Streams

The Rocky Road Ahead

Thursday, June 04, 2009

Ray Young, the chief financial officer of General Motors, talks about GM’s bankruptcy. Then, Damon Lester, president of the National Association of Minority Automobile Dealers, and Greg Williams, former owner of the recently closed Huntington Chevrolet in Huntington Station, NY., discusses the effect GM’s bankruptcy has had on dealerships and their employees.

Guests:

Damon Lester, Greg Williams and Ray Young
News, weather, Radiolab, Brian Lehrer and more.
Get the best of WNYC in your inbox, every morning.

Comments [41]

Phil from Brooklyn

I live in a neighborhood where there are a lot of immigrants from various nations. When I go to any of the food stores, I've observed that most, almost any age except for children, have food stamp cards which they use liberally. It's hard to believe that they only get $14 a month since they buy a lot of stuff and I never see cash changing hands. Food stamps are a valuable benefit but honestly few of these people look like they are starving. I've seen things--anecdotally speaking, I saw a woman use her food stamp card wearing a fur wrap and then sitting in a Lexus when I exited the store. I saw a man once buy his fruit and veggies which filled several bags and then get $60.00 worth of lottery tickets which he paid from a bankroll in his pocket. I would never attack food stamps or welfare for the needy, indigent, the disabled and those whose circumstances prevent them from working at a decent job. But someone must look into what I think are abuses.

Jul. 08 2009 11:56 AM
Chris

I have been both a walker and a driver for many years in Manhattan. Here's some of the biggest problems.

Pedestrians need to look before they cross even in a crosswalk with the walk sign. Sometimes it makes sense for pedestrians to let a turning car go ahead of them to keep things flowing. If they never allow the cars to turn then traffic builds and builds and nothing flows. The pedestrian can usually have a safe crossing very soon no matter what, whereas cars have to wait and wait for the next light and the pedestrians.

I find that many drivers drive way too politely! They let people through, they stop and wait, drivers need to keep moving along safely but not stop and let everyone else through. This also causes gridlock and everything stops flowing.

Taxis need to pull over to pickup and discharge passengers. They constantly block the flow of traffic by stopping in moving traffic lanes. There is almost always room to pull to the side. There are also too many taxis, want to releive congestion?, how about less taxis!

For both drivers and pedestrians...Keep moving, stay to the right, put down the phone!

Jun. 18 2009 12:07 PM
Mr. Math

The purpose of business is to make a profit. The first purpose of business is to help disadvantaged minorities? When did Exxon become the NAACP? It's illegal for corporate executives to put racial justice over the interests of their stockholders. They have a fiduciary responsibility to maximize profit for the people who own the company and pay their salaries. For GM and Chrysler that's you and me.

Some people seem to be confusing the roles of government and private enterprise. The role of government is to improve the situation of the disadvantaged. I support affirmative action, I support laws against discrimination and I hope every company follows the law. But racial justice is not their only purpose.

I have never seen such fundamental misunderstanding of capitalism as I've seen in this thread. We're not a "free market" but unless you think businesses can survive losing billions of dollars a year then GM and Chrysler have to make dramatic changes. If that involves jettisoning parts of their business that lose money it's unfortunate for those affected, but sadly necessary. I don't hear such protest over the brands and divisions being sold or liquidated, why the dealers? They already benefit from state and federal laws designed to prevent competition from other business models (internet anyone?), now we need to prevent competition between dealerships? No wonder they're failing.

Jun. 05 2009 12:46 PM
superf88

Mr. Math--
From this conversation I can only conclude that the race issue is anything BUT a canard -- if you believe that the FIRST job of "American Business" is to help people or groups in our society who are considered considered disadvantaged. (And a perfectly legitimate and quite noble pursuit indeed!).

From this interview I learned that some of our best informed and well intentioned citizens feel this way. And that Obama's presidency, and overt spending of public money on social interests -- specifically propping up failed companies in order to save jobs in the short term -- appears to some Americans to be a window of opportunity to make their revolutionary vision a reality. No less than Bush's presidency appeared to some Americans to be a chance to invade Iraq, and break down the walls between Church and State, among other interests.

This increasingly overt revolt is quite interesting and edifying for the neutral observer. Indeed -- I sometimes wish I fell into that category!;-))

Jun. 05 2009 09:19 AM
Mr. Math

As I understand it, GM owes 90 billion dollars more than its assets are currently worth.

Treasury (the taxpaying public) has agreed to provide an additional 30 billion dollars for a 60% share in this company that is currently worth less than nothing.

Those who hold unsecured GM debt will get a 10-15% stake in a company that is 90 billion dollars in debt. (Nobody knows what GM stock will be worth when it goes public again, but the bondholders are definitely NOT getting all their money back.)

Shareholders get basically nothing. This is appropriate for an inherently risky stock purchase.

The UAW is sacrificing guaranteed pension obligations for (currently worthless) stock just so the bankruptcy court doesn't void their (formerly) binding contract.

But sone dealership owners think they share no blame and should absorb no pain for the failure of GM and Chrysler. Pardon me if I see a disconnect here.

I'm sorry, but Darren's got a point here. I don't know about his numbers, but if American car makers have too many dealerships they need to do whatever they can to return to viability and not keep following the losing ways of the last few decades.

The race issue is a canard here. If a minority-owned dealership makes sense for GM or Chrysler they are not going to destroy it. We all know they need the money. If those dealers are "last-in, first-out" that really sucks, but don't expect bankrupt companies to subsidize failing businesses because of the race of the owner. In good times they can. When they're 90 billion dollars in the hole it's just not on the table.

I'd love to hear a follow-up. (hint, hint)

Jun. 05 2009 04:30 AM
Frank from NYC

It's tough for this dealer indeed, but quite frankly he was sharing the wealth during GM's good days he must share the pain today. That's business 101. Congress should force GM to release its list of closures, however. As as a taxpayer/owner I think we have a right to ensure it doesn't disproportionately hurt minority dealerships.

Jun. 04 2009 09:40 PM
jack from queens

yo brian! nice interview, bro! we got yer back in queens. haterz like #12 got nuthin' better to do than hate. seriously, nice interview. would have liked to hear some follow up on the public/private question but i got your point. have a good day lehrerdude.

Jun. 04 2009 04:17 PM
Voter from Brooklyn

…and, I happen to agree with both hjs and #30. We are not a true capitalistic society, we believe in helping our fellow citizens, and companies should not be allowed to grow to the point where they are too big to fail.

Jun. 04 2009 11:58 AM
Nick Lento from NJ

This was Brian's best interview ever.

I only wish he was this sharp and intelligent and ballsy with all of the POLITICIANS he interviews!

The CFO was being evasive, and Brian wouldn't let him skate. The fact is that GM is, so far, getting away with murder. They are getting to keep their company and the execs will mostly keep thier highly paid jobs....all while the taxpayers and the workers eat the losses....and the dealers who are being hung out to dry get to hold the bag and suffer the kind of legalized shafting that we heard described today.

If hadn't used fifty billion PRINTED/BORROWED taxpayer dollers to bail out GM then they could do as they wish...but to ask us to subsidize them like this as they screw everyone is insane.

Unless they actually build cheaper and better cars than the Japanese et al; no one is going to buy their products.

The tech is there now to build all electric vehicles that can recharge in an hour or less that can get 200 miles to a charge. I wish we had let GM go under and spent the 50 billion starting from scratch with the new tech and a new company that could totally leapfrog the Japanese et al.....and even if that meant carrying the GM employees for two years at full salary it still would have been cheaper than what we're doing now.

No one...NO ONE in the management of GM should have a job. They messed up...they get to stay in business and we get to pay the bills. What a scam!!!

Jun. 04 2009 11:48 AM
Voter from Brooklyn

Dear Catherine,

We are approaching the end of a pledge drive where, for about a week, we here how “above the fray”, “well researched”, “non sound-bite” driven, and civilized in tone WNYC is. We’ve heard how WNYC does not resort to the same cheap and obfuscatory tricks of syntax that other media outlets have made their bread and butter. Today’s interview flies in the face of that. Not only did Brian seem to not truly understand the legal difference between a public and a private company, but he also accused GM of becoming more opaque because they will not file with the SEC as a privately held company. I agree with comments above that the entity we should really be concerned with through this bankruptcy is the majority stockholder of this privately held company… the US government.
I though snark and irony were dying the deaths they deserve in favor of open and honest conversation. What’s better, true understanding or patting oneself on the back because of the snappy line (sound bite) you were able to get out?

Jun. 04 2009 11:45 AM
Edward from NJ

When did the OWNERS of car dealerships become the down-and-out-working-man? Until the past year, these owners were making 6-figure incomes selling the same gas guzzling vehicles everyone is so outraged that GM manufactured. A lot of people will lose jobs when dealerships close, but the owners, if they planned well in the good times, should be better off than their employees.

Jun. 04 2009 11:39 AM
Daniel from Munich

From Voter: " Private profit, private risk... Would that have been the responsible thing, probably not."

When you are talking about an entire sector of the economy there's no such thing as private risk. Maybe companies should not be allowed to get so big that they cannot be allowed to fail, but it doesn't remove the current state where many companies _are_ that big. When you dry up a whole sector of the economy you impact society in numerous negative ways; it's not preferable, but the government must be involved in some way to prevent that.

That said, it makes no sense to prop up a company to continue along its path of failure. Bailed-out auto companies cannot be allowed to hock dinosaur technology. Change must be initiated.

Jun. 04 2009 11:33 AM
ttwet

darren/28 you are 180 degrees wrong -- at least to anybody who believes that the point of businesses is firstly to improve the social and economic standing of certain minorities, and to create jobs. Tip -- DO NOT marry a Communist unless you can avoid discussing business -- AND you are both independently wealthy!

Jun. 04 2009 11:30 AM
Darren from Ozone Park

These two interviews were completely one-sided. I feel for the dealerships that are forced to close, but Mr. Lester and Mr. Williams got off too easy. They should have been asked how GM and Chrysler are supposed to be viable companies with far too many dealerships. They want owners of failed dealerships to walk away with money in their pockets while GM takes on the cost of disposing of their inventories? Owning your own business may be the American dream but it carries risks, and one of those risks is that your business will fail.

Greg Williams revealed that there are 19 Chyrsler dealerships on Long Island. Isn't that way too many? Is anyone suggesting that they currently sell enough cars in Long Island to support 19 inventories of parts, 19 sales staffs, leases on 19 showrooms and 19 service centers?

Over at NPR, the Planet Money Blog has some interesting information about this:

http://www.npr.org/blogs/money/2009/06/_caption_photocredit_gm.html

This chart makes me think they may not even be shuttering enough dealerships. I'm sorry if minority dealerships are especially hard hit, but that's not by anyone's design. Minority dealerships do not face "extinction," and Brian needed to call him out for his hyperbole. There will always be minority-owned dealerships, maybe not a proportion equal to their share of the population, but this is a long-standing problem not a diabolical plot from within GM.

Taxpayers are saving over 6000 GM and 3000 Chrysler dealerships, don't ask us to save every last one of them. We're saving a lot of factories, but not saving every last one of those either. Without taxpayer money Chrysler would have been liquidated months ago.

I love the show, but if you hammer Ray Young over returning GM to profitability you should have asked the dealers how their demands would affect GM's bottom line.

Jun. 04 2009 11:24 AM
hjs from 11211

voter
maybe we should stop claiming to be a capitalist society, which we have not been for a time. think about all that welfare going to red states and the money spent on the war that ended up in the bank accounts of the 'unarmored humvees' manufactures.

Jun. 04 2009 11:20 AM
Voter from Brooklyn

So, James from DUMBO (#20), are you saying we should applaud Brian for using the same obfuscatory, socially hot-button, fast and loose language that the political Right has mastered (which, BTW, Geoff Nunberg, yesterday’s guest on Fresh Air, did an excellent case of explaining) because it makes him look like he’s holding the fat cats responsible… even though it does nothing to advance the debate and lets them get off by explaining how business works in terms you would use with a third grader?

Jun. 04 2009 11:18 AM
Aaron Burr Society dot org from williamsburg brooklyn

What happened to Obama's promise to work for Main Street rather than Wall Street? The restructuring of GM looks like a classic hostile takeover by hedge fund managers with the workers, small investors and dealers bearing the brunt of bankruptcy.

Like the failed management of Wall Street that lead to the total collapse of the international financial system, which survived only because of taxpayer bailouts, the American Auto industry's management totally failed and yet the top executives will walk away with millions of dollars in individual bonuses.

Due we live in a Republic or are we all Slaves of Wall Street and their Corporate Cronies?

Jun. 04 2009 11:18 AM
Catherine Torpey from Rockville Centre

Brian, I am so upset for this unfortunate car dealer. What can we do for him? I'd pitch in for a legal defense fund for a class action suit pursued by him and others in similar situations.

Jun. 04 2009 11:12 AM
Catherine Torpey from Rockville Centre

@voter:
Clearly, Brian understands the difference between a public and a private company. You missed the IRONY of his line of questioning. He was pointing out the irony and inequity of our definitions and he was pushing the CFO on the injustice of the situation.

Jun. 04 2009 11:10 AM
Voter from Brooklyn

Hjs,

Personally, I feel the right thing to do, if we are the capitalist society we claim to be, would have been to let GM enter bankruptcy and liquidation without government intervention and investment creating a scheme where a bankrupt company is allowed to sell itself to itself, hurting it’s investors, creating an assured loss for the American taxpayer. Perhaps GM should have been allowed to fail months ago without US taxpayer dollars. Private profit, private risk... Would that have been the responsible thing, probably not. But the government wanted to save thousands of blue-collar factory jobs, many held by minorities. The truth is, minority dealers won’t be the only ones getting hurt, and as long as they are not being specifically targeted (which would be egregious) everyone’s going to feel some pain.

Jun. 04 2009 11:10 AM
fdaf

20/james I am in agreement w #12 in that i was expecting and hoping for a business story with social implications that broke new ground -- and we got the exact opposite.

that said, if this were wbai i would have no problem w that interview. it would fit that stereotype perfectly -- in my opnion.

THAT said, this is bryan's show, and he can obviously say whatever it is he likes. In fact, that (along w some other post-obama business topic interviews on this show) has revealed a side of brian we hadn't seen before, which is helpful, if disappointing to some.

Jun. 04 2009 11:09 AM
James from DUMBO

RE. #12 Voter from Brooklyn:

I think Brian understands the difference between a public and private company. I think that YOU don't understand the difference between a technical definition and a tangible explanation of what is meant by using these terms. The fact that the CFO of GM is allowed to use these terms without clarifying what that will mean in specific actions and dollars is "shameful."

Jun. 04 2009 11:01 AM
Edward from NJ

As a left wing social elitist, I actually agree with Voter from Brooklyn. I think most listeners understand the difference between and public and private company. GM is no longer a public company, so of course they won't be filing with the SEC. As a private company, they would still have to disclose information to their major shareholders. The federal government, being one of those shareholders, should be able to find out whatever they need to know. Ideally, the government would then share that information with the general public. The level of disclosure shouldn't be any different, just the methodology.

Jun. 04 2009 11:01 AM
CL

I haven't heard a single good explanation of the need to close dealerships. How is that going to save GM money? I thought Brian's interview with Young was good, but I would very much like to have heard him ask this question.

Jun. 04 2009 10:58 AM
hjs from 11211

Voter
doing the right thing does have to cost more, it fact in the long term the right thing to do is cheaper.

Jun. 04 2009 10:56 AM
fdaf

Brook Gladstone/OTM, are you feelin' comment #12? It's time...

Jun. 04 2009 10:49 AM
Thomas

Are we sure that non-minority dealers aren't getting screwed as well? Why not broaden our objective and ask that GM/gov't not screw anyone? I'll bet that people in rural areas with high sales have it just as bad...very interested to see if I'm wrong.

Jun. 04 2009 10:48 AM
Bruce from Union, NJ

With $ 1million for $5Million of inventory, you should be able to have quite a sale of new cars at 20% off.

Jun. 04 2009 10:47 AM
antonio from park slope

indeed hjs. Light-rails, High-speed rails and Maglev's!

Jun. 04 2009 10:46 AM
Voter from Brooklyn

Listening to that conversation with Mr. Young was painful and embarrassing. Brian Lehrer’s attempt at populism exposed how ignorant he was on the issue. Not understanding the difference between a “public” and a “private” company (yes, privately owned companies that are not publically traded have investors as well. In this case, the US government) was shameful, especially for WNYC. Also, pushing for an answer on whether GM will have a social agenda when it is attempting to stave off a total collapse loosing tens of billions of taxpayer dollars is why WNYC and the northern states have a reputation as out of touch left-wing social elitists.

Jun. 04 2009 10:45 AM
Totally serious

I will TRIPLE my contribution right now to WNYC if you put the dealer on with the CFO who just ripped him off! And I will pay that amount every year for the rest of my life.

THAT I want to hear. (And not much else)

Jun. 04 2009 10:43 AM
Milton from Manhattan

Will they be disclosing the compensation, especially at the upper echelons?

Jun. 04 2009 10:43 AM
hjs from 11211

cars are so 20th century!

Jun. 04 2009 10:42 AM
James from DUMBO

Thank you for TRYING to hold him accountable Brian!

I feel like a need a shower after listening to his swarmy replies. I'm sure he'll come out of this just fine - screw everyone else. Put 'em in jail...

Jun. 04 2009 10:41 AM
Andy from Brooklyn

What was Ray Young talking aboot?

Jun. 04 2009 10:40 AM
asdf

Governments controlling all your biggest markets are passing out bailout or corporate welfare monies to domestic manufacturers.

Which governments are passing out the cheapest money, and as a global company, is a cheap money strategy directing where you plan your manufacturing bases?

Jun. 04 2009 10:38 AM
JP from Garden State

George from Bay Ridge,

Believe it or not, we actually have stricture emissions standards then Europe which is one of the main reasons why their cars get better gas mileage because stricture emissions will reduce miles per gallon. Expensive retro fits for emissions would have to be made before these European cars could be sold here.

Jun. 04 2009 10:37 AM
Joe Ample

What is Ample?

Jun. 04 2009 10:32 AM
levine.josh

A. What is GM's profit associated directly from the U.S. Government? Police and Military are currently required to purchase vehicles from U.S. firms, like GM America, purely for perceived security purposes.

B. If GM continues to increase overseas manufacturing and shut down US plants -- will Mr. Young continue to argue that GM is qualified as a "patriotic" vendor? After all, Subaru, Toyota, etc. assemble and even manufacture in the USA -- is there an argument against NYC cops be driving Chevy-priced Lexuses if Toyota agreed to sell them and the cops agreed to drive them?

Jun. 04 2009 07:42 AM
Gabrielle from brooklyn

Why not use the manufacturing infrastructure to create green technology (ie solar panels, eind turbines, etc) and to better our transportation system (ie. faster trains, better roads and bridges). all of these projects are part of the stimulus plan, they would keep our workers employed and keep what little is left of our manufacturing industry alive.

Jun. 04 2009 07:13 AM
George from Bay Ridge

Why has GM been unable to build a competitive car for so long despite GM's vast resources?

Why has GM been unable to sell GM's European cars in the American market like the Saturn Astra?

Why has the been a disconnect between the European and American car markets?

Why is Opel being sold off when Opel is GM's largest beachhead into the European market?

According to The Truth About Cars, is it true that GM upper echelon get ringer cars for testing purposes; i.e. cars with no panel gaps and good engines?

Jun. 04 2009 05:07 AM

Leave a Comment

Register for your own account so you can vote on comments, save your favorites, and more. Learn more.
Please stay on topic, be civil, and be brief.
Email addresses are never displayed, but they are required to confirm your comments. Names are displayed with all comments. We reserve the right to edit any comments posted on this site. Please read the Comment Guidelines before posting. By leaving a comment, you agree to New York Public Radio's Privacy Policy and Terms Of Use.