CHICAGO (Dec. 14, 2005) - Beethoven once said that music is not so much about the notes, as it is about the spaces between them. For testimony and rhetoric, does that mean one has to read between the lines?
After observing the Nov. 10 Subcommittee on Commerce, Trade, and Consumer Protection hearing, Motor Age sent a common list of questions to the organizations that testified to amplify the meaning from the testimony presented. Rather than rehash what has been said over and over by the industry representatives, let's compare and contrast comments made by the participants during and after the hearing, to see which gaps have been closed and which remain wide open.
Governance: Whose voices matter? At the hearing, Stephen Cole, president of the Council of Better Business Bureaus (CBBB), reported, "The biggest issue is governance." And while parties testifying wanted a board with fair and balanced representation, the question was the makeup of that board.Parties in both camps told Motor Age that the CARE proposal for governance was introduced on Sept. 23 into the CBBB-facilitated negotiations. Some suggested it was just a starting point, while others felt that for such an important issue, the late introduction of the proposal did not provide enough time to reach a meaningful agreement.
CARE President Parde explained, "It came up when we got around to discussing the details of a governing board. The problem the OEs had was that at the beginning of the negotiations, they demanded that ASA and NADA be included. At the end they did not want them to serve as two of their [the manufacturer's] four."
He added, "Four-four was a proposal, not a take it or leave it. We are willing to listen to other proposals as long as the representation is even. We also proposed an advisory board that would be made up of anyone with an interest or who has already been involved to make recommendations to the board. We believe that what is needed is a strong board that can and will make decisions and be an advocate of the consumer and the technician."
Steve Brotherton, a shop owner and member of the Automotive Service Association (ASA), countered this by saying that ASA represented only service and repair businesses and technicians, and thus was an aftermarket organization, not an auto manufacturer. Just as automakers may disagree on an issue, the same is also true for aftermarket associations. For governance, where an association stands on an issue shouldn't be the basis of which half of the industry board they are assigned to. What they do, who they represent, and where they work in the industry should determine that.
The Alliance of Automobile Manufacturers (AAM) Vice President Michael Stanton explained, "CARE's insistence on controlling at least 50 percent of the National Automotive Service Task Force (NASTF) governing board would have significantly diminished the voices of the most important stakeholders in this issue: repairs shops, diagnostic equipment makers, auto makers and automotive trainers."
Several subcommittee members, including Rep. Janice Schakowsky (D-IL) inquired whether including consumer advocates on a board was needed, and whom would serve that role. John Neilsen, a director for the American Automobile Association (AAA) told Motor Age, "AAA is not seeking a seat on a repair industry oversight board." His organization simply wants a competitive vehicle repair industry that provides the best possible service and choice of locations for vehicle owners. When pressed by the subcommittee, Cole said the CBBB could serve such a role if invited to.
Congress also has the difficulty of crossover membership between industry groups. While the automaker organizations have distinct and separate memberships, the majority of aftermarket representatives - ASA, AAIA, AASP, CARE and NFIB - acknowledged there was crossover between their membership rosters. As Congress deliberates, discerning whom is being heard once from those being heard twice or more will be a challenge.
Subcommittee members and those testifying acknowledged that while the industry wanted a voice in its direction, the size of the governing board could be expanded, and could include other such as consumer advocates. Given the polarized testimony, Motor Age asked each party if there were other industry voices that could provide a middle ground perspective, and if so, to identify them. The Equipment and Tool Institute, the Society of Automotive Engineers, the Associated Locksmiths of America, the Motor and Equipment Manufacturers Association and ASE were amongst the replies.
Rep. Gene Green (D-TX) noted the willingness of the industry to embrace others and commented, "It seems both sides aren't having a problem adding members to the board that are independent of the aftermarket and the automakers." Remember that distinction.
Oversight and enforcement: Close, but no cigar Parde told the subcommittee, "Oversight and enforcement is the most important issue." Aaron Lowe, a vice president of the Automotive Aftermarket Industry Association (AAIA) explained, "Oversight and enforcement was a prerequisite as a discussion item for AAIA to join the CBBB facilitated meetings. In negotiations, it's a package deal, with give-and-take on all sides." Bob Everett, a shop owner from New Jersey, concurred by saying, "From the Alliance of Automotive Service Providers and the National Federation of Independent Business' view, oversight and enforcement is a drop dead issue."Cole had testified that the parties had reached general agreement on a third-party dispute resolution process, with details to be worked out as to how the process would work through a restructured and better-funded NASTF. According to a statement from CARE Legal Counsel Dana Rosenfeld, the parties had agreed to a minimum $2,000 payment to a repair shop as compensation in the event of the untimely provision of information, but an 'escalation' clause for late payment and the amount of enforcement penalties did not find agreement by the time the talks broke down.
Parde shared that CARE was seeking "an independent third-party to oversee and enforce an agreement signed by all the manufacturers." During discussion at the CBBB facilitated meetings, Parde noted that "The parties had agreed that the NASTF would be reconstituted and employ trained service technicians who would act as a "buffer" between technicians and automakers to determine if information was available, and if not, could make a recommendation about whether it should be made available." If either the technician or automaker disagreed with the recommendation, either of them could bring the matter to an independent third-party dispute resolution panel, for a binding decision.
John Cabaniss, a director for the Association of International Automobile Manufacturers (AIAM) said "This issue was basically resolved during the CBBB facilitation meetings." During those meetings there was envisioned a three-level process to answer questions about missing information. All three levels are in response to a subscriber of an OEM Web site who purports not to be able to find needed information.
The first level of response would be the "help" functions (toll-free numbers or e-mail address for help) on OEM Web sites which currently exist today but may be expanded in some cases.
The second level of response would be provided by the subscriber filing a "missing information inquiry" with NASTF, which would be expanded so NASTF staff (with assistance from OEM contacts) would be able to respond to most of these inquiries.
The third and final level of response would be a binding dispute resolution mechanism, which would be operated by a third-party entity. These disputes would be handled only in cases where the first and second levels of response did not resolve the problem."
Reality check The Subcommittee was clearly frustrated over the continued polarization in testimony and lack of a self-determined resolution by the industry. During the hearing Rep. Barton told those present, "I don't believe legislation is the answer to all things. But every once in a while, it is the answer to some things."Rep. Charles Gonzalez (D-TX) concurred, saying that "The solution is to fashion a bill that is so unacceptable to all sides that it will get them back to the table." He added, "If you listen to Rep. Barton, you'll hear that he is fed up."
Rep. Green echoed caution when he said, "Congress doesn't need to do this if the industry will sit down and do it." He then added, "Unless the industry sits down to do it, Congress will. If Congress does it, no side is going to like what is done."
Rep. Bobby Rush (D-IL) warned, "A word to the wise should be sufficient. It's cheaper to keep it, and it would be cheaper for the industry to resolve, than Congress and the Subcommittee."
When closing the hearing, Chairman Cliff Stearns (R-FL) said, "I will recommend to Rep. Barton (Chair of the House Committee on Energy and Commerce) the crafting of a letter to the Federal Trade Commission (FTC) to create an independent board and to create a dispute resolution process," he surprised many who testified, in that his recommendation excluded the desire for industry input and control. The threat that the industry stakeholders might be excluded from input and control shook most people off of their rhetorical perches.
Faced with the potential outcome that control and direction of the industry might slip out of their grasp, Motor Age asked the parties if the these consequences were enough to persuade them to resume talking.
Parde held CARE's line saying, "If H.R. 2048 passes as written we would be happy." He added, "We want the problem solved. We do not care if that is by a non-legislative means or legislation. There is a history with the OE's that leads us to believe that legislation is what it will take to get the job done."
Everett answered, "I would be willing to go back to the table if there was new motivation, for example in the bill's markup, for the OEs. I am not sure that they all see the urgency to get this done, perhaps passing H.R. 2048 in the House would provide it."
"I've got an awful lot of concerns," Everett added. "Who is the FTC going to find to run the board and how is the FTC going to get it fixed? I'm like everyone else, and don't want government in my shop any more than it already is."
Lowe stated, "The concept of a FTC determined governing body and dispute resolution process was new. Not having seen anything yet, all sides would need to discuss this. AAIA had envisioned the governing board being made up of industry stakeholders, with resolution of disputes being made up of non-partisans."
Lowe said that the industry is going to constantly need to determine whether a non-legislative agreement is best or whether the industry would best served by going for enactment of the legislation. "There are trade-offs with each one. While a non-legislative agreement might mean a more effective system for resolving information and tool issues, legislation would probably provide a bigger hammer to make car companies make everything available. We're going to have to review this trade-off as we go ahead."
He added, "While no one wants Congress to write our business plans, we have to ensure the aftermarket is protected, and that consumers continue to know they have a viable choice."
"If the car companies are willing to address our concerns on governance, tools and immobilizer systems, we are open to back to the table. Rep. Barton announced at the hearing that he would like to move the bill. However, the Subcommittee and Rep. Barton will need to review the hearing record and discuss next steps. We will just have to see what happens next," said Lowe. "One possible direction of course is that the FTC could ask the parties back to the table to iron out differences, but that has not happened yet."
NADA Chief Legislative Council Robert Braziel noted that, "In NADA's view, it would be a mistake for anyone other than all the stakeholders in the automotive service industry to determine the future of NASTF."
ASA's Washington representative Robert Redding answered, "If I understand your question correctly, we believe that a contentious, government bureaucratic process will fail due to a burdensome regulatory process, as well as too much litigation." He noted that while such a solution might work as well as EPA has with emissions, the last time Congress mandated a legislative solution, the specter of Fed World ensued.
Cabaniss stated, "We are open to reopening the discussions to try to reach agreement on a non-legislative solution." Redding responded that, "ASA is open to a continued dialogue on the service information issue. Again, the NASTF process is working. If it fails, then legislation should be considered."
Perhaps the industry's leadership will reach out to each other, in a leap of faith, rather than give up industry control of its own governance, regulation and destiny. Compared to the years spent on arguing for and against legislation without resolution, in just two short months of facilitated negotiations, factions of the industry were able to find accord on much of the chasm between them. That in itself speaks volumes for continued and earnest dialogue, let alone maintaining control of the industry by its stakeholders.
