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tv   [untitled]  CSPAN  June 12, 2009 9:00pm-9:30pm EDT

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may be profitable, chances are they are making money selling used cars, competitive vehicles, and by our assessment, they are a drag on the networks in total. the last page of my presentation is not here, but i will paraphrase it quickly. this is a very painful process. going through bankruptcy was not our choice. the company is no longer a functioning organization. we have had to make some very difficult decisions in business that would assure, by making these tough calls for 789 dealers, we have 2391 dealers not represented here in small towns with little leagues, with a lot of employees, whose jobs and businesses are saved, along with the full enterprise of our company, suppliers, and the rest of the nation. this was a very difficult decision we have made. it is one we want to share with
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you in terms of transparency. we have taken every step to make this a soft landing for the dealers involved. you will find out soon that all the vehicles in the discontinue dealers have been redistributed, along with most of the parts and most of the equipment. . . may have, they give very much. >> thank you, mr. press. mr. henderson, your opening statement. >> thank you chairman stupak and ranking member, walden. >> teeone to move that closer. >> on each action out to reinvent gm there is a human reinvent gm there is a human story, our d the larger gm family. there are valued business partners and for many consumers the face of general motors. however, the sacrifices all painful that we're all making are necessary to put gm in a better path to long-term viability and success and we owe this to the u.s. taxpayer. in essence this is our last
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chance to reduce debt, to operate under competitive labor agreements, to have the manufacturing capacity that matches realities 10 and partly to continue to design and build trucks with the leading technology. we simply cannot undergo the sweeping transformation without a comparable effort to reshape its retail network, one which was largely created in the '50s and '60s. we have been called upon to make tough commercial decisions and will do so responsibly and compassionately. and in the case of our dealers to act as carefully responsible and objectively as we can come to help the wind down their businesses in an orderly fashion was structured assistance package that benefits them relative to alternative. this approach is in stark contrast to a happens in most wear typically simply rejected with no assistance and unfortunately we are a company today in bankruptcy. let me first discuss cost and sales opportunities that are
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relevant to these decisions. a concentrated -- highly profitable dealer network will reduce cost for gm at a time when every dollar is precious. the savings come into categories: a rightsize network of strong dealers will allow gm two systematically and this is over time produced direct dealer support programs which today and bawl for general motors about $2 billion in the u.s. or approximately a thousand dollars for retail sales and this is a gross savings of a little less than a million dollars for discontinued dealer. this however does not take place immediately because the support programs are, in fact, subsidies have been incorporated over many years to help dealer profitability in the network is unfortunately weak financially. to the best of our knowledge our best in class competitors today bear few if any of these costs. our consolidation will also provide an estimated $450 million in gross fixed cost savings potential. items like guaranteed local advertising -- excuse me,
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assistance, service and training technology systems or potential of across mali $180,000 per dealer. second, our dealer consolidation is not just about saving money by trading opportunity and revenue growth. it is about to dealers augmenting evers to really enhance consumer perception in our products, brands and general motors directly on a daily basis and as wine every other aspect of the retail business from harley-davidson to apple stores and, yes, toyota and honda you see that a premium is placed on crating the distinct consistent and top-notch retail experience. that's why we're building a profitable business plan for between 3500 and 3800 u.s. dealers by the end of 2010 which was a retail sales market over 10 million units and conservative share assumption would allow our dealers to approximately double the throughput. for dealers this is a greater return on investment, better profits and ability to attract and retain new customers and the best people to serve as
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vehicles. finally even with the cutbacks and gm will have a large network in the country more than any of our competitors and in our case around 3600 verses, for example toyota at 1200 and this would include an extensive oral network of 1500 dealers nationally in markets where we hold today on average more than 10 points and manage and market share. while we're operating with a high sense of urgency is equally important and get the process right considering the personal and financial stakes at hand and we recognize we wanted recall rights and as why we're listening in working with the dealers and with the nada to get a better understanding of their concerns. as a result we sent our dealers a letter clarifying various edges and a participation agreement most notably dealing with competitiveness and performance standards. so what is the current status of our work in the support from? we have in place an appeals process and have considered and a 56 appeal requests as of yesterday granted 45, will continue to evaluate all gm
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dealers against a common set of performance standards to ensure selection process is fair and robust. as of today's deadline, we are encouraged by the progress made in the overall dealer response strong. approximately five -- 99 percent have signed or verbally agreed to a participation agreement almost 96 percent have done so with the wind out agreements. in closing we are deeply grateful for the support of the steelers. they're helping to create viable gm that will preserve over to 1,000 jobs at remaining dealers along with hundreds of thousands of jobs with gm direct manufacturing and supply network. we're grateful for the support for your support during this critical time and we take our responsibility to the american taxpayers very seriously and promised to be open and transparent and all we do every step of the way. thank you and i look for two questions. >> thank you, mr. henderson. john mceleney of national auto dealers association.
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>> [inaudible] [inaudible] [inaudible] the jim of dealers throughout this ordeal. in the initial viability submissions chrysler mention nothing other than continuing our current program to facilitate dealer consolidation. yet bankruptcy has less on hundred 89 chrysler dealerships without franchisees on 26 days'
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notice without even buying back their vehicles, cars and factories specific tools. it no manufacturer has ever done this. gm original liability submissions reflected desire to eliminate some brands in his call for additional dealer consolidation over an extended time. now besides the brand eliminations, 1350 additional gm dealers face terminations on a much more aggressive time line. why this dramatic shift? in response to a question before the senate banking committee on june 10th, ron bloom of the auto task force said and i quote, we did not give the companies in the miracle targets but we certainly did say regarding plants and dealers regarding white and blue caller head count, regarding all these matters that you need to be more aggressive, closed quote. everyone agrees that these companies need to decrease costs and increase revenue by dealer cuts did not achieve these goals. it the other key elements of the
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restructurings provide direct and time and cost savings to gm and chrysler. in sharp contrast terminating a dealership does not provide any material cost savings. in the retail an hour, the land, the buildings, the employees, training, the dealers pay for all of this. as detailed in my written testimony we dispute the notion the dealer network imposes a significant per vehicle cost or any significant administrative costs on the manufacturers. indeed, company officials have been widely quoted as saying the manufacturer's cost do not very whether 6,000 dealers or 3,000 dealers. moreover the faster deeper approach of the auto task force will actually reduce manufacture revenue at this critical juncture. in over 90 percent of chrysler and gm revenue come from the dealers because the dealers buy the cars, the parts and even the dealerships signs when the manufacturers. the automakers will tell you that it takes least 18 months to begin the sales of a close
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dealership and that's the best case scenario in short the dealer termination will cost revenue losses for the manufacturers without any corresponding cost savings. as such, we do not see how these cuts make economic sense. not for the companies, not for the dealers, not for local communities, and certainly not for the struggling u.s. economy. now i will turn to the status of the gm agreements both participation for those going forward and the wind down agreements for those who lose their franchises. last week during my testimony to the senate commerce committee i voiced nada concerns about the extremely one-sided participation agreements it delivered to 4,000 dealers of the new gm. during that hearing mr. henderson committed to meet with nada to discuss our concerns. gm followed through on that commitment. in our leadership met with senior gm officials last friday and we had a very frank discussion. as a result, gm has agreed to make significant improvements in
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the participation agreement. additionally, gm is committed to clarify some of the terms of the wind out agreements. and nada will continue to work with jim to improve the agreements. we appreciate gm efforts to end iraq's with nada on these matters. in conclusion it mr. chairman i want to thank you again for giving me this hearing because we still have fundamental concerns. this government negotiated bankruptcy's continue to threaten to their rights under state motor vehicle franchise laws. these laws inject balance of the inherently on balance economic relationship between a dealer in the manufacture and they also provide consumers a reliable convenience and competitive on a retail network. therefore congress should insure that the franchise laws of 50 states apply with full force and effect especially when the new chrysler and the new gm are opating outside of bankruptcy. we urge members of congress to support h.r. 2743 which would restore a fundamental rights to
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dealers. we stand ready to work with you to achieve this goal. thank you for holding this import hearing and thank you for the opportunity to testify. >> thank you. we now go from left to right with dealers, mr. thomas, which led to begin. a pull the mike over thomas began to its so we can hear you and i can pick it up. >> thank-you, chairman stupak. [inaudible] >> is or might on a price -- is your my god? >> thank you. may 15, 11:00 a.m., employs watch as a driver has with thin cardboard envelope that contains our destiny. i received an unsigned letter from general motors, the total was vague and referred to criteria but not specific methodology neither stating the relative importance of regional how great a time was being referenced. the letter stated quote, we don't think we'll be able to renew your contract in october 2010, this is not final, similar to live by the end of
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the month to this e-mail address. the significance of this became clear on june 2 when the content of the big letter have been construed into the offer of a wine that agreement. the agreement offered on the second had to be returned in time to arrive in detroit by the 12th, a scant 10 days to dede once options to confer with professionals regarding unprecedented legal matters and loved ones about financial and professional future. my grandfather emigrated to the u.s. in 1900 and by 1918 establish itself as a chevrolet dealer in bend, oregon and his daughter read my father and was a dealer until 1982 and i succeeded him. our company has woven itself into the social fabric of the committee since the time it was a village. our family provided automobile sales and service, civic leadership and community involvement every year continuously since 1916. these are hard times since but not as difficult as those we survived in the great depression and the world wars. general motors has been with us the whole time from 1918 forward. we have been gm to our
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community, now it is a dark time when gm must abandon our town, our region and gas. just as gm is an icon that we enjoy iconic status of our region, always there and noise level and compassionate, always act irresponsibly. the letters we were hobbling in their appreciation of our caliber and quality of service and committed to support. moreover there was confusion as to why ben now 80,000 strong will be abandoned as will we come other dealer of choice, the largest gm dealership in central and eastern oregon. their world is crumbling, things they thought they could count on being are taken away, longstanding reliability, integrity, a safe harbor in a very real sense our customers are afraid. who benefits from this taking? this cancellation that is so unnecessary, so wrong, so wrong executed, not gm? having no dealer in bennett will not for increased jann sales, up to a 16,000 people in our region left solely with a small gm
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dealer in the tiny town and as parameter was limited inventory and repair capacity, not our community who has relied on us a voice to generously support its activities, not our employees or highly trained to work on sophisticated gm products like cadillac and chevrolet and service@@@@@@@@ >> that we would be here forever. that is our business model. always do it right, be here for the long haul, rental loyalty of your client out. over the years, that has been a gm's business model, too. we were a good fit until we got cut from the team. what with these cuts necessary? i recently attended a meeting. a roomful of prospective business men. all this become what they are able to have been able to survive.
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if the plan to replace us with another dealer, why have we been deprive with the opportunity to make a transaction with their approval? this would seem to be an unreasonable and wrongful taking of a valuable asset merchant to the years only to be snatched from an overreaching with a moment of opportunity. bankruptcy. and one of the inventory that remains? in our case of $4 million, the value of which fishing by a million or more from what we paid. over a year's supply of a gm cars a witter sale. half million dollars of parts cannot be returned. what i would hope for in such dire straits would be a request the reason, allow us to provide support for those in gm customers and our region and relieve us of the inventory obligations we incurred in good faith by repurchasing it will be paid. this is a small price to pay for a potentially depriving long and painful associate of its livelihood.
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>> thank you, sp -- mr. thomas. >> my name is frank blanklenbeckler, the dealer principal of carlisle chevrolet cadillac in waxahachie, texas and to my knowledge the only chevrolet dealership in the senate texas. the cadillac line was added in 1990 and the jeep line was added around 1978. this dealership has operated continuously in the same community and the same family ownership since 1926 the dealership was founded in 1926 by my maternal grandfather. my father frank blanklenbeckler jr. who was awarded a bronze star for his service to his country during world war ii and you received a master's in tax law from harvard it married my
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mother in 1947 and moved to waxahachie to beat the dealer for the next 55 years. i read with of the university of texas in 1974 with an mba. since that time i've had one job. i have been a gm chief dealer for nearly 35 years. approximately three years ago my son graduated from old mess and join me at the dealership to fulfill his childhood dream of being an automobile dealer. like his father, his grandfather, and his great-grandfather before him during these 84 years of dealership ownership and operation my family has been one of the most generous and civic minded in the waxahachie. my family was instrumental in the founding of baylor hospital, the ymca, served on the school board and made many other numerous contributions to numerous to mention. the point of this type of intervention is to say that my family has been an integral and generous part of it waxahachie for a longtime. on may 13th i received a
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letter from chrysler stating our no longer be a jeep dealer after june 9. on may 14 there received a letter from gm saying that my chevrolet and cadillac dealer agreements would not be extended beyond 2010. in 24 hours i was told that everything my family and i have worked for for 84 years would be taken away with no compensation of. i have introduced a ford was conveys backs about carlisle chevrolet and out like to request a this folder and the balance of my testimony to be entered into the record. >> without objection, mr. walden has applied to the committee and without objection will be part of your testimony. >> the pages of this show the location of the dealership and include an article by the local paper and pays a fax about the dealership. out particularly encourage you to look at the total amount of taxes paid by carlisle in 2008, about 1.3 million year in contained sales history, csi scores and a couple of articles about the dealership that is
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located next door. i can assure you that carlyle was not the bottom of the heap. in regards to its peers. purvis folder. i want to mention of my employees. over the year carlyle has numerous employees and have worked for my family for 35 to 50 years. time doesn't permit me to do them justice. my point is carlyle has had an currently has the best people in the industry. i would like to mention to the committee the human element of these actions by gm and chrysler, nearly 90 souls depend on the carlyle for their assistance and with our closing these people will be subjected to serious economic hardship. i had numerous offers to sell my business and i have had that right taken away. i family will be left with a single person facility with no tenant. this is senseless. my grandfather pay for carlyle chevrolet from his labors, my
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father paid my grandmother for carlyle chevrolet to his efforts, it took me nearly 20 years to pay my parents for carlyle chevrolet committed to gm and chrysler a mere 24 hours to take carlisle chevrolet from maine. this makes no sense. why is this happening? gm and chrysler have stated publicly they have not used the bankruptcy code to usurp state and local motor vehicle cousin statute, this is patently not true. i don't care how it is gone, they have offered a wide done agreement or participation agreement and the content of these is horrible. dealers are told to sign the agreement or gm will petition the bankruptcy court to have them immediately turn. there is no alternative to sending these new agreements, this is wrong and out and buy to address what i think is most important part of my testimony. 24 hours my business was essentially taken from me with no explanation other than that these are difficult times. out in this country in a man's property be taken without due process and without compensation
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and apparently given to another dealer with a better political collections who has been my committee for less than a year for nothing? i adamantly thing my constitutional rights have been violated. i think i am a victim of an illegal taking. this is the most important points of this hearing in my mind and i think it is the feeling of all the dealers that are the same position. i feel like it should be the concern of all americans. when your property rights are destroyed, how long will it be until happens to you? i am hurt. i feel violated. and i am extremely upset. i wear my father's bronze star label pinned on my toe to. he was truly a member of the greatest generation. i am glad that he is not a live to witness this terrible injustice.
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two have risked his life for a country that do what they're doing, it would have destroyed him. i love my country and i love my state. i feel great pain in what is happening. it is my hope and my prayer that i will be able to continue my life and not be consumed by bitterness should the situation not be reversed. in this country not return to the tenants of the founding fathers who created it. thank you for your and my testimony. >> thank you. and mr. paddock, your opening statement. you might want to pull that microphone closer. they don't pick up as well as we would like. thanks. >> good morning.
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i am a go for the dealer, i am a dealer owner of paddock chevrolet in new york or we employ 135 of the finest most hard-working americans in the buffalo area. i am proud to say that paddock chevrolet is currently the largest gm dealership in the nation and we have been proudly serving western new york for almost 75 years. i am really pleased to be here today. it seems especially appropriate for me at least since my father passed away exactly 15 years ago to this day. it was on that day the livelihoods of employees of my employees were passed on to my hands and our company's responsibility to our community had to be preserved. in addition to my responsibilities at the dealership i serve as chairman, gm's national dealer council known as the nbc for the past two and a half years position i was elected to but my fellow gm dealers. it this in our industry is this -- the u.s. marketplace for automobiles is the most open and competitive in the world.
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with that competition taking place across a wide variety of brands culminating dealers and now the internet. but it is a recognized fact that since 2006 in rapid decline of our retail business across all adam anchors has occurred. in our industry has gone from an annual selling pace of over 70 million units to just more than 9 million. my fellow dealers every brand of both gm and done jim have suffered huge financial losses in a very short time the amount of working capital necessary to fund their day-to-day operations has been severely diminished. in addition to bank loans to dealers for working capital are essentially nonexistent. as i said before you today, i am a franchisee of a company going through a painful restructuring committee and restructuring that is not only necessary but critical to our future of our customers suppliers, dealers, employees and other stakeholders. some of my fellow dealers many of whom i consider friends
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received notices of this past few weeks that they will not be part of the new gm. well, i cannot advocate determination of any individual dealership. i will tell you that the dealer council will work vigorously with a senior gm management over the past two and a half years to address circumstances that we dealers face today. during my tenure as chairman of meetings between the nbc and gm management have and will continue to be led with dealer profitability as the primary goal of our dealer network. that is because dealer profitability and every investment it makes possible a the keys to improving our customer expands at a dealership. and improving that experience is essentially -- essential two our ability to compete against our best competitors. i also can tell you that regarding the restructuring of gm dealer network to improve its competitiveness, gm has elected to wind down affected dealers
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over 17 months time. allowing them to make an orderly business planning decision about their futures. in addition gm has recognized the need -- >> keep going to buy gm has the recognized the need to offer certain compensation that dealers winding down their operations, something chrysler clearly chose not to do. before i conclude i should tell you that the vast majority of gm dealers i know are also overwhelmingly up losing about gm future. they believe that the uncompromising quality, reliability and dependability of our current portfolio vehicles. i can tell you that my 26 years as paddock chevrolet i have never had a better porfolio vehicles to sell. the stunning designs and compelling fuel economy improvements of these vehicles gives us hope for the future. in closing let me say i appreciate your time and more importantly understand -- your
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understanding of the significant impact successful general motors will have on this great nation. my family has been a part of gm for decades, my father as a gm dealer, my two uncles who were uaw members working at the engine plant since the day i was born. everything my family had come from a their association with gm from the food on my table to the 1982 camaro i probably drop to my high-school graduation. paddock chevrolet and all gm dealers will continue to be a vital part of the future success of the new gm. i let my father before me will continue to work tirelessly to ensure that a vibrant gm dealership can a problem passed on to my children and will continue to be a fixture in the buffalo community. thank you for this opportunity and i look for to answering questions. >> thank you. we have won the votes and let
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members know i plan on getting to this testimony of this witness and take a 15 minute break and get right back and finish up this hearing. it is the only vote today so we will get it done. >> mr. chairman, and members of the subcommittee, my name is daniel and i'm the general shareholder of to, dodge an automobile dealership in tacoma, washington. thank you for the opportunity to tell you that too, dodgers store in how the target funds you authorize your being used. two, dodge has been in business since 1972. until this with the dealership was valued at several million dollars and employed 71 people. in the month of april 2009 the last month for which we have a complete report reports prepared by chrysler show that too, dodge was ranked number one in western washington and number two in the entire set of washington for the sale of a new dodge vehicles. these reports prepared by


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