My God, Mike Sheehan and I agree! - Ferrari Life
 
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post #1 of 14 Old 10-31-2011, 03:52 PM Thread Starter
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My God, Mike Sheehan and I agree!

Even though Mike and I contribute to the same magazine he and I have little common ground on most topics.

The October issue of Sports Car Market has an exellent article by him describing the Ferrari repair industry.

I doubt it is appropriate to reproduce it here but it is worth looking for.
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post #2 of 14 Old 10-31-2011, 04:03 PM
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thanks, think i'll pick that up. passed last month when i was picking up my cavallino.



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post #3 of 14 Old 10-31-2011, 04:04 PM
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Brian,

The article was indeed interesting, particularly if you've never had to deal with P&L before or run a small business.

But even more interesting is why the two of you would disagree so much or on what topics? While he is definitely skewed toward the Enzo era cars and often repeatedly beats the same drum, I find most of his arguments to be rather well laid out.

I've read quite a few critiques of his opinions "over there", most are personal attacks or a rehash of old folklore. However, I haven't seen any of yours. Care to expand? I'm genuinely interested.
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post #4 of 14 Old 10-31-2011, 04:12 PM
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Quote:
Originally Posted by Brian View Post
Even though Mike and I contribute to the same magazine he and I have little common ground on most topics.

The October issue of Sports Car Market has an exellent article by him describing the Ferrari repair industry.

I doubt it is appropriate to reproduce it here but it is worth looking for.
He and I have discussed numerous times in the past and he has given us permission to re-post all his articles. Several of them are at the top in the "Articles" tab (which is getting a serious update and overhaul early 2012 or late 2011).

------

As appeared in:
Sports Car Market--October 2011 issue
Sheehan Speaks
by Michael Sheehan

As long as market values keep rising faster than hourly shop rates...
This column was inspired by two clients who emailed on the same day searching for "an honest shop and/or mechanic," as both had heard too many tales of the high cost of Ferrari service. I replied that shop owners do not stay up late at night scheming how they can cheat clients. Instead, they worry about delivering the best possible work while getting paid for their time. Most shops often find that jobs take longer than they bid and end up eating lots of unbillable hours. No one is getting rich from Ferrari service.

The Ferrari service business is very competitive. Southern California has no lack of Ferraris, and consequently there are eleven different Ferrari service shops within a 30-mile radius of our business. Some are small, some are large and one is the authorized dealer, but all work on Ferraris old or new--and all compete on price and reputation for the same client pool. That level of competition keeps prices and profits down. Most of these shops are well-established, stable and have little staff turnover. Well-trained and experienced mechanics are hard to find, and job openings for trainee mechanics are few and far between.

Paying for training and tools

An apprentice mechanic starts at a community college or for-pay trade school and usually leaves the school with $30k in student loan debt. Once graduated, the new mechanic's next step is to find a dealer willing to commit the time and expense to train a new hire. Once trained for several years at a mainstream dealership, an aspiring Ferrari mechanic needs to find a Ferrari shop with an opening that's willing to commit to the time-intensive learning curve needed to transform the trainee into a qualified Ferrari mechanic. That shop knows it is probably training their future competition.

Mechanics take pride in--and cannot work without--their massive roll-around tool boxes and rows of gleaming tools. Roll-around prices start at $10k, plus it costs another $30k for a set of starter tools. If our apprentice also wants to own his own minimal shop equipment and diagnostic units, they will quickly add another $50k-plus to his expenses.

A professional mechanic will keep current through the ASE (Automotive Service Excellence) programs, which offer 40 individual certificates in such categories as Advanced Engine Specialist and Engine Machinist.

Each auto manufacturer also offers ongoing school programs. Ferrari mechanics go to two to four factory-sponsored schools per year, each of which costs the dealer from $250 per day to $1,500 for a four-day school. Standard protocol is for the dealer to pay their mechanic $23 to $35 per hour for each hour in school, plus airfare, hotel and per diem costs for out-of-town schools. I was surprised to be told that an authorized Ferrari dealer expects to spend $100k per mechanic for initial and long-term training.

Fast-changing technology

Ferrari diagnostic equipment began with the Jofatron in 1982, which was used until 1990 on carb cars, 308s, 328s, Mondials and Testarossas. In 1987, the Ferrari Tester by Marelli arrived, which was used on the F40, 348 and 512TR--until the SD1 arrived in 1990. The SD1 was a DOS-based computer system by Digitek, which was used on the 348, Mondial T, 456, 550 and 456M. In 1999, the Windows-based SD2 worked either alone or in series with a computer on the 355 and 360. In 2003, the SD3 arrived with greater capacity. The DEIS, or Diagnostic Easy Information System (an Italian oxymoron?), was introduced in 2008, and it operates both alone and with the factory through the Internet.

The latest-and-greatest machine is the Leonardo, made by Accini (staffed by ex-Digitek employees). At $35k, the Leonardo is compatible with all the latest Ferraris, Maseratis and Lamborghinis. Both the DEIS and Leonardo require a monthly subscription for updates, which adds another $500 per month.

Barely making money on a $60,000 Enzo engine

One of the local shops recently finished a $60,000 rebuild on an Enzo engine. Although $60k may seem like a staggering number, it was, at best, a minimally profitable job for the shop for many reasons.

Because of parts and machine shop delays, the rebuild took six months and was a start-stop-restart project, which is never time-efficient. Enzo-rebuilds are few and far between, so the project required a learning curve and multiple double-checks on every restart. The Enzo occupied a full shop bay for six months, and the car had to be protected from curious customers, loose floor jacks and other dangers. That same space should have produced dozens of clutch jobs and major services in the same time period, which give much more cash flow and profit.

The madness of science projects

Most mechanics and shop owners love a challenge and want the reputation as The Shop That Solves any Problem, from a concours-winning restoration (done in record time) to solving any electrical problem or building nonexistent gear sets, cylinder heads or blocks for early 1950s Ferraris.

These science projects always have an extremely time-intensive (aka money-losing) learning curve, which few Ferrari owners are willing to fund. Additionally, when all goes wrong, as often happens with science projects, few Ferrari owners are willing to pay the high price to revise and re-engineer a science project gone awry.

Only $300,000 away from being a $250,000 car

The high cost of startup

Opening a new shop is only for the brave of heart and wallet. Lease and security deposit costs, insurance, build-outs, welders, compressors, lifts, parts cleaners, hot tanks, sandblasters, state permits, a phone system and much more will easily start at $100k. Add in cash reserves for the lean opening months that are sure to come. Any mechanic opening his own shop will need a large client base or an "Angel" multi-Ferrari owner to have a chance of success.

Divergent skill sets

In the world of Chevrolet, Toyota or BMW service departments, an experienced mechanic can "beat the clock" and do service work in less than the book time, which makes the job more profitable. Parts are moneymakers and almost always in stock at a dealership.

In the world of old Ferraris, many jobs are based on time and materials, so it's impossible to "beat the clock." Parts are becoming a problem with any pre-430 or 599 Ferrari, and anything pre-308 is always a major parts problem. If an independent part supplier hasn't had parts reproduced, the shop will have to make parts, meaning the shop owner will also need to be a fabricator, machinist and welder.

Looking down the road, the few mechanics who grew up with and know the Enzo-era cars are now shop owners in their late 50s, 60s or 70s. They will not be turning wrenches for many more years.

As for the best shop to use, if you own a 360, it probably doesn't belong in a shop filled with Enzo-era Ferraris, just as your local authorized dealer is usually not the best shop for your 250 PF coupe. These cars require very different skill sets.

Been there, done that

I owned and ran a very large, full-service and restoration shop with an engine clean room, a dyno room, frame shop, paint booth and fabrication department. I know just how hard it is to be paid for every hour worked. Walking the tightrope between too much work (and angry owners) versus too little work (and hungry mechanics) gets old. I still own three industrial buildings, and all are rented out to auto service shops. I'm much happier being a landlord instead of kicking out a paying tenant to open another service or restoration shop. Been there, done that. I am much happier to deal only with the daily drama of used Ferrari sales.

This article originally appeared in Sports Car Market Magazine. To read more of Mike's articles from Sports Car Market or other publications please click here.

My regards.

M. Sheehan.
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post #5 of 14 Old 10-31-2011, 05:05 PM Thread Starter
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Originally Posted by Killer58 View Post
Brian,

The article was indeed interesting, particularly if you've never had to deal with P&L before or run a small business.

But even more interesting is why the two of you would disagree so much or on what topics? While he is definitely skewed toward the Enzo era cars and often repeatedly beats the same drum, I find most of his arguments to be rather well laid out.

I've read quite a few critiques of his opinions "over there", most are personal attacks or a rehash of old folklore. However, I haven't seen any of yours. Care to expand? I'm genuinely interested.


Outside of some personal, direct, business related negative experiences which I will put aside for many reasons I am in serious disagreement with his often expressed opinions of post Enzo cars. He makes some valid points as to value, investment potential etc. but he never misses a chance to criticize their quality, cost of operation or any other single aspect of them. He resorts to embelishment and outright fabrication to do so. He doesn't like them, I get that, but he is wrong far more often than he is right in that area and he lets his disdain for the fact that Fiat era cars far exceeded the quality and engineering sophistication that Enzos products ever did. I do love the vintage cars but accept their shortcomings sans blinders. Michael cannot do the same when the Fiat era cars are the topic. I also believe his rantings on the topic of modern era Ferraris have led directly to higher repair costs and reduced value of some of those cars.
When Mike tells the world how expensive a TR or 550 is to service because they are such junk, shop owners and service managers from coast to coast rub their hands together waiting to help your next major service live up to your worst expectations. Having been in the industry for over 30 years I have seen that scenario first hand more times than I can tell you and it directly effects the value of the cars.

On the flip side, some of his statements of the vintage cars are what wives tales are made of.

Last edited by Brian; 10-31-2011 at 05:17 PM.
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post #6 of 14 Old 10-31-2011, 05:18 PM
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I for one am in strong belief that the 360 is very solid and of course is a post Enzo era car worth owning. The vintage cars >1.2 million are certainly not cheap either. I'm sure Patrick Otis service isn't inexpensive, but it's all relative when you get into that ownership group.
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post #7 of 14 Old 10-31-2011, 06:01 PM
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my thoughts

,,,i was happy with my last 30k service,,,but the truth is 3500 to tune up a 328 is definetly overpriced and the shops are makiing serious money.(valve adjustment..cam belt change,,and waterpump rebuilt kit new tenioner bearings .,spark plugs .,2 shims and gaskets, oil and filter change,are you kidding me !! lol )..,,but its the botton end of the going rate,,,i know Ferrari parts are very high in price,,they are high because Ferrari and all of the other parts outfits know they can get a premium price for them,,,Ferrari owners make an average income of 800,000 per year...its as simple as that,,,shops are in busines to make money,,600 dollars for a 328 vent contoller,,600 for factory ignition wires,thats insane!!..and it just gets worse as the models years climb...i was just reading a post on here about 355 exhaust manifold replacement costs,,,they are staggering.,..as far as the labor goes,,,,100 per hour..is the bottom end...and the shops all charge on the very high end of the stated hours per repair,,,500 dollars to re place the shift shaft seals,,plus parts,,5 hours of labor,,,probably not,,but it was done correctly,,and i gladly paid,,,but i dont agree with any statement that Ferrari shops are not making serious money..i remember way back,,,when i first had my car,,,i paid 750 dollars for front billets spacers and the longer bolts to go with them....they shop owner knew i wanted them,,and he charged me up the ass ...im thinking a good Ferrari mechanic might make 25 per our,,,thats a 75 per hour profit.,,.yes i know you have to figure in .,.other costs,,,the phones,,lights,,,insurance,,,etc,,,but a good shop stays busy,,and makes tons of money...thats just my observation,,,i know that when it comes to engine out services,,,the hours for repair increase even more.,the more time it takes,,,the more profit for the shop..the more parts needed,,the more profit made....i absolutely disagree with Mike Sheehan on this issue,.,,ive dealt with 4 different shops over 12 years...and they are basically all the same..they are not in competition with each other,..they all have their own clients,,,as well as building their business by world of mouth...

Last edited by lucca brazzi; 10-31-2011 at 06:17 PM.
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post #8 of 14 Old 10-31-2011, 06:37 PM
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Great read!

I think we are all big boys and capable of paying to play.

No one likes getting ripped off - but it happens to all of us.

Live and learn - but why anyone would beat up another owners dream is beyond my comprehension.

It's a hobby and certainly not one for the faint of heart.

FWIW - there are two sides to every story and one side without the other is worthless.
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post #9 of 14 Old 10-31-2011, 07:51 PM
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Thank you for posting Michael Sheehan's article. It was good reading. Much has been written (by Mike himself) about why he closed down his own shop in Costa Mesa (Southern California) after the Ferrari bubble economy popped. In a way, I wish he would have stayed open just to carry on the history. During the 80's and early 90's you could drive up to Mike's shop, walk up the driveway and have a little peek around to see all the magnificent cars he was working on. Then another short drive and you were at Richard Straman's shop where, again, there was always something fascinating going on. Good times!

1997 F355 Berlinetta, Rosso Barchetta
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post #10 of 14 Old 10-31-2011, 08:27 PM
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Thanks Brian, I appreciate the perspective. We certainly agree that he is biased towards the Enzo-era cars. I just summed it up as the natural evolution of his business viewpoint- the of selling "investments". As such, a car like a 360 or 550 is a losing proposition. However, I hadn't considered the effect of that bias on repair prices and value though, so I appreciate your analysis.

One point of note - while I was still researching my purchase, Mike sang the praises of the 550, and favored it over the purchase of a 360.

BTW - I agree with Andrew, the 360 is a great car to have - hence our Spider!
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post #11 of 14 Old 11-01-2011, 05:03 AM
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Brian you and others posting on public forums is the highest form of giving possible.

The wealth of knowledge offered by the Gents here - and they know who they are is priceless.

Thank You and all the others that place a tremendous effort here.
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post #12 of 14 Old 11-01-2011, 08:07 AM
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These are the types of threads that really add value to FLife.

Thanks Brian.
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post #13 of 14 Old 11-01-2011, 08:23 AM Thread Starter
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Thanks Brian, I appreciate the perspective. We certainly agree that he is biased towards the Enzo-era cars. I just summed it up as the natural evolution of his business viewpoint- the of selling "investments". As such, a car like a 360 or 550 is a losing proposition. However, I hadn't considered the effect of that bias on repair prices and value though, so I appreciate your analysis.

One point of note - while I was still researching my purchase, Mike sang the praises of the 550, and favored it over the purchase of a 360.

BTW - I agree with Andrew, the 360 is a great car to have - hence our Spider!


A 250 GTO wasn't considered an investment in 1968 either but it didn't stop people from loving and cherishing them then either. That is not to say that a 360 or 550 will ever be an investment, I am in total agreement with Mike there but it in no way invalidates a persons desire to own a TR or 550. I am not in favor of helping the prospective buyer put on a pair of rose colored glasses. I am a total supporter of full disclosure of the down side to exotic ownership but Mike has made a career of trashing cars he does not have a personal affection for and blows the down side way out of proportion.

I have never heard him speak of the fact that Daytonas had an even worse reputation in their day for fragile transaxles than TR's do now or 250's notoriously short engine lives ( I know of several TR's with over 100,000 miles on their motors and one with 250,000) but one 550 breaks a reverse gear and by God they are all junk.
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post #14 of 14 Old 11-01-2011, 08:26 AM Thread Starter
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These are the types of threads that really add value to FLife.

Thanks Brian.


Thank you.
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