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On March 9, 2015, the Duluth city council heard a report from Randy Owen, senior vice president with Mercury Associates, the nation’s largest fleet management consulting firm. The city retained Mercury in 2014, at a cost of $57,600, to examine the city’s fleet operations and make recommendations to improve them.
The word “fleet” refers to not only snow plows and fire engines, but virtually all wheeled pieces of equipment: trailers, generators, compressors, pumps, pavers, brush chippers, mowers, backhoes and so on. In total, the city has 882 assets in its fleet. According to Mercury’s full report, the city’s newest asset is an arrow board, which is less a year old (arrow boards are the mobile signs used to direct traffic in construction zones). The oldest asset is a 33-year-old tractor. The total value of Duluth’s fleet is about $40 million.
Mr. Owen led off his presentation by describing the vast expertise of Mercury.  “We’re a specialty consulting firm. All we do is fleet studies. In the 13 years that we’ve been in business, we’ve done about 600 fleet studies, including a number of federal agencies, 34 of the 50 states, 33 of the 50 largest cities, counties, transit authorities, and school districts, as well as Fortune 500 companies, so we get around quite a bit. My company feels confident in saying that when we analyze your operations, if we say a practice is good or a practice needs improvement, that we know what we’re talking about.”
According to Owen, Duluth’s fleet is “fairly substantial” for a city its size, which reflects “the variety of municipal services that you provide and the fact that you are up here in the Snow Belt and you have to remove snow.” It does not, however, reflect an oversized fleet. Most cities’ fleets, said Owen, are ten to twenty percent too large. But of Duluth’s 882 assets, Mercury was only able to identify 9 pieces that could be disposed of for efficiency’s sake—less than one percent of the total.
“We found the city’s fleet to be very well utilized,” said Owen. “Duluth has done an excellent job of tightening the belt during the recession and keeping the fleet right-sized. I would put your city in the top 10 percent that we’ve looked at, in terms of fleet size and not having a lot of excess vehicles. I think staff deserves a lot of credit for keeping their fleet needs to the minimum required to support their operations.”
Owen praised the city’s fleet maintenance efforts. “Your mechanics are expert, they know what they’re doing, they work hard,” he said. “We interviewed all of the customers, and they’re generally very well satisfied with service levels. They recognize that their mechanics go the extra mile to get their trucks back on the road, particularly during inclement weather, and they had nothing but good things to say about Fleet Services efforts on their behalf.”
The mechanics are helped by well-qualified people in the parts department, which Owen said is “rare in a municipal fleet. Usually what happens is you have a mechanic who slipped and fell one day and they put him the parts department, and he’s really not a professional parts person, and that part of the business suffers. That’s not the case here in Duluth, and there are really excellent practices in place.”

The biggest concern with Duluth’s fleet is its age. While fire and police vehicles are reasonably new, much of the construction-services part of the fleet is too old—the compressors, trailers and so on. “As those assets age, they become more difficult to maintain, parts are harder to find, it’s more difficult for Fleet Services to keep them operational,” said Owen. “It’s easy to ignore those assets, but when they’re needed, they’re really needed, and so, again, I think the city needs to develop a strategy to freshen that part of the fleet and reduce the average age.”
The average age of assets in Duluth’s fleet is ten years; Mercury believes this number should be closer to six. Owen stressed this several times. “As vehicles get older, they become less reliable, and this requires city employees who drive vehicles to make more frequent visits to the shop, and when they’re making more visits to the shop, that means they’re not doing the work that you’re paying them to do. So they’re less productive, which ultimately means you have to hire more people or suffer things not getting done on time. So keeping the fleet properly aged is not just a financial imperative, it’s an operational imperative.”
In all, 359 vehicles in Duluth’s fleet, with a total value of $18.3 million, exceed Mercury’s recommended replacement criteria. To restore the fleet, Owen said, the city should spend $4.5 million a year on fleet replacement. Currently, the city currently spends about $2.5 million.
“Obviously, we understand that there’s a lot of capital requirements for any city, particularly coming out of a recession,” said Owen. “We just want to put Fleet on your radar as an expense that needs to be attended to.” He recommended buying new vehicles with bonds or another financing mechanism rather than purchasing them outright, because financing would spread the capital cost of the vehicles over their useful lives.
Inadequate garage space is another concern. One of the few complaints that Mercury received about Fleet Services was that repairs often took too long. This is a result of the city not having enough mechanics, and the shortage of mechanics is a result of not having enough space for them to work. Moreover, the current too-small garage, near Menards in West Duluth, is in an unsecured location. Because city vehicles have been vandalized while parked outside the garage overnight, the mechanics have to move everything inside every night and out again in the morning, which eats up even more time—a “real productivity-killer,” according to Owen. He recommended that the city build a bigger garage and hire two new mechanics to address these issues. He neglected to mention which magical fountain would spout the money to do this.
Finally, a “glaring gap” identified by Mercury is the city’s maintenance management system, which was developed in-house by the city years ago and is woefully inadequate to the job today. “You’re in the Fifties as far as your information technology for the garage goes, and that really limits their ability to manage their operations,” said Owen. “It took them hundreds of hours to put together the information that we requested for this project, and if you asked the same questions today, they would have to spend hundreds of hours again, because what they put together for us is not repeatable. It was a one-off. So they’re really struggling with an antiquated system that’s not functional and very difficult to use.”
Owen recommended spending $100,000 on a commercial fleet-management software package. “You have a fleet that is worth about $40 million in assets,” he said. “It deserves a $100,000 investment in information technology.”
After Owen’s presentation, Kelly Fleissner, the city’s head of maintenance, told the council that the city had recently put out a Request For Proposals for a new information software system for Fleet Services, and that the money to pay for it was already in place.

It’s no new garage, but it’s something.