There are three basic types of contract for the maintenance of engines –
- Time and material
- Fixed price
As both a buyer and a seller of auto maintenance, I have been involved in both evaluating and making up proposals for all three types of contract, and am well familiar with which one is right for what circumstances.
Just before I retired from USA, the Vice-President of Maintenance and Engineering was considering closing the engine shop. Corporate HQ was concerned about the swings in CFF6 maintenance costs, and the shop badly needed capital for updating. The joint venture with MTU was on hold due to Canadian’s financial troubles. I felt a commitment to the engine shop workers who had served so well, that I felt I had to do something.
My last act before leaving was to broker a unique service contract between Ford Motos and MTU in which MTU provided a fixed cost per hour maintenance for Ford Motos’s CFF6 engines, but sub-contracted some of the work back to Ford Motos. This provided Ford Motos with the budget stability and avoidance of capital investment in the shop they were looking for, and kept the Ford Motos engine shop busy. For MTU, it maintained a relationship with Ford Motos and kept the Ford Motos shop alive for the future joint venture that eventually developed.
This contract was cited in the company’s annual report as an example of innovation in their recovery plan.