Together We Can Strengthen the Industry Through a Year of Disruption and Change
Tuesday, July 07, 2020
By Ann Wilson, senior vice president of Government Affairs, Motor & Equipment Manufacturers Association (MEMA)
As the industry prepares for AAPEX, we are facing disruption and change in virtually every aspect of public policy. From state governments confronting significant budget deficits and back to business directives to new immigration orders that could restructure how the industry hires talented individuals. The issues confronting the aftermarket will shape the industry for decades to come.
2020 will always be remembered as the time everyone in this country faced a crisis unlike any we have seen before. Yet the industry has persevered navigating emergency closure orders, disruptions in Mexican operations, and concerns for the health and well-being of employees and entire communities.
At the same time, we have joined with the industry to examine our role in expanding social justice for all Americans. Our colleagues, executives and companies continue to foster open dialogue to decide on what we can do to address the racial inequities in our country. Our emphasis is on action – both personal and collective and it will remain so.
This dialogue, communication and action also are key to the aftermarket’s future. For me, AAPEX has always served as the venue where the entire aftermarket comes together to discuss, disagree and deliberate. But we can’t wait for AAPEX to act! Whether it is by Zoom, Teams, or in person, the opportunity to share information and best practices becomes even more important, and I urge you to work collaboratively and individually to strengthen the aftermarket. Since the public policy issues facing the industry will not wait for November, in the intervening months our mission must be for direct action and engagement.
So what are the critical aftermarket issues?
Data Access is a key issue to the aftermarket’s continued success. The Automotive Aftermarket Suppliers Association (AASA) and the Auto Care Association continue to work closely together to gain support on Capitol Hill and address this important issue. This united front allows the aftermarket to speak with one voice and will be even more important as we address the impact of new technologies on the aftermarket and motorists. But the battle on Capitol Hill will be tough and the entire aftermarket must be involved. I encourage you to work with AASA and the Auto Care Association and sign the petition to demand Congress join in our fight for data access. We need all our voices heard.
Public policy is often about a good defense. By the end of September, Congress must vote to reauthorize funding for our nation’s transportation system. It is critical that Congress consider a number of issues during the reauthorization process, but it is also necessary to stay attuned to any proposals that might limit the aftermarket’s ability to compete.
Liquidity and incentives have played a major role in all our discussions this spring. Although the aftermarket was, in large part, able to stay open during the period of business closures, no operation has come through this crisis unscathed. MEMA played a major role in the creation of the Main Street Lending program and is pleased to see the Federal Reserve open the funding for businesses throughout the United States. In addition, we are working with Congress to create an incentive program to foster the re-shoring of manufacturing into the United States. But liquidity for all businesses will remain a critical issue as we move through 2020 and into 2021.
Trade and particularly the new trade agreement between the U.S., Mexico, and Canada (USMCA) has caused significant concerns in the aftermarket. But with USMCA going into effect on July 1, 2020, the aftermarket can now breathe a sigh of relief as it specifically defines “aftermarket part” as “a good that is not for use as original equipment in the production of passenger vehicles, light trucks or heavy trucks …”. We interpret this definition to also include “service part” as that term is used in the industry. The aftermarket must comply with USMCA requirements, but the provisions for aftermarket parts are less restrictive than for the parts used in the production of original equipment. This will make the transition to USMCA more seamless and less costly for the industry.
Trade policy continues to be political and problematic. The United States continues to struggle to create a successful dialogue with our largest trading partner – China. While we continue to focus on improvements on IP policies that will protect the industry’s commercial investments, tariffs remain in place on most goods and virtually all aftermarket parts imported from China. Ultimately these tariffs are an increased burden on U.S. businesses and consumers. We do not foresee any change in these policies before the election and perhaps even into 2021.
Yet, trade policy concerns are not limited to China. President Trump is moving closer to imposing tariffs on aluminum imported from Canada. The impact of these tariffs will be felt by all manufacturers at a time when new costs are impossible to absorb. With the advent of USMCA, we are watching this debate closely and have urged the Trump administration to not impose additional tariffs.
State governments will struggle in the coming year to balance budgets and provide critical services to their citizens. Cuts will probably appear in a wide range of areas including infrastructure, education, and workforce programs. The aftermarket needs to pay attention to the issues and be willing and able to identify how spending cuts will impact operations in any given state.
Finally, all eyes are on the election in November. The United States Senate is of particular interest with Republicans defending 23 Senate seats and Democrats defending 12 seats. But the pressure on the Republican party is even greater with 26 GOP House members retiring along with 4 GOP Senators. Make no mistake about it – the 2020 election will set the agenda for our industry for the next four years, as well as decades to come.
This is your time to reach out to your elected officials. We might not hold our traditional Washington fly-ins in 2020, but your elected officials will be happy to come to your facilities and hold Zoom calls with your workers. MEMA will be happy to assist you in scheduling these virtual or in-person visits. It is the time to open and continue the dialogue on issues of greatest importance to your business and your community.
The partnership and drive of the aftermarket have helped the entire industry weather the last few months. We must continue and expand our conversations to strengthen the industry for 2020 and beyond, and this includes being at AAPEX 2020 in November, where many of these issues will take center stage.
I look forward to seeing you there!