Deregulation means added pressure to cut costs
As the electric utility industry undergoes deregulation, companies are being forced to find ways to reduce their operating costs. That includes changing how they manage the truck fleets that install and repair their networks of power lines.
At the 48th annual Electric Utility Fleet Managers Conference in Williamsburg, Va., last June, a variety of speakers discussed some of the implications of those changes - and how the lessons some utility fleets have learned can be applied to trucking in general.
"In an earlier era in my company's history, the test of effective fleet management was that the necessary vehicles were available when needed. When a vehicle broke down, it was repaired," said keynote speaker Albert J. Budney Jr., president of Niagara Mohawk Holdings, a $3.2-billion New York electric and gas utility.
"Today, our fleet managers are challenged to operate the fleet as a stand-alone business, achieving both the greatest efficiency and lowest cost possible," he said. "When it comes to fleet management, we compare our overall program to the best fleets in the business. Not necessarily other utilities, but companies whose core business is fleet management, like Hertz, Penske, Ryder, and PHH."
Niagara Mohawk's fleet of some 4,500 vehicles represents an annual expenditure of about $42 million. Under the direction of Jack Young, the company's director of fleet management, Niagara Mohawk is looking to use everything from rental contracts to e-commerce to keep fleet costs down, said Budney.
"Ten years ago, our fleet faced a question of whether it would be more economic to provide each department with enough vehicles to meet their peak needs or develop some other, less costly way to manage peak vehicle demand periods," Budney said.
"We decided meeting peak period needs could be accomplished at a reasonable cost with a pool vehicle strategy that included an option for outside rentals. That way, departments don't have the expenses associated with ownership of vehicles that are not used daily.
"We've also begun to look into the use of e-commerce to reduce the cost of paperwork and trim fleet administrative costs," Budney said. "We'd like to acquire new vehicles, maintenance products and even fuel through direct electronic links with our suppliers."
The need for fleet managers to get involved in e-commerce was echoed by Lawrence Kinder, chief information officer for rental car giant Avis. "In two years, 91% of companies in the U.S. will be doing electronic business via the Internet," he said. "In the next four years, e-commerce is predicted to total $8 trillion. The world of business is getting connected; you need to get connected, too."
Why should fleets get on the e-commerce bandwagon? Kinder told the utility fleet managers that more and more Internet fleet services are being developed to make their operations more efficient and easier to manage. Real-time vehicle location and routing information are already available, and real development is taking place in the use of onboard vehicle diagnostics and voice-activated, hands-free commands for Internet use while driving.
However, before utility fleets can take advantage of such technology, they must also address a more fundamental problem haunting their operations: a growing shortage of skilled mechanics.
That's why Ohio-based American Electric Power (AEP) is trying to find ways to make the mechanic's job more attractive, especially in light of the tight labor market currently being experienced in the United States.
"Mechanics are the right arm of the fleet," explained Dan Cox, fleet operations manager for AEP. "These people are the wrench that keeps the fleet operating, and it's becoming very difficult to find them in today's labor market," he said.
"Few students today consider a technical career," said Cox. "Most are pursuing four-year college degrees. For those who do enter the repair trade, they are finding it is a lot easier to be a computer repairman instead of a mechanic - they don't get dirty."
AEP's fleet maintains 12,400 vehicles with 283 mechanics spread out in 65 service centers across 11 states. As its work force ages and gets closer to retirement - the average mechanic's age in the fleet now hovers between 45 and 49 years old - AEP has developed its own recruiting and training program in conjunction with Ohio State University.
"We call the program 'TUF-TECH,' which stands for 'Training of Utility Fleet Technicians,'" said Cox. "The curriculum was designed by 10 of our best fleet technicians and concentrates on teaching 23 duties and 90 tasks we feel are critical to developing good mechanics." The fleet plans to roll out TUF-TECH out this fall.
All of these issues - from management strategy to technology and labor concerns - must be successfully dealt with so utility fleets can continue to fulfill their vital role of keeping the lights on in the U.S., said Van Walbridge, president and CEO of Colorado-based Mobile Tool, an aerial device manufacturer.
"Utilities in the U.S. will spend in excess of $80 billion in the coming years just to maintain electric and gas systems," he said. "At thesame time, the cost of fleet equipment will increase, while the demand for employees will exceed supply.
The Used Truck Assn. kicks off its inaugural convention October 26-28, at the Mission Inn Golf & Tennis Resort near Orlando. This year's theme is "Turning Problems Into Profits: Managing Your Way Through An Oversupplied Used Truck Market." For more info, contact Sue Dorso at 701-293-6941, or click on www.uta.org.
Schneider National is spinning off its logistics business as a separate company to be called Schneider Logistics. The information technology organization will provide operational systems and capabilities to Schneider National. Chris Lofgren will lead the new company as CEO. Rodger Mullen, currently vp-logistics, will serve as senior vp-operations for Schneider Logistics.
Don Armacost Sr., one of the founding members of TSEI (Transportation Safety Equipment Institute), passed away on July 6 at the age of 82. Armacost purchased Peterson Mfg. in 1956, and served as chairman of the board until his death. Nationally known and respected for his business acumen and industry leadership, he was a trusted friend of the Motor and Equipment Manufacturers Assn., as well as throughout the motor vehicle parts industry.
Roadway Express celebrated the opening of a new service terminal in Guadalajara, Mexico, built to handle the company's growth south of the border. It is one of nine Roadway facilities in Mexico.
ATA has just released the 1999 edition of "American Trucking Trends." The 50-pg. publication includes information on the size and scope of the industry, freight volume, revenue and expenses, taxes and regulatory costs. Copies are $35 for ATA members and $50 for nonmembers. Orders can be placed online at www.truckline.com or by calling 800-ATA-LINE.
Ryder System recently broke ground at Alliance Industrial Park in the Dallas-Ft. Worth Metroplex for the new Transportation Management Center (TMC), future home of Ryder's logistics network. TMC will incorporate several transportation services and logistics functions into a single network that supports clients' global transportation needs. The 42,000-sq.-ft. facility will open in November.
Michael E. Scumaci, who currently hauls liquid hot asphalt and flatbed loads of packaged asphalt shingles for Owens Corning in Summit, Ill., has been named 2000 Driver of the Year by the Truck Renting & Leasing Assn. (TRALA). During his 32-year professional driving career, Scumaci has logged 3.5-million miles without an accident.