Financial Bailout: Do Interests of Automakers and Members Diverge?By Bill Allison Dec 04 2008 11:42 p.m. 1 comment
Reading the restructuring plan that General Motors put together makes me wonder whether, in a broad sense, there isn't an insuperable conflict of interest between members of Congress and the automakers. Consider just one aspect of the plan:
...the number of GM retailers is expected to decline to 4,700 by 2012. This will occur primarily in metropolitan and suburban areas where GM has too many dealers to serve the market. In the Plan, it is projected these dealers will be reduced by 35%, increasing annual throughput for the remaining outlets to a more competitive level with other high-volume manufacturers. GMs distribution strength in rural areas, which is a significant competitive advantage, will be largely preserved. GM intends to have the right number of brands, sold by the right number of dealers, in the right locations to obtain maximum profitability for GM and the retailer network.
There are currently 6,450 dealerships, so to get to the right number of dealers in the right locations, 1,750 dealerships will have to disappear. Presumably, most of the jobs at those dealerships would disappear with them. Using GM's online dealer locator, I made this Google map showing GM Dealerships within 10 miles of the Sunlight Foundation. The dozen dealerships (I'm counting the Saturn dealership at the same address as a Buick/Pontiac dealership as a single entity) which all serve the Washington D.C. metro area, are split among multiple congressional districts and a pair of states. Eliminating 35 percent of them leaves you with eight GM dealerships -- who loses out? Do you shut down the Cadillac dealership in Alexandria, Va., or Bethesda, Md? Or do you get rid of both, and sell Cadillacs from the Chevy dealership in Bethesda and the Saturn dealership in Alexandria? And if you're a member of Congress, are you pleased with a restructuring plan that could be eliminating employers in your district that, on average, according to the National Auto Dealers Association, have payrolls of $2.59 million?
NADA, by the way, is no shrinking violet when it comes to influence. According to the Center for Responsive Politics, it was among the top 20 contributors to a whopping 158 members of Congress in the 2008 election cycle. General Motors could say the same of just 15 members, Ford of 13, and Chrysler of none.
If you're a member of Congress, do you pressure GM to lay off the dealers (for whom state laws, in any case, offer numerous protections)? To take the 35 percent reduction of dealerships in the other fellow's district or state? Or do you proudly point out that you helped save General Motors (assuming, rather optimistically, that the company's restructuring will work precisely as planned) at the expense of a couple of employers who had big payrolls, were big advertisers in the local media, and whose PAC had been, once upon a time, a big contributor to your campaigns?
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