On Monday, Senate Republicans unveiled their COVID-19 relief bill. If adopted, the bill will cost taxpayers $1 trillion, which is far less than the $3 trillion HEROES Act the Democratic House passed in May. The Republican Senate bill will include business liability protections, direct payments of $1,200 to individuals, new Paycheck Protection Program funds, and federal unemployment payments of $200 per week. It is worth noting that the Paycheck Protection Program provisions will only allow businesses with fewer than 300 employees that have seen revenues fall by more than 50% to apply for a second round of aid. The Republican Senate and Democratic House will only have until the end of next week to try and hammer out a bill prior to the Senate’s August recess.
The inspector general of the Environmental Protection Agency (EPA) will be reviewing the agency’s rollback of federal auto emissions standards. The inspector general will determine whether the EPA followed federal regulatory requirements when the EPA along with the National Highway Traffic Safety Administration revised auto emissions standards by only requiring 1.5% annual increases in fuel efficiency through 2026, which is a dramatic departure from the Obama administration’s rules requiring 5% annual improvements through 2025. The inspector general’s review comes after Ranking Member of the U.S. Senate Committee on Environment and Public Works Tom Carper (D-DE) called for the emission rollback to be reviewed.
ARA is pleased to announce the nomination of professional automotive recycler Nick Daurio of Daurio Auto Truck Inc. in Pueblo, Colorado to ARA’s Executive Committee. Nick will serve as the Executive Committee’s Secretary for 2020-2021. In the press release announcing Nick’s nomination, ARA’s Executive Director Sandy Blalock stated that “Nick like many of our members literally grew up working in his multi-generational family business… and his insights from many years of experience working in our industry will be an asset to the leadership and members of ARA.” For the full press release please click here.
ARA’s Board of Directors recently adopted an update to the association’s Strategic Plan, which will represent ARA’s current and future work. ARA's Strategic Plan is grounded in the Association's mission to advance the automotive recycling industry and promote its beneficial effects on society. The Strategic Plan identifies four strategic initiatives that are the means through which ARA plans to translate its vision into practice.
The strategic initiatives focus on branding, non-dues revenue, government advocacy, and education/certification/compliance. 2020 has been a game changer,” said ARA President, Scott Robertson. “During these challenging times and given the unprecedented impact that a global pandemic is having on all businesses and industries, the direction outlined in this Strategic Plan will help ARA continue to move forward. A lot of planning and strategic thought went into this document, designed to promote the professional automotive recyclers and their businesses for many years to come.” For the full press release please click here.
Last week at the Collision Industry Conference, a hot topic of conversation was that CARFAX has been getting vehicle repair estimate data. As of now, there is a leakage of vehicle repair estimate data somewhere in the supply chain. CCC, Mitchell, and PartsTrader have all come out and stated that they are not the source of the leak. The Society of Collision Repair Specialists is trying to find out the source of the leak.
On Monday, the Senate returned from recess and the GOP is rushing to put together and pass a COVID-19 relief bill prior to the August recess. The Senate’s proposal is estimated to cost around $1.3 trillion, which is substantially less than the $3 trillion HEROES ACT passed by the Democratic house in May. However, the Republican party is divided on what should be included in a new relief bill. President Trump and Republican leadership are at odds on issues such as a payroll tax cut and funding for COVID-19 testing but are united on business liability protections and a second round of stimulus checks.
COVID-19 Relief Programs:
The Senate is considering legislation that would grant Paycheck Protection Program (PPP) borrowers automatic forgiveness if they received less than $150,000 from the Small Business Administration (SBA) program. Senate Bill S.4117 has bipartisan support in the Senate and would give borrowers the ability to have their PPP loans automatically forgiven (if they received less than $150,000) so long as the borrower submits a one-page form affirming that they complied with SBA loan requirements. The proposal gained further support earlier this week when Treasury Secretary Mnuchin told members of Congress that they should consider passing legislation that would automatically forgive many PPP loans. Furthermore, the American Bankers Association, which represents the U.S. Banking industry, has been aggressively lobbying congress to support the bill’s passage. While the legislation may not pass as a stand-alone bill, it is likely that S.4117’s provisions will be a part of a larger COVID-19 relief bill.
Earlier this month, the Department of Labor’s Occupational Safety and Health Administration (OSHA) supplemented its prior COVID-19 guidance with an additional FAQ. While OSHA has not yet published a regulation that would mandate workplace protections, this FAQ serves as a good resource for businesses to learn about how to best protect employees and customers.
According to the Certified Collateral Corporation (CCC), repairable vehicle appraisals are down 25.7% of June 2019 numbers. While these numbers show a positive increase from May’s numbers, it is unknown as to whether the spike in COVID-19 cases in July will cause Americans to once again reduce the amount of vehicle traffic.
Last week, ARA participated in the Suppliers Partnership for the Environment 3rd Quarter Meeting. Suppliers Partnership is a forum for those involved in the automotive value chain to collaborate on cutting edge industry issues such as sustainability and electric vehicle batteries.
￼Paycheck Protection Program:
Prior to leaving town for the July 4th holiday, the House and Senate passed a bill that allows the Small Business Administration (SBA) to continue issuing Paycheck Protection Program (PPP) loans until August 8th. The bill was signed into law by President Trump last week. Prior to the enactment of the bill, the PPP was set to stop issuing loans on June 30th. However, due to the ongoing COVID-19 pandemic and the fact that $130 billion allocated for the PPP remained unspent, Congress decided to allow the SBA to continue issuing loans. To apply for a PPP loan click here.
The Senate will be in recess until July 20th, which means a new COVID-19 relief bill will not be enacted until late July or early August. This means the Senate will only have three weeks to pass a bill prior to the August recess. The House of Representatives is still in session and will be working on appropriations bills.
If your business is still looking for COVID-19 relief click here for a list of state and local loans available to businesses. In addition, ARA’s website contains a spreadsheet containing COVID-19 Relief Resources for Small and Medium Businesses.
On July 1, the Consumer Access to Repair (CAR) Coalition formally launched. The coalition, whose members include LKQ Corp., Allstate, Certified Automotive Parts Association, and the Automotive Body Parts Association, has called on Congress to explore expanded consumer choice over personal vehicle data. The CAR Coalition urged members of Congress to oppose automakers’ call to impose a five-year federal preemption on any state taking action on the sharing of telematics data. By opposing automakers’ request, Congress would be supporting consumer choice and would allow consumers to have greater access to less expensive replacement vehicle parts.
According to data released by INRIX, vehicle traffic in the United States has rebounded to at least 90% of pre-pandemic levels. It is also possible that vehicle traffic will continue to increase to levels higher than before the pandemic due to people staying away from public transportation.
U.S. light vehicle sales declined by 33.8% in Q2 2020 from Q2 2019. However, used car sales have jumped to 17% above pre-pandemic forecasts in June. Observers have attributed the spike in used car sales on a shortage of new vehicle inventory, favorable interest rates, and the overall cost savings associated with buying a used vehicle.
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If you have an article or piece of news that you think is important to automotive recyclers send an email to Emil@a-r-a.org.
FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD
COVID-19 Relief Programs:
Paycheck Protection Program (PPP) and COVID-19 Relief:
Treasury Secretary Steve Mnuchin told CNBC last week that “shutting down the economy for a second time to combat the spread of COVID-19 isn’t a viable option.” However, as states and localities begin to reopen, some governments are hitting the pause button on reopening due to spikes in COVID-19 cases. For example, Governors in Oregon, Utah, and Tennessee are pausing reopening plans due to there being sharp spikes in COVID-19 cases. Businesses will have to remain cognizant of any local or state changes to their reopening schedules.
COVID-19 Relief Programs:
Last week, the Federal Reserve released its semi-annual report to Congress, which painted an alarming picture of small business health. The report found that a majority of small businesses are not expecting to return to normal operations within the next six months and that three-fourths of small businesses with employees had applied for the Paycheck Protection Program (PPP). The Federal Reserve also explained that while the PPP program proved to be extremely valuable, some industries will continue to need federal aid even after the PPP program expires. This likely increases the chances that there will be more small business aid in the next round of COVID-19 legislation from Congress.
The Small Business Administration (SBA) has reopened the Economic Injury Disaster Loan (EIDL) grant and loan program. Businesses who have not already applied can apply for an EIDL grant and receive $1,000 per-employee (up to $10,000). Click here for the application page on the SBA website.
There are still funds available in the Paycheck Protection Program (PPP). If you have not already applied for a PPP loan, you can still apply for a loan until June 30, 2020. To find an eligible lender click here. Remember, if you are applying for a PPP loan, you will be more likely to receive funds if you apply with a regional or local bank.
Last week, the D.C. Circuit Court of Appeals ruled against the AFL-CIO, which filed a lawsuit against the Trump administration and claimed that the Department of Labor’s Occupational Safety and Health Administration (OSHA) must issue mandatory COVID-19 workplace safety rules. As of now, OSHA has not issued mandatory COVID-19 specific workplace protections and that the guidance OSHA has published thus far has merely been voluntary and unenforceable. This ruling by the D.C. Circuit Court of Appeals is consistent with past holdings that grant federal executive agencies broad discretion and deference when considering enacting or not enacting regulations.
U.S. automobile shredders are struggling due to lack of feedstock availability and low prices for shredded scrap metal. Due to COVID-19 shelter-in-place orders, the number of vehicles on the roads in April decreased by almost 40% from April of last year. The substantial reduction in vehicle traffic due to COVID-19 has caused some shredders to operate on a limited basis because there is an inadequate supply of vehicles. According to a survey conducted by Argus Media, “inbound scrap volumes now are barely enough to cover April orders.” While April was the worst month for automobile shredders, prices for scrap metal increased slightly in May due to increased demand in part from the reopening of manufacturing by automakers.
FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD
Yesterday, the Federal Reserve projected that the U.S. economy will shrink by 6.5 percent this year and that unemployment will only drop to 9.3 percent. This is despite a positive May jobs report from the Bureau of Labor Statistics that found the U.S. economy added 2.5 million jobs last month.
The Federal Reserve made sweeping changes to its Main Street Lending Program. Due to fears of there being little demand for the $600 billion loan program meant to provide support to small and medium-sized businesses negatively affected by the COVID-19 pandemic. As part of the changes, the new minimum amount companies can borrow is $250,000 down from $500,000. The Fed also extended the repayment period from four to five years and will increase the repayment period to two years. These changes are designed to broaden the appeal of the program, which has received little in the way of excitement or interest from businesses.
Recent data from the Department of Transportation shows that car traffic dropped by nearly 40 percent this past April from April 2019 as a result of stay-at-home orders due to COVID-19.
The Insurance Institute for Highway Safety found that only about 34 percent of collisions could be avoided through the use of self-driving cars.
￼COVID-19 Relief Programs:
Last Friday, President Trump signed a bipartisan bill to reform the Paycheck Protection Program (PPP). On Monday, the heads of both the Small Business Administration and the U.S. Department of Treasury issued a joint statement explaining that they would provide new rules and guidance relating to PPP loans. In addition to new rules and guidance, there will be a new modified borrower application form and a modified loan forgiveness application. While these rules and documents have not yet been published, the joint statement outlines some of the important changes to be made:
1) The covered period for loan forgiveness will be extended from eight weeks after the date of loan disbursement to 24 weeks after the date of disbursement. Borrowers who have already received PPP loans will retain the option to use an eight-week covered period.
2) The requirements that 75 percent of a borrower’s loan proceeds must be used for payroll has been reduced to 60 percent. Additionally, if a borrower uses less than 60 percent on payroll, they will still be eligible for partial forgiveness.
3) There will be a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020.
4) There will be a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees and unable to hire similarly qualified employees.
5) Extend the deferral period for borrower payments and increase the date PPP loans mature to five years.
According to the National Bureau of Economic Research, the United States economy is officially in a recession – ending a historic 128 months of economic growth. While this news does not come as a surprise due to the sharp economic downturn that came as a result of state responses to the COVID-19 pandemic, many were shocked by the Bureau of Labor Statistics May jobs report. According to the report, which pushed the S&P 500 into positive numbers for the year and the Dow Jones Industrial Average to trim its 2020 losses to 3.3 percent, payroll employment rose by 2.5 million jobs and the unemployment rate declined by 1.4 percent to 13.3 percent. These numbers come as a shock since many economists had expected the unemployment rate to jump to about 20 percent. As states continue to ease stay-at-home restrictions, the next few weeks will be crucial in determining the trajectory of the economy moving forward and whether we can continue this positive momentum.
The Senate passed legislation on June 3 that would give Paycheck Protection Program (PPP) loan recipients greater flexibility in how to spend their funds while still remaining eligible for forgiveness. The Senate passed H.R. 7010 unanimously and President Trump is expected to sign the bill into law. Some of the main provisions of the new bill gives PPP loan recipients 24 weeks to spend PPP funds – a dramatic increase from the current requirement that businesses spend PPP funds within 8 weeks. The bill also changes the threshold for the amount of PPP funds required to be spent on payroll from 75 to 60 percent of the loan amount. However, to be eligible for forgiveness borrowers must spend at least 60% of the loan on payroll or none of the loan will be forgiven. There are several more changes in the new bill that may have consequences for your business. For more information on how the new law changes the existing rules for PPP forgiveness click here.
On Wednesday, House Democrats rolled out their proposal for a surface transportation bill that would spend $494 billion over next five years. As soon as the House Transportation and Infrastructure Committee released their proposal, Republicans criticized the committee for not taking Republican concerns into account. Republicans also criticized the proposal for giving funding priority to urban areas at the expense of rural communities.
Senate Republicans seem to be changing their position as it relates to federal augmentation of unemployment benefits. Last month, Senate Majority Leader McConnell vowed not to renew the $600 weekly boost to state unemployment benefits from the federal government. However, with the continued rise in unemployment due to COVID-19 and projections that there may be double digit unemployment into 2021, Republicans appear to be more open to continuing the federal supplements to state unemployment benefits. The second highest ranking Republican in the Senate, Senator John Thune (R-SD), stated with regards to federal augmentation of unemployment benefits that the federal increase of weekly unemployment benefits could last until the end of the year depending on how long the current economic downturn lasts.
Former United Auto Workers (UAW) President Gary Jones pled guilty to racketeering and embezzlement on Wednesday. Jones’s guilty plea came after a multi-year investigation by the federal government into the lavish spending and misappropriation union dues by Jones and other UAW board members.
Effective June 1, 2020, Ford Motor Company ended its lighting and bumper core return program. Today, ARA issued a press release responding to Ford’s cancellation of the recovery program. ARA President Scott Robertson said about the issue that “It’s clear that over the past several years, Ford and other auto manufacturers have taken aggressive steps to push the automotive recycling as well as remanufacturing and aftermarket industries out of the market… I find it highly suspect how in 2012, Ford can publicly acknowledge that their original equipment manufacturer (OEM) parts still have a lot of life left, yet they’ve taken every position to the contrary when it comes to the recycled, genuine OEM parts sold by our members. The professional automotive recycling industry is the true champion of recycling here, and I think Ford’s termination of this program shows that.”
FOR MORE IMPORTANT INFORMATION, VISIT ARA's COVID-19 DASHBOARD