Can operator training programs be profit centers for distributors?
Forklift operator training can be an integral part of a material handling equipment distributor’s business. Whether used as a marketing tool or as a profit center, it has become almost a necessity for many material handling distributors in recent years.
In 1999, OSHA passed its PITOT regulations, rules governing Powered Industrial Truck Operator Training, mandating that operators of forklifts had to be certified. Many MHEDA distributors offer these training programs and have seen a tremendous impact on their bottom line.
A typical training program consists of a classroom session and some hands-on experience. Classes usually range in size from five to fifteen students, although some of the seminars can be larger. The classroom portion of the training usually lasts three to four hours, and may include safety videos, terminology lessons, theories of lift truck design, vehicle inspections, etc. Once the seminar is completed, a written test is given to verify the participants’ proficiency, followed by some on-board training to put the theories into practice. Training is usually offered for both new operators as well as experienced operators who need to be re-certified or need to learn a new piece of equipment. In addition to standard forklifts, many distributors also offer operator training for rough-terrain forklifts, aerial work platforms and other types of equipment. It is also typical for a distributor to offer “train the trainer” courses, at which an individual learns to become a trainer for his or her company.
The length and cost of these training programs vary by distributor, but most agree that it is a vital service. Many distributors had these programs in place long before the OSHA standards went into effect, though all agree that the standards put a renewed focus on the subject.
Modern Group (Bristol, PA) has offered a training program for 30 plus years. President and CEO David Griffith says, “We’ve always been a hawk on training. All our technicians must get at least 40 hours of training every year. We have a very conscious plan to have our people trained better than anybody else. It’s a huge productivity driver and we can always do it better.”
In addition to internal training, Modern also offers operator training programs, a department that Griffith plans to grow aggressively. Modern currently employs nine trainers, with plans to add more in the coming year. An increased staff will allow an increase in training that can be offered to customers and, thus, an increase in profitable revenue. “Our training department generates a substantial amount of revenue. Our objective is for our operator training to cover the costs of internally training over 200 technicians. That’s a significant figure and we typically can meet that objective,” says Griffith.
An added feature of Modern Group’s offerings is a training class for pedestrians, the rationale being that a significant number of forklift accidents involve pedestrians. Jim Westfield, vice president of operations, explains, “Unfortunately, a high percentage of the fatalities from forklift accidents are pedestrians who inadvertently step behind or walk into the path of a lift truck. So we offer a short pedestrian awareness course where we talk to employees who don’t operate the equipment but still may walk into environments where lift trucks are being used. They need to be aware that these are very serious pieces of industrial equipment that are very heavy.”
Modern also provides operator training in Spanish. “A lot of our customers have Spanish-speaking operators, so we have a bilingual trainer who addresses the requirements of the community that doesn’t speak English as their primary language,” Westfield says.
Griffith indicates that most of Modern’s trainers are former mechanics, something he finds beneficial. “A trainer first needs to be technically proficient, and then we work with them on communication and training skills.” Westfield adds, “We look for someone who understands the basics of lift trucks and who also has the ability to communicate well and speak in front of a group, someone who has the capability to get people to understand some facts or technical issues that a lot of people may not comprehend initially.”
Sheri Brimley, general manager at Liftow (Toronto, ON, Canada), takes the opposite approach. “I’ve found that sometimes former mechanics can get too technical and lose their audience,” she says. Brimley chooses to develop trainers who have three to five years of operator experience. “We teach our trainers to be good presenters. It takes about three months if they have never taught before.”
Liftow’s training program differs from those in America because the Canadian regulations are not quite the same. The OSHA standards that serve as a guideline for American companies do not apply in Canada, where the Canadian Standards Association (CSA) and Ministry of Labour and the Occupational Health and Safety Act set the standards. The basic concepts are the same, however, for both new and experienced operators. “The newest CSA standard is similar to the OSHA. The biggest difference is that we have a mid-term evaluation component after the completion of either initial training or retraining, which OSHA does not,” Brimley says.
From an economic standpoint, the training program is a major benefit, for both the distributor and the customer. Brimley indicates that once the training is complete, it is important for the customers to utilize and enforce what they have learned. “If you only train the operators, the training won’t be effective. You must have a commitment from the senior management to make sure that all of the safety parts of the program are being enforced. Otherwise it doesn’t work as it is meant to.” In order to ensure that it works, Liftow places a heavy emphasis on supervisor awareness programs. “That’s where you start to see reduction in maintenance costs, reduction of product damage, damage to trucks and longer vehicle life. Companies that are very diligent will definitely see savings, but those that don’t enforce it go right back to their bad habits,” says Brimley.
Brimley doesn’t look at operator training as a huge money maker for the distributor, but she understands that it is still significant. “It’s not going to add huge dollars to our bottom line, but it does make us a full service dealership. We see a lot of incremental business as a result of the training, whether it leads to increased service, used trucks or new equipment. It’s more of a marketing program for the company than anything.”
Liftow has been offering training for at least 15 years, but really began to focus on it in the late 1990s because it saw a growth opportunity in that area. Currently, Liftow has five dedicated Training Centers and employs 20 instructors corporately who conduct various courses, including new operator training, train-the-trainer courses, instructor training, supervisor awareness, first aid, cranes and aerial work platform training. Brimley says that the growth the company has experienced in this field will stabilize, because “during certain times of the year, we have to find ways to keep our instructors busy. Just like mechanics, they’ve got to be working or we’re not making money.”
At Hyster Sales Company (Eugene, OR), Lee Hall, director of product support and marketing, agrees that the training program is more of a marketing tool than a profit center. “We treat it as a value-added feature. As we sell a lift truck, we make the training available to our customers. If we can just cover our costs, we’re quite happy in doing that.”
Hyster Sales generates monthly revenue of $45,000-$50,000 from training done by its three full-time trainers. The corporate budget is designed to absorb all the costs and recoup all the revenues, but it hasn’t always been that way. “We have 22 locations, and we allocated our training budget to each store depending on that store’s service revenue. A store’s service revenue would be expensed directly to its service department, and 100 percent of the revenue from any training we did in their territory would be returned to the store. So the stores that were aggressive could make a whole bunch of profit,” explains Hall. Now, however, the training program is all handled through the corporate budget, though product support reps still get paid commissions. “That keeps it a free state,” Hall says.
In addition to the typical training classes, Hyster Sales developed a new class, called EvalTech, where students are taught how to evaluate drivers. It’s an offshoot of the normal Train-the-Trainer course. “This has worked out great for us because it saves time for customers and trainers. In the EvalTech class, we teach the trainers to be cognizant of the hazards to look for and to bring to the attention of future forklift drivers in their locations.”
When the latest OSHA regulations went into effect in 1999, Hyster Sales created a Document of Initial Training, a four-part form that helps customers evaluate their drivers after they leave the training class. The first section of the form indicates that the initial training was performed by Hyster Sales. The remaining sections, for site orientation, equipment spec orientation and driving, are for the customer to fill in. “We try to get ourselves extricated from that portion of training.”
Another beneficial development for Hyster Sales Company is its drop-in classes. “The regulations say that you can’t drive a lift truck unless you take the test,” says Hall, “so if an operator is hired and we have these open classes going on periodically, we can schedule that person before he ever gets on a lift truck. That works out better than looking for a date in the future.”
Hall notes that Hyster Sales Company has offered operator training programs for at least 35 years, but back in those days, the sales representatives were used as instructors. “We want our salespeople selling, not teaching. Now we have professional trainers, which is a much better deal.”
Spencer Ecklund, director of safety services at Toyota Forklifts of Atlanta, is the lone wolf on his company’s training staff. Ecklund manages to train eight new and 20 experienced operators a month, and does about ten on-site classes for customers, including Instructor Development Programs. Ecklund’s background as a paramedic and safety instructor has served him well in forklift training. His long career of safety instruction more than makes up for learning how to drive a forklift only five years ago.
Ecklund’s operator course is no walk in the park. “The training program entails basic operations, design theory, principles of a lift truck, stability triangle, load centers, center of gravity, pre-operational checks, propane handling and safety, battery handling and safety,” he says. “We take them through formal training for a day, and then we get them acclimated to the truck and let them start maneuvering it around. Once they get that down we start working into loads. We keep working until they get it down pat. Usually I’ll have at least three pieces of equipment and maybe a pallet truck so everybody’s actually doing something. Nobody’s standing around twiddling their thumbs, getting bored. I keep these guys working.”
Ecklund believes that the training programs are a bargain at any price. “They’re good for our customers because it cuts down on forklift abuse and negligent handling of equipment.” They are also a bargain for the distributor. Ecklund says that the program has a relatively low overhead. “We use rental forklifts when they’re not on rent, and I’ll be able to snag one or two to use. Then it’s just the cost of books, supplies, the training room and salary, that’s about it.”
His aims are to expand the program, introduce it to the region’s growing non-English speaking community and make it more of a profit center. “One of my goals is to expand our offerings. Atlanta is a big metropolis and is getting an influx of immigrant workers. I want to be able to open this program up to the local community. Everybody should have the ability to get trained and get out into the workforce.”
One way he illustrates that belief is through a program feature that is not PITOT-related but certainly qualifies as a value-added benefit. Ecklund helps unemployed individuals find jobs by training them to drive forklifts. “I grade people on a scale of one to five on attendance, how they get along with others, the ability to follow instructions, the test score and the driving performance,” he says. “If someone goes to a job interview and needs a training reference, the prospective employer can see that individual’s strengths and weaknesses.” Ecklund also keeps his eyes and ears to customers in need of qualified operators and will often match trainees with potential employers.
Another company that sees a boost from its training program is Liftech Equipment Companies (East Syracuse, NY). President Joe Verzino employs two full-time trainers for the training program, which he chooses to run as a break-even operation. “We use it more as a customer service that just keeps us closer to our customer base. Since we’ve been doing it so long, we often get called in to do operator training for multiple brands of equipment for customers whom we do not sell to.”
In that respect, training has a positive impact on the bottom line, says Wayne Lucht, Liftech’s manager of training, “It is a source, although not a huge source, of income. With the proper amount of training going on, it is self-sustaining. More importantly, it is one of those intangible points that a customer sees as a benefit.”
Lucht has been conducting training in various industries for over 30 years, the last 12 at Liftech. He oversees a training program that instructs about 1,000 people each year. Such high demand can sometimes be a burden, especially when covering the five branches in two states that comprise Liftech’s territory. Lucht says, “It would be really nice if we could bring everyone into our headquarters, schedule three programs a week for centralized safety training and do the classroom and hands-on programs under very controlled conditions. However, the OSHA code mandates training on the equipment they’re going to operate at the place they’re going to drive. So we go there.” Verzino estimates that 95 percent of Liftech’s training is done at a customer site.
One thing Lucht points to as a challenge is getting customers to understand that the training distributors offer is the best value. “Other organizations—not distributors—do forklift training, but many of them do not meet the letter of the law. They claim to be able to certify operators, but only the employer can certify according to the OSHA requirement.”
Competition from these less-qualified training centers thankfully has not cut markedly into the possible revenues distributors garner from their programs. End-users wishing to be in compliance with OSHA still turn to the expertise that can only be offered by distributors who know the product inside and out.
Whether a distributor chooses to operate a training program as a break-even business or as a profit center, operator training is a vital tool for value-added service in today’s material handling equipment marketplace.