Learn why premium benefits are crucial for repair shops in 2022.
Episode 141: One need every independent repair shop has in 2022 is insurance. Without medical insurance and adequate benefits, independent repair shops struggle to attract and retain technicians.
My guest today is John Stoeckinger, the President at Independent Truck Repair Group or iTRG.
John has been in the industry for nearly 30-years, worked for Volvo Truck NA, and was part of the start-up of VIPAR Heavy Duty as Vice President Sales & Business Development. They built the network from $10 MM to $600MM in purchasing revenue, then started a network for Truck OEM dealers and sold to the OEM in 2016, and started iTRG in 2017.
Guest Website: indtrg.com
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Transcript of Episode:
You are listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost-per- mile. When we look at planning for 2022, and we think about independent repair shops and the vital role that they play in the independent service channel, it’s important that all repair shops are taking the steps necessary to ensure that they will continue to be successful because we need them. We need them to buy parts and install them on vehicles, and we need them to support the trucking industry because the independent service channel is very, very important. So what are some of the needs that independent repair shops have? Well in this episode and in part two of our conversation next week, we’re gonna talk to someone who has identified two very important needs, and we’re gonna discuss how independent repair shops can advantage of resources that are now available. So my guest today is John Stoeckinger. He’s the president at the Independent Truck Repair Group, also known as ITRG.
Now, for those of you who perhaps recognize John’s name, he was on Episode 35 and Episode 47 of the podcast. So he’s a returning guest. And for those who don’t, I’ll give you a little bit of background on John. So John has been in the industry for nearly 30 years. He’s worked for Volvo Truck North America, was part of the startup of VIPAR Heavy-Duty as a Vice President of sales and business development. And they built that network from $10 million to $600 million in purchasing revenue. And then he started a network for truck OEM dealers and sold that in 2016. And now he’s working as the President of the Independent Truck Repair Group, which was started in 2017. So that gives you an idea that John is the guy who we want to talk to, who can really have some authority on this subject. John, welcome back to the show. So happy to have you here.
Thanks Jamie. Appreciate it.
So, in part one of our conversation, we’re gonna talk about why a premium benefits package matters for independent repair shops. We’re gonna talk about that insurance. John, why is that a missing part of many independent repair shops operations?
We about a year ago, sat down with a lot of our members and said, look, what are the most important things to you today? National programs, parts, programs, training. A lot of those things came up, but the end of the day, the number one issue controlling their own operating costs was the national insurance was employee benefits, healthcare insurance, workers comp, and property casualty insurance on their own facilities. And it’s a rising cost. It continually goes up. And I think everyone, especially with our members that are in the U.S., everyone knows ACA or Obamacare as it’s known.
And it’s a national insurances piece that the U.S. tried to bring into. It’s not perfect. Our costs are continually rising with our independent shops. Our average shop is seeing an increase on their employee benefits by as much as 19% a year. So we sat back and said, look, if we need to do this, let’s figure out how we can enter into that space, especially with all our locations and see how we can control that operating cost. And we did. So we partnered up, it took about six or seven months. We talked with a number of different insurance companies and we now are working with Peoplease they’re our partner in that, we are specifically a partner with them and where we put in a national self-funded critical piece, self-funded captive program. That means we’re vested. And if you you’re a member of our group, you can come in, we will then quote you on your premium. So today roughly 7,200 lives are in our program today. So if you’re an independent repair shop and you have 26 employees, you’re now quoted as a member of our 7,000 plus heads that are in our program today.
So what does it that mean? We then take our pooled program, our premiums again, in a captive space. That means we’re vested. And we take it back into the reinsurance carriers and they quote on us. Our average guy today on employee benefits is saving right almost 30% on his employee benefit. So it’s in health insurance. That’s a big deal. So if you’re a 50 employee company, you’re price spending $125 000- $130,000 a year on insurance. That means right out of the gate, you’re have a $45,000 savings. Also we’re on worker’s comp big piece on worker’s comp we’re averaging 22% savings on that. Along with our payroll service, everyone has their payroll service. It’s either an internal expense or an external expense. I’m using 50 employees as the average here, if you’re 50 employee shop and you’ve got a payroll service you’re price spending $18 to $25,000 on payroll service, we provide that to you at no cost.
So John, when I was listening to all of that there’s really only two ways to make money. You can increase your revenue or you can decrease your costs. And when you’re talking about the way that these healthcare costs are expanding year over year for most shops, it’s not like you can just go raise your prices by 19%. So to take this avenue and actually reduce your costs, it’s going to make your business stronger.
Absolutely. And not only that, we’re there for you. So now you’ve got a person that’s, when you become a member, you become part of our family. And again, with that, by aggregating those costs, if you will, or those premiums, we, again, talking about insurance here, we’re now negotiating as a pool. I mean our pool is $200 million, that’s a big pool. When I say on the premium side, what you’re gonna see with our guys today, especially if they go through their most traditional way of finding insurances through their broker carrier local market. And what they’re gonna see with that is that they’re gonna see double digit increases roughly in the 12 to 15% with us, we’ll be in single digit. And what we’re experiencing going into 2022 with negotiating with our reinsure carrier will be at single digit. We’ll be at 3% increase going into 2022.
We’re gonna take a quick break. We’ll be right back. Don’t have a heavy-duty part number and need to look up a part? Go to parts.diesellaptops.com or download the app on Apple or Android to create your free account. Looking for high quality fuel injection for heavy duty applications? Having one supplier for fuel injection allows you to better serve customers by providing them with a complete line, which increases your sales and profitability. Learn more at ambacinternational.com/aftermarket.
We’re back from our break. And before the break, we were talking about the significant cost of having healthcare in place, having these other services in place for your independent repair shop. This has an impact on your ability to be profitable, which of course has an impact and is a real threat to the strength of the independent service channel. And John was outlining how their program is really helping to lower people’s cost significantly for the independent repair shop owner. Let’s talk about another issue that’s very closely related to this and that is retaining top talent. So John, it’s no surprise to anyone when we say that there’s a technician shortage right now. There’s some arguments sometimes about why that has occurred, but I don’t think any people would would say it doesn’t exist. It’s a real issue. And on the independent service channel, they are constantly struggling to not only attract, but also retain top talent. How does getting this part of the business model, where you incorporate a really strong benefits package, you’ve got good insurance. How does that help us with the issue of both attracting and retaining top talent?
That’s a great question. It’s the number one issue we see within our members, when we have our monthly and quarterly meetings, which have been virtual but still very informative. The number one issue with our guys is that I can’t find people. I can’t find, we’ve always had a shortage. You couldn’t find drivers, couldn’t find technicians. We got that. We really can’t find them now. And so who are they competing against? I’m competing against the dealer down the street. He’s got 150, 250 different employees. He’s part of the national chain. He has access to some of the benefits that we’re talking about here. Again, not to be redundant here, but with our national insurance employee benefits program, in a captive self-funded environment, that’s what those guys are doing. So when we put that program together, what does that mean? Our average guy is paying roughly 90 to a hundred percent of the individual premium for that technician. But for the family premium, he’s typically paying 50%. So when that technician walks into his room, he goes, look, I’m gonna hire you. You’re a great guy. You walk in and you’re competing against the dealer down the road, the dealer down the road’s probably paying 80 to a hundred percent of the employee benefit side. He can’t afford that. Now by being a part of our group, we provide him the savings that we can on the employee benefit side. He can now reinvest those dollars back into his company so that he can bring in the proper technicians.
That makes a lot of sense to me. And when I was interviewing people before I started The Heavy-Duty Parts Report, I was just trying to get some focus groups together to figure out what I was gonna do with this show. And one of the things I heard from the independent service channel was that there was a real shortage of resources for the independent side, that the people, the technicians who went to work for dealers, they had so many tools at their disposal and so many sources. And whether that’s identifying parts by using one of their VIN parts look up tools on the parts side or the repair technicians, having access to diagnostic tools and having access to real in- depth training. And then on top of that, all of the benefits that they got working for a dealer that were lacking the independent service side, and I had a lot of repair shop owners just say, I don’t know how I’m going to ever compete on wages on benefits and on providing the resources necessary. So this really resonates with me as a real threat to the independent service channel.
Again, another great point. So we have a number of recent sources for our members. We have training, we have consulting, we have our ITRG training academy. So there’s a lot of resources that our guys can have access to, to make them look like the dealer channel, but still maintain themselves independent.
This brings part one of our conversation with John to a conclusion. We’re gonna continue the conversation next week in Episode 144. You’ve been listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And we’ve been speaking with John Stoeckinger the president at the Independent Truck Repair Group, or ITRG for short. To learn more about their premium packages and what’s available for the independent repair shops. When you become a member of this group, go to INDTRG.com and that’ll bring you to their homepage and then you can go from there. So that is INDTRG.com. And all of that information that we’ve been talking about today can be found on their website. Thanks for listening. We’ll talk to you soon.