shortfalls are Opportunities in Disguise

Steep declines in tax revenues are resulting in budget cuts at all levels of government, which most likely will persist for the next 12 to 24 months. These budget shortfalls are particularly acute at general fund departments. The implications are enormous for fleet operations since most fleet budgets are already operating at bare-bones levels. In a cost-cutting environment, brought on by tax revenue shortfalls, all expenditures are subject to challenge.

Adjusting fleet budgets to cope with revenue shortfalls is emerging as the number one issue facing fleets in 2009. In addition, user groups likewise are being confronted with reduced budgets, impacting fleet operations through reduced expenditures on transportation and equipment operations.

In times of adversity, the need for fleet manager leadership is crucial. A major challenge facing fleet managers will be balancing customer demands within the confines of tighter operating budgets. This is not easy, since customers want the same or higher levels of service at the same time fleet managers are striving to reduce costs. Leadership requires fleet managers maintain a cooperative working relationship with all internal users associated with fleet operations and be intimately aware of their needs. Leadership requires fleet managers to work with user groups to assist with proper utilization practices and in right-sizing their fleets.

Fleet managers are guardians of taxpayers’ dollars. When fiscal resources dwindle, fleet managers must be creative in stretching budget dollars. Fleet managers need to step up to the challenge and find creative ways to operate with less, while not degrading services provided to taxpayers. These solutions are team decisions that involve both fleet and user groups.

More Technicians Looking for Jobs

One bright spot in today’s economy is that layoffs resulting from the decrease in the number of automotive dealerships will free up more technicians to enter the labor pool. Many fleets hope to recruit qualified technicians from dealerships reducing staff or going out of business. The Catch-22 is that many fleet operations have hiring freezes. As most fleet managers will tell you, they have an aging work force. This poses problems as employees retire during a hiring freeze. Fleet manager leadership requires annual staff evaluations, not only for continuity, but to ensure irreplaceable institutional knowledge is not lost. One way to do so is to create an apprentice program that pairs inexperienced technicians with tenured employees. However, support for technician training sometimes meets management resistance, especially when paying employees for non-billable hours. In addition, employee retention and satisfaction remains an ongoing concern at many fleet operations due to long stretches without pay increases and, in many cases, with none in sight for the foreseeable future. This is especially an issue for management and administrative level staff, since their salaries are typically below what’s paid in the private sector for comparable positions.

As an aside, another bright spot in today’s economic climate is that the cost of fuel is dramatically lower. However, fleet managers are well aware of the volatility of fuel pricing. Most fleet managers believe lower fuel prices will be temporary. Past experience with the fuel price volatility makes budgeting a less-than-precise task. For instance, what will an economic recovery do to fuel prices? Will fuel rise based on increased demand? Ironically, lower fuel prices throw cold water on many green fleet efforts.

An Opportunity in Disguise

Fleet managers, by nature of their positions, must become better leaders. Fleet managers need to be decisive in their decisions and nurture their management teams. This leadership also extends to dealing with politicians, especially the newly elected “fleet expert” who assumes from the beginning that the fleet operation is being run inefficiently. They constantly challenge fleet managers to justify every decision proposed or make. Successful fleet managers rise to this challenge. They persuasively articulate their thoughts by demonstrating a strong knowledge base of the fleet management profession. In difficult working environments, great fleet managers thrive with change.

Consider the following observation made by Marvin Fletcher, CAFM, director of fleet services for the County of Hanover in the Commonwealth of Virginia. “We also see this current situation as an opportunity. We expect to review and examine all aspects of our fleet management function beyond routine efforts, looking for ways to improve operations, reduce costs, increase values, and/or re-verify we are providing services in an optimum manner for our customers and our employer.”

This shows vision. This is the type of can-do attitude all fleet managers should emulate.

Let me know what you think.

 mike.antich@bobit.com