Legislature(2023 - 2024)BARNES 124
04/27/2024 01:00 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| SB127 | |
| HB233 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | SB 127 | TELECONFERENCED | |
| += | HB 233 | TELECONFERENCED | |
HB 233-RATES: MOTOR VEHICLE WARRANTY WORK
2:06:55 PM
CHAIR MCCABE announced that the final order of business would be
HOUSE BILL NO. 233, "An Act relating to rates and time
allowances for motor vehicle warranty work."
CHAIR MCCABE moved to adopt Amendment 1 to HB 233, labeled 33-
LS1042\A.2, Gunther, 4/26/24, which read as follows:
Page 1, lines 11 - 13:
Delete "the rates and time allowances in the
schedule of compensation may not be less than the
rates and time allowances that the new motor vehicle
dealer charges retail customers for similar
nonwarranty service work"
Insert "[THE RATES IN] the schedule of
compensation may not contain
(1) rates [MAY NOT BE] less than the rates
that the new motor vehicle dealer charges retail
customers for similar nonwarranty service work; and
(2) time allowances less than time allowances
provided in independent labor time guides"
REPRESENTATIVE VANCE objected for the purpose of discussion.
CHAIR MCCABE explained that Amendment 1 would synchronize the
rates and time allowances for manufacturers and dealers aligning
them with recognized independent labor time guides. He gave
examples of timelines for actual vehicle labor. He further
noted the legislature's involvement in the issue six years ago
and stated that "maybe it is time to fix this."
2:09:17 PM
REPRESENTATIVE MINA asked how the amendment would change what is
currently in the bill.
CHAIR MCCABE explained that the amendment would establish the
use of a non-partisan guide for the amount of time it takes
technicians to do a job.
2:11:24 PM
REPRESENTATIVE STUTES said she liked the amendment and
recognized that six years ago, it was agreed upon by
manufacturers and dealers that they would address the issue if
the legislature had passed the bill.
2:12:03 PM
REPRESENTATIVE MINA requested an opinion from the bill sponsor
on the amendment.
2:12:29 PM
DAVID GOFF, Staff, Representative Frank Tomaszewski, Alaska
State Legislature, on behalf of Representative Tomaszewski,
prime sponsor of HB 233, addressed Representative Mina and
offered his belief that the amendment was positive. He gave an
example of an independent shop setting its own hours, and with
the proposed amendment, there would be a criteria for setting
hours.
CHAIR MCCABE noted the "fluctuations out there" and that he
sought a way to have more discussion on the issue. He
reiterated that the amendment would require the use of an
outside estimator for the time that work takes. He welcomed
more comments on Amendment 1 from committee members.
2:15:16 PM
REPRESENTATIVE MINA asked the bill sponsor about other states
that have passed the law and whether they required reimbursement
based on independent time guides only.
MR. GOFF replied that he had not done research about a set
criteria, but it was a standard to which he was referred.
2:16:17 PM
CHAIR MCCABE gave an example of independent estimating on a
particular job and quoting the customer. He noted that is
industry practice in many businesses, and estimating is "an
art." He opined it was important to have an independent person
doing the estimating.
2:17:18 PM
REPRESENTATIVE MINA acknowledged that there was frustration with
the manufacturer's time guide testing and inquired about the
success rate with an independent time guide.
CHAIR MCCABE responded that he did not know the answer. He
noted that Mr. Nichols was online and could address the
question.
2:18:18 PM
LESTER NICHOLS, Board Member, Alaska Automobile Dealer's
Association, briefly explained how manufacturers compute job
hours. When it came to the independent labor time guide, he
said he did not have a statistic to clearly answer the inquiry
due to there being a wide variety of skill levels in the
industry. He added that they are looking for time guides that
are achievable and compatible with the skill level of the
technician. He opined that the independent time guides are much
more realistic.
2:21:18 PM
REPRESENTATIVE VANCE removed her objection to the motion to
adopt Amendment 1. There being no further objection, Amendment
1 was adopted.
REPRESENTATIVE VANCE moved to adopt Amendment 2 to HB 233,
labeled 33-LS1042\A.1, Gunther, 4/20/24, which read as follows:
Page 2, following line 4:
Insert a new bill section to read:
"* Sec. 4. AS 45.25.300 is amended to read:
Sec. 45.25.300. Unfair practices. A manufacturer
may not
(1) require, coerce, or attempt to coerce a
new motor vehicle dealer to change the location of the
new motor vehicle dealership or to make any
substantial alterations to the new motor vehicle
dealership premises or facilities if the alterations
would be unreasonable or if there is not expected to
be a sufficient supply of new motor vehicles to
justify the change of location or the alterations
because of market and economic conditions; this
paragraph does not apply to alterations that are
necessary to comply with health or safety laws; in
this paragraph, "substantial alterations" does not
include erecting signs subject to the manufacturer's
intellectual property rights, doing interior painting
that is necessary to keep a new motor vehicle dealer
facility in an attractive condition, or performing
routine maintenance;
(2) require a new motor vehicle dealer to
purchase or include in inventory a predetermined
number or percentage of certified pre-owned motor
vehicles or lease return motor vehicles;
(3) except because of reasons beyond the
manufacturer's control, refuse or fail to deliver or
offer for sale in reasonable quantities to a new motor
vehicle dealer holding a franchise for a line make of
new motor vehicles sold or distributed by the
manufacturer a new motor vehicle, part, or accessory,
if the new motor vehicle, part, or accessory is being
delivered to other new motor vehicle dealers; this
paragraph does not apply to limited edition or limited
release vehicle parts or accessories;
(4) require a new motor vehicle dealer to
purchase unreasonable advertising displays or other
materials or an unreasonable number of signs;
(5) require a new motor vehicle dealer to
order or accept delivery of a new motor vehicle, part,
accessory, piece of equipment, promotional material,
display device, display decoration, or other item that
is not otherwise required by law and that the new
motor vehicle dealer does not voluntarily order; this
paragraph does not apply to safety and emissions
recall campaign parts or to a motor vehicle feature,
part, accessory, or other component required by
federal law, the law of this state, or local law;
(6) coerce, attempt to coerce, or require a
new motor vehicle dealer to
(A) join, contribute money to, or affiliate
with an advertising association; or
(B) participate monetarily in an
advertising campaign; [OR]
(7) increase the price of a new motor
vehicle that the new motor vehicle dealer has ordered
from the manufacturer and for which there exists at
the time of the order a bona fide sale to a retail or
fleet purchaser if the dealer submitted the order to
the manufacturer before the manufacturer provided the
new motor vehicle dealer with an official written
price increase notification; or
(8) recover the manufacturer's costs for
compensating a new motor vehicle dealer for warranty
work by reducing the amount due to or imposing a
separate charge, surcharge, administrative fee, or
other similar cost on the new motor vehicle dealer;
this paragraph does not prohibit a manufacturer from
increasing the price of a new motor vehicle or
changing a schedule of compensation in the ordinary
course of business."
Renumber the following bill section accordingly.
CHAIR MCCABE objected for the purpose of discussion.
REPRESENTATIVE VANCE pointed out the bolded lines on page 2 and
noted that the legislature's first duty is to protect Alaskans,
and that she did not want to see any punitive fees imposed. She
requested that Mr. Goff further explain the impacts.
2:22:42 PM
MR. GOFF noted other states that have put in this addition to
their law because of the rise in prices for that particular
state. Increasing prices or changing schedules in the ordinary
course of business is fine, he said, but not singling out the
state of Alaska for additional charges. Putting this language
in the bill would eliminate that.
2:23:50 PM
CHAIR MCCABE removed his objection.
REPRESENTATIVE SUMNER objected.
A roll call vote was taken. Representatives Mina, C. Johnson,
McKay, Vance, Stutes, and McCabe voted in favor of Amendment 2
to HB 233. Representative Sumner voted against it. Therefore,
Amendment 2 to HB 233 was adopted by a vote of 6-1.
2:25:10 PM
REPRESENTATIVE SUMNER offered his belief that the adopted
Amendment 1 was an improvement but inquired about the selection
process of the independent time guide.
CHAIR MCCABE said he suspected that the manufacturers and
dealers would have to come to an agreement on which time guide
they would use. He noted he could have put a descriptor in the
bill but did not want to make it overly complicated; therefore,
it would be left to the industry to decide.
REPRESENTATIVE SUMNER noted that he had no objections or
concerns for other amendments.
2:26:41 PM
REPRESENTATIVE C. JOHNSON mentioned testimony being one-sided
and that there was not much heard from manufacturers. He added
that he was concerned to not hear both sides of the story and
why the manufacturers have not been more active regarding the
issue.
CHAIR MCCABE explained that there are individuals waiting online
for public testimony and most are manufacturers.
2:27:53 PM
REPRESENTATIVE STUTES reiterated that six years ago, the
manufacturers asked the legislature to get involved.
2:28:34 PM
REPRESENTATIVE SUMNER noted hearing substantial testimony from
manufacturers in the House Labor and Commerce Standing
Committee.
2:28:47 PM
CHAIR MCCABE opened public testimony on HB 233.
2:29:29 PM
ANDREW STRITZ, representing self, testified during the hearing
on HB 233 and spoke to technician retention and how the bill
would help. He noted that technicians come and go, which
affects service advisors and negatively impacts their paychecks
as well. He pointed out that third party contracts use the same
exact labor guides that he would use to approve for repairs.
2:31:42 PM
JADE KINCAIDE, representing self, testified in support of HB 233
and shared that she was new in her career as a technician. She
stressed that the difference between warranty times and third-
party times was discouraging to her, and the difficulty getting
close to the warranty times given by the manufacturer is
physically taxing, she said. She opined that the passage of HB
233 would afford her as a technician to further progress in the
field and have a better quality of life by compensating
technicians fairly.
2:32:50 PM
WILLIAM SIMMONS, representing self, testified in support of HB
233. He said he is a flat rate technician, and he shared how
his hours and pay were calculated. With the manufacture pay
scale, he explained, he hit the times "zero percent" of the
time, but with third party contracts and labor guides he was at
80 to 90 percent. He noted it was taxing on his motivation to
continue in a dealer setting, and he asked for proper
compensation.
2:33:58 PM
PHILIP GINTER, representing self, testified in support of HB
233. He shared that he is a lead technician, and he opined that
the bill would have positive effects on coworkers and customers.
He related that staff did not want to be sent out to
manufacturer training to perform warranty repairs, as they know
they can receive better pay performing the same repairs on
vehicles out of warranty. He emphasized that intensive repairs
should not be rushed to keep up with the cost.
2:35:48 PM
LUCAS KINCAIDE, representing self, testified in support of HB
233. He noted that he is a master technician, and he explained
they have been operating on two sets of rules for too long. The
playing field should be operating fairly and there should be an
agreement that the manufacturer can pay the same as the Alaska
consumer pays, he said. He gave an example of an engine job and
the times allotted by the manufacturer being unrealistic. He
thanked the committee for its time and support.
2:38:17 PM
CARRIGAN GRIGSBY, Executive Vice President, Avis Alaska, offered
an anecdote from a fleet owner and offered his belief that the
bill would help get cars back on the road faster. He gave
examples of labor and hours paid for particular repair jobs and
all the logistics involved in "messing with the operation" and
actual pricing of rental cars.
2:40:36 PM
DAVID BRIGHT, Staff Franchise Attorney, Alliance for Automotive
Innovation, testified in opposition to HB 233 and stated that he
was confident that the guides and the processes work. He said
compromises are drafted to put into Alaska franchise law, to
which he provided examples. He opined that the bill would
require payment for hours that are not worked and require
payment under a flat rate guide. He noted that technicians
would not be getting more compensation, and he asked the
committee to hold the bill.
2:44:16 PM
CHAIR MCCABE highlighted a line from Section 2 of HB 233,
beginning on line 10, and he remarked that it opened the door
for conversation. The language read as follows:
(c) Unless otherwise agreed to by the manufacturer and
the new motor vehicle dealer, the rates and time
allowances in the schedule of compensation may not be
less than the rates and time allowances that the new
motor vehicle dealer charges retail customers for
similar nonwarranty service work.
2:44:49 PM
DAN CARTER, Manager, Labor Time Activity, General Motors,
testified in opposition to HB 233. He offered examples on how
labor times were developed by General Motors as well as the
third-party estimating companies and their impact. He opined
that third party companies do not perform studies to the depth
that manufacturers do, and that they are partisan. The practice
of adding time is driving the industry to expect to bill more
hours to customers than time spent actually repairing the car,
he said. He questioned what the Alaska consumer gets and
whether the "Alaska Automobile Repair Act" was being followed.
2:48:20 PM
REPRESENTATIVE MINA asked for more explanation to Mr. Carter's
statement that allowances were included for real world factors.
MR. CARTER explained the percentages involved in factoring in
variations to repair jobs.
REPRESENTATIVE MINA pointed out that the majority of testimony
expressed concern about factors that are specific to Alaska,
such as the cold weather impact on cars. She asked whether any
of these factors are integrated in Mr. Carter's real-world
factors.
MR. CARTER acknowledged that there are a lot of factors specific
to regions but said there is nothing specific to Alaska.
2:50:12 PM
CHRIS GILKER, Technical Quality Manager, Volkswagen of America,
related that he was a technician for years; therefore, he could
speak to the topic and wished to state for the record that he
rarely lost time performing Volkswagen warranty repairs. He
said he averaged 120 percent efficiency on warranty work, and he
noted the differences in tools used by dealer technicians that
can speed up a repair. He opined that the bottom line is that
the Alaska consumer would be hurt.
2:53:03 PM
REPRESENTATIVE SUMNER asked whether there were franchise fees or
advertising spending requirements. He offered his opinion that
the adopted Amendment 2 may interfere with some of that.
MR. GILKER responded that that was outside his area of
expertise.
CHAIR MCCABE pointed out that Alaska consumers are already being
hurt, as there are dealers closing down rapidly because they
can't keep mechanics or make enough money.
2:54:36 PM
JEFFERY HARBAUGH, Manager, Regional Customer Service Operations,
Toyota Motor Sales, said he worked with Toyota for over 40 years
and was a technician but now oversees warranty administration,
policy, and procedures in addition to other areas. He
recognized that dealers were concerned about the fairness of
warranty reimbursement allowance but said it varies from
manufacturer to manufacturer. He gave examples of Toyota's
practices and said that when "push came to shove" and problems
cannot be addressed at a high level, then he gets involved, and
many times the additional pay that dealerships requested was
approved by Toyota. He further noted his support for dealers
and that they keep customers coming back for service and
generate revenue for the dealerships.
2:58:24 PM
THOMAS LAWSON, Government Affairs Regional Manager, Ford Motor
Company, testified in opposition to HB 233 on behalf of Ford
Motor Company. He noted after-market labor time guides not
being relevant and he underscored that there is nothing in the
bill that would guarantee higher wages for technicians. He gave
Ford-specific examples of labor time guides. He noted he would
take time to review the amendments [adopted] earlier and
reiterated that his company was opposed to HB 233. He thanked
the committee for its time and offered to answer questions.
3:00:56 PM
REPRESENTATIVE STUTES asked whether Ford's time guide was
available publicly.
MR. LAWSON replied that he was not sure the time guide was
public, but he noted a publicly available video that highlighted
how Ford developed its time.
REPRESENTATIVE STUTES asked whether there was a reason the time
guide was not publicly available.
MR. LAWSON said he would follow up.
3:02:02 PM
NICOLINA HERNANDEZ, Regional Director of State Government
Affairs, Toyota Motors North America, echoed former comments
given by other manufacturers and added that there have been deep
dives into data that she could share. The data showed that
dealers are beating their time guides in Alaska and similarly
situated states. Dealers can request adjustments to their time
guides, and she noted that it was not common. She stated she
wished for dealers in Alaska to be successful and that she was
sympathetic to the work force challenges. She recognized that
at the end of the day, there would not be a guarantee that
compensation would be increased due to the change.
3:03:48 PM
REPRESENTATIVE STUTES asked Ms. Hernandez whether the time guide
was publicly available.
MS. HERNANDEZ said she could provide an answer at a later date.
3:04:27 PM
CHAIR MCCABE, after ascertaining no one else wished to testify,
closed public testimony on HB 233, as amended.
CHAIR MCCABE asked for the will of the committee.
3:05:15 PM
REPRESENTATIVE SUMNER wished to hold the bill as he had concerns
surrounding Amendment 2.
3:05:30 PM
CHAIR MCCABE thanked everyone for attending and stressed that a
resolution needed to be found.
[HB 233, as amended, was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 127 Version R 3.13.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 127 Sponsor Statement Version R 3.14.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 127 Sectional Analysis Version R 3.14.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 127 Supporting Document - Frequently Asked Questions 3.21.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 127 Explanation of Changes Version U to R 3.12.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB127. Ver R Fiscal Note DOR. 4.25.24.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 127 Testimony - Received as of 3.14.2024.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 127 |
| SB 124 DOR Presentation to H.TRA - Vehicle Rental Platform 4.27.24.pdf |
HTRA 4/27/2024 1:00:00 PM |
SB 124 |