Senator Hutchison’s Statement on GM and Chrysler Dealership Closures

June 3, 2009

WASHINGTON, D.C. – Senator Kay Bailey Hutchison (R-Texas), the Ranking Member on the Senate Commerce, Science, and Transportation Committee, made the following statement today during a Commerce Committee hearing on the General Motors and Chrysler dealership closures.

Thank you Mr. Chairman. Would you allow me to ask every person in the audience who is a dealer to stand.  We really wanted to see the people who are facing the issues we’re talking about today.   I think after the supplemental appropriation the week before last, just as I was offering my amendment to try to extend the time, for these Chrysler dealers be able to shut down their businesses in an orderly way, I got word that you were going to set this meeting for this week.  I appreciate it because I think we need to hear what is really happening.  It’s been about ten days since we had the debate on the floor and we had the assurances of Mr. Press of Chrysler, that there would be contact with the dealers who were being closed.  I want to set the stage because it was just the week before last that I was contacted by some of the dealers in my state who were affected and they received a letter from Chrysler dated May 13, 2009 saying that the agreement would be rejected with these dealers as of June 9th and that meant about three weeks notice.  Here was the attachment to the letter:

“As a result of its recent bankruptcy filing, Chrysler is unable to repurchase your new vehicle inventory.  As a result of its recent bankruptcy filing, Chrysler is unable to repurchase your parts inventory.  As a result of its recent bankruptcy filing, Chrysler is unable to repurchase your essential special tools.”

Many of the dealers, some who have been in operation and have had the burden of paying the taxes, hiring the employees, doing business in a community and being an employer providing a part of the economy of this great country, were notified after years of service that they have three weeks and basically no obligation from the company. So, I introduced an amendment to just say, sixty days.  Not three weeks.  Sixty days.  Well, then as we started debating this on the floor, all of the sudden, I had five co-sponsors and then ten and then fifteen and by the end of the afternoon, as I was talking to the Chrysler executives, we had 38 bipartisan, Democrats and Republicans who were cosponsoring the amendment.  The agreement that came forward from that process was that Chrysler would indeed do everything possible and make commitments to the dealers, that they would take every piece of inventory and the specialized equipment could be transferred by June 9th.  And so, I looked forward today to hearing from Mr. Press about the progress on that and I look forward to hearing from the dealers  about whether they believe that they have had that kind of outreach from Chrysler.

In addition, just this week, General Motors has begun its process, saying that it would close up to 40% of its dealerships, which would be approximately 2,300, give or take, of the dealerships in this country following on 789 dealerships from Chrysler.  Now just to put this in perspective, the families of these dealers who have made such an investment and who have taken, really, the financial burden for these dealerships, they buy the inventory, they take the financial risk. It’s a huge burden for those around the country. 

But we’re also talking about 40,000 employees of these dealerships.  We’re talking about 40,000 families besides the dealers themselves, and we’re talking about communities. I remember selling ads for the high school football program in my hometown, and who was the first person to buy that high school football program for the students that came in for their first experience at selling?  It was the auto dealer in town.  In my hometown, we had one, and I remember that and I know all over this country people remember that.  In United Way, who’s there first supporting the community for those less fortunate?  It’s the auto dealers and their employees.  So they’re the backbone of the community. And so every community where these auto dealers are going to be shut down, it’s going to be a loss, a loss of revenue, because the families are going to have to look for other jobs, but also their own charitable and community events will also suffer.

So, I think it is very important that the CEO’s, who are here, realize what is happening with these dealerships and I, for one, want to know how this process is working.  I want to know from GM how it’s going to work and I want to see if there’s any mitigation for these communities and these families that will come forward and it’s not our place to change your decision, it is not.  But it certainly is our place, especially where there is so much tax payer money involved for us to make sure everyone is treated as well as can be in this circumstance and we’ve heard from the people who make the cars, the workers.  We’ve heard about the bond holders, we’ve heard about the stockholders.  And now today, we’re going to hear about the dealers, because I think they had nothing to do with the design of cars, nothing to do with the cost of the company, and yet 40,000 people from Chrysler are losing their jobs and General Motors is yet to come.  I think it is Congress’ responsibility to look at the whole picture of this economic impact.  Thank you Mr. Chairman.  

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Click HERE to watch Sen. Hutchison’s statement during the Commerce Committee hearing on the General Motors and Chrysler dealership closures.

Click HERE to read the letter sent to Chrysler Dealers.

Click HERE to read the Commerce Committee letter to Chrysler and GM CEOs.

Click HERE to read the letter to Sen. Hutchison from Chrysler.