Trade groups prove they're a necessity

CUYAHOGA FALLS, Ohio — Phones are ringing, emails are filling inboxes and websites are being constantly updated. Amid the pandemic, trade associations are being put to the test of how relevant — and necessary — they are in the tire and automotive business world.

On days when new federal funding programs opened to help small businesses affected by the pandemic, "we would get bombarded," Roy Littlefield, CEO of the Tire Industry Association (TIA), said.

"When the small business loans became available, and it was a rough rollout, we were overwhelmed by questions, concerns, things like that.

"And we still get questions on the five different laws that Congress has passed and how that affects them. And I'm sure we'll get another round when the new (funding) bill comes out," he said.

"In the last month or so I've never seen the amount of contact we have had with our members in one crisis after another, trying to work with them and help them and make sure they have the information they need," said Aaron Lowe, senior vice president, regulatory and government affairs for the Auto Care Association (ACA).

"It's been crazy. … It's been a daunting task the last several weeks."

ACA President and CEO Bill Hanvey added that addressing members' concerns has bolstered the perceived importance of trade associations.

"We have heard that time and time again from people that have reached out to us to say 'Thank goodness you're around. Thank goodness you have our back.'"

"Working together, exchanging information and sharing experiences — especially in challenging times — is a major part of what belonging to an association like TIA is all about," Mr. Littlefield said.

"We have worked tirelessly to understand, explain and support members. A large number of members have turned to us with questions, concerns and requests. We have expanded our social media outreach, increased the number of email newsletters, developed a unique resource page on our website, and answered every email sent to us and returned every telephone call," he said.

"We are appearing on industry webinars, working with the industry trade press and working with the state and regional tire dealer associations to share important information to help this segment of the industry survive the pandemic."

Meanwhile, the Automotive Service Association (ASA) said it has been disseminating information relevant for businesses during the pandemic, providing advocacy education and offering suggestions for best practices.

"We have been providing Facebook videos, updates, 'calls to action,' etc. along with some business tips on reducing costs," ASA President and Executive Director Ray Fisher said.

He said there are four overriding concerns he has heard from his membership:

• Maintaining employee staffing and the availability to keep them busy;
• The length of time businesses will be shut down;
• The impact the pandemic will have on consumer confidence for the coming months; and
• A potential relapse of the pandemic.

"Mainly what we're hearing is there are a lot of small businesses with great concerns about how to keep the doors open, how to keep their business. They've really been challenged," Mr. Littlefield said, adding, "Most of the dealers that have called have expressed great concern about the future of small business and the future of their business. So they're doing everything they can to try to make it work but there's a lot of concern out there."

For TIA, calls and emails from the membership surge whenever a new federal program or law is issued.

"Some are calling just because they're struggling with sales, what to do with their employees, how can they keep the payroll. It depends on the situation and the day. We're hearing from people every day," he said.

"If we get 10 emails a day or 150, we're trying to get back to everybody that day. If we get eight phone calls or 80 phone calls a day, we're trying to get back to those people every day. ... We encourage our members: If you have questions or concerns, call us, email us. We'll get back to you."

Business impact

TIA's Mr. Littlefield said that based on anecdotal information from talking with members, the retail tire business seems to be down 30-70%, depending on the region of the country. Commercial tire business seems to be down roughly 3-5%, buoyed by continued commercial delivery business.

"We did a sampling this past week and 31% of the surveys reflected business being down 25% or more compared to 2019, with some saying as high as 45-50%," ASA's Mr. Fisher said.

"On the flip side, 14.7% said that they are about the same with another 18.2% saying that they are doing better than last year. I think though that when you are talking about having 30-plus states that have been locked down for a month or so, the overall impact will be a decrease in retail opportunities."

"Everyone has been affected by the pandemic, whether you're a tier one supplier, whether you're an aftermarket-only supplier or manufacturer, retailer, distributor, shop, DIY, regardless," Mr. Hanvey said. "Everybody within the supply chain has been affected."

He estimated that automotive retail sales are down 60-70% with vehicle miles driven down 65%. "Everyone has been feeling the pain."

Government aid

"When the federal government came out with the $600 addition on the federal unemployment, in addition to the state unemployment, we had a lot of dealers who expressed a lot of concerns that they were trying to protect their employees and they were trying to stay open and (their employees) could go home and make more money than they were making working," Mr. Littlefield said.

"So they thought that was a great concern for the morale of the dealers. It goes both ways. Some are saying if we didn't get this money, like on this last round, we wouldn't have survived."

Mr. Littlefield said many TIA members applied for small business loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

He said a majority of members that contacted TIA said they were able to get the loans before money ran out, however the application process was daunting.

"It sounded like their were frustrated early and grateful later," he said.

Likewise, many ACA members applied for CARES funding before the allotted funding ran out. "It was very popular for our members to help keep payroll going," Mr. Lowe said.

"I think for the most part that the PPP (Paycheck Protection Program) has gone well as far as the application process is concerned," Mr. Fisher said.

"I believe the biggest issue is the lack of funding or in some instances, the unwillingness of a larger lender to really engage. About 39% of those filing for PPP were approved, 11% were also funded, 40% were waiting to hear. With the EIDL (Economic Injury Disaster Loan), only 8% had been approved and very limited funding to date."

ACA's Mr. Lowe noted that member businesses with more than 500 employees don't qualify for federal funding.

"We've been pushing really hard to find assistance for them as well because they're kind of the middle child in all this and are not able to get the funding in the Paycheck Protection Program, but are struggling to stay afloat."

The trade associations touted their lobbying efforts to assist businesses, including promoting a country-wide consensus that automotive repair businesses and their suppliers are considered "essential" and can continue operating under state stay-at-home orders.

"The first several weeks especially were a massive effort to make sure that we could keep the industry open during this crisis," said ACA's Mr. Lowe. "And I think it paid off. Nearly every government in the nation did find that repair shops and the supply chain were essential. But it took quite an effort.

"Also working on the aid packages, making sure they were included and making sure our members knew enough about it to be able to apply for it. So we did a lot of webinars for members and for their customers to try to make sure they understood what was available for them for financial aid," he said.

"We formed coalitions. We have a coalition of the automotive aftermarket, we have a coalition of the state associations in the tire industry, we have several coalitions that we're working with," Mr. Littlefield said.

He noted that with most Congressional offices closed, the association has to adjust its lobbying efforts.

"We're working through coalitions and we're working through letters because it's pretty hard to do anything else right now. ... So we're doing it through these coalitions, trying to speak in one voice to reach as many legislators as we can. So we're active, but it's a different kind of active for us."

Expectations

There is a consensus among the associations' leadership that once the state stay-at-home orders are lifted, consumers will be cautious about spending disposable income.

Mr. Lowe expects consumers will refrain from buying new cars.

"They're going to be cash-strapped and want to keep their cars that they have on the road."

"I think everything is going to go slow — kind of like walking on a lake that iced over during the winter and is beginning to thaw," Mr. Fisher said.

"It will take awhile for consumers to regain confidence away from the fears. People will be taking precautions on disposable income for quite awhile just in case another bout or two occurs, like some say there is potential for. Needed repairs will remain at the forefront, and I think 'recommended repairs/services' will potentially be procrastinated on."

"I think because of the economic situation, people will hold on to cars longer," Mr. Littlefield said. "We're already holding on to cars for 12 years (on average), longer than any point in history, and I think that will extend. That typically is good for the aftermarket for the business.

"It also presents a lot of problems when people hold on to cars longer and they're holding on to money, because you're going to have a lot of vehicles on the road that might not be as safe. And people might not do the repairs that are really necessary."

Advice to members

"I believe we have created a new expectation of service level, especially pick-up and delivery, and I think that many of these consumer conveniences will become the 'expectation' and not the 'extra,'" ASA's Mr. Fisher predicted for when the economy gets back up and running.

"We're going to need to listen more and respond with empathy of 'how can we help you?' and not just give a list of required service or maintenance.

"Lastly, don't give up — seek other banks, keep hounding your bank, whatever it takes to get the PPP. Keep checking on the EIDL, now is not the time to have ego — nothing you did caused this and everyone is in a similar situation — go after the assistance and know that ASA will be here for you," he said.

ACA urged members to continue maintaining customer relationships and communication.

"The thing we really want to emphasize is good communication really makes the pill go down a lot smoother," Mr. Hanvey said. "That's something we're trying to practice as an association. It's a very fluid situation and it's very important for people to understand what we know at the current moment even though that may change. … It's so important for our entire industry to maintain those close customer contacts which really what makes our industry great."

Mr. Lowe also stressed the importance of businesses developing relationships with their government representatives so when a crisis occurs, they already have a connection.

"The one lesson I hope a lot of companies take away from this in the future is to really develop that relationship with elected officials because they will pay off when you need them," he said.