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Liberty Opinion: 18 May 2009
Washington's plan to save union jobs in car factories will cost Main Street America hundreds of thousands of jobs. Bill Wyckoff has a hunch that's not a great idea.
How is closing businesses good for business?
I waited 38 years for the return of the Dodge Challenger just so I could own one.
Now that I have one, I get the pleasure of driving an hour to get it serviced. The only good news about this is I love driving that car. If this were a minivan needing service, it would be a long trip.
But it could be longer soon.
I read where the hot shots on the president’s “automotive task force," the people calling all the shots at General Motors and Chrysler, want fewer dealerships. These are the same people who don’t drive or own any American cars, but they have been anointed to tell the companies what to do and tell us what cars we can buy.
Seems they found out Japanese companies have more sales per dealer. Honda sells about 1,100 cars per dealership and Chrysler sells only 400. Their solution is to close a bunch of dealerships and that will increase the sales per dealer. Really makes you wonder if any of these eggheads ever traveled to the center of this country by means other than crossing it in an airplane.
If I owned a Honda, to get it fixed, I would need to travel to another state to see a service tech. This same group seems enamored by what the auto companies in Germany and Japan do. No one in the group is old enough to remember that the good old USA had to defeat both of these countries at the same time and then we rebuilt their economies.
So what is keeping us from doing that today, and just what is the reason the foreign carmakers can build products in the US and still beat Detroit? I guarantee everyone in the administration already knows the reason, but the politically motivated solution isn’t to fix the problem. It is to pass the card check bill so all Americans get to pay for built-in labor union inefficiencies.
The reason this group of “experts” gives for closing dealerships just doesn’t hold water. Dealers pay for inventory. Dealers must also buy all that marketing literature in the show room. They must lease expensive signage from the auto manufacturer. Every month they must buy specialty tools, parts and training material, plus they all share in the national advertising expense. So what is the reason for closing them? Maybe Suzie in Detroit has to keep a spreadsheet on all of them?
I also read where they have said that fewer dealers were going to reduce competition within the same brands, allowing the remainder to boost prices and profits! Just what is this task force smoking? I guess since these companies are now owned and controlled by our government, we can just think of it as a tax increase to help the greedy folks in Detroit and Washington, D.C. Can you believe that all this time we have been getting too good of a deal on car-buying and that’s been bad for the country? Wonder where that logic was when Wal-Mart rolled up the streets in almost every town. Nowadays it is quite all right to buy everything from China at the Wal-Mart near you, and count on it that China will be supplying most of the new cars to your grandchildren.
Since the people operating government motors don’t know or care anything about the cities and towns that make this country great, I thought I’d share just a few examples. Hometown car dealers spend advertising dollars locally. They sponsor all kinds of activities and events. They contribute in every conceivable part of the community plus they employ people and collect billions in taxes for their communities.
The average number of employees at the dealers being closed is 50, so closing 3,000 dealerships will put 150,000 new people on the unemployment line along with an equal number of people supporting those businesses. Just how can this be a good thing?
You may wonder why I’m spending all this energy on something that the president has already decided. I’ll give you several reasons. These dealerships were closed because the bureaucrats said in their opinion (1) they were too small, (2) they didn’t have enough customers, (3) they didn’t have nice enough facilities, (4) there were too many of them so buyers could negotiate low prices (5) plus, they didn’t fit the European or Asian model that everyone at the Capitol loves.
With that in mind, maybe we should all think about what our government will do with the local hospitals, schools or even banks in our communities. All of those statements said about the auto industry also fit the planned consolidation of this group, and all of them are already extremely over regulated by the government.
So when universal health care becomes law and that is followed by some new vision of education, don’t say I didn’t warn you about why Uncle Sam is boarding up your local school or your community health facility.
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Kansas Liberty columnist Bill Wyckoff is president of Labette Bank, a community bank with locations throughout southeast Kansas, and an occasional contributor to the Wall Street Journal and Fox Business News. He lives on a farm outside Altamont, Kan. A graduate of Kansas State University with an MBA from Southern Illinois University, he enjoys collecting antique John Deere tractors and driving his hemi orange Dodge Challenger. Email bwyckoff@labettebank.com
The geniuses at Chrysler