In their reelection push for the midwest’s auto country, the Obama-Biden team is stepping up promotion of the auto bailout and the jobs it saved for United Auto Workers members, but industry officials say they are ignoring the tens of thousands left jobless when the administration ordered dealerships to close.
According to industry insiders, some 2,243 dealerships were ordered closed in virtually every corner of the country. And with an average of 50 workers per dealership, according to auto dealers groups, that means some 112,150 salesmen, mechanics, finance managers and custodians were shoved out of their job.
In the agreements with Chrysler and General Motors, the two firms that took the taxpayer-funded bailout, Chrysler terminated 25 percent of its dealerships and GM 26 percent. Ford did not take any bailout money.
Vice President Joe Biden was in Ohio’s auto country this week touting “Obama economics” and how it saved auto workers’ jobs. He said that the administration “values the role of workers.” Today he met with workers at a Chevy dealership.
When the administration moved to cut dealerships, many fought back but most lost.
Ford, on the other hand, began restructuring long before the bailout was considered and reported to Congress in 2009 that it had cut 15 percent of its dealerships through closures and consolidations over four years.
In explaining the rapid closure of GM and Chrysler dealerships, the “Office of the Special Inspector General for the Troubled Asset Relief Program” gave the following reasoning:
“The Auto Team’s view about the need for GM and Chrysler to reduce their dealership networks and do so rapidly was based on a theory that, with fewer dealerships (and thus less internecine competition), like their smaller networked foreign competitors, the remaining dealerships would be more profitable and thus would permit the dealerships to invest more in their facilities and staff. For GM and Chrysler, the theory goes, this would mean better brand equity and would allow the manufacturers over time to decrease their substantial dealership incentives. In addition, the Auto Team felt the companies’ best chance of success required “utilizing the bankruptcy code in a quick and surgical way” and noted further that it would have been a “waste of taxpayer resources” for the auto manufacturers to exit bankruptcy without reducing their networks. Only time will tell whether and to what extent the rapid reduction of the number of dealerships will improve the manufacturer’s profitability over time…”
