And I Thought Bailouts Were Supposed To Save JobsWe were told that the bailouts and the massive federal interference was going to save GM and Chrysler, but Chrysler files for bankruptcy and now this from both Chrysler and GM:
General Motors Corp. told 1,100 U.S. dealers Friday they
will be phased out by October 2010 but acknowledged the plan could be difficult
to execute outside of bankruptcy-court protection.
The move marks the first phase of efforts by the company to cut its U.S. dealer network by 40% by the end of 2010, part of wider restructuring efforts it needs to win further U.S. government backing by a June 1 deadline.
"Without a legal [bankruptcy] filling, these [dealer cuts] would be hard to enforce," said GM sales chief Mark LaNeve during a conference call with reporters. "They may want to take legal action. We're not looking to get into a legal battle."
The company said 18% of its U.S. dealer network received letters informing them of
the auto maker plans to phase them out over the next 18 months. They have a
combined inventory of 65,000 cars and trucks and employ tens of thousands of
salespeople, mechanics and other personnel.
When dealerships begin to close en masse, it impacts literally hundreds of thousands of jobs. It isn't just the dealers, staff, salespeaople, and mechanics at each closed dealership that stand to lose their jobs. The workers at GM dealerships will have at least a small reprieve until next year when their contracts expire, although I am sure that some of them will walk the line now to begin trying to rebuild their lives, and because some dealers will just close their doors now to hasten the inevitable and ease their pain.
Local charities and school extra-curricular programs in many of the local communities where dealers are being shut down will suffer because car dealers are traditionally their biggest supporters. Tens of thousands of jobs in small towns may fade away because they are related indirectly to the presence of these dealerships.
The bailouts didn't stop the bankruptcy, but we may lose a whole lot of taxpayers who won't be working who can't pay for the failure. Congratulations, Mr. President.