THE fleet industry is facing a massive rise in servicing costs and insurance premiums because dealers and bodyshops will need to increase wages to solve the recruitment crisis.

The problem of trying to recruit and hold on to technicians could lead larger fleets to re-establish their own workshops, after industry experts estimated that the shortfall of staff in bodyshops, particularly serious in the south east, could force premiums up by about 7-8% in the next couple of years.

The situation is little better for general service and maintenance technicians.

According to Chris Oakham, research consultant for Fleet News' sister title Sewells, and author of the report Retail Motor Industry Pay Guide 2003, there will be 6,000 fewer panel beaters and resprayers in 10 years' time.

He said the insurance industry had effectively capped the hourly rates it pays bodyshops for the past three years at about £22 per hour on average, when bodyshops really need to be earning £30 an hour to survive.

Resprayers within the M25 area are paid as much as £40,000 a year, while insurance companies are paying hourly rates way below this. The shortfall has to be met somewhere and it could well be fleets that foot the bill.

Oakham said: 'More money will have to be paid by insurance companies and it does seem to be happening.'

So if insurance companies are paying out more, it means premiums will rise as well. At the moment, insurance companies are not making a profit on premiums, generally due to the massive rise in personal injury claims.

Instead they have to make their money from investments and stocks, which have not been in sparkling form for months. The problem is set to get worse. As more bodyshops are squeezed and then go out of business, there will be less choice, less chance of fleet discounts because the remaining bodyshops are full, and fleets will have to travel further to get cars mended.

The technician shortage will cause further long-term problems. A panel beater or painter takes three years to train and probably a further three years to get to full productivity, according to Oakham. As there will be no quick fix solution, it will take another half-a-dozen years to correct.

Matthew Carrington, Retail Motor Industry Federation chief executive, said: 'All of this is potentially a nightmare scenario for the industry and recruitment issues need to be addressed as a matter of urgency.

'For bodyshops, there must be a rise in labour rates to retain talented workers and to invest in training and this can only be done with the co-operation of the large insurance companies.'

'Across the industry, 69% of franchised dealerships and 49% of independents are reporting recruitment problems and the majority of reports concern productive service and bodyshop staff.'

Carrington added: 'The nub of the issue is that young people are still not being drawn towards our industry - we have to reverse this outdated image of being 'low tech' and 'dirty'.

'There are tremendous opportunities for the right people. The RMI, through its training division ReMIT, is trailblazing the way towards increasing awareness that many career paths exist within the retail motor industry sector.

'The Government should give as much encouragement to those suited to 'hands-on' careers, as they do to students embarking on academic courses. The industry at present is being starved of its crucial teenage recruits.'

Sewells found that 69% of franchised dealers are having trouble recruiting and most of these problems (74%) involve aftersales staff and in particular service technicians.

And bodyshops are having similar difficulties, with 49% reporting problems with finding panel beaters and painters.

According to Oakham, a major reason why there would be 6,000 fewer panel beaters and resprayers in 10 years' time is because it is an ageing workforce with about 32% aged between 35-45.

So how do dealers and bodyshops attract younger staff? UK motor dealer, Priory Motor Group, which has 27 dealerships across the UK, believes it has cracked the problem with its advanced modern apprenticeship programme, which it claims attracts hundreds of applications from young people across the UK.

Ian Maitland, Priory's national training manager, said: 'The key with all aftersales personnel, and particularly young people coming into the industry, is to offer a well planned employment and training package.

'I think the reason our training programme is so popular is that we offer a clearly defined role to all our employees, backed up by job support, National Vocational Qualification training and long-term career prospects within Priory Motor Group.

'During the past three years, we have recruited more than 70 people via the scheme, mainly technicians, but also in bodyshop, parts and clerical roles. The percentage completing the course and remaining with Priory is more than 80%.'

All apprentices complete their training over three years, working at various Priory sites under the supervision of senior staff, while attending college on day release to complete a relevant NVQ Level III course. At the end of this period, they become fully qualified members of the Priory team.

Maitland added: 'We regard the scheme as the cornerstone of Priory's future requirement for professional and highly trained staff. I think the answer to the recruitment question is quite clear. People will always want to work for a well regarded company that supports its staff and customers.'

But in the future, will technicians be needed as much as they are now? BMW claims it is developing technology from its Formula One programme that will reduce the amount of time its cars need to be in for a service.

Called ConnectedService, the 'intelligent diagnosis based servicing' means that wear and tear data will be transmitted from the car to the service centre, so that problems are known and parts are ordered before the car comes in.

This system will be available on certain models, including the 7-series, in a year's time.

So perhaps electronics and telemetry may help to stave off the servicing problem in a number of years' time. But what can fleets do about the shortage of bodyshops and bodyshop technicians?

Oakham believes looking back, rather than forward, could provide the answer. He said: 'With fewer independent bodyshops, I think bigger fleets might have to go back to the days when they had their own workshops.'