think that would actually what happened. >> thank you. >>. . >> next, a house hearing with top executives at general motors and chrysler. we will hear from several auto dealers about the two companie'' restructuring plans, which include thousands of dealership closures. bart stupak of michigan chairs

the commerce subcommittee on oversight. this is a little over four hours. >> this committee will come to order. there's a lot of interest in this hearing today, and i expect members who are not on the committee will be coming in and out. we will try to hold a tight rein on time, statements, and questions in this hearing. there is a lot of interest in this oversight hearing, as i said. this hearing today is entitled gm and chrysler dealership closures and restructuring. i will begin. for much of the past 100 years,

general motors has been the largest automobile company in the world. the detroit free, gm, ford, and chrysler have filled the engines of michigan's economy and that of the u.s. for generations. through their vehicle manufacturer, the industry has created and supported millions of jobs. with the recent global financial collapse, much of the domestic auto industry has been brought to its knees. in 2008, gm and chrysler lost $30.9 billion and $70 billion respectively. in order to survive, the both filed for bankruptcy. in the bankruptcy process, gm has announced plans to close roughly to predict zero hundred dealerships and chrysler announced plans to close 789 dealerships nationwide. the government has loaned billions of dollars to them and offer -- in an effort to help stabilize them. committed to assist them while

emerging from bankruptcy. today's hearing will focus on several issues associated with general motors and chrysler is decisions to close more than 2,000 dealerships across the country. among the questions to be answered r -- why did the manufacturers believe they need to close so many dealerships? what criteria were used to determine which dealerships to close practice how do gm and chrysler save money by closing these dealerships which are independently owned? why were chrysler dealers given a mere 26 days notice that their franchise would be pulled? why were dealerships that have been meeting or exceeding their expected sale requirements still ordered to close? cited chrysler effectively ordered dealers to buy more cars in january but now refuse to buy those cars back from dealers who are being forced to close? who made these decisions of which dealerships to close? what are gm and chrysler doing to assist dealerships with

selling their parts, cars and tools before they are put out of business? how well the dealerships closures and restructuring make gm and chrysler more competitive and profitable? from michigan and i want to see general motors survive. i think we all do but we have a saying in michigan that when the auto industry sneezes michigan catches a cold and out due to the global financial collapse entire nation is feeling the impact of a crippled domestic auto industry here and other than high gas prices or serious food an outbreak i can think of a few subjects that have brought a buyer of some money as they closed. i understand that general motors and chrysler new to improve their bottom line. i also understand that the import brands have far fewer dealerships with higher sales volume per dealership. what many of my colleagues and i do not fully understand is why there is a need to close some many dealerships and why

dealerships that. to be forming well are now being told to close their doors. we will hear from chrysler today, the average chrysler dealer sold 405 vehicles and lost $3,431 in 2008. we'll also hear from the komen dodge in tacoma, washington. tacoma dodge had a net sales exceeding $1.7 million last. was one of the top 100 dealers for sales of parts in 2008 and was the number one ranked dodge dealer in western washington during the month of april this year but still received a closure notice from chrysler. i look forward to asking mr. press how he reconciles this decision to close the, dodge spirit as i mentioned, i want to see gm and chrysler return to strong and private companies. i am however, concern that the time frame for dealership closers in the way in which dealers have been treated it may actually damage the brands more than help them.

i am also deeply concerned the closures will hurt rural communities disproportionately. in my pastoral number mission -- michigan district if a dealer closes down and can be a two hour drive to reach the next closest dealer and this will cause added expense and hardship for my constituents who need to have worn to work for a special service done and is certified dealership. in addition, when it comes to time to purchase a new vehicle many of my constituents will abandon gm or chrysler and go to whichever brand is locally sold by people they trust within our communities rather then traveling a long distance to future impersonal big box dealerships with a tone of the sales or the service staff. in closing, i want to thank general motors and chrysler executives for coming here. this committee understands how busy you are and greatly appreciates ticking time to work with our staff and attend today's hearing. in addition i want to thank the dealers who have come from every region of the country to testify

today. i know that in many instances many are facing the loss of your livelihood and to take the time and expense to travel to washington to be part of this hearing is appreciated by myself, the staff and everyone here. next i turned to the ranking member, mr. walden, for opening statement. >> thank you, i want to thank you and chairman waxman for concurring in the need for some committed to conduct oversight hearing an investigation to get answers regarding the termination of auto dealers franchises across our country. i want to recognize the dealers including constituent of organ second district, bob thomas of thomas chevrolet cadillac. at bob and the rest of the dealers have taken time and expense to travel to washington and provide us with their perspective on the issue and i welcome mr. press of chrysler and mr. henderson from general motors, we're honored to have you here today as well. we have hard questions and i appreciate your willingness to come here today and explain your situation, your perspective with

clear and straight answers. since american taxpayers on sister% of general motors we have a right to know just how the decisions affecting our constituents are made. we have a duty to make this process more accountable and trans parents were all concerned. so let's start with a look at the customer service. mr. henderson, you spend pretty large sum of money on newspaper ads recently and i'm sure you're familiar with their own ads proclaiming concern for greater transparency and customer service. yet you have dictated the closure of gm dealerships across organic and the country and it was specific in burns, organophosphate appear if you are a gm customer and the dealership in burns, oregon is closed, your nearest gm dealer is idaho 136 miles away. that is the equivalent of driving from philadelphia to washington d.c. to get service for your general motors vehicle. since we don't have the three plus hours to take to drive

their even in line of the new camaro is we're using the fastest plane on our air force, the f-15 eagle and to demonstrate their route all i talk to enact new brand of customer service, this will be in 3-d for your enjoyment. it will take a while. just about a month ago general motors and chrysler said what were effectively termination notices to about 2,000 auto dealerships nationwide. we're told these notices are to accelerate restructuring plans that are i must do step for the troubled automaker's and this is a chrysler and gm can emerge successfully from bankruptcy with stable financial support. many dealers in the communities they serve frankly feel blindsided. the mid-may notice is given the form of complex take-it-or-leave-it wind down contracts with weeks to make important and expense of life changing decisions about their own livelihoods. a few explanations, no real opportunity to negotiate corrections or even sell to another more favored dealer and no clear rationale for why they

ever chosen foreclosure. thousands more receive continuation contracts equally complex which force into 18 months of limbo giving up protections against abusive practices they would normally have been able to be protected against under state franchise laws. but they have no choice -- it was a take-it-or-leave-it. in the agreements require the dealers to say there were assigning underdress. really? was talk about transparency -- we have yet to get a clear answer on how the so-called rationalization of dealer network will save the automakers are taxpayers' money and rationalization seems like the 21st century version of we have to burn the village to save it. i want to hear this morning from gm about how cutting dealers' really will save $2 billion. the national auto dealers association argues that cost a little on the margin and provide necessary convenience outlets for consumer sales and even local connection the automaker is so sorely needed. dealers even small dealers make sales and if the automakers

money by what we can gather today, many affected are not bad apple operations and may be worth meeting amended its sales quotas but it is hard to see them as costs rise on a maker operations. they often are the mainstays of the local communities, they contribute substantial taxes, support local supports the community events and have good reputations. they are the established, hard working and struggling in a horrible economic environment and soon their employees will be out of work. by one estimate the termination notices may cost upwards of 190,000 well paying jobs. in the validity of the cost issue is a particular interest since the press reported yesterday the house majority leader said he has spoken to the white house auto task force and an acknowledged that the automakers will say no immediate cost savings from closing the dealerships. mr. henderson, you say gm is going to be more accountable, let's talk about accountability -- two mid the closure decisions, however, the maine, where they may come amid the

recent decisions to reverse closures of 41 dealerships. mr. anderson, you say gm will be focused on customers and less talk about customers -- how is it the mustard eliminated dealerships which compete with each other for price, quality and service. it has been set our domestic automakers on a rural america and you know how it is to serve rural america to limit the loan dealership in a place like burns, oregon. we're still not to idaho by the way it. we did past stinking water pass. in this alice-in-wonderland world of rationalization were up is down and less is more our customers are by less competition and higher prices while on the taxpayers a dime better served. in bend, oregon and the general motors terminated the only gm dealerships substantial service repair facilities servings -- servicing thousands of assisting thousand square mile radius and to the planners behind us understand the rural america really understand customers and the world market, the loyalty, let's talk plainly if you want

to turn gm and chrysler into a network ever been dealerships then tell me the don't ask me and my constituents to provide the bailout. or is your plan to use the crisis of bankruptcy as a cheap and quick way to get rid of dealers you don't want only to eventually sell or put in place since you don't sell them a new franchise in a market you have laughed? if you plan to reduce dealers can you give me a guarantee was simply get rid of a bob thomas only to turn around and offer a gm franchise to someone else in the coming months? so the goal today mr. chairman is to get straight talk and fax, we need to know the real reasons for the closure decisions and whether they are really justified. we need to know how this is a good deal and the consumer, we need to know whether auto dealers targeted foreclosure in their local communities are getting a fair shake. we recognize tough and painful times for the auto industry especially workers and suppliers, the reverberations of detroit's troubles have reached into every one of our districts. i look forward to the testimony

and to working with you on further investigating this matter and hope future hearings will focus on the role of the president's auto task force as well. >> thank you, mr. walden. mr. dingell for opening statement please. >> mr. chairman, thank you, and i commend you for holding this hearing. this is a time of unprecedented hardship for the domestic auto industry. but i feel it is prudent that we objectively examine all aspects of general motors and chrysler restructuring plan. including how they affect dealers. although restructure of these companies is inevitable, and necessary, it means that we are going to have to achieve their long-term viability. but at the same time, are going to have to look to see how it is being done and how it is going to impact on other parts of our economy. measures must be taken to mitigate excessive hardship on working americans especially in

in view of this, i will be asking frank questions of our witnesses today. in particular, i seek to determine for the record how gm and chrysler are arrived at the decisions they did related to dealer closures. public furor over these closures demands truthful answers from these companies regarding these matters. it is my hope that will provide much needed insight into the decisionmaking process whose results will affect the livelihood of many thousands of americans in all parts of the country. moreover, i understand that gm and chrysler have approached dealer closures in a markedly this similar fashion. this should again be subject to candid discussion. finally i wish to ascertain what steps if any at all gm and chrysler have taken or will say to mitigate the impact of these closures on dealership owners

and their employees. and also on the communities where there are fair treatment is paramount to the success of any rational and a rationalization of the companies' respective a value streams. i conclude by encouraging our witness to engage in open dialogue with members of the committee about the matters that i have just mentioned. the honest disclosure of today's hearings is necessary to restoring the semblance of public trust in the plans were restructured. so thank you mr. chairman, thank you to our panel, and i yield back the balance of my time. >> thank you, mr. dingell. mr. barton. >> thank you mr. chairman. i want to thank you and chairman waxman for holding this hearing and thank you personally for agreeing to let mr. frank backer who is a dealer in my district testify and also thank you for being willing to put a statement in the record of congressman allowed to read to isn't a member of the committee but has

asked to sit on the diocese and you indicated you except unanimous consent to allow his statement into the record so i appreciate all of those courtesies. in mr. chairman, i have a prepared statement and i will submit for the record. but i want to just kind of speak extemporaneously. i see both sides of this issue, i have a gm assembly plant in my district in arlington, texas that has been in business since 1954. 2400 people that workfare. mannesmann about 250, and the uaw workers around 2200. they have been making cars and trucks in arlington, texas are over 50 years. i've got dealers all over my district about a dozen of which have received closure or termination or failure to renew

notices. and i met yesterday with the president of gm north america and also the president of chrysler. and i see the management side of this, the manufacturing of the business side of it. it's a different era and we have to make tough decisions to keep u.s. nameplate manufacturing cars and trucks in america. i understand that. in but there is another side -- there is a human side. a dealer side and we are going to hear from mr. frank that is from a water taxi, texas. he is a fourth generation gm dealer and i think a second generation the jeep dealer. his grandfather started selling chevrolet in texas in 1926. he made it to the great depression, he made it his family -- his family minute through world war ii when you have quotas, they made it to the

boom years of the '50s, they made it through the gas rationing of the '70s. boom or bust and there has been blank and tackler selling cars in texas for over 80 years and then bang he got letters on i think back. >> terminating his contract immediately or within three weeks ended gm say they weren't going to renew him. now, when the gm and chrysler people and the managers were in my office yesterday there were very sincere. they have their flip charts and they have their notebooks and they could look up and show me if i wanted to see the performance or nonperformance of all the dealers in my district. but that doesn't touch on the human story. and again, carlyle chevrolet in

texas has 40 employees. they are not at the bottom of this flow charts, and they're not at the top either, they are not at the bottom. he told me that last year he paid $1.3 million in taxes in ellis county. it employed 40 people. cells and average -- he sells an average of 50 cars and trucks a month. in good years you can double that. so he could do better, he says that. but his business that has been in his family for four generations, if we can't get chrysler and gm to take a second look, it is gone. and his son, austin, who is sitting out here, his opportunity to the american way of life as we know it is gone. now what i am asking, mr.

chairman, is i am not asking the management of chrysler and gm to do things that don't make sound business and economic sense. but what i am asking is to show little mercy of that is the right term. every decision doesn't have to be the toughest decision you can make. you cannot bear on the side of leniency and if somebody is selling 50.5 cars a month and the goal is for them to sell 51, you don't have to cut them off at the knees. so mr. chairman, i want to hear from both sides but i really hopefully by the end of the day want to hear from the presidents of the manufacturing companies that they will go and take a second look at some of these decisions and if there is an

opportunity that makes reasonable business sense, that they will give the people that are represented today an opportunity to continue in business. because if they go out of business it is gone. and ultimately of nobody is selling cars and trucks, it doesn't matter which are manufacturing capability is -- nobody will buy. so i thought i yield back. there is another hearing going on downstairs. mr. markey subcommittee is having a transmission hearing and i got to make a statement down there to but i will be back up here for the questions and thank you for your many courtesies. >> thank you and members will move in and out. while i am adding it to, we have other members are not part of the energy and commerce committee who are not part of the subcommittee on our year. and i know there is some legislating pending an patrick

rphy from pennsylvania, not on committee but very interested. and i'm sure there will be popping in and out with legislation and in all honesty i think we have for the 35 members of congress and 430 contacted me at one other dealer to testify today. that wasn't possible, but we're going to try to get to this hearing and we welcome members and would like to watch these proceedings. but we're going to have to keep a tight timeframe on all members to have opportunity to ask questions. for those not part of committee if you have an opening statement you like to submit for the record without objection that would be accepted. and let me go one more thing. as we were preparing for this hearing, there is some concern that members -- to the confidentiality agreement or i should say dealer agreement that gm has and since chrysler is already emerged out of bankruptcy and gm is still there there is confidentiality with

the dealers and to talk with mr. walden it is our understanding that gm mr. henderson has no objection whatsoever to a dealer testified before the subcommittee about its business, circumstances are other matters involving the dealership. it is our understanding that general motors has no objection to the dealer testifying about the terms of the wind down agreement itself. and gm is proud of these agreements and the assistance and support they will provide to do is compare to what they would have received under an ordinary bankruptcy proceeding. gm does have concerns though on a confidentiality part of these wind down agreements into areas -- the amount of the wind down payments set forth in paragraph 38 and discussions with gm representatives about the wind down and out and found in that agreement. so i am cautioning members if we go and want to talk about the wind out agreement you have a right to but will not expect the witnesses for proprietary and business reasons to get into

financial amounts of things like this with the agreement. other than that we are in agreement, mr. henderson. >> that is, correct. >> mr. press, i'd guess you have no problems to make that is, correct. >> was continue with three opening statements, i will hold you to a pretty firm. next on the list would be mr. braley. >> thank you mr. chairman and ranking member walden. i thank you can tell from the interest in this hearing that is something that affects all for under 35 congressional districts and that is why i am going to segment by written statement and focus instead on the human cost of what we're here to talk about as ranking member barton was talking about. i am very fortunate one of my constituents who is the chairman of the national auto dealers association from clinton, iowa is here because he works and sells cars in the heartland and i think a lot of what we're talking about today is an explanation of how the decisions that are being made are affecting dealers over the country. my wife's grandfather was at

first ford dealer in dubuque, iowa and my uncle came home from world war ii and at the request of one of his navy bodies move to my home town of berglund, iowa and started working as a parts manager and a chevy dealership that he later purchase and worked in for 60 years. i want to talk a little bit about where we have been to get to where we are right now. because i remember those fall rollouts of a new models and the excitement that they brought to my home town. and i remember those ads that my old man and my hometown newspaper showing all of the employees of his dealership and how many years they had worked there to show the impact that his business was having on our community because of those same employees were the ones volunteering in the boy scouts and the little league and in school activities and they were

making our community a better place to live. and when you talk about these dealer closures, you are not just talking about the application of economic principles and mathematical formulations. you are talking about the impact on people's lives in every congressional district in this country. and that is why the issues we are going to be discussing today matter. that's why they matter to me, the matter to my colleagues on both sides of the aisle and a matter to the constituents we represent. because when these dealerships closed, they don't just take away the opportunity to buy and get service for your cars and trucks. they take away the life blood of these communities. and it is much broader than simply the loss of sales and service, it is part of the fabric of this country and mr. henderson and mr. press, your corporations were built on the backs of people like the dealers use the in this room who

went out there, invested in their communities and made to profitable during your boom time. and now i think each of you and your company is owed them and the taxpayers of this country a detailed explanation for your business decisions because we have to live with the aftermath. and i welcome every once testimony on the committee and the board to further opportunities to question the witness. >> thanks, mr. braley. miss degette for opening statement, please. >> thank you very much mr. chairman. in following up on what mr. braley and mr. barton said, these bankruptcies and is closing of the local car dealerships are not just affecting the dealers themselves, but millions of people who live in all of our districts who are going to be inconvenienced at the very least. .. because on the one

hand, we see these profitable dealerships in our districts. on the other hand, we see the need for consolidation and for saving money but we don't quite understand how closing those profitable dealerships works especially given the human implications and that's why we're concerned and that's why we're having this