THE fallout from the final rule establishing an Early Warning Reporting System — a result of the TREAD Act enacted in November 2000 — is more serious than first believed.
When it was first handed down in July, most of the discussion in the industry centered on the impact it would have on companies that manufacture truck trailers. Since then, clarification has indicated that truck-equipment companies that produce more than 500 units will be held liable for the more severe reporting standards because they are final-stage manufacturers.
Beyond that, light-duty trailers also will be affected. In response, the National Association of Trailer Manufacturers (NATM) has petitioned the National Highway Traffic Safety Administration (NHTSA) to reconsider its decision.
The TREAD Act — which stands for Transportation Recall Enhancement, Accountability and Documentation — requires vehicle and equipment manufacturers to report periodically to NHTSA a wide variety of information that could indicate the existence of a potential safety defect and to advise NHTSA of foreign safety recalls and other safety campaigns.
The TREAD Act required NHTSA to draw up a final rule that establishes an Early Warning Reporting System. The agency did this in July in the form of a 63-page document.
NHTSA has divided manufacturers into two groups, both of which must file quarterly reports:
Manufacturers of light vehicles, medium-heavy vehicles and all buses, trailers, and motorcycles who produce, import, offer for sale, or sell more than 500 units annually in the United States. They must report on deaths, injuries, property damage, consumer complains, warranty claims information, field reports, and production.
Those who produce, import, or sell fewer than 500 in the US. They must report the same information about incidents involving deaths, but are not required to report any other information.
A belief that it's burdensome
Last year, Utilimaster Corp, a Wakarusa, Indiana-based manufacturer specializing in walk-in delivery vans, straight truck bodies, and parcel-delivery vehicles, submitted several letters of comment to NHTSA. The company was a significant contributor of dissenting viewpoints to the final rule document.
Ernie McDonald, Utilimaster's director of advanced engineering, believes an Early Warning Reporting System is necessary to comply with the TREAD Act, which was passed by Congress. He believes NHTSA has to do something, but that the system NHTSA has devised is burdensome to manufacturers and potentially compromises the confidentiality of customer communications.
Like those in the trailer industry, he says NHTSA has grossly underestimated the number of truck-equipment companies that will be affected by the “large manufacturer” designation, along with the amount of time and money they will have to spend.
Utilimaster, which he says produces “well in excess of 500” units a year, will have to have at least one staff member who is dedicated full-time to collecting data and reporting it. He disagrees with NHTSA in the final rule when it states: “We believe the industry commenters have exaggerated the burdens that the proposed reporting rule would place on them, their subsidiaries, and their affiliates.”
“NHTSA isn't aware of the burden this is going to place on everyone affected,” McDonald says. “From where I sit, I think they've greatly underestimated the burdens that the Early Warning Reporting System is going to place on the industry, especially for smaller companies like Utilimaster.
“The impact of the final rule on an organization like Ford Motor Company is significantly different than the impact it will have on smaller enterprises. The impact of hiring an additional person at Utilimaster is equivalent to hiring a much larger number of employees at Ford.
“Even if our person is somewhat clerical, the director of customer service and I will be overseeing this, so some percentage of our time is required. Collection is required from a number of different people. They're all going to have extra burdens placed on them to record any type of communication they have relative to potential safety related issues and systems.
“And ‘potential safety related issues and systems’ could mean that someone complains about something that doesn't even exist. There is no requirement for any truthfulness in an allegation. A mere complaint by somebody who's upset has to be reported.”
In addition, he says there is no confidentiality protecting the information submitted.
“We have to submit information on fleet communications, and our fleets aren't going to want their communications to become public record,” he says. “So it may put a freeze on communication between us and our customers. As soon as our customers — particularly fleets — understand that the information they provide, even in a single e-mail, is potentially a public document, it may put a stranglehold on communication. And that's not good for anybody. That's not good for the fleets. That's not good for Utilimaster. And that's not good for NHTSA.
“NHTSA is making estimates based on the fact that they see 500 recalls a year by a certain segment of the transportation industry. The reason there are so few is because there is such a large pool of ignorance in the industry. People who should be reporting on a regular basis to NHTSA aren't. It puts the more sophisticated and more conscientious players in the field at a disadvantage, because the regulations continue to get more restrictive and burdensome, and those who are unaware of them continue to be unaware.”
Joe Valdivia, general manager for Royal Truck Body in Paramount, California, says he would prefer to see NHTSA define a “large manufacturer” as one that produces over 10,000 units a year, which would bump his company and many others into the “small manufacturer” category. He also has some concerns about the confidentiality issue.
But he says he is in favor of the final rule, even if that puts him in what he believes would be a 10% minority in the industry.
“I think these reporting requirements are overdue,” he says. “This is going to put management on a stronger awareness of any customer-service problems. With all the pressure to improve the bottom line, some people have been overlooking some key areas.
“The way our industry is moving, we'll see more of these regulations coming in. We need it. I've seen people get a chassis from the manufacturer and torture the frames. I remember seeing people getting little half-ton Toyotas, cutting the chassis in half, and making them one-ton trucks. Rules like this really eliminate some of that.
“Management in many companies will be well-informed and will have a system that will activate some warning when there are spikes of customer-service reports of incidents and unsafe things. A lot of times, that information does not get communicated to upper management. I don't think NHTSA is trying to complicate business. It just doesn't want to have any surprises.”
He says that while the reporting templates might appear vague to many in the industry right now, they won't be after the process kicks into gear next year with the first report due 60 days following the end of the second quarter.
“The more I look at the forms, I don't think it's going to be terrible,” he says. “It's been shown time and time again: As soon as everyone focuses and reads the regulations and tries it and practices it and rehearses it, it will be come natural and much easier. This is nothing compared to the EPA's Title V.”
When the Environmental Protection Agency handed down its Title V regulations in the early 1990s, it required companies to record emissions for everything from a forklift to a torch. Valdivia became the Title V point man for Royal Truck Body.
“I used to be so against it,” he says. “I went to a couple of hearings. I was on the other side, always complaining, ‘Why this? Why that?’ A few years later, I realized it would have been much better for me to take it in the positive side and convince myself it was something necessary and good for the environment, and find ways to efficiently get it done. Get it done right, get it done fast, and move on.
“I've gone to the NTEA meetings on the final rule. I guess I was one of the few guys who was thinking a little differently than everyone else, thinking, ‘Well, it's going to happen. Get used to it. Let's get the association to help us. Why fight it?’
“Do I want this? Do I need it? I don't want to do it, to be honest. But in the long haul, the industry will benefit from it — maybe five years from now.”
Meanwhile, NATM is asking NHTSA to reassign all trailer manufacturers of 26,000-lb-and-under GVWR trailers to the “small manufacturer” reporting category, regardless of the number of trailers the manufacturer produces.
NATM says that based upon member surveys, it has discovered that not only are 58% of its manufacturing members classified as “large manufacturers” — 154 out of 265 respondents — but that 96% of those companies are “small businesses” under the Small Business Administration (SBA) definition. NATM also is convinced that a 26,000-lb GVWR trailer very rarely is involved in an accident resulting in fatality or serious personal injury and even more rarely in an accident attributable to a safety defect in the manufacturer or design of the trailer or a failure or malfunction of the trailer, a trailer system, trailer component, or part.
NATM also has written to the SBA to urge it to participate in the NHTSA rule-making proceeding and advise it of the serious economic impact that the new rule will have on the trailer industry, and in particular, on the small- to medium-size trailer manufacturer.
Although NHTSA estimates that each large manufacturer will have to spend about $225,000 in startup costs and an additional $10,000 a year to comply, Sundowner Trailers owner Jerry Shipman calculates that the rule will require annual compliance costs of $144,000 for his company.
NATM has advised NHTSA that this segment of the small-trailer industry can't afford to comply with the new requirements when they go into effect in April.
“Let's hope they listen,” said Jack Klepinger of Wells Cargo Inc.
NATM executive director Pam O'Toole was encouraged by the 93% response rate to the organization's survey — 265 of 290 members — and says it “was crucial in assisting us to build our case with NHTSA.
“NATM presents a stronger voice when the response from membership is so high,” she said. “It indicates the concern among our members over this rule, and that NATM is a very proactive group.”