News

Local dealers say bailout necessary

By NATHAN BRUTTELL Argus-Press Staff Writer

Friday, November 28, 2008 10:11 AM EST

SHIAWASSEE COUNTY - The continued existence of the Big Three is at stake as Congress continues to haggle over a potential automaker bailout - and Shiawassee auto dealers are watching closely as their livelihoods are discussed in Washington, D.C.

“(A bailout) needs to happen more so for our local economy,” Tony Young, president of Young Chevrolet in Owosso, said. “If they actually end up filing for bankruptcy it will put a lot of hurt on the dealers that are already struggling.”

Congress continues to discuss whether to loan the Big Three up to $25 billion to help with cash flow problems. GM has said it will have the minimum amount of necessary cash to operate at the end of this year. The massive corporation already has suspended spending on things such as research and development and has closed plants and laid off workers.

Congress already said it would give the industry $25 billion to re-tool plants to make more fuel-efficient vehicles. This latest cash infusion would be in addition to the previous amount.

Young said sales this year at Chevrolet have dipped below 12 million cars, compared to more than 16 million just two years ago.

General Motors Corp., Ford Motor Co. and Chrysler LLC employ about 1 million people at auto dealerships nationwide, the Associated Press reported earlier this week.

“If the bailout doesn't happen, the other dealerships might be around,” Young said. “But there will be a lot of suppliers and workers in general who will have a tough time making it.”

Young said a bailout would not only help the automakers and service plant workers, but it could be the first stabilizer to getting the country's economy back on track.

“If we can at least get the public to realize that GM and other companies aren't going bankrupt, then it will add a lot of confidence to our area,” he said. “It will bring stability to markets back to the country, too.”

Young said he didn't think the federal government was doing enough to help Michigan and the troubling economy.

“You can see all of the arguments of why (the automakers) need to be around,” Young said. “I think (the federal government) has been thinking too long and they're not thinking about the big effects. The longer they wait, the worse it gets to pull out of this.”

Signature Ford of Owosso dealer Joe Falzon agreed.

“The (automakers) should get it,” Falzon said. “The financial institutions got the money without any questions asked. For Michigan it would be a huge blow if it didn't happen.”

Falzon said the bailout should be looked at as a loan.

“It simply means that (the automakers) are asking Congress to have enough faith in the American auto business to loan the money,” he said, “coming with the understanding that structural changes will be made and there will be an attempt to pay back with interest. They're just asking Congress to make an investment.”

Falzon said that is why it needs to happen; to show people the government has faith in the auto industry - faith that is lacking and affecting sales.

“It's slowed business down a bit,” he said. “If this loan doesn't happen, then hopefully the car manufacturers are going to have to make some contingency plan. That means closing plants, laying off people and filing for bankruptcy.”

Falzon said the impact would quickly spread to Shiawassee County.

“We'll see it right away,” he said. “You're talking about people losing their jobs for an unknown period of time. It will probably start a cascade that will ripple through the whole industry and the economy of the country too.”

Graff Chevrolet manager Mark Benmark said he sees a positive future for Michigan and the country if the bailout is approved.

“I think it will happen,” Benmark said. “I think right now it's a good idea for (Congress) to have the automakers come back with a good plan for what they're going to do before they get the money. I think the market will be very good after it happens.”

- Contact Nathan Bruttell at 725-5136 extension 231 or nbruttellarguspress@gmail.com. Post comments about this story online at www.argus-press.com.

Comment on this Story

The Real Truth wrote on Nov 29, 2008 9:48 AM:

" People, Ford and GM have established production facilities in China, India, Thailand, Brazil, Mexico and other low-labor-cost countries. What's more, U.S. car brands have "gone native," mixing their DNA with foreign-made vehicles. GM sells German Opels as Saturns, Korean Daewoos as Chevrolets, and Australian Holdens as Pontiacs. It's only a matter of time before Chinese Buicks hit the scene. "

Exactly Right wrote on Nov 29, 2008 9:41 AM:

" You're exactly right. These foreign-owned auto companies are only coming to the U.S. because they know they can play one state against another. They know they can go to Tennessee and say "We'll open a $2 billion plant in your state if you have a right-to-work law." What does that mean? It means the car manufacturers' employees are NOT FORCED to pay union dues. So they negotiate with Tennessee and know that they'll never be given a cherry deal like that from Michigan.

Unions are the death of Michigan. "

Why Do You Think... wrote on Nov 28, 2008 11:12 PM:

" Why do you think foreign auto manufacturers choose to open plants here when they can relocate to other countries and build less expensive cars there? 2 reasons:

1. They know the U.S. Big 3 are being strangled and crippled by these stupid unions like UAW. They know other states (Texas, Tennessee, and others) will gladly give them tax incentives to relocate there because they're going to put thousands of people to work and pump billions of dollars into their local economies. They know that Michigan can't offer those same incentives because of the unions. Michigan can't afford to attract exactly the type of manufacturers it needs to stay alive.

2. Take the same exact product. One sells for $25,000 and one sells for $23,500. These foreign-owned manufacturers know that 9 times out of 10, the smart car buyer is going to buy the same vehicle for $1,500 less. Wouldn't you? "

Red State Blue State wrote on Nov 28, 2008 11:07 PM:

" Google "Right to Work States" and you'll see 22 states that have legislation that forbid unions from requiring paid membership. Isn't it odd that these states - most of which are in the south and west - traditionally vote Republican(pro-business) while the states that favor mandatory paid union memberships traditionally vote Democratic (pro-union). What does that tell you, people? The Democratic party has been for decades with the unions - just look at Hoffa.

We need to erase this Michigan union mentality once and for all. The only way to do that is to let the automakers fail. There's no need for auto unions if the auto companies themselves fail. Shut them all down. Here's what'll happen to the U.S. consumer as a result:

1. Car prices will fall because we won't have to pay the health care premium in every U.S. auto union vehicle we buy.
2. Car quality will improve.
3. More choice: An industry that is run more like a business and less like an illegal charity will see more choices evolve, more competition, and a level playing field. "

Let Them Fail wrote on Nov 28, 2008 11:00 PM:

" If your body gets cancer, you go to the doctor for radiation or for invasive surgery to remove the cancer. It isn't until the cancer is fully removed from the body that the body can regain health and begin to regenerate.

If your state economy gets economic cancer, you need to remove the problem. You need to replace the dead industries (yes, the Big 3 are essentially on life support) with thriving industries. People on this thread are getting confused. The dead industry here is the unionized auto industry. The thriving industry is the non- or lightly-unionized auto industry.

The unionized auto industries of the Big 3 are a blight on Michigan's economy. Kick the unions out and watch the foreign-owned automakers jump at the chance to take over existing plans, supply chains, vendors, etc. "

Dead Wrong wrote on Nov 28, 2008 10:55 PM:

" "Itsnotaboutsympathy" - you have this narrow-minded and myopic misperception about the importance of the Big Three automakers to the U.S. economy. Get past the 90-year legacy and you have nothing. Here's exactly what's going to happen:

When the Big 3 fold, the automakers, insurance companies, food industry, tire industry, etc. - every industry you mentioned - are simply going to gravitate to where the real U.S. auto industry relocated years ago...to states that have right-to-work laws and don't require unionized employees to pay dues. It's called capitalism. Those same companies will abandon Michigan in a heartbeat and head to the south and west where the thriving automakers are working

You also erroneously state that "Hyundais" and "Toyotas" are basically all imports. Well, no, they're not. There are more Hyundais, Toyotas, and vehicles owned by foreign companies that are manufactured and produced in the U.S. than U.S.-owned automobiles. Repeat: more "foreign" cars are built in the U.S. with U.S. workers than U.S. cars. It all boils down to one thing: the input costs of labor. These workers in these southern and western states are more than happy to work for a decent, respectable wage and don't need their unions to dictate policy.

Unions: the death knell of the U.S. auto industry. "

Itsnotaboutsympathy wrote on Nov 28, 2008 6:15 PM:

" We need this bailout! I understand that the "big three" have run themselves into the ground. I understand that all three have taken jobs away from Americans. I understand the important facts about what is going on and what is going to happen. DO YOU?

If the goverment doesn't bail out the "big three", then what? Maybe 200,000 - 300,000 jobs lost? No, try millions over a period of a couple years. You need to think outside the box.

Think of the industrys that will be affected. The IT industry, insurance industry, tire industry, trucking industry, national security industry, food industry, clothing industry etc.... If the demand goes away for parts, layoffs happen, unemployed Americans. If the demand to transport vehicles lessons, layoffs happen, more unemployed Americans. If there are more IT specialist unemployed, the average pay will go down. If more and more people have less money, they don't go out to eat as often which will result in closing resturants and more unemployed Americans. If a million Americans can't afford health insurance and the policy writers have less policy holders paying monthly, the price for insurance goes up. The national crime rate will sky rocket just because of Americans doing what they can do to survive, and I believe the unemployment rate for the US will hit 30% within 2 years.

Hondas, Toyotas, basically all imports, will increase their price just because of demand. The used car market will crumble just because the dealers with new car inventory will be giving them away. Why, you ask? New cars with no warranty. Are you going to buy one at full pop? Dealers employ not only sales people, they also employ technicians, accountants, human resource managers, clerks, delivery drivers, general maintenance workers, etc..... And, just think how many new car dealers will shut down across the US. More and more unemployed Americas.

Yes, some of these people will find other employment opportunties, but what of the rest of them. Where will they find work?

Everybody in the United States Of America should be conserned. If the goverment doesn't help with the bailout, the American dream will consist of nothing else but food and where to sleep.

Please set aside your anger and really think what could happen, or better yet, what will happen if the "big three" shut down. "

Nonsympathetic wrote on Nov 28, 2008 9:51 AM:

" "disagree", you said that I need to wake up because it's not the guy making 25-30 bucks an hour crying. You are just plain incorrect. I frequently interact with many GM wokers. Both "about town" in my social life and at family get togethers. I know what they make, I see what they spend their money on, and I hear them complain about not being paid enough and how they can barely make ends meet. Don't insult my intelligence. I see what I see, I hear what I hear, I know what I'm talking about.

I know that if the Big Three go belly up it's going to be a "economic whirlwind" that will effect "suppliers, auto dealers and anyone else remotely associated with the industry". Again, you insult my intelligence. I know how the automotive supply chain works. I may only make 10 bucks an hour but that doesn't make me a moron. The human intellect isn't dependant on making more than 15 bucks an hour or obtaining a college degree. Will I have money in my pocket if the big three go under or file bankruptcy? Yes. I will. My wagon is hitched to a different horse. Will it be tough? Most likely. Will I be able to make it through? Most certainly. Why? Two reasons: 1)I've never complained about my pay, and 2)I've just lived wihin the means of whatever my income provided.

It's not hard, it simply requires a change in attitude from that of a consumer to that of a provider. "

Greedy People wrote on Nov 28, 2008 3:45 AM:

" I live in Michigan, And to tell you the truth, I think all of you GM workers need to pay your own health Insurance out of your own greedy pockets. The rest of us have to or go without. And for all of you idiots who took bail outs, just how long do you think that money is going to last you? You will be broke before I am, and I don't work for GM. GM is just being greedy right now. They want it all or nothing. And for all of you GM workers, if they can sell you out they will. I think all of you need to start paying for your own health insurance out of your own pockets. It looks like congress is going to bail them out, but at what cost and to whom. It is our tax dollars at work bailing out GM. And your sorry butts with your health plans. Other big bussiness have failed and the world still rotates. So wake up. "

concerned citizen wrote on Nov 26, 2008 6:11 PM:

" I say get rid of the unions and get wages back down where companies can afford to stay HERE. Its your union leaders and their greed that run our auto indrusty out of the US. I'm just afraid you haven't seen anything yet..We're in for change alright..hang on! "

Anne wrote on Nov 26, 2008 6:09 PM:

" Falzon is correct, it is meant to be a conditional loan...
However those running the car companies have a hard time being realistic in the damage they have done, nor have they taken responsibility for much of it for decades (3 planes to ask congress for corporate welfare, yep... that is going to get them respect... lol). If they haven't learned to manage their company yet, they never will.

The dealers, the workers, etc. are always the ones who suffer for the incompetence of the bosses, but bankruptcy is the only hope for them to restructure in a way that won't have them back begging in a decade.

Falzon's comparing the finantial bailout with a single industry's long past due reconning indicates either he is as willing as the CEO's to take advantage of a situation or he, like many, didn't understand how serious the
meltdown of our entire banking industry would be to the world. The car companies affect Michigan largely, even the US as a whole is not tied to them as it once was.

Painful, yes. The end of the world, no. "

You Do the Math wrote on Nov 26, 2008 4:15 PM:

" Tony Young indicates GM will sell about 12 million vehicles this year. The Big Three automakers are seeking $25 billion in bailout money. There's about 138 million taxpayers in the U.S.

That means every U.S. taxpayer should be taxed an additional $181 to bail out an industry whose (mostly foreign) competition is employing Americans elsewhere in this country and building a superior product. In other words, the Big 3 automakers are asking us to each pay an additional $181 so some Michigan auto-workers don't lose their jobs in which they're building overpriced, inferior products.

That's socialism, folks, and corporate welfare at its finest.

Tony Young's a successful man - and our family has purchases vehicles from his dealership - but he's wrong here. There's no financial contagion at risk if the Big 3 automakers don't get the bailout. If you want our hard-earned taxpayer money, show us how you're going to spend the $25 billion you're seeking to offer cheaper, more competitive products like the Japanese, Germans, and Koreans.

Otherwise, stop taxing us for your decades of failures! Is there anywhere else on Earth where taxpayers are asked to pay a tax on an entire industry's failures?????? "

Sick of Unions wrote on Nov 26, 2008 4:09 PM:

" Let them fail. It's no coincidence that the automakers in southern states such as Alabama, Georgia, and Tennessee are thriving because those are not big union states and there are right-to-work laws in place that limit unions' abilities to impose mandatory dues.

There are 22 states in the U.S. (including Florida and Texas) that have right-to-work laws and that's where the foreign automakers (who generally build a better car for lower wages) choose to build their assembly lines.

Michigan needs to clean house immediately. Kick out the auto unions on day one and you'll see an economic renaissance the likes of which you cannot contemplate. Why are people getting paid to go to work and literally do nothing???

If Michigan fails to pass right-to-work legislation, the state's official unemployment rate will top 10%. Any support for Michigan automakers has to be tied in with right-to-work provisions. Short of that, let them all fail. "

disagree wrote on Nov 26, 2008 3:50 PM:

" Hey, Mr. Nonsympathetic are you going to have money in your pocket if the big three go out of business or if they file bankruptcy? You need to get out of your dream land and wake up it's not the guy that makes 25-30 dollars an hour that crying it's the CEO's that take their corporate jet's to meet with congress that's what is causing alot of the problems. If the big three go belly up it will send us into a economic wirlwind that we may never get out of, because it's not just the Gm worker that will get let go but the suppliers and the auto dealers and anyone else that is remotly associated with the industry. That's great that you can go and do your thing but it's not all it's wrapped up to be. THE UNITED STATES NEEDS THIS BAIL OUT!!!!!!!!!!!! "

Carolyn S. Pierce wrote on Nov 25, 2008 11:35 PM:

" Our government needs to think about the many people who will be without jobs through no fault of their own, the line from the manufactures to the stations who sell the gas, and the ones who make the parts to fix our cars of the ones who can not fix them theirselves.
Now to the manufactures....Bring your companies back to the states, from all the foriegn places......to me you are guilty of treason to your county who has been so good to you all these years, maybe more people would be on your side in this issue, if you spent the money you spend in those countries here in the US of A. of course this is just one persons opinion.but think about it......... "

Nonsympathetic wrote on Nov 25, 2008 7:04 PM:

" Employees of the Big Three need to wake the heck up. Michigan hitched its wagon to the auto industry and now that the industry is in dire straits, so is Michigan. That said, those of us who do NOT work for the Big Three don't feel your pain and could care less whther you keep your jobs or not. You are among the highest paid hourly workers in the world, you have some of the best insurance in the country, and your fringe benefits are, in a word, extravagant. Yet you complain about not making enough or not being respected or not being treated fairly or not being able to pay your bills. KNOCK OFF YOUR WHINING!!!! I make a little over 10 bucks an hour, my wife makes 12 and hour. Yet, we have zero credit card debt, we pay our bills before their due dates, our cupboards have plenty of groceries in them, our kids have more clothes and shoes than I ever had growing up, they have more toys than I ever dreamed of...and we STILL have enough for me to be able to spend 140 bucks a month on cigarettes, buy a 12 pack of beer every now and again, pay for a cell phone for her and I, pay for DSL internet usage, and go out to eat every couple weeks.

The taxpayers shouldn't have to foot the bill for the perpertuation the Big Three's collective foolishness. They need to go to their employees and say "This is how it is and we can't put it any simpler...you take pay and benefit cuts or your job is eliminated because we signed union agreements we just plain can't live up to."

For government to use MY money to help the Big Three isn't going to accomplish anything except serve as a reward for the greediness of the automakers and their employees.

Yes, I said GREEDINESS. If my wife and I can meet our obligations and still have some smoking, drinking, cell phone, internet, and dining out money it on 22 bucks an hour why can't YOU make your ends meet with your 18 or so bucks an hour? Does your husband/wife work? If so, the federal minimum wage law tells me that he/she makes more than $4 an hour. If there are tow breadwinners you already make more than my wife and I. You should have plenty of play money after meeting your obligations if you're living within your means. We have play money, BOTH our employers are financially solvent and neither we nor our our employers are begging government for help...because we and our employers live within our means.

Try it. It makes life MUCH easier...and prevents the embarrassment of being forced to resort to begging. "