Vermont: Not an Example to Follow

At times, when we find our members under attack, and state legislatures are acting without logic or fairness, we find it helpful to look at how that same body of elected officials is viewed by those outside our industry.

Americans for Tax Reform’s Patrick Cleason recently wrote in an op-ed for Forbes:

As of this writing, the only thing standing between the Vermont legislature’s effort to interject its will on what language should be required in a private business agreement between manufacturers, distributors and independent dealers, is the lack of agreement between the House and the Senate on which version of bad legislation to send the governor.

Here are some examples of what is being debated by conference committees appointed in the last few days.

• Is it a “disparity” or an “inequality in bargaining power” between equipment suppliers and independent dealers?
   
• Who are these Vermont independent equipment dealers who need the state to negotiate their business agreements?  

  Well here, the Vermont House and Senate are at least in agreement on what is NOT a dealer. Equipment retailers who count on a single supplier for more than 75 percent of their annual sales, and average more than $100 million in sales, are NOT “dealers.” This is a special interest carveout supported by one of the giant multi-national equipment manufacturers.
   

• While both the Vermont House and Senate also agree that dealer “inventory” covers everything from tractors to implements to garments and accessories, they specifically exempt any heavy construction equipment.
   
• Members of the House, however, want to be sure that all understand that the word “coerce” means “the failure to act in a fair and equitable manner in performing or complying with a provision of a dealer agreement; provided however, that recommendations, persuasion, urging or argument shall not be synonymous with coerce or lack of good faith.” Apparently the Vermont Senate was not ready to accept that definition.
   
• How much termination notice does a manufacturer need to give a dealer? The Senate would provide a minimum of 18 months; not to be outdone, the House went with two years.
   
• What about canceling a dealer who pleads guilty to or is convicted of a felony? Not a reason to cancel allowed by the Senate, but if the felony is “substantially related to the qualifications, functions of the dealer,” the House would see that as cause for immediate termination of the dealer agreement.
   
• If a Vermont dealer wishes to quit selling your equipment, how much should the manufacturer/distributor be required to pay to repurchase repair parts the dealer ordered? Senate thinks 90 percent of net price is a good number, the House puts the number at 100 percent.
   
• What if the repair parts are old and superseded? The Senate found that 85 percent of net was fair compensation, but the House wants manufacturers to pay 95 percent of net on superseded parts.
   
• What about inventory the dealer obtained from another source, say an auction or trade with another dealer? The House would not require the manufacturer to repurchase the inventory; the Senate, however, does not provide an exemption. The Senate would require the manufacturer to buy (repurchase) something it did not sell to the dealer in the first place.

We will wrap this up with one of our favorite sections of the proposed law.

• The House and Senate agree that complying with the provisions of their law will bring additional cost to the manufacturer/distributor. Not wanting to take the blame for those costs, they make it unlawful for the manufacturer or distributor to impose a surcharge (the House adds “or fee”) to pay for the increased costs.

We can’t help but note that this state’s legislative body was elected by the same voters who elected Bernie Sanders to the U.S. Senate and recently echoed their support to nominate their self-declared socialist senator for the office of President of the United States.

The Vermont Legislature should rethink its further intrusion into private business and not rush a decision with so few days left in the 2016 session. Any proposal needs the proper time to be considered, and lawmakers should table this issue.

The status quo, while not ideal, will serve Vermont until voters of this state have their say in November.

While the Vermont proposed legislation is not an example to follow, it is clearly an example of what can happen in any state where our members are not actively involved in the election of representatives. We encourage all members to take the time to meet and get to know your local candidates for public office. Make sure the people in your state who represent you understand the issues important to your continued success and your ability to create good manufacturing jobs in their districts. S