The axe swings wide at Obama Motors;
A car dealer in Outlook is wondering what to do after being told by General Motors they were terminating his franchise. GM is chopping 40 percent of its dealerships in Canada with most of the closures happening out east. Bob Reid found out the hard way rural Saskatchewan is not immune. Reid Motors first opened in Broderick in 1912 and has been in Outlook since 1949.
In keeping with the new hopey-changey spirit rising in America, profitability is no defense;
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
I wonder how many still have Obama-Biden stickers on their back bumpers?
h/t Brent Weston
State intervention always sounds/feels good at the outset but is a very bitter pill in the end.
“I wonder how many still have Obama-Biden stickers on their back bumpers?”
I hope all of them.
My mother used to tell me stories about how the Soviet government systematically killed off the merchant class.
I scoffed at here. It’ll never happen here, I said. Too bad, so sad for your former country.
Now, I see it happening on a daily basis since late January.
In what is slowly transforming into the USSA right before our eyes.
First the financial system. Then the major industries (car manufacturing).
Last night, on the Greta va Sustern show on FOX, it was revealed Obama had a delegation visit the White House. No media was allowed, but the event was recorded nonetheless.
We like to rant on about the MSM here, but how many of us will be able to stomach life once Obama continues in the same direction and allows only government-approved media.
Take a look at the redistributive taxation policies, giving to those who ‘deserve’ any riches you may have.
I’m not normally paranoid or taken with conspiracy theories, but the US public only has a 16-month window left if they want to preserve their individual freedoms.
The People’s Republic of America is starting to take a recognizable form.
We the People have to rise against this monstrosity. You have nothing to lose but your future chains.
I’m beginning to see much clearer what my mother, may her soul rest in peace, warned about decades ago.
It’s not too late. Once top spokesmen for individual freedoms start mysteriously disappearing or dying, that will be final warning sign.
It’s sad that so many of the people to suffer from the idiocy of that disgrace of a man were people who didn’t vote for him (those that did are reaping what they sowed.)
“On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them.”
Reminds of when the Germans decided to take over the Polish owned businesses and put the owners out on the street. Then just hand the keys over to a relocated German.
Now if you’re Socialist this is perfectly understandable procedure as long as it’s not happening to you.
He’s just been nationalized. He is supposed to feel patriotic about it. Or so he’s told.
Will the Kulaks revolt ?
If they don’t, they are toast in Obamaland.
The liquidation of the Kulaks, Nepmen and other counter revolutionary elements must be accomplished ruthlessly. Petty bourgeois reactionary concerns about ownership, profitability, jobs etc. must be taken as evidence of counter-revolutionary agitation. Resistance must be assumed to be wrecking or sabotage.
Next, we can expect the forced collectivization of the farms and the nationalization of the financial institu . . . oh wait, we’ve already had that, heh, well, musn’t stand in the way of “progress”.
Welcome to Zimbabwe.
Profitable “farms” being passed to government cronies.
Well, it’s just a good thing the obamanation hasn’t had the chance to stack the court. Yet.
There may be hope.
the alternative is to withold any subsidies/bailouts/whatever.
but you righties fail to realize in a move of this scope there are ALWAYS oddball injustices and unfairness that happens. the main objective is to put the Big 3 on life support for the good of the economy. it is debatable if it will work; that’s not the point I’m making. the point is the nit-picking extreme right has tunnel vision because you disagree with the majority of American voters.
you can’t have it both ways no matter how constant the ankle biting.
soooooooo the right wing view is that it is very bad to have a prime minister with strong ties to Americans?
oh. only if it is a conservatist of the mulruiny tax cheat strain.
“A car dealer in Outlook is wondering what to do after being told by General Motors they were terminating his franchise.”
What to do? SELL TOYOTAS. Or Subarus, or Hondas, Nissans, Volkswagens… or get a Tata dealership.
Oh, and sue the hell out of Obama Motors for sticking you with the inventory.
I’m glad its not me.
“but you righties fail to realize in a move of this scope there are ALWAYS oddball injustices and unfairness that happens.”
Yes. That’s why us “righties” think its a bad idea. If you can’t do something without screwing over and financially ruining hundreds of companies, maybe it would be better to keep your fingers out of it.
Truth be told, this guy bought into a failing automaker with all he had.
This guy could’ve bought into any one of hundreds of franchises, or he could’ve actually built his own business, instead of tithing someone else’s ideas.
Instead, he went lock stock and barrel into a shit business model, and he’s paid the price.
Kinda sounds like capitalism to me.
carsalesman
“but you righties fail to realize in a move of this scope there are ALWAYS oddball injustices and unfairness that happens.”
Never mind those starving Ukrainians or those freezing in Siberia, you can’t make an omelette without breaking a few eggs, right comrade?
So you evil baby killing right wing hitlers should just stop complaining about those we crush for the revolution.
By the time 4 or 8 years roll around,most likely 4, the right will mobalize and start the clean-up.
“the main objective is to put the Big 3 on life support for the good of the economy”
Uh huh. For the “good” of the economy.
The reality is Americans will consumer less cars in the future. Production needs to fall with capacity. As production falls, capital will be freed up for more profitable ventures. Letting GM and Chrysler go bankrupt is necessary for the good of the economy. It will punish terrible management and force the union out. It will also allow new, efficient, and profitable companies to emerge if demand warrants it.
What is happening now will be terrible for the economy. Bad managers and unions will be rewarded for having bankrupted these companies. Good capital will be tied up in these bad companies and will not be redeployed elsewhere. Furthermore, the violation of property rights (for example: Chrysler bondholders) will have lasting long term repercussions.
But hey! Apparently wanting to have a sound economy based on long term viability is an extremist right wing concept.
I genuinely want Chrysler to go down in the clouds of dust. I want the company to not just be bankrupt, but become history, disappear, vanish.
Their latest models have the headlights that are either designed or adjusted so poorly, that their DRLs and low beams blind me. I am sick and tired of being blinded during the day and at night by Chrysler/Dodge/Jeep exclusively. Hate their guts and can’t wait till they are no more.
Hardboiled, do you not understand the difference between having your business fail due to business reasons, and having it shot out from under you by a tyrant?
Lemme ‘splain it to you. The first is capitalism, the second is socialism.
Oh … and let’s not forget the obvious immorality of stealing from taxpayers to fund a failed company. But then again, morality is a very difficult concept to grap …
Prosperity is a former American idea.
Genteel poverty with Horton’s $2.29 Lattes is all that anyone needs.
Spend more time getting to know your neighbors so you can keep an eye on them and report anything that my be look non-progressive or anti-state.
Yes, on planet Obama, life will be very different. You can get rid of buzz harshing uncertainty and challenge.
No need to worry about awful stuff like your retirement funds nor your mortgage your job … there won’t be any of those worrisome things. You will be worry free. But that is the only freedom you will have.
Live better in a more efficient 600 square foot apartment (no more yard work) … Do more reading and walking … and freezing and starving it’s good for your health. That is important because under the Coming Obama health care plan, you will not have much actual health care, just a place to go line up and read the New York Time while you slowly die of whatever ails you waiting to see a state doctor.
ETC.
Seems to me all those dealers being dropped would have an excellent reason to start class-action lawsuits against the manufacturers.
As far as I can see, GM is shooting themselves in the foot by shutting down 40% of their dealerships. How many of those small-town dealerships are going to take on Ford, or Nissan, or Toyota, and transfer their good will in the community to the new brand?
You know, it’s actually funny. I’m at a point in my life where I could really afford to buy a new vehicle; it wouldn’t be a financial burden. But the current spate of offerings from the Big 3 leave me quite cold, and there is scarcely anything better from offshore. My current work rig is 13 years old, and holding up just fine. And my leisure-time vehicles are collector cars, and are all much older than that.
Seems to me that one of the reasons that the Big 3 are in the glue is that their products have improved to the point that they are good for 20 years’ service with reasonable care, but they are still operating on a business model structured for a 2-year trade-in cycle. In effect, the pool of buyers that NEED new cars has become a much smaller part of the marketplace, and the fact that the products have all become so similar and “safe” in design has put a big damper on the group that might WANT a new car.
This is good. Once people get all the socialism they ever thought they wanted, force fed to them by Obama, maybe things can actually start to get better. Until then, expect it become, oh, not quite illegal, but very frowned upon (wink wink, nudge nudge), to be driving anything other than a Government Motors product. There will be extra taxes, levies, and disincentives for Eurpoean, Asian, and even North American cars not manufactured by government owned companies.
Posted by: The Phantom at May 22, 2009 11:34 AM
Say – if the domestic car companies were liquidated (or restructured) under bankruptcy protection, their production capacity would have been reduced by a bunch.
Do you believe that capacity reductions at the plant would not have been mirrored in the distribution side as well?
There would have been similar outcome, whether TOTUS/Harper have pissed away billions of our dollars on these welfare cases, or whether liquidation/restructuring had occurred.
That’s the irony.
Besides: it ain’t just a left leaning rookie president. It’s also a Conservative prime minister that’s doing the yanking.
One of the commentors on NP’s story on GM and CAW posted that CAW had lobbyed the Ontario government in the 90’s to allow GM to reduce payments to their pension so GM could give more goodies to the union at contract time. Can anyone verity that this really happened as I can find anything on it yet?
hardboiled
Cutting back on distribution networks is appropriate. Selling a franchise and not buying it back is not.
Yanking a franchise, refusing compensation and then giving it away for free to someone else is outright theft.
So, there is a grave difference.
I would bet good money that the beneficiary of the theft is politically connected to the democratic party.
I hope the affected dealers mount a class-action lawsuit, though America’s increasingly perverted sense of justice renders success uncertain.
Carsalesman wrote: “…the nit-picking extreme right has tunnel vision because you disagree with the majority of American voters.”
That has to be the most insane statement I’ve heard in quite a while. Since when does disagreement with the majority imply limited understanding?
I know a couple of used car salesmen, and they are great guys.
Owe-bamba would starve to death if he was a used car salesman.
I wouldn’t even make eye contact with the guy if he started asking if I “need any help” in his dealership.
On the other hand, almost any used car salesmen would make a better president than a marxist professor from Chicago’s burned out ACORN wasteland.
There’s plenty of blame to go around, but the obligation (under CAFE standards) to produce “fuel efficent” cars at a loss in order to continue making the profitable ones that Americans actually wanted to buy didn’t help.
Not many people know that even Toyota sells the Prius at a loss. How long can a company sustain itself under a regulatory – read politically motivated – burden that runs counter to market demand?
“How long can a company sustain itself under a regulatory – read politically motivated – burden that runs counter to market demand?”
That depends. Is the company unionized? lol.
gordinkneehill – good comment !
And under the ‘Not So Fast’ Banner;
———————–
Indiana pension funds ask court to halt Chrysler restructuring
By Bernard Simon in Toronto and Nicole Bullock in New,York
Published: May 21 2009 03:00 | Last updated: May 21 2009 03:00
Three of Chrysler’s secured creditors have asked a New York court to halt the carmaker’s Chapter 11 restructuring on the grounds that it violates their legal rights and the government’s authority under the troubled assets relief programme.
——————–
And, ‘Thrown Under The School Bus’
———————–
However, the Indiana State Teachers’ Retirement Fund said yesterday that it had a fiduciary responsibility to its members to continue the fight. The fund stands to lose $4.6m under the current settlement proposal.
—————–
http://www.ft.com/cms/s/0/8e88357e-459c-11de-b6c8-00144feabdc0.html
There must be some legal recourse for this guy and others, no? Sadly I get the feeling that their franchise agreement probably states they can terminate the agreement for any reason, not just for not meeting certain requirements…still, there’s got to be some kind of protection in the agreement for the franchisee.
“How long can a company sustain itself under a regulatory – read politically motivated – burden that runs counter to market demand?” Posted by: Kate at May 22, 2009 12:35 PM
Forever. Call it a Crown Corporation and charge excessive rents for output and restrict competition by legislative fiat. Bang, there you go.
The politicians have more clout, the bureaucracy have bigger budgets, and statist Canadians simply shrug their shoulders and complain about the evil socialist Obama.
There’s 40 Crown Corps now. What’s one more? Hey – you’re invested in the car companies now remember. $4 billion bananas in Chrysler’s pension fund. Soon to be followed by another $6 billion to bail out GM’s pension fund.
And besides, if Crown’s aren’t the way – the government is adept at using your money to create artificial outcomes all the time.
Those regional ‘development’ agencies have seen their budgets increase 28% since the Conservatives got power. Think they’re not for insiders and politically connected welfare cases? Think again…
still, there’s got to be some kind of protection in the agreement for the franchisee.
Posted by: bar_jebus at May 22, 2009 12:50 PM
As a franchisee, you are dirt.
If you’ve had success and hold multiple franchises, one will eventually get some stroke and be able to negotiate. Other than that – if the franchisor tells you to do it – you say ‘how high Sir’…
This guy has some warning after Obama stole Chrysler from the bind holders and gave it to his political supporters in the UAW.
He’s actually quite transparent.
“How long can a company sustain itself under a regulatory – read politically motivated – burden that runs counter to market demand?” Posted by: Kate at May 22, 2009 12:35 PM
Almost forgot – Air Canada.
The french language requirement sets them back millions of dollars per year.
And why yes, they are asking the government for bailout money too…
There is a lot of malaise in the world today – especially in Europe and N America. But the emerging economies seem to be doing quite well, thank you very much ! (India’s stock market is almost back to last summer’s high already)
Any dots to connect here ?? Could part of the West’s malaise be the worry over what the fetish might bring ?
The fetish of concentrating our efforts, allocating resources, spending dollars on the “Big Fight”.
The fight against an essential, for life on earth, gas.
A gas that is only 0.03% of the atmosphere.
A gas that is an insignificant GW gas.
A gas that powers plants, food.
The poor old, much maligned carbon dioxide. You are a Scape Goat like the world has never seen !!
The Automotive Industry, one of among many, could have dealt with, and is dealing with, real pollution problems (think catalytic converter) but is really up against it – the Disciples of CO2 religion.
I fail to see how it is the dealers fault, that the mother corporation cannot make a buck.
I always thought, the dealers are independent and buy their ware from the corporation, and are free to sell at a profit or loss. The only real connection coming into play when there is a warranty issue. If those powers that be, built better cars, those warranty claims would decrease…
so can someone explain how decreasing the number of independent dealers, helps the bottom line of the mother corporation?
cause I think they have some issues with their unions that need sorting out, more than anything, including any perceived quality control issues.
bob,
US doesn’t have 4 years to mobilize, it’ll be long over by then I’m sure, if they don’t do more than talk right now, then it’s lost.
I find it a little unsettling how these successful dealerships are being shut down, and being given away for free. That can’t be legal.
I am also willing to put money down on the fact that those decisions were based on party contributions/affiliations rather than the success of a dealership.
This doesn’t bode well for Canada, let alone the US.
**”Paterson makes a powerful case against the tendency, still all too common, to judge policies by their intentions rather than their effects.”
The end effects/result of O’Narcissist’s corporate-fascism:
“The axe* swings wide at Obama Motors”.
*Fasces: the rods with the blade of the Ax projecting: Chop, chop ……
…-
**”The God of the Machine”
http://www.cato.org/special/threewomen/god-machine.html
Obama’s “plan”:: Cut dealers, save UAW/CAW jobs.
Car buyers see no GM/Chrysler outlets, goes instead to Ford/Honda/Yoto/Nissan.
Order book gets thin at GM/Chrysler factories. CAW/UAW types told to go home – with pay. Red ink. Bail outs needed. Cost cutting needed, again. Close more dealerships. (Sounds like a computer programing do-loop, doesn’t it ?)
A must-watch video:
http://www.glennbeck.com/content/articles/article/198/16200/
Hardboiled said “This guy could’ve bought into any one of hundreds of franchises, or he could’ve actually built his own business, instead of tithing someone else’s ideas.”
My guess is the guy just played the hand he was dealt. We don’t know the reasons he went this way or that way. It was probably his best choice of the available choices. But he played the game fair and succeeded. He won in other words. Then someone stole everything. If he gambled and lost? Well that’s part of the game of business and you can criticize him for his choices. He played and won though.
If you play poker and win. Then someone breaks into your house and steals your money you don’t blame the game of poker. You blame the thief who broke in and stole the money.
I just have question, since we are forced to save GM here in Canada why are we not getting the assets of GM Canada? We bought it we own it!
Instead we get 2% of GM, I want the whole Canadian business broken off from the Parent. Why should the US Government own a corporation operating in Canada, plus I am pretty sure we have a law against foreign companies operating in Canada with more than 25% FORIEGN GOVERNMENT ownership.
I agree – and that’s the point. If you are a franchisee, your ass is owned by someone else. This ain’t appropriation.
If the car company had gone into receivership, same deal: reduced production, reduced distribution. You can’t change one without the other. That’s like WalMart ordering 30% less product but keeping all of their existing stores open.
The car companies failed. So will their distributors. And the gubmint as screwed you, and the dealers by getting involved.
The outcome though would’ve been the same if it was a court ordered closing, or those chosen by GM – probably under the same methods.
“There would have been similar outcome, whether TOTUS/Harper have pissed away billions of our dollars on these welfare cases, or whether liquidation/restructuring had occurred.”
That is the lure of totalitarian economics, the delusion that outcomes can be known in advanced, and arrived at more efficiently. This is like looking at the rosters of a sports team, and awarding the championship based on opinions, without playing the game.
The difference is that a government functionary now has power over people’s lives, and can hold out for bribes or favors based on his position.
This is like the European I once argued with who maintained that the bear in the cage at the zoo was free, and the bear in the forest was enslaved, because the bear in the zoo had his needs provided for for free and had no responsibility.
It’s just someone’s livelihood. What’s the big deal?
WOLVERINES!