Automakers eye Customs funding saga warily

DETROIT, Mich. - The big three automakers are watching warily as the Customs Service, Congress and the Clinton administration spar over how to pay for a proposed multi-billion dollar information technology modernization at the agency.

And they have reason to be wary. In February, Customs announced that it would shut down its National Commercial Automated Prototype (NCAP), a pilot project that streamlines entry processes for trucks carrying automotive parts from Canada and Mexico into the U.S.

"We felt betrayed after Customs announced it was shutting down NCAP," said Gilbert Duhn, Customs Manager for General Motors Corp. "We invested hundreds of thousands of dollars in it."

Shutting down NCAP meant that DaimlerChrysler AG, Ford Motor Co. and General Motors had to notify their suppliers and freight carriers that expedited border crossings would stop. Changing back to older entry practices has direct repercussions on the companies' assembly lines.

General Motors, for instance, had to apply for labels that would qualify them for the Customs Border Release and Selectivity System (BRASS), the next quickest way of entering the country with imported goods.

And while BRASS does move trucks through the border quickly, car companies that utilize it cannot bring trucks through the border that are used in a just-in-time manufacturing scheme. BRASS is set up to allow truckers just 3 shipments per truck. A fourth shipment would require a stop in at a Customs broker, a private company that helps importers file the correct Customs paperwork, and then at the Customs office.

Under NCAP, trucks carrying up to 35 shipments move through the Customs lanes at the border without ever having to stop in at the Customs office to file paperwork.

With such a great disparity between the number of shipments allowed on NCAP and BRASS, General Motors faced stopping so-called "milk runs." Milk run trucks visit multiple part plants in Canada and deliver the shipments on an as-needed basis to assembly plants in the U.S. Such a system enabled General Motors to eliminate auto part storage. The time between a part being completed in Canada and its installation into a vehicle in the U.S. can be as short as 4 hours, according to GM officials.

If General Motors wanted to continue sending milk runs, it would have had to stop at the Customs facility while the paperwork for 35 shipments was processed first by a broker and then by a Customs official, a process called Border Cargo Selectivity.

But at the last minute, funding surfaced to keep NCAP alive. Even so, after preparing for life without NCAP, DaimlerChrysler and Ford found it cost-prohibitive to continue using a program whose future was unsure. As a result, they both dropped out of NCAP.

"It was just too disruptive to us and our carriers," said Walter Manns, customs administrator for Ford. "Even so, NCAP is a good program. We put a lot of money into this thing."

DaimlerChrysler refused to comment on why it pulled out of NCAP.

Customs officials understand the two companies' reasons for dropping out of the prototype effort. "I think there was a reluctance on their part to sink more money into NCAP because they are not sure how long it will be around," said James Mayer, a senior customs inspector at the Fort Street Cargo Facility in downtown Detroit, Mich.

Customs has enough money to operate NCAP until the end of the fiscal year. However, after October, its future is as uncertain as that of the Automated Commercial Environment (ACE), Customs' overall modernization project.

The companies are resistant to the administration's proposal on how to pay for ACE-by assessing a new user fee on companies that import goods. However, like other years, Congress has not been receptive to a new fee. Unlike other years, the administration has left open the option of Congress finding other means of funding ACE.

"Customs has its heart in the right place," Duhn said. Manns agrees, but he is cautious when it comes to funding for ACE. "We are not opposed to ACE," he said. "But we will not support it if its funding results in more user fees." The automakers and the rest of the nation's importers currently pay nearly $1 billion per year in such fees.