Transcript on Automotive Issues Resulting from Hurricane Katrina

SAE International Media Conference Call Regarding Automotive Issues Resulting From Hurricane Katrina
(Transcript)
Sept.1, 2005

CHORUSCALL: Good afternoon, ladies and gentlemen, and welcome to the SAE International conference call. All participants will be in listen-only mode. There will be an opportunity or you to ask questions at the end of today's presentation.

An operator will give instructions on how to ask your questions at that time. If you should need assistance during the conference, please signal an operator by pressing star, then zero, on your touch-tone phone. This conference is being transcribed. If you have any objections, please let us know by pressing star, then zero, now. Hearing no objections, I would now like to turn the conference over to Ms. Nancy Lewis. Ms. Lewis, you may now begin.

NANCY LEWIS: Thank you very much, and thank you to everybody who's joined the call. Just for your information, we pulled this together quickly because we saw that Katrina had caused a lot of damage to vehicles, and so we wanted to be able to answer some questions from our professional aspect. For those of you who don't know a great deal about the Society of Automotive Engineers, let me give you a little backgrounder:

Founded in 1905, SAE International is more commonly known as the Society of Automotive Engineers. We're a membership organization of nearly 90,000 professionals in 100 countries. Our core competencies include the development of standards, lifelong learning programs and publications in the automotive, aerospace and commercial vehicle industries.

Our standards promote safety, uniformity and cost savings. Our lifelong learning opportunities include conferences, seminars and access to industry research. Our publications are offered in printed and electronic format and range from engineering magazines to technical papers to books.

SAE International is headquartered in Warrendale, Pa., and has offices in Troy, Mich.; Washington, D.C.; and Greenville, S.C. At this point, I'm going to turn the conference over to (SAE's) News Editor, who is Shawn Andreassi, and he will be the person who will direct the questions. Thank you, Shawn.

SHAWN ANDREASSI: Thanks, Nancy. Good afternoon. At this point, we will entertain questions you may have. I will alert the operator, and then she will provide instructions on how to ask your questions. With us today on our panel is Gary Pollak.

He is the technical projects program manager. Tim Mellon, is director of government affairs; Wayne Juchno, director of the service technical program office; and Brian Finnegan, president of the Professional Aviation Maintenance Association, more commonly known as PAMA. So, without further adieu, we'll go to questions.

CHORUSCALL: At this time, if you would like to ask a question, please press star, then one, on a touch-tone phone. You will hear a tone to confirm that you have entered the list. If you decide you want to withdraw your question, please press star, then two, to remove yourself from the list. Again, that's star, then one, to ask a question. We now have our first question.
QUESTION: I'm just sort of curious if someone there could give me a more in-depth explanation on the reason - as I understand, President Bush is going to reduce or lift the standards for pollutants. My question is, isn't that a little bit late in the game? Where is the gas going to come from? I mean, is this something they can transport across borders, or does this allow the refineries to produce gas more quickly, or what are the implications from that?
ANDREASSI: Tim Mellon will be answering that question.
TIM MELLON: The intent of that action was to free up any refinery to supply any area of the country with gasoline. Prior to that action, due to the boutique nature of the gasoline requirements in the states, refineries could not supply gasoline to certain areas of the country. There is a shortage of refinery capacity now. This should help somewhat in the allocations to move gasoline on a freer basis from area to area.
QUESTION: OK, all right, to go a little bit deeper on this, now, does that mean that they can more quickly refine the gasoline, or is there gasoline in other parts of the country now that can be transported over there?
MELLON: The change in the president's directive was basically to free up gasoline so it could be shipped from one area of the country to the other. It does not really allow the gasoline to be refined easier.
QUESTION: I've been seeing a lot about the acronym, RVP. Can someone on our panel provide some background about RVP?
ANDREASSI: Gary Pollak can answer that question.
GARY POLLAK: OK, typically, gasolines have different vapor pressure characteristics, and primarily these vapor pressures are assigned to different geographic regions of the country to coincide with the climate conditions. Typically, sections of the country will have requirements to have gasoline with certain vapor pressures to be used during certain calendar months during the year.

The effect of the president's decision to do away with those requirements will enable the gasoline to be readily used in any section of the country. This means there shouldn't be stockpiles in some areas and shortages in other areas just because of the different vapor pressure requirements.

ANDREASSI: Thank you, Gary. Do we have any other questions at this point?
QUESTION: I have a quick question here. Does anybody have any idea as to the time that we can expect insurance claim adjusters from the automakers to enter into these areas affected by the hurricane to assess the damage that has been done to the dealerships down there; and I guess to find out, basically, how many dealers have been affected by this storm.
ANDREASSI: That is not our area of expertise. We would recommend that you contact one of the insurance organizations, but that does not fall under our area of expertise.

We can talk a little bit about the vehicle identification number and how that can be used in identifying a vehicle, and how that plays into the insurance part of it. As far as timing and when they would be down there, we couldn't answer that.

LEWIS: But speaking about it, I think this is a good opportunity for us to talk about the VIN program and how that will be useful for people who have had their vehicles damaged because of Katrina.
ANDREASSI: And our expert on that is Gary Pollak and he can talk a little bit about that at this point.
POLLAK: Each vehicle does contain a vehicle identification number, or VIN, number. SAE is the holder of the standards for these vehicle identification numbers. The number is a 17-digit number. SAE is responsible for certain characters of that 17-digit number, but the NHTSA is responsible for keeping the database of the entire vehicle identification number. What this number is, is a way of tracking the characteristics the vehicle - where it was manufactured, the time of manufacture, the plant and all of the characteristics.

This 17-digit number is then used to register vehicles at the state level, at the state department of motor vehicles, and these departments then can keep track of each vehicle, who it was sold to, what the history of that vehicle might have been. And it will enable the insurance adjusters or claims adjusters to identify the particular vehicles.

SAE is also responsible for a number of standards that contain information on where this VIN number should be placed on the vehicle so that it can easily be identified and that adjusters know exactly where to look for it, et cetera.

LEWIS: Gary, where is that VIN number on the car?
POLLAK: The SAE standard for the VIN number states that the number must be affixed to a plate that is visible from the left pillar of the vehicle, which is the pillar in the driver's side windshield. It has to be visible from the outside of the car, and it should be unobstructed from any kind of part or something that would cause it not to be seen from the outside.

In addition to that, SAE has specified that the VIN number should be affixed to all permanent structures of the vehicle, things that will not be normally replaced in a vehicle, such as the transmission, the engine, the frame, et cetera.

LEWIS: Gary, we have received another question on the VIN. Why is it in a location that is so hard to see?
POLLAK: Well, the VIN number is meant to be utilized for identification purposes, but it needs to be obscure enough that it's only visible to those people that have a legitimate reason for reading the number. It has been shown in studies that there were some problems with thefts caused by unscrupulous people looking at the VIN number and then trying to acquire ignition keys, et cetera, to then entire the vehicle.
QUESTION: Gary, some of the pictures and video that we've been seeing from the Gulf Coast shows a lot of automobiles and trucks, but we also see some many other vehicles. I guess these would be termed recreational vehicles. Do they have similar identification numbers?
POLLAK: Right now, the NHTSA organization only requires vehicle identification numbers on vehicles that are licensed for on-road use. What has been happening, recently, is there's been a proliferation for recreational vehicles that are not licensed for on-road use but are still quite expensive and are requiring the same degree of insurance, et cetera, from the insurance agencies for theft purposes, or damage purposes, et cetera.

Up to this date, there was no way of identifying each of those recreational vehicles uniquely, but SAE has started a new program, and it's being titled the PIN number, which is the product identification number, very similar to the VIN number, but used only for off-road recreational vehicles.

And under this program, we're trying to do the same thing that we're doing with the on-road vehicles in giving each of these vehicles a unique 17-digit identifier. And SAE will be keeping the database records of these recreational vehicles. And this program has just been initiated within the last year. SAE currently has an extensive database of the vehicle numbers and will continue to offer these.

ANDREASSI: Thanks, Gary. I'd like to go back to our operator, Jennifer, now, and see if there are other questions on the line.
CHORUSCALL: Sure, we do have another question.
QUESTION: My question is, do you have anybody there who might be able to talk about the potential disruptions for the auto industry if the Port of New Orleans is closed for a while? Is there anybody who can comment about, like, if the supply chain will be affected, especially for factories in the South?
LEWIS: Tim Mellon is going to take that.
MELLON: Yes, that's really not our expertise. I would suggest contacting the Alliance of Automobile Manufacturers in Washington, D.C.
QUESTION: OK, all right. Thank you.
ANDREASSI: OK, any other questions?
CHORUSCALL: None at this time. Would you like me to repeat the instructions once more?
ANDREASSI: Yes, please.
CHORUSCALL: OK. At this time, to ask a question, press star, then one, on a touch-tone phone. You will hear a tone to confirm that you have entered the list. To withdraw your question, press star, then two. Again, that's star, then one, to ask a question.
QUESTION: OK, one of the other questions that we've had is with all the talk about fuel going up, gasoline prices going up, some people said that they were going to try to save money by getting the cheapest grade of gasoline they can, and this brings us into the whole thing with the octane rating.

If your car says that you have to have a specific octane rating, are you going to just trash your car if you put in the cheaper kind of gasoline? Or what's going to happen?

POLLAK: The answer to that question is really twofold. SAE recommends that you follow the instructions that are contained in your owner's manual. However, if there is an emergency situation and the proper octane gasoline is not available, it would be all right to run a tank full or two of a different octane. What you'll see is a degradation of the designed power, possibly a loss of some fuel mileage, but short-term use would not have a great effect on your vehicle.
MELLON: And going up in octane ...
LEWIS: This is Tim Mellon who's adding something.
MELLON: If a filling station is out of regular octane, which is 87, you can always go up an octane and that will have no detrimental effect.
QUESTION: Will it have an enhanced effect, though? If I buy gas that's better than what's recommended?
MELLON: No.
ANDREASSI: We had a question via e-mail. The question is, what are some of the steps that people can take to make sure that their car is safe to drive, if it has gotten wet. Wayne Juchno is the best person to answer that question.
WAYNE JUCHNO: When you say wet, it's all relative. The old rule of thumb was that if it was up to the rocker panels, it would be relatively safe to start and to go, but that rule is out the window these days because of the complexity of the vehicles and the location of electronics and electronic systems in the vehicle.

If the car has been submerged to any degree that may be as low as the floorboard of the car itself, it may be suspect, and the idea of it being suspect is that if you have a car that has been submerged in that type of way, you don't want to start it unless you know that the system is safe in terms of no water, no mud, in certain areas.

And chances are, determining whether that is safe to start is going to be extremely difficult because of the location of electronic products. So, because of the complexity of the modern vehicle is so heavily dependent and reliant on electronics, a lot of these cars may not be able to be started after they've been submerged.

QUESTION: Would the same thing apply to light aircraft that the individual person might own?
BRIAN FINNEGAN: Could you repeat the question one time, please?
QUESTION: If a light aircraft had been submerged in water - many people do own their own planes, and particularly in that area, if they're in River Ridge. Would the submersion of that plane be affected the same as a car, Brian? Would that basically put the plane out of commission?
FINNEGAN: Well, in the structure of an aircraft, corrosion is a very big, important factor, and any aircraft that's been submerged would have to be examined very closely for corrosion. That could include disassembly of all of its major components. In a freshwater environment, it would be a little bit easier than in a saltwater environment, and of course that record would stay with the aircraft as having been submerged in saltwater or brackish water.

And so, yes, it would have a detrimental effect, and you'd definitely want to make sure that you inspected the aircraft very closely, including following up with treatments to prevent further corrosive damage. But it could be saved, but it would still become part of the record.

QUESTION: Would it matter if it was only partially submerged, or if it were - in some cases, I guess, with as high as the water's been down in that area, totally submerged?
FINNEGAN: Well, certainly, we have a wind factor as well that's been whipping the water around, and even aircraft that are just exposed externally to this kind of environment would probably warrant a very close inspection, even if it wasn't submerged. But you're right, the submerged portions would deserve, and probably receive a more in-depth and thorough inspection.
CHORUSCALL: We do have another question on the phone. Would you like to take it now?
ANDREASSI: Yes, thank you.
QUESTION: I was wondering about SAE standards for parts and maybe aftermarket parts. Is there a resource or is there anyplace where people can go now to make sure they're not getting scammed when trying to get their cars repaired. How do they know going in that they'd be getting quality parts, and is there any way that they can verify the legitimacy of what parts are being used in their repairs?
JUCHNO: Well, the repair process is just not totally reliant on parts, but I'll address the parts issue. SAE does have several programs, aftermarket programs, for parts, but it's very limited. I believe brake is one of them, and also for AC service and compliance with the CFC containment laws. But in order to address the idea of counterfeit parts or not, it's an extremely difficult situation.

The people that manufacture these counterfeit parts are relatively sophisticated in how they mask them. It's very difficult for a consumer to determine whether that part is legitimate or not, and they'd have to rely - their first line of defense is to rely on the honesty and integrity of the people that they hire to service their vehicles.

QUESTION: One of the other things that I think people are interested in are brakes and braking systems. Some cars will show that they have such things as ABS breaks. For the people, anybody who's driving in water, but specifically for people who would be in that section of the country, is it - what about the brakes? Is there anything to that people have to know what kind of brakes they have as to how they should handle the car?
POLLAK: I don't believe there's a big difference. The different types of brakes are actually different kinds of control algorithms, but when you get to braking material on the wheels, they're all very similar.

So the only advice would be that you should try the brakes in a non-critical situation just to make sure that you do have some stopping power, and also by trying them and utilizing them in a non-critical situation that will tend to help to dry them out. And you shouldn't rely on brakes being there without a little bit of a test in a non-critical situation.

QUESTION: So is that why they tell you to pump the brakes?
POLLAK: That's one of the reasons. Another reason in pumping the brakes is you're not going to lock up your wheels by applying them. If you do not have ABS braking system, if you apply them firmly and strongly, you could lock up a wheel and lose control of the car.
ANDREASSI: OK, we're going to go ahead and wrap it up, then. We appreciate everybody's input and their questions. The transcript from this will be made available on SAE's Web site, and we will make that available as soon as possible. We want to thank everyone for participating and for all the insightful information that was shared today. Thank you.
LEWIS: And one other thing that I would add is if you have any follow-up questions, please just send them to pr@sae.org. Thank you very much and goodbye.
END