The Senate will lend a friendly ear to dealers, concerned about cuts at GM and Chrysler, but it's unlikely they can do anything to save close to 3,000 retailers slated to lose their franchises.
Federal bankruptcy Judge Arthur Gonzales is expected to issue a ruling from his New York courtroom, today, on Chrysler’s plan to terminate 789 of its dealers, the same day that Washington lawmakers will take up the debate over those cuts and General Motors’ plan to terminate 2,000 of its own retailers.
Both makers insist they need to make the reductions in order to maintain a viable, competitive distribution network that can effectively compete against their import rivals. But opponents insist that such claims are overblown, that the makers will wipe out thousands of independent businesspeople, eliminate tens of thousands of jobs and devastate communities around the country.
Both makers have already been hit with lawsuits aimed at blocking the proposed cuts, though with GM and Chrysler both under court-ordered bankruptcy protection, it appears highly unlikely such measures would do much, especially if Judge Gonzales and the judge in the GM case, rule in favor of the automakers’ plans.
In the Chrysler case, a group representing about 300 dealers are hoping to block the dismissals. Observers say the motion is unlikely to succeed, as Judge Gonzales has ruled in favor of Chrysler and the White House – which helped draft the automaker’s turnaround plan – in almost every instance.
Lawmakers, however, have threatened to intervene separately. A proposal floated by Texas Senator Kay Bailey Hutchison – and later withdrawn – might have blocked federal aid for the two makers if they didn’t take steps to assist their dealers.
That doesn’t mean Congress is giving up on the matter. GM CEO Fritz Henderson and Chrysler Vice Chairman Jim Press will be among those testifying before the Senate Commerce Committee, today. The meeting was called by the committee’s chairman, West Virginia Senator Jay Rockefeller, who wrote that, “The egregious time frame and terms of these franchise terminations seem unprecedented to me.” (more…)