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 |