From: Bonnie G. Carter
Date: 3/5/99

PRESS RELEASE

The third in a series of Subcommittee on Technology hearings was held on February 25th. Cleverly called "Unscrewing the Fastener Quality Act", the intent was to review the report from the Department of Commerce as prepared by NIST, and hear the views of representatives from the Association of International Automobile Manufacturers, National Fastener Distributors Associations and the FQA Reform Coalition.

The Department of Commerce report was delivered less than 24 hours before the meeting convened and Representative Morella, chair of the committee, rescinded the invitation for the Secretary of Commerce to speak at the hearing, their written statement is on file to accompany the findings of their study.

Edward J. McIlhon, President of Iowa Industrial Products Corp. and spokesperson for National Fastener Distributors Association [NFDA], explained that NFDA through their own membership of 240 companies and as secretariat of the Fastener Industry Coalition [FIC] represents nearly 2000 distributors, importers and manufacturers dealing in nine billion dollars of fastener commerce conducted by their members in the United States.

The NFDA and FIC have conducted exhaustive studies through their memberships and reached the conclusion that no current need exists for the implementation of theFQA. Several areas of concern were itemized as examples of how the FQA is unworkable.

There is no longer a basis or need for the Act. The Industrial Fastener Institute commissioned a study by David Edgerly, formerly of NIST. Mr. Edgerly's study titled "Is There Still A Basis for The Fastener Quality Act?", finds that the problems present in the 1988 Congressional investigations no longer exist, and that American health and safety are not threatened by widespread falsification and misrepresentation of fasteners. There are laws currently in force and government agencies in place to prosecute the few violations of fastener frauds which may now occur.

The current Act fails to meet Congressional intent that only high-strength fasteners used in critical applications be subject to the Act. After nearly a decade, neither government or industry can reach an agreement on which factors constitute a high-strength fastener. Automotive and heavy equipment industries would like their proprietary fasteners exempted, yet the same item as a commercial fastener would be considered critical use. The original intent of the law was to cover approximately 1% of the fasteners used in commerce. The law, as written, covers between 40%-65% of fasteners. This discrepancy in covered fasteners increased the cost of compliance well beyond the original estimates.

The current Act has statutory language that prohibits use of modern manufacturing and record-keeping methods. The law, as written, is ingrained with language that does not allow currently accepted quality assurance programs. The use of digital signatures and computer scanned documents is still disallowed for certifications. Importers and raw material manufacturers still carry a disproportionate burden of paperwork.

The current Act does not permit retesting and recertification of fasteners produced before its date of implementation and this could result in a one billion dollar loss to industry. There is evidence that fastener users would not want "grandfathered" fasteners and would want to purchase only "FQA Compliant" fasteners.

The current Act's requirements pertaining to accredited laboratories are unworkable. It has never been established how many testing labs will be adequate for the demands for fastener testing. The geographic distribution and the types of tests offered by various labs should have been considered in the estimated number of labs needed.

The current Act is considered an impediment to trade by our major trading partners in Europe. The European Union has filed formal complaints with the U. S. Special Trade Representative and with the International Trade Administration of the Department of Commerce. The unequal and discriminatory treatment of fastener importers violates the spirit, and possibly the letter, of trade agreements negotiated between the World Trade Organization and the United States. This complaint is based upon the requirement to have test and certification reports on-file in the U. S. before the fasteners arrive onshore.

Mr. McIlhon furthers feels some parts of the FQA should be preserved. The recordal of manufacturers' fastener insignias, head markings, with the Patent and Trademark Office will assure traceability through the life of the fastener. Laboratories should continue to be certified by NIST to assure the quality of testing is appropriate. The use of grade markings on critical use fasteners should be continued as required by consensus standards.

John O'Brien is vice president of Sales and Marketing for Federal Screw Works and Chairman of the Industrial Fasteners Institute [IFI]. The IFI represents 105 fastener manufacturers who employ approximately 45,000 workers in the United States. His comments were on behalf of IFI and the Fastener Quality Act Reform Coalition. The Coalition represents manufacturers and distributors of fasteners and major end-users in automotive, aerospace, heavy equipment and general industries.

The IFI was an original proponent of the FQA and now feels "the FQA as it currently exists is fatally flawed because it forces reliance on testing procedures and protocols that have been eclipsed by technology and improved practices. In addition, many of the original reasons for the law have either been discredited or become faded memories."

Mr. O'Brien stated examples of how quality assurance procedures used by government end-users has reduced the occurrence of defect rates.

IFI suggests the FQA should prevent the intentional sale or offering for sale of mismarked, substandard or counterfeit fasteners. FQA should also address the registration of head markings and maintaining adequate documents for traceability of fasteners.

George Parker represented the Association of International Automobile Manufacturers, Inc. [AIAM]. AIAM is a trade association which represents companies that sell passenger cars and light trucks of both domestic and foreign origin.

AIAM feels that the use of modern manufacturer-approved quality assurance systems and pre qualification of fastener suppliers offers greater safety at a lower cost than the outdated, redundant tests required by FQA. This closed- loop system of fastener supply exceeds the level of quality that the FQA would assure.

In a study by Price Waterhouse of the cost of compliance to the FQA, it is estimated to cost the motor vehicle industry $317 million. The original estimate by the Department of Commerce for compliance was $18 million for all affected industries. The study also indicated the cost of after-market service fasteners would become prohibitive.

The motor vehicle industry is monitored by the provisions of the National Motor Vehicle and Traffic Safety Act and the Federal Motor Vehicle Safety Standards issued by the National Highway Traffic Safety Administration [NHTSA]. The NHTSA mandates not only the quality of the fastener, but also that the fastener is appropriate for the intended use.

Among the statistics cited, 15 million vehicles are sold each year containing 2,000 to 3,000 fasteners each. In a study of recalls between 1994 to 1998, only 13 recalls involved 150 to 225 billion fasteners used on motor vehicles.

The Department of Commerce was mandated by Public Law 105-234 to review aspects of the FQA to determine if a need still existed for the law. The five- month study was conducted by the National Institute of Standards and Technology [NIST] from September 1998 through January 1999. The study covered three primary areas of interest: 1. Are the conditions that led to the Act in 1990 still valid; 2. Are the definitions of fasteners covered by the Act still appropriate; 3. Given the change in manufacturing technology over the past eight years, are there more appropriate methods for sampling, testing, and reporting compliance to standards and specifications?

The NIST study directed by Dr. James Hill was handled in a very open and fair- minded manner. During the public comment period the Department received 137 responses: 62% of the respondents favored a repeal or a simplified Fastener Fraud Act, 32% requested specific changes, additional exemptions beyond the aviation exemption or were unspecific, 6% recommended the FQA be implemented without significant change. Federal agencies using fasteners were asked to address issues relating to the FQA by: 1. documenting problems related to fasteners in programs that regulate public safety and 2. improvement in fastener procurement practices today as compared to a decade ago. Members of the study staff visited the facilities of six manufacturers, distributors and importers to view current business practices related to fasteners. Copies of the Federal Register notice were mailed to manufacturers overseas soliciting their comments.

This study is worth the time to review. Copies can be requested by e-mail from fqastudy@nist.gov.

Quoting from the first page of the Executive Summary:

"After analysis of all available information, weighing significant advances made by industry in the manufacture of fasteners, and assessing public safety needs, if Congress determines that it is appropriate to continue to regulate fasteners, the Department recommends that Congress amend the Act to limit its application to fasteners where public safety may remain a problem. The Department recommends application of the Act be limited to "high strength" fasteners, the paperwork burdens be streamlined, the Act be amended to recognize quality management systems in manufacturing and provide simpler compliance requirements for those manufacturers using quality management systems of sufficient rigor and consistency, and amend Title 18 of the United States by adding a criminal penalty for fraudulent activity in commercial transactions involving fasteners. The intent of these changes is to have a statute that recognizes the positive developments in the fastener industry, focuses on assuring public safety, and imposes the least possible burden on industry."