tv [untitled] CSPAN June 5, 2009 1:30am-2:00am EDT
you have worked hard to save in your savings account to be invested in general motors. you know what i think the response would have been, they would have laughed at me and hung up. they would have laughed at me and hung up and yet on monday our government bought general motors appear and by every definition i can seem that is probably the poorest investment you could possibly make. and then this on top of all of that with dealerships close, people losing their jobs, i don't see how this makes any sense. so i want to hear today about your role of the administration. i want to know who had this plan. i am not saying who had it for approval, but who did you
submitted to before you roll it out that is an associated in any way with the administration. i also want to just mention as i wrap up my comments today, i am going to speak on the senate floor about this tomorrow but i have an amendment that basically says if you're going to use t.a.r.p. money and going to end up with the ownership of the stock of a company, you have to get congressional approval. you see, i think it's time to bring some transparency to this, to shine a bright light on what's going on here because it's not fair two these dealers. you know, they see chrysler going into bankruptcy, they see general motors going into bankruptcy,ç and they can even into the question they're going to be one of the ones getting a letter in that's not fair to them. that simply is not fair so i
appreciate the chairman's courage in taking this issue on a. i think it is enormously important, not only to folks back home and how we operate as a nation and the impact on our economy when we nationalize something like the auto industry in. thank you mr. chairman. >> thank you, senator baggage. >> thank you very muchç mr. chairman, and i appreciate the hearing, also welcome back. thank you for one of the meetings, i was allowed to take the gavel, don't worry, we aren't going to get used to it but i appreciate the opportunity. to the folks that are here, thank you for attending here and i'm not going to go to a long list of speech on the whole issue but i do have questions that i want ask so i'll ask my presentation so you can still thinking about them because i think all of us will have issues of concern. alaska is actually on the best
and of it if you can call any best and and i think in chrysler we have none that were requested to close in dealers and gm we're not sure yet, but the issue to me is when we go from here? had ali ensure the long-term growthç of the companies are there in fadel?ç have you expand the dealerships? because of the assumption is these companies are going to be reorganizing and wrote that in theory dealership growth will occur with it. what are you doing with regard to dealerships? i can remember the exact dates but in june when they are no longer an authorized dealer and still have inventory. other situations you'll be able to allow them to send a time so they can sell off that inventory in order to recoup their costs investment. are you doing any mitigation? just as we do in light of situation or furlough you might give a package to the employee, what are you doing for the dealerships to ensure they have capacity to deal with the
transition that may have to make. how do you ensure that the individuals that have warranties in small towns have a place to go to get their work done. are their ideas that the companies are considering to be even a hybrid to some of the dealerships to make our warranty dealerships available to communities that may have to go several miles or hundreds of miles to get a vehicle taking care of. to me those of the issues i am looking to, i can complain about what happened, where we are, who caused it, the people paying the price our sitting in this room, a lot in my community dealers and backbone of ourç nonprofit working him in a day work in the ones eupepsia the rotary'sç and the lions club, academic in the community have been in the people would be the first and the deck to help us make a
difference in our community. so i'm interested in what you're doing to help the transition but how you're going to grow your business to ensure that more dealers exist but also what mitigation are you going to do to help those to the transition. at that to do similar things for employeesç when doing layos what are you doing in this situation. i have many questions about my time is out, that is what i'll ask so that gives you food for thought as we move to the questions. thank you very much. >> thank you, senator lautenberg. >> thanks mr. chairman, one and to those of you at the witness table who have leadership positions with in yourç respective industries must have a terrible conscience right now when you think about what is being done to dealers.
small businesses. typically family businesses businesses that have endured for years in mercer county attorney for instance mw. his father started a family business 22 years ago and people are losing their jobs left wondering if they are next. and i want to be clear because there has been double dealing here with. there was an imposition placed on dealers byç chrysler mr. prs who said they had to buy in january of this year that dealers collectively would have to take another 78,000 cars,
could be sold in the month of february. to help chrysler or take this liability and an additional loans from the government. i remind you that $4 billion went to chrysler in december and $3 billion in financing held in march. when chrysler restructures their $4.5 billion is committed to restart operations. frankly i think it is pretty simple. in the bankruptcy proceeding what ought to happen is a plan to say to the dealers we shove this down your throat and now we will take them back. that is part of the government and went on to be done, to relieve the dealers of additional burdens besides clothes and their businesses and smashing their dreams and church. it is tough and i know you don't
like it, but whether or not you liken the burning your passing on to then dealer network is absolutely unconscionable and you ought to figure on a way toç redeem the problems you have turned to the dealers and all of you are per the bankruptcy process for which the united states government and as taxpayers is providing the way out. thank you mr. chairman. >> thank you senator lautenberg. >> thank you very much. this is about of the restructuring and have heard a lot about restructuring recently, restructuring the financial industry, restructuring the auto industry and watching and all i am wondering who is making the decisions in this country about who is too big to fail into small to matter. have the decisions about the auto dealership that work, those
decisions belong to the manufacturing of the government. i don't think that is the point of the hearing to decide that we want to create some sort of missionç of your network, but there are questions as seems to me, serious questions that are on order. and understand and desire to eliminate overlapping dealerships of the same brand of automobiles so you don't have to dealers competing against each other to drive down a price for the same car. what i don't understand is, but the have been made especially with respect to rural areas and among the questions is what is a square losing a great deal of money have ordered the closing of dealerships inç taking profits. seems strange to me that in rural states important question is what is the impact on smaller of want dealerships and with
respect to in the dealerships when is the impact with respect to inventories. automobiles that they have on the lot and a price inventories. some dealers have shown me that in january of this year they were encouraged by their particular manufabdurer to buy more cars on the lot, it's important that we move cars out and get them on a lot and so now the discoverer new cars and a lot and now being told i am not to exist anymore. what about customers in rural states? in my state customer that has bought a pickup truck for example or a car and did so because their brand loyal, their parents did it for years and they bought it from a small dealer that has been around for seven years selling the same car and a bout with a warranty and other question is who's going to service the warranty with respect to the close of two dealerships in north dakota it
appears to me those folks will get in a pickup trucks and drive it is 3-mile round trip from a three hour round-trip. i think those questions need to be asked of you, did you consider all that, and finally is there a process for a dealer having heard from on high and 30,000 feet that you are in dealer as you described the process for a dealer on the ground to say, you know what, you made a mistake and now on to read that case you, is there a process to make that because you perhaps have made some mistakes and i think it is important to have you answer those questions for those dealers many who have been loyal for decades to the automobile companies represented here. >> thank you, senator snowe. >> thank you.
chairman rockefeller, welcome back, and thank you for holding this very critical hearing today mr. chairman because obviously we are grappling with a devastating affects the sad state of affairs on a comes to the domestic auto industry. the two not provide the requisite leadership television ingenuity to transform the industry and also a lovely has led us the taxpayers to provide a massive infusion of more than $70 billion to chrysler and general motors and now we are confrontingç the reality for te worst economic recession and i sense of depression and, of course, we now hear more than 2,000 auto dealerships that are facing closure and will be disenfranchised think no fault ofç their own and their loyal d longstanding small businesses in the communities in you have
already heard and the companies represented provide no clarity with respect to exactly how wide it has come to the specific decision that they have made little longer provide any transparency with respect to these decisions for theçç arbitrariness of the time frame in which is of use are compelled to make these so it is a very heavy-handed approach without question. moreover the companies are providing significant assistance in winding down. as we ever chrysler is providing three weeks for dealers and as you heard from senator dorgan it is right. the dialers to ask what you buy more chryslers us year so that we can avoid bankruptcy and they did a look where they stand today. they are asked to close their doors and a thing for the
amendment offered a couple weekç ago on the floor to give a love it more breathing room to the auto dealers. but where's that put them at the end of this whole process? where they have no idea what their futures are and general motors tested for example in this line down agreement there will not be buying back tools in the dealerships their closing and i got a copy of the wind down agreement last night. it is 12 pages in and would take a team of lawyers that obviously adviser to make it as difficult and tense as possible so now and possibly make a decision within the 10 days required to make a decision, they have to sign its within the 10 days close down and there has been no detailed accounting and disclosure from a company that
will result in dramatic savings and is interesting to note the business journalist dealers that paid for the inventory is shipping of the inventory for more and to work and purchased repair equipment and also said that cutting costs is not a major factor in the auto maker as some smallç dealer network t that is about it. and i know mr. henderson have claimed in an interview there was economic rationale for these actions. it has been reported neither the wind house is aware of the economic rationale behind the closings of precisely how they would determine so what is the rationale for shunning a dealership like in maine. i had a conversation with a dealer, heartbreaking story and conversation and of most poorly trained workforce is, high as customer service index in the
state and according to a letter from. >> and alondra maintain a productive business relationship. why? this is a business that has been in partnership with general motors for 80 years, third-generation and gm asked this dealer to pack upç and relocate and now they are targeted foreclosure. due in part to that relocation. this is a dealership that serves an area of more than 1,000 people and $2 million and confidentially deals in several populous area as an entire counties will go from multiple gm dealerships to absolutely none. leaming geographical areas without anyhnealers and customers time to rely on providing getting the service they depend upon having to drive 100 miles or more to service. if you don't have service you will haveç sales. i don't on know how you refresh
from bankruptcy and reestablishing liability on that basis when you are reducing your market share to nothing. the taxpayers provided billions of dollars and ultimately the auto dealers are now on the frontlines with some harsh consequences of failure at the top and they deserve far better than what they're getting and hope that we can address the ramifications of these decisions with enormous impact acrossç te country. thank you mr. chairman. >> senator isakson. >> thank youç very much mr. chairman. iran a company for 22 years with 800 salespeople in a brokerage business and they're very much like, neil dealers, they made money of this all this seemsç like when you close your dealership's your firing your sales force, they are an asset and i don't understand the
pervasiveness of the closures taking place but i have two questions in case you don't go too long and want to make sure these questions getç answered. mr. press, on february 5th 2009 you are quoted in appealing to your dealers to make 15,000 additional purchases of price our products in orbit to save the company in new said the falling -- you have two choices, you can either help us or burn us down. think of it this way, we are a bucket brigade to our in-house under present positions are filled and we don't tell the other 30 we're going to burn down. if you decide not toç do that we've got a good memory of who helped us and who didn't. i think that recognizes the fact that the dealers are your assets and you depend on them and so many of them are being closed and for general motors i have not seen the list mr. henderson and i appreciate the times in my office on the way, but in the phone calls i have had in the last three days it appears what
senator dorgan refer to distract the there's a disproportionate closure of a world dealerships and is the way it appears the main so i think the question of are they disproportionately close general areas and never to what is the rationale to fire your sales force need to be answered at this hearing and mr. chairman i look for to hearing the answers to both, thank you. >> thank you pericenter martinez at. >> mr. chairman thank you andç thinking ranking member hutchinson for holding this hearing at an important time. i will echo theç remarks of so many of my colleagues about the importance of dealerships to kinase and also the very? that senator isakson just asked without a sales force had we remain viable but where i want to zero in and the questions i want answered are very specifigç which are two examples of dealerships that are closed in the san of florida. one is inç crisis and cheap doe
and his dealership was perhaps a top seller and one ofçç the tp 100 in the country. and seems to me the kind of dealerships you'd want to see continue. the other one is central florida, holler chevrolet i have grown up in central florida on my life and it is synonymous with chevrolet in this central florida region. until chevrolet and ceased to exist the remember to and there would be the number one dealer in the central florida region. how in the world doesn't make sense for a dealership like that two also be on the list of closures. in addition to the fact there are one of the top sellers you have to have on florida they also have excellent customer service and how to do this business all the lives so the specifics of this one grammar reason is there toç this becaue
it is people's livelihoods and businesses so we need to understand it so we can understand the questions from our constituents and i think they deserve to understand the rationale why a dealership would be closed in the securities to anyone who would see it would seem to be incredibly successful dealers the kinds you would want for your future company if you're going to makeç its. >> thank you, senator brownback. >> thank you mr. chairman. i want to thank the panelists for being here, this is a tough time for you to come i'm sure these decisions on ec was two have made more you make lightly and i think everyone is frustrated about what is happening in taking place. i do have some questions that have made quite sense to me at and i've had a number of dealers
in my state say we don't cost gm or chrysler and saying so why are they cutting us off? and is seen to be a legitimate question to ask, if your sales force is a cost you anything was to cut them off. the second piece am sure you must have some numbers as a year is why we're doing this. i like to know what it is when you look at those numbers if you radically downsize your distribution network that you're going to be moreç profitable in theç future by doing that becaue i understand you got more dealerships than toyota, honda and others that may be built in america later date and what you.com but by downsizing that radically do you substantially of skill your ability to be profitable, if you're not work really doesn't cost that much.
i to understand the numbers on a better basis. theç second piece is you're operating off of one of the most difficult, is we have had in 50 years and you're looking at 9.6 million in annual sales are now.ç i think you said that 10.1 million was the latest monthly figure you're running ads but a normal year would be a fourteener 15 million and wasting car sales and my colleagues are putting up a scrap its bill of that and other countries when they put this foreign have increased sales of automobiles anywhere from 10 to 30% in months' time so if you get back anywhere close to a normal car salesç markets do yu need this sort of spending down of dealerships and to get back summer clothes, this is an extraordinary situation we're in
in a free help for the with the stoppage program do really needed to push down that dealer network and finally we've got a lot of rural dealers in my state that have been loyal to american brands and united you have a 10% market penetration and manage the nano pawn would look at that as an asset not a liability and maintain in that market share. and wal-mart in very well going into oral areas in many urban areas with market evanish in here's a place you've got marketing manager. out of to give deference to those dealerships in particular. >> senator warner. >> thank you mr. chairman and welcome back. i want to follow up to senator brown backs, and one echoing my other colleagues concerns about
the real human affects these decisions have had upon your dealer networks and their employees and families across the country but also recognizing the economic reality of the last couple years the national auto sales were down to about 10 million and the reality means that to shrink. with i also have to say at some level some of the two spent 20 years in the business sector before i went into public service if i would've ever thought in my business life that i would see a group of senators trying to micromanage the workings of american industry like gm and chrysler i would have said never would happen so if there was any more impetus to try to get back to profitability in get the garment out of your business soon as possible so these kind of sessions don't act going for and with today's session on to be that of the
tests but dressing some with consternation and are as shareholders we have that right and responsibility to ask t@ore questions so mr. press one of the things i ever heard from our chrysler dealers is not only is it a short time frame but if you want to make an appeal this would only between may 15th and the end of the month and the notion of a dealer tried to put together an appeal process made the case back to corporate that maybe the wrong decision was made it seems a bit and reasonable and mr. henderson i come from virginia and we got a broad dealer network an awful lot of concern when badger requirement, i believe the document you sent out says it has to be signed by june 12th. my question is not so much to perhaps second-guess the reason why have shrank but myç understanding this document
requires basically in virginiaç in right to a problem with manufacturer, you can go to the dealer board and have an adjudication rights signing the document is for those rights going for a a dealer that signs up on thisç june 12 date will lose any ability to have a say if you choose to put a dealer on top of them, no ability to control the level of inventory coming in and i guess from a business guide to business, my question when beingç a somebody signs up to this new agreement was sent to what i have is a local dealer to reinvest in my business and trying to build up my business if you at any point to do with my due process and put a competitor on or force me to take inventory even if not any good business. thank you mr. chairman. >> senator mccaskill.
>> who we see is a bad guy it depends on where we sent and other considerations, some will say the company's seven the bad guys for treating a business model that depended on treating artificial demand. some will say that it is the unions that are the bad guys for working hard to get agreements that allow them and their families to aspire to a comfortable place in a middle-class. allow us to consume a lot of goods in this country and allow us to have the trajectory of growth we've had in some will say it is the president, some say it is congress for authorizing the funds in the first place that are being utilized to invest in these companies and some will say it
is the people who promote with some primary this theory when bottom line is we'reç going to build today in a quarter backing. the alternative two what has happened is a much more drastic results and if we are honest about it would have to knowledge that if the actions have not been taken which will last 30 days voir, two giantç manufacturers would cease to assess and there would be no dealers of standing and would be no families that would go to work proudly and the line making american automobile which is two private companies that have such a tradition in our country want and i think all of us are trying to struggle with how we worked through with the situation floatplane in despair and anger with to come out of the other and with companies that are free of government interference and profitable.