WASHINGTON—It will be a rollercoaster year for the tire and auto repair industries, full of both opportunities and perils, according to Washington representatives of those industries.
Congress didn't change much in November—though Democrats gained seats in both the House and Senate—but President Barack Obama's victory portends a continuance and even a strengthening of the Obama administration's aggressive regulatory agenda, according to representatives of the Rubber Manufacturers Association (RMA).
“We're expecting a full regulatory agenda on environmental issues,” said Daniel E. Zielinski, RMA senior vice president.
In a president's second term, there are often changes in the administration's approach and tone, according to RMA President Charles A. Cannon.
“Of course there's a continuation of the policies of the first administration, but there are also opportunities for change,” Mr. Cannon told Tire Business in his Washington office. “The emphasis may change, and personalities may change. The congressional response may also be a little different.”
Representatives of the Tire Industry Association (TIA) are spending lots of time on Capitol Hill, making the Bowie, Md.-based trade group's positions known on a number of major issues, according to Roy Littlefield, TIA executive vice president.
“We are expecting a floodgate of regulations,” he said. “The deck is really stacked against us right now. We think we're in a better position than in recent years, insofar as our visibility on the Hill, but we need every ounce of influence we have.”
For the Automotive Service Association (ASA), January to March is the time to watch, especially as the White House makes its choices to head regulatory agencies. “It's a question of who stays and who goes,” said ASA Washington Representative Robert L. Redding.
All three associations were watching the Hill closely to monitor negotiations between the White House and Congress on the so-called “fiscal cliff.” (The interviews for this article were conducted in early December.)
TIA and the ASA were especially concerned about what would happen to individual income tax rates and the estate tax—two tax issues of supreme performance to their members—in the fiscal cliff negotiations.
“Philosophically, the president doesn't agree with us, and I don't think he wants to compromise much on this,” Mr. Littlefield said.
Mr. Obama has a Biblical belief in the redistribution of wealth, and truly believes children shouldn't live off the wealth of their parents, according to Mr. Littlefield. Unfortunately, he tends to lump inheritors of small businesses in with the children of tycoons, he added.
“A small business may be worth $3 million, but it doesn't mean the owners have that kind of cash,” he said.
Even more in 2013 than in past years, the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) are the federal agencies the entire industry is watching.
March 15, 2013—a full three years after NHTSA issued the final rule on tire fuel-efficiency labeling—is the date the agency has set to issue proposed rules on the standard's tire labeling and consumer education provisions, said Tracey Norberg, RMA senior vice president, environmental and resource recovery.
However, Ms. Norberg pointed out, this is the latest of several dates NHTSA has issued for release of those proposals.
When asked if she thought the agency would meet that deadline, she said, “I'm not a betting person.
“They update their regulatory schedule on the Secretary of Transportation's website every month.
“According to the latest schedule, the proposal should have gone to the OMB (Office of Management and Budget) already, and I don't think that happened.”
The tire fuel-efficiency bill remains TIA's top issue, whenever the labeling and consumer education provisions appear, according to Mr. Littlefield.
“This is very frustrating,” he said. “Everyone in the industry wants it to appear, and it could be a very good thing for the industry if it's done right. It's very hard to understand why it's taken so long.”
In particular, the consumer information requirements are far too important to TIA for it to give up on them, he said. TIA has offered itself to NHTSA as the logical third-party organization to handle distribution of point-of sale and other information on fuel efficiency grading.
“We're worried this could end up like Uniform Tire Quality Grading (UTQG),” he said. “You can't come up with a bunch of posters and say you have a consumer information program. It didn't work with UTQG, and it won't work with this.”
The RMA and TIA also are waiting on revised truck tire safety and performance standards from NHTSA, though there is no specific date for that rule to be issued.
“Our issue with the truck tire standard was that tires used at low speeds might be required to pass high-speed tests,” Ms. Norberg said. “They couldn't meet H-speed standards, which they aren't expected to meet anyway.”
NHTSA oversees many issues of vital interest to the ASA, from certification of replacement auto parts to mandates on periodic state vehicle safety inspections, according to Mr. Redding. But the association's relationship with the agency has been very disappointing, he said.
“For 20 years, we've asked NHTSA to define parts certification. What is certification? Are the insurance companies getting together to set standards? What about collision parts—what does certification mean for them? And what about mechanical parts?”
The greatest disappointment for the ASA came in the fall of 2012, when NHTSA issued a consumer advisory about counterfeit airbags. The advisory said essentially that motorists should trust only auto dealers and their service departments to replace airbags, which the entire aftermarket found insulting in the extreme, Mr. Redding said.
“We got the release on counterfeit airbags after everybody else had it,” said Mr. Redding, who added that the ASA was approached on the issue only after the fact, by a public relations firm—not NHTSA. “They presented the issue as 'Good vs. Evil,' and that's no way to do business.”
Early in 2013, the industry will watch for the Maximum Achievable Control Technology rule on industrial boilers to come down from the EPA, according to Ms. Norberg.
The boiler/MACT standard could prove crucial to the future of tire-derived fuel (TDF), she said. A boiler standard issued in early 2012 stated that scrap tires collected under accredited state or industry programs were OK to use as fuel. However, the rule was reopened, and a redefinition of TDF as a solid waste would price the material out of the fuel market, because of the extra controls necessary to burn it.
At the beginning of 2012, the idea of legislating proper tire repair had tire manufacturers and tire dealers at each other's throats.
Now, as 2013 begins, the RMA and TIA have created a mutually agreed-upon tire repair bill that has drawn both organizations closer together and made them optimistic about future collaborations.
“We have new language that we will introduce in Maryland as a model bill,” Mr. Littlefield said. That introduction should happen soon after the Maryland legislature goes into session in January.
Unlike the bill the RMA introduced in New York last year—which set forth a step-by-step procedure for proper tire repair—the new model legislation only directs tire repairers to meet a few common-sense requirements.
The RMA also plans to reintroduce the rewritten tire repair bill in New York, according to Messrs. Cannon and Zielinski.
Next up is a model bill on used tires, an RMA-backed version of which was introduced in Florida last year.
The RMA hopes to reintroduce a bill to keep unsafe used tires off the road in Florida and two other states this year, Messrs. Cannon and Zielinski said. However, the association is in ongoing discussions on this issue with Mr. Littlefield and TIA President Randall Groh to create a bill that both organizations can support.
“Our goal is to find common ground,” Mr. Zielinski said. “We won't agree 100 percent on every issue, but we've always agreed on most issues. We have a very good relationship with TIA executives and staff.”
Mr. Littlefield said he is encouraged by the discussions with the RMA, noting: “We take our work with the RMA very seriously, and we want to be united on these issues.”
Just as the two associations are working together to create legislation on tire repair and used tires, they are working together to fight state bills that would force the removal of tires from the road and from dealer showrooms on the grounds of their age.
Working with the Chesapeake Automotive Business Association early in 2012, the RMA and TIA beat back a bill in the Maryland legislature that would have required tire dealers and manufacturers to inform consumers of the age of tires they sold in the state.
While tire aging legislation remains a problem, it seems to be one that is dissipating to some extent, Mr. Cannon said.
“The volume of tire age legislation peaked in 2009,” he said. “In 2012, there was one bill. In 2011, there were bills in New York and Florida, neither of which advanced.”
The re-election of Mr. Obama means the provisions of the Affordable Care Act passed in March 2010 will be going into effect this year and next. This prospect makes the members of TIA and the ASA nervous, according to Messrs. Littlefield and Redding.
“There are 18 tax increases in Obamacare,” Mr. Littlefield said. “Most people don't know what's coming.”
To make the provisions of the health care law as friendly as possible to TIA members, the association is working on a program to give them a choice of health care options, according to the regulations of whatever state they live in.
“We'll give them four or five major medical plans in each state,” Mr. Littlefield said. “People who have our insurance will have our Internet map. They can click on the states they live in, and the options will come up.”
TIA will introduce this program early in 2013, he added.
To reach this reporter: [email protected]; 202-662-7211.