TIA RELEASES PRELIMINARY DETAILS OF "CHECK-OFF" PROGRAM

BOWIE, MD – (December 8, 2003) The Tire Industry Association (TIA) has released preliminary details of the proposed "check-off" program. A great deal of dialogue has occurred in the past several months regarding the need for a mechanism that generates funds used for programs that support the collective tire industry. However, very little has been reported on how such a program would be established, how it would work, and exactly what the funds would be used for. While some of the details of the program are still in development, following is a preliminary description of how the program TIA endeavors to create will work.

TIA proposes a National Tire Safety, Research and Education Alliance Act to fund a coordinated national program to support consumer education, industry training, research and development. This program would augment existing consumer education and tire industry personnel training programs by the Rubber Manufacturers Association (RMA), the National Highway Traffic Safety Administration (NHTSA) and TIA, and it would fund a variety of other industry training and education programs, including those sponsored by state and regional tire dealer associations. This legislation must be approved by Congress to allow the tire industry to work together without violating antitrust regulations.

The Alliance can only be created through a national referendum of all new tire manufacturers, tire dealers and marketers, and tire importers after the legislation is approved by Congress. The Alliance would only be established if approved by a two-thirds majority. Further, the Alliance could be terminated at any time through an industry referendum. Oversight of the Alliance would fall under the Secretary of Transportation. This would provide some level of government oversight for projects directed to the public good and help to deter challenges asserting that the Act is nothing more than a private sector public relations campaign.

A Board of Directors made up of people representing tire dealers and marketers, importers, tire manufacturers and other tire industry-related professionals would manage the Alliance, with each having one vote. This Board would determine what programs the Alliance will conduct to enhance consumer education, employee safety and training, and further industry research and development. Information discovered in research and development activities would be used in education and training programs for consumers and tire industry personnel. A full-time professional staff would be hired to implement the Board’s directions.

These activities would be financed by a small fee on each new and replacement tire manufactured in or imported into the United States that is used on highway vehicles. One of the staff’s functions would be to collect the fees amounting to about $100 million annually. Assessments for new and replacement tires manufactured domestically would be collected at the first point-of-sale by the Alliance. Assessments for tires produced outside the United States would be collected by Customs Service, under contract to perform this service for the Alliance at the points the tires enter the U.S. The tire manufacturers or import agents would advise the Alliance of the purchasers and the numbers of tires sold to them. At that point, the Alliance would invoice those purchasers quarterly for the assessed fees. This allows dealers to use the "float" to their advantage.

At no point do the funds collected go into government coffers. The National Tire Safety, Research and Education Alliance Act would expressly restrict how assessments may be used. It would limit the level of administrative expenses and prohibit the use of assessments for lobbying purposes or consumer advertising. The Alliance would be responsible for ensuring that all fees are collected and would also be authorized to sue in federal court to compel the payment of the fees. Anyone who fails to pay would be liable for the Alliance’s attorney fees and costs.

Over sixty "check-off" programs are currently operating in U.S. industries. Two were recently subject to challenge. TIA has studied these challenges and believes that as long as the funds are expended on education, training, research and development (the Act specifies funds cannot be used for generic industry advertising), there would be no basis for challenging the National Tire Safety, Research and Education Alliance Act.

TIA believes the tire industry needs a coordinated national program to foster consumer education, industry training, research and development. A national program would reflect positively on the entire industry because it would demonstrate the industry’s commitment to ensuring safe tire use, servicing and furthering product improvement through industry-funded research and development.

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