Auto dealers begging for help from Congress, media

While GM, Chrysler, and Ford were on Capital Hill, hat in hand, asking for a $25 billion bridge loan to keep them afloat, they are hedging their bets.

Like any good Political Action Committee, they are trying to stir up support among the general public.

Jeff Haley, president of the Radio Advertising Bureau, wrote in the online Radio Sales Today publication on Monday:

Dear Radio Colleagues:

As you know it is a challenging time for the auto industry. One of our great partners, General Motors, has reached out and asked for our help.

Below, please find a letter from Betsy Lazar, Executive Director, Advertising and Media Operations, General Motors.

I appreciate your giving this matter your attention.

Sincerely,

Jeff Haley
President and C.E.O., Radio Advertising Bureau



Dear Colleagues,

As an important partner of General Motors, you are probably well aware that the auto industry is at a crossroads. Companies that support millions of workers and families across the U.S. have been slammed by the worst economic downturn in 75 years. Particularly frustrating is that this crisis struck just at a time when these companies were successfully restructuring themselves and creating a new generation of cleaner, more efficient vehicles.

This progress, and the very existence of the U.S.-based auto industry, is threatened.

Discussions are now underway in Washington D.C. about government support for this vital industry through this downturn. We are asking for your support, too.

The U.S auto industry has been hit at every level by the global financial crisis. Carmakers can't get loans to complete their restructuring and put advanced technology vehicles into production. Customers can't get credit for new cars, and consumer confidence has plunged to an all-time low. Suppliers and dealers can't get loans for routine business needs.

This crisis caught the U.S. auto industry in the midst of a successful restructuring. Domestic carmakers have closed the productivity gap with their global competitors, and GM has closed the quality gap as well. New labor agreements are in place to make U.S. manufacturers' costs competitive with non-union transplant factories.

Since 2005, GM has taken a series of bold steps to restructure its business and reduce its structural cost. In fact, since 2005, GM has reduced structural cost in North America by over $9 billion. And more recently, GM has outlined plans to enhance its liquidity position by $20 billion through 2009. And, we've tightened our belt in hundreds of other ways, large and small – some of which you have felt too.

On the product front, we have introduced a series of award-winning products, including the Saturn Aura, Cadillac CTS, Chevy Malibu and Buick Enclave. Today, we have the most models that get an EPA-estimated 30 mpg or better on the highway, more vehicles capable of running on E85 ethanol than any other automaker and a wide variety of hybrids, one for every need. We are also testing the world's largest fleet of hydrogen-powered cars right now and are committed to building the Chevy Volt extended-range electric car in 2010.

However, faced with the worst economic downturn since the Great Depression and the worst car sales since World War II, this hasn't been enough.

This current crisis knows no geographic boundaries. What happens to the U.S. auto industry also had an immediate impact on Main Street. U.S.-based car makers have 105 plants in 20 states, including California, Texas, Kansas, Louisiana and Maryland. They support 14,000 dealers across the country, and these dealers in turn employ 740,000 people, with a total payroll of $35 billion a year. The companies buy $156 billion in parts and services from suppliers in every state. The auto companies provide pensions for 775,000 and health care benefit for 2 million.

Because carmakers are so tightly woven into the fabric of the U.S. economy, the collapse of this industry would reach far beyond Detroit. The Center for Automotive Research in Ann Arbor predicts that a collapse of U.S.-based carmakers would lead to widespread failures of supplier companies, already pushed to the brink by the downturn, and this in turn would shut down the transplant factories owned by Toyota, Honda and other non-U.S. companies. Shockwaves through the economy would quickly put nearly 3 million people out of work. In the first year alone, personal income would drop by $150 billion, and tax and social security receipts would fall by more than $45 billion.

Faced with these risks to the well-being of millions of Americans, and to the U.S. economy as a whole, it is clear to us that government support is a sound investment in an important industry, and in America itself.

The Aura, CTS, Malibu and Enclave show that GM can compete with the best. Our aggressive restructuring and rapid global growth shows our commitment to reinventing our company. And the Chevy Volt and other advanced technology vehicles show our passion for being a leader in reinventing the automobile.

Please share this information with all of your employees and other stakeholders. We hope you will ask your legislators and other political leaders to support the U.S. auto industry through this critical transformation. It's easy and turnkey. Please take a minute to go to http://gmfactsandfiction.com to show your support and let your voice be heard.

To give you more context and the facts, below are links to some industry talking points and the study recently released by industry analyst, David Cole, with the Center for Automotive Research (CAR), entitled: "The Impact of the U.S. Economy of a Major Contraction of the Detroit Three Automakers."

Thank you for your time and support.

Respectfully,

Betsy Lazar
Executive Director, Advertising and Media Operations General Motors Corporation

Among the GM talking points was this chilling figure:

The collapse of the U.S.-based auto industry would be devastating. In just

the first year:12

o Direct, indirect and spin off employment would drop by 2.95 million people

o Personal income would drop by $150.7 billion

o Government transfer payments would increase by $14.3 billion

o Social security receipts would drop by $21.1 billion

o Personal income tax paid would drop by $24.7 billion

When you look at those numbers, no one can dispute that if those numbers are even one-third accurate, it is much cheaper to loan the money and pray.

But, Pat Choate made some very good points in a radio appearance with Lou Dobbs on Tuesday:

1) Keep the jobs here

2) Keep the production here

3) Require concessions from the unions, who are so far digging in their heels and saying they will make no concessions to keep their jobs. (By the way, how many union workers who used to work on the strip are wishing they had their jobs back....)

While I am not a fan of government involvement in business, we've already invested over $300 billion in bailing out Treasury Secretary Hank Paulsen's best buddies in the banking industry with no real impact on the economy. $25 billion to save nearly 3 million jobs is a price we can afford.

And while I'm a friend of the car industry, I'm truly offended at the recent attempt by the National Automobile Dealers Association to wheedle free dealer advertising out of the radio industry in the guise of a Public Service Announcement.

In a fax sent to radio stations, the NADA said in Part,

Help Us Help You: NADA Produces PSA Campaign Promoting “Best Time To Buy”

As you know, the new-car dealers in your area are a major source of advertising revenue for

radio stations and contribute millions in tax revenue to your local, state and national

economies. But the economic crisis has hit the automobile industry hard, leaving your local

dealers facing unprecedented challenges. It’s in everyone’s interest to help get the auto

industry back on Its feet. The sooner auto sales pick up, the sooner the auto Industry will be

in a position to resume robust product advertising. . .

Attached you will find a :30 audio PSA from the National Automobile Association (NADA).

NADA, along with your local new-car dealers, are asking for assistance with the insertion of

the PSA. The purpose of the PSA is to help stimulate auto sales and, most importantly, inform

the public that auto credit is available. Your efforts and consideration are greatly appreciated.

Now, if the PSA was a “Help your dealer help the economy” spot, I'd be sympathetic. But here's what the “PSA” says:

“In today's economic climate, you might think it's impossible to get credit to buy a car. We have news for you. In fact, financing is available, and there's never been a better time to buy a car or truck. Your local dealer has access to multiple sources of credit, and will work with you to find financing that meets your needs. You can find interest rates as low as zero percent, end of year savings, and rebates. Vehicle quality and fuel efficiency are the highest ever. NOW is the time to buy. A message form the National Automobile Dealers Association.”

I'm sorry. That's not a PSA. That's a commercial.

And my opinion is apparently shared by other broadcasters. Bruce Dierking, who owns six radio stations scattered across the Kansas-Nebraska border, says, “Isn’t it ironic that the NADA could even find my contact information in their request for public service time for the automobile industry? They certainly couldn’t find us when the advertising dollars from the manufacturers and dealer buying groups were distributed to the daily newspapers, television stations and sports sponsorships. We haven’t even picked up any crumbs from the table. I hope that those parties have greater sympathy for the cause than we do.”

In the past, I've supported the various public service efforts of NADA in child car safety and keeping flood damaged vehicles off car lots. While I'm sympathetic, I have a hard time supporting this...