The recent elections caused a major sea change in the way our government will do its job. That is a fact that is indisputable. A directional shift that began occurring in 2006 with the majority change in the U.S. House of Representatives was a significant, protracted event. The 2008 elections furthered the gains and ushered in a near impervious period of control for one party.
The people wanted something different.
That was followed by a few political miscalculations that basically scared the crap out of most voters. In the 2010 elections, the country showed that it really didn't like giving that much power to the government and we are now in a situation where some kind of balance has been achieved.
I remember in December 2006, Ann Wilson, our senior VP of government affairs, telling me: "If you think you don't like government regulations and anti-business legislation now, you haven't seen anything yet." She was right.
I sat for several months shaking my head every time I read the news. It took me a few minutes to remember who OSHA was the first time I saw proposed regulations and enforcement news coming out of that group. I think it was the first time in several years that they had done anything politically visible. Now they were doing a lot.
Shortly after that discussion with Ann, she arranged a meeting for us with a senior staff person from the U.S. House Energy and Commerce Committee. This was one of those "get-acquainted with your new colleagues" type of meetings that happen all the time in Washington. The staff person made a point of telling all of us repeatedly: "Carbon output is going to be the single most significant issue for your industry."
I didn't have much of an idea what he was talking about until one of the more visible senators from a really big state on the West Coast began talking about carbon credits. I had no idea what those were, but she was claiming that it would be a vehicle used to raise obscene amounts of tax revenue to "restructure our new green economy, with a new green industry and new green jobs."
I really had no idea that any economy, industry or job was anything other than green – as in the color of money. I was thinking about economies, industries and jobs in the variety of green applied to our collection of green bills, in various denominations with pictures of former presidents and other famous deceased individuals.
It wasn't long that with lightning speed the buzz all over the country became one of carbon output, credits, trading, restrictions, carbon taxes and something called Cap and Trade. We were all numbed into thinking that there was no way this would negatively affect us, until our legislators started to put together an energy bill that used my least favorite word in its title: comprehensive.
Whenever you hear the word comprehensive used in conjunction with legislation, be afraid. Think of legislation as a form of corporal punishment, like a spanking. Then, think in terms of what would constitute comprehensive spanking. Would that scare you? It is the same thing with comprehensive legislation.
With the turns of events occurring over the past few years: the sinking economy; the full shift to a single majority party in our government; a lot of discussion about the ways that we could alter the way we do business; and several other things, it became a little more than this country could absorb. Significant changes kept coming, and at an accelerated pace.
Without getting into areas that are not directly related to our industry, like health care, banking, credit markets or government ownership of industry, things got pretty hairy, as us old timers like to say.
The truck industry, particularly those who make powertrains and trucks, was under assault from 2000 through 2010 with environmental legislation. The soot and NOx output of heavy trucks was mandated to a reduction of over 90 percent, at a per-vehicle cost of more than $25,000 versus pre-2000 vehicles.
So for that price and the benefits derived, we are now manufacturing 350+ hp truck engines that produce exhaust that is cleaner than the ambient air in many major U.S. cities. I don't disagree that exhaust from trucks looked and smelled really bad every time they pulled away from a dead stop. It really needed to be cleaned up, and with our having the best technical resources in the world, we accomplished that.
At the same time, however, the economy tanked, bank lending dried up, freight slowed down, etc. The result: we now have finally sold as many new trucks as we did in 2006, but it took four years to do it. Point being, regulating something as extensive as truck engine exhaust had a series of unintended consequences.
We are now facing new regulations on mandated carbon output and heavy truck fuel economy. The laws passed a few years ago are now kicking in.
Patterns tend to repeat and we will see a push-back from the new vehicle purchasers on vehicles being developed to meet these new standards. I suppose that is good news for anyone that likes to keep equipment for extended periods of time, particularly the people responsible for the repair of those vehicles.
As we go forward into the next chapter of divided government and look forward to more change, it is important to remember that we are the ones responsible for those people in D.C. that love to micro-manage our industry. They work for us.
We want the environment to be clean and we want to do whatever we can to reduce fuel consumption. It just seems to me that those are issues better solved by the business people running our various elements of this great industry.
As an avowed free-marketer, I look forward to watching how effectively the next class of elected officials has listened to the voices of the people.
Tim Kraus is Executive Director of the Heavy Duty Manufacturers Association. Prior to joining HDMA, he served as director of sales and marketing at Triseal Corp. The Heavy Duty Manufacturers Association (HDMA) is the heavy duty market segment association of the Motor & Equipment Manufacturers Associations (MEMA). HDMA exclusively represents the interests and serves heavy duty product manufacturers.
