HAS YOUR COMPANY ever failed to satisfy a customer?
If you manufacture trailers, have you had any warranty problems? Any customer complaints?
What about you, Mr Truck Equipment Distributor? Have any of the trucks assembled in your shop caused injuries? Damaged property? Have you ever been sued?
Welcome to The TREAD Act.
Beginning April Fools' Day, the National Highway Traffic Safety Administration (NHTSA) will expect to hear from you. If you meet NHTSA criteria, you will need to let the agency know how your products have failed and how you have failed your customers.
And you will have to pay for the privilege of doing so.
Some estimate that each large manufacturer in our industry (anyone manufacturing at least 500 trailers or equipping 500 trucks per year) will spend an average of $225,000 setting up the electronic reporting system that will be required to keep NHTSA informed of the company's product flaws and customer distress. Part of this expense will involve gathering data from three years of records (April 1, 2000-March 31, 2003) and getting these records into an electronic format that NHTSA can access easily.
After the initial setup costs, these companies will need to file quarterly reports so that the database of flaws in commercial trucks and trailers can be kept fresh. According to the National Association of Trailer Manufacturers (NATM), this will cost large manufacturers approximately $145,000 per year.
We doubt that customers will want to be charged more for truck bodies and trailers to pay for this system. From where, we ask rhetorically, will the money come?
It's no wonder that The TREAD Act has brought industry trade associations together like no other issue in recent memory. From MEMA to SEMA, trade associations provided the agency with input designed to help NHTSA draw up a final rule that manufacturers would not consider inordinately burdensome.
Some may question why any sort of reporting system is needed. But when Congress passed The TREAD Act in response to the Ford-Firestone fiasco, NHTSA had to develop an early-warning system to carry out the congressional mandate.
NHTSA published the final rule last July, and the results did not bode well to those who had objected to the expense and/or the intrusiveness of the reporting system. The agency had decided to include our industry's custom-made trucks and trailers in regulations initially intended to identify safety defects in mass-manufactured automotive products.
In August, NATM responded with a petition asking for relief from the rule. Meanwhile, NTEA and the Recreation Vehicle Industry Association teamed up to file another petition December 5 in an effort to convince NHTSA to raise the threshold from 500 to 2,500 per model or 5,000 total vehicles, and to extend the effective date of the regulation by six months.
Complying with The TREAD Act will not be easy, according to Erika Jones, a partner in the law firm of Mayer, Brown, Rowe, and Maw in Washington DC and a speaker at this year's NTEA convention. “It's going to require a lot of new ways of coding warranty claims, customer complaints, property-damage claims, and lawsuits — coding them, capturing them, formatting them, then sending them electronically to the government every quarter. This is requiring a lot of changes in the way records are retained and organized in the industry.”
Although the final rule has been published and the effective date is approaching, the struggle for relief continues. NATM has turned its attention to the source of The TREAD Act — Congress.
According to NATM, 154 of its members are considered “large” manufacturers under The TREAD Act and subject to the more demanding reporting requirements. President Norm Helmke has sent letters to NATM members large and small urging them to write letters to their senators and representatives.
NATM already has appealed to the Office of Management & Budget and the Small Business Administration in an effort to get the rule modified. The association is offering a sample letter and additional information for those who contact NATM headquarters at (785) 272-4433.
NATM, NTEA, and TTMA have each scheduled workshops that will explain The TREAD Act and what companies must do to comply. The workshops will be held during the associations' conventions in February, March, and April, respectively.
We commend the industry for doing what it can to prevent what we consider a regulation that does little to promote safer commercial trucks and trailers. But even while the letter-writing campaign continues, it probably would not be a bad idea to start setting aside some money for computer systems and accounting clerks — money that could otherwise be spent designing and producing safe vehicles.