With up to 1,200 dealers and 16 factories set to be uninvited from “the reinvented GM,” union locals and dealerships with their livelihoods on the line are preparing to fight the future. With the UAW leadership on board for an equity position in the new GM, locals are scrambling to show their willingness to give up once-cherished perks to keep their plants open. Bloomberg reports that workers at GM’s Spring Hill plant have ratified a local agreement that “allows GM to schedule its hourly workers for weekend shifts without paying special premiums, ends the policy of paying overtime based on a daily shift instead of a 40-hour workweek and loosens the work rules so that workers may be used for a broader variety of tasks.” Sadly, since Spring Hill’s Chevy Traverse production is likely to be moved to Lansing Delta to take over Saturn Outlook production capacity, this sudden rash of reality probably won’t save the plant.
In addition to Spring Hill, Wilmington, Orion Township and Pontiac are said to be GM’s most vulnerable assembly plants. According to IHS Global Insight, Arlington, Texas; Flint, Michigan; Detroit; and Toluca, Mexico could be on the block as well. Ultimately though, plant closings are still being decided, a reality that pits union local against union local. On the dealer front the plans are better understood. Accordingly, the battle lines are being drawn.
Automotive News [sub] reports that GM has identified “1,000 to 1,200” dealerships which will be receiving “Dear John” letters from S&M honcho Mark LaNeve. This means about one in six GM dealers will see their franchise agreements go unrenewed, not counting the Hummer, Saab and Saturn dealers that are being cut anyway. GM has said it will buy back unsold inventory but otherwise will not compensate owners for the loss of their franchise. All of which has dealership lawyers rubbing their hands with glee. “If GM tries to end its relationships with all these dealers, or many of them, involuntarily, its legal and factual burdens will predictably be extremely difficult,” says one such lawyer. “Remember, under state laws, there’s not a whit of difference in what GM would have to show in a nonrenewal versus an involuntary termination.”
Of course, bankruptcy would supercede state franchise laws, but it seems that GM is still trying to threaten its dealers into accepting their terms with the threat of a Chapter 11 filing. But the dealers (many of whom are cross-collateralized, meaning the loss of a GM dealership could trigger default on their other delerships) are going to call the General’s bluff unless they pay up more than is currently being offered. “If GM wants to get rid of dealers outside of bankruptcy, it’s not just buying back new and unused inventory,” says the president of the New Jersey Coalition of Automotive Retailers. “It’s also buying back special tools, parts, signage and the blue-sky value of the shingle.”
Is there any possible reason to discuss a GM reorg outside of bankruptcy?
In re: to the dealers, Chrysler’s path is probably a precursor to what Rattner and Co plan to do with GM:
Basically, different payment plans for different dealer groups.
I’m sure the dealers owned by Chrysler Realty will be treated like everyone else, right?
http://detnews.com/article/20090504/AUTO01/905040386/Chrysler-creditors-claim-death-threats–win-hearing-delay
“the blue-sky value of the shingle”
None, unless you are smoking some very strong herbs.
I can’t see how GM plans to get out from under the 1,200+ dealership agreements without C11. There’s too much payoff to be made, and it doesn’t appear that many (if any, really) of the owners are too willing to go quietly. Without C11, they’re going to have to find loopholes, get GMAC to pull floorplans (which has already been happening), or pay dealers to piss off. And right now, obviously, GM’s not in any position to make those payoffs.
I guess I must be smoking some good sh–.I see Chevrolet with 3 cars in the top ten sales for April.But the Bowtie shingle has no value?
Where has this willingness been for the last 25 years?
Its us-versus-them until the axe starts to drop. Now we’re all friends and in this together, doing everything we can. Though I suppose it is still in the interest in saving their own bacon. Again.
If I were VW, BYD, Chery or Geely I’d be eying Spring Hill. You have a relatively new plant with its own casting facility proximate to the supplier base in a right to work state. Heck you could likely get TN or the Feds to give you some grant $ for retooling it.
Cherry pick some of the free agent Saturn, Pontiac and Chrysler and viola! you’ve entered the US market for pennies on the dollar.
mikey
I guess I must be smoking some good sh–.I see Chevrolet with 3 cars in the top ten sales for April.But the Bowtie shingle has no value?
i don’t think it matters to them, they see it as just too many dealers for the market
My town experienced what these poor guys in Spring Hill are going through. 13,000 jobs were lost by our steel mill and people living here are really desperate for jobs. Our population has dropped from 40,000 to less than half that today. People are taking $8/hr jobs as long as there is some kind of basic health insurance involved with the companies wanting to come in. Its sad that it has to come to this as the manufacturing sector has all but disappeared in our country. Millions are displaced, generally with no other skills other than those that they learned on the job. Retraining is a joke and I don’t know of many “retrained” workers getting even close to half the money they made before.
I am generally pro-union but this Detroit Debacle with the UAW is a classic case of abuse of power and lots of gullibility. The same is true in our politics as rime and reason have disappeared and all we ever hear are extremist views from both sides. The media has become a willing and eager co-conspirator and we are now in a period where brother fights brother and both are right. Our country is so polarized that I fear that our “culture wars” will soon lead to something similar to the Civil War. All one has to do is to visit here and we can see the polarization manifest itself in all its ugly venom and vile.
What is lacking in Detroit and in Washington is consensus and moderation. Unfortunately, to them, it is always black or white and never gray. The other critical factor is leadership. Some will say Bush had it….or didn’t, and some will say the Obama has it….and/or is misdirected. We, the people, lose again. My point is that Spring Hill workers are pawns in a fight they cannot win.
And that is truly sad.
..@panyoti.. Well said.Here in Motor City of the north we have been devastated.We went from boon to bust in the space of six months.Our truck plant officially closes May 14.
Not 2 years ago that plant ran flat out 24hrs a day 6 days a week.
VW must be kicking themselves after obligating themselves to a new factory in Chattanooga when Spring Hill will be available…
Maybe the Spring Hill folks will be scrambling to SE TN ASAP.
Glad I’m no longer in the auto industry. Still interesting but not a stable paycheck…