By James Tarbox, published in The Providence Journal
Wednesday, July 29, 2009
WITH CONGRESS EXPLORING the impact of auto industry bankruptcies, we hope lawmakers will fully expose how the bailout of General Motors and Chrysler dismally fails taxpayers by spending billions of dollars to actually eliminate hundreds of thousands of jobs across the country.
As part of plans to emerge from bankruptcy, Chrysler — and now GM — made the arbitrary decision to close more than 3,300 dealerships, including my two Jeep dealerships, located in North Kingstown and Attleboro. More than 160,000 jobs are in direct jeopardy, as are small businesses, mostly family-owned, like mine, that have long been economic and civic anchors in our communities. Not only is that a strike at the heart of our nation’s economic recovery, it’s unnecessary, and detrimental to the two auto manufacturers themselves.
Tarbox is a well-known name in Rhode Island, and as a person who built his career in the auto industry and the owner of Tarbox Jeep for the past eight years, I have been proud to continue the tradition of excellence in sales and customer service my father began over 35 years ago.
When Chrysler spoke of its bankruptcy restructuring, I had no idea it would result in the closure of my dealerships. I have had to close my Attleboro dealership, although we remain open and are continuing our operations as a used-car dealer at our North Kingstown facility.
The car companies want us to believe cutting dealers will position them to emerge stronger and better able to compete, that there are too many dealers, they cost too much and deliver too little. This logic is flawed.
Consider the facts:
- In the 1950s, 40,000 dealers serviced 50 million Detroit-brand cars. Today, 9,600 service more than 150 million Detroit-brand cars. It’s hard to agree with the “bloated dealership” theory when 75 percent fewer dealers are now handling 300 percent more cars.
As dealers, we cover the cost of our land and buildings, employee payroll and training, service equipment — even auto inventories. Shutting down dealerships won’t eliminate much overhead at all — just stable, well-paying jobs.
Many of the targeted dealerships aren’t unprofitable; they have incurred the companies’ wrath in the past by refusing to take excess inventories forced upon them, or raising quality issues.
Although we have been rated the top-performing dealer in Rhode Island and in the top 10 percent nationally, Tarbox is among these targeted dealerships.
The closure of Tarbox Jeep impacts my wife, my three young girls, my employees and the surrounding community. With dealerships in Attleboro and North Kingstown, we once employed 60 people; we now employ 18. We paid more than $2.2 million in taxes, paid for hundreds of thousands of dollars in advertising and served as a good corporate citizen, making charitable endeavors a priority, as well.
Dealers are a key part of the economic engine that enable manufacturers to sell their products and for customers to receive quality service and parts.
So what will shutting thousands of dealers really do?
- It will limit, or eliminate, price competition for GM and Chrysler cars. The old Soviet economy showed us all what happens when retailers don’t (or can’t) compete. Prices go sky-high. For Toyota, Honda and other imports, though, competition will prosper — and consumers will vote with their choice of wheels.
It will make servicing those cars a nightmare. Once auto-owners realize how far they have to go and how long the wait, they’ll make their next purchase an import.
It will diminish demand at a time when demand is what Detroit needs most. The numbers bear it out. In areas where domestic dealers dramatically outnumber import dealers, the percentage of domestic vehicles in operation is between 73 and 86 percent of all vehicles in operation. But in markets where import dealers significantly outnumber domestic dealers, the percentage of domestic cars in operation drops to as low as 40 percent.
At a time when the ranks of America’s unemployed are swelling, the loss of any job is unfortunate. When hundreds of thousands of jobs are forfeited for no reason at all, it’s a cause for public outrage — especially when those jobs fall victim to a “bailout” designed to save and create jobs.
Thankfully, it appears Congress will not stand by and let GM and Chrysler needlessly terminate Main Street dealerships and kill the jobs associated with them. The House of Representatives boasts more than 250 sponsors on H.R. 2743, legislation to force the two automakers to restore franchise agreements for dealers facing closure. Among this number are both Rhode Island representatives, Jim Langevin and Patrick Kennedy. We thank them for their efforts.
We hope for similar action in the Senate. Senators Jack Reed and Sheldon Whitehouse have shown an interest in assisting their Rhode Island dealers and we hope to continue working with them to make preserving our dealerships and saving these needed jobs a priority.
Our nation’s recovery — and this industry’s — depend on it.
James Tarbox is owner of Tarbox Motors.
