Keep Those Dealerships Closed

Pretty much every aspect of the auto bailout frustrates me. One great frustration is Congress wanting to have its cake and eat it too. The prime example of this is their attitude about dealership closings. Sure, Congress wants the auto companies to succeed. But some lawmakers aren't okay with so many dealerships closing. You can't have it both ways. According to the New York Times, Obama's auto task force head Ron Bloom is trying to persuade Congress to back down and let the dealerships die. At last, the voice of reason.

The Times says:

The leader of President Obama's automotive task force warned members of Congress on Tuesday that reversing or stopping the closing of thousands of General Motors and Chrysler dealerships could threaten the automakers' turnarounds and keep them from repaying billions in government loans.

That's exactly right. These dealerships must be closed because that's part of the business plan that those companies have developed in order to survive. Their new strategy intends for GM and Chrysler to be much leaner with reduced output. They can't do that if their costs continue to include dealerships that they don't need for their slimmed down operations. Naturally, if the companies become profitable again, then Bloom is correct: they will also be able to pay the government back.

Let's hear from one of those lawmakers opposed to dealerships closing, via the Times:

"There's been very little transparency into how these closings were done," said Representative Dan Maffei, Democrat of New York, who has introduced a bill to prevent dealer cuts.

Transparency is fine, though I'd be astounded if that didn't just consist of the auto companies showing Congress that they closed the dealerships with the worst sales. But here's where he loses me:

"We don't want a bailout for the auto industry to become a washout for the auto dealerships."

Actually, we do. You can't bail out companies, force them to restructure and expect no jobs to be lost. That's simply crazy talk. Many jobs should be lost, because the auto companies couldn't sustain their costs.

And here's another bizarre quote, via the Times:

Representative Henry C. Johnson Jr., Democrat of Georgia, who called the closings "mindless" and "devastating," said he feared that the cuts were an indication that anyone who had contributed to the automakers' past success was now expendable.

Right, because these companies have seen so much success over the past few decades. Somehow, I don't recall such "fears" are being voiced about bankers being laid off by banks who got bailout money. Cutting costs is anything but "mindless," whether you're an auto company or a bank.

Some dealerships closing shouldn't make the bailout seem like a waste for those in Congress who wanted jobs preserved -- thousands were still saved. The idea that all, or even most, would be just ignores the reality of trying to get these companies to become economically viable.