Local dealership, test facility unaffected as GM declares bankruptcy

FROM STAFF AND AP REPORTS

President Barack Obama pushed a humbled General Motors Corp. into bankruptcy on Monday and said the federal government will act as ‘‘reluctant shareholder’’ when it assumes a 60 percent ownership of the smaller carmaker that emerges.
 
"We anticipated it," said Karl Moedl, whose dealership includes Buick and GMC trucks. "But it will be business as usual for us. As far as I know, GM will be open for business every day and we'll still be getting cars and parts and honoring warranties. Customers shouldn't feel at risk."
 
Joe Fisher, owner of Fisher Chevrolet, could not be reached for comment Monday.
 
Neither dealership is slated for closure as part of GM's plan to reduce its dealerships in connection with its reorganization.
 
As for GM's hot-weather test facility, which recently was relocated to land leased at Yuma Proving Ground through a joint use agreement with the Army, "we're still going forward with our plans," said manager Frank West. "There's no direct effect on us at this time."
 
He said operations at the test facility "are ramping up. We're still unpacking boxes, but we've begun testing."
 
The Army is looking forward to a long-term, mutually beneficial relationship with GM, said Chuck Wullenjohn, YPG spokesman. "We don't see that changing for the foreseeable future. They've built an impressive facility and YPG will be able to test there."
 
Wullenjohn added: "If General Motors was ever to decide that it no longer needed to own and operate the desert testing complex at the proving ground, it would revert to the Army and become part of YPG.  However, there are no plans for this."
 
Obama said he hopes GM — once a proud symbol of American capitalism — would emerge quickly from bankruptcy court, and pledged up to $30 billion in additional federal assistance to help it get on its feet.
 
The government’s partial stake in GM comes on top of a far smaller ownership of Chrysler LLC, as well as significant federal equity in banks, the AIG insurance giant and two mortgage industry titans — all victims of an economic crisis unrivaled since the Great Depression.
 
Republicans lobbed questions in Obama’s direction even before he finished speaking.
 
‘‘The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars,’’ said House Republican Leader John Boehner of Ohio.
 
‘‘Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability? It’s time for the administration to fully explain what the exit strategy is to get the U.S. government out of the board room once and for all,’’ Boehner said.
 
But the president said the actions were part of a ‘‘viable, achievable plan that will give this iconic company a chance to rise again.’’
 
Speaking at the White House, where he was flanked by Cabinet secretaries and top economic advisers, he added, ‘‘What I am not doing, what I have no interest in doing, is running GM.’’
 
The president said auto executives ‘‘will call the shots and make the decisions about turning this company around.’’ He said the government would refrain from playing a management role in all but the most critical areas.
 
‘‘Our goal is to help GM get back on its feet ... and get out quickly,’’ he said of the federal government.
 
Obama spoke as GM entered bankruptcy court at the same time Chrysler was looking to emerge after a two-month reorganization. Over the weekend, a bankruptcy judge gave the No. 3 automaker approval to sell most of its assets to Italy’s Fiat, part of a plan under which the U.S. government will own somewhat less than 10 percent of the firm.
 
Ford Motor Co., the other large U.S. automaker, has said it can weather the current economic and industry crises on its own.
 
Obama said the coming restructuring will ‘‘take a painful toll on many Americans.’’ GM announced during the day that it would permanently close nine more plants and idle three others, steps affecting as many as 20,000 workers.
 
Obama cited Chrysler’s experience in bankruptcy court as a model of how GM could fare.
 
‘‘Some said a quick bankruptcy was impossible ... they were wrong,’’ he said.
 
He said that unnamed critics predicted car sales would ‘‘fall off a cliff,’’ and added, ‘‘they were wrong.’’ Chrysler sold more cars in May than it did in April.
 
The outcome, he said, is ‘‘dramatically better than the one we found when we began.’’
 
Looking ahead, he said, GM will be prodded at every juncture by the administration’s top officials.
 
The announcement marked the latest step in a series of measures Obama has taken since he became president to salvage an industry that has been part of the American landscape for a century.
 
Earlier in the year, he rejected a restructuring plan submitted by GM’s ownership, and ordered its leaders to try again. They did, under the direction of administration officials, and it resulted in a blueprint in which hundreds of dealerships will be closed and familiar model names jettisoned.
 
Officials have estimated the new GM should be profitable when Americans are buying about 10 million vehicles a year. The company that entered bankruptcy court needed U.S. auto sales to stay at an estimated 16 million units a year to make a profit.
 
Obama stressed that GM’s workers and its investors had both made sacrifices. The United Autoworkers Union agreed in recent days to numerous concessions, and a majority of investors agreed to accept less than the paper value of their holdings. The administration, sensitive to charges that it favored the UAW, said the terms accepted by the unions were harsher than what had been proposed by the Bush administration.
 
Obama’s assurances about a temporary federal ownership were seconded by Senate Majority Leader Harry Reid, D-Nev., who said the president’s ‘‘decision to take a short-term stake in General Motors is driven by our nation’s shared interest in ensuring the American auto industry can survive.’’
 
Interest in Congress was intense, though, and the Senate Commerce Committee announced it was summoning top executives from GM and Chrysler to a hearing on Wednesday into their firms’ plans to close hundreds of dealerships as part of an industry restructuring.
 
Chrysler has said it will close nearly 800 dealerships. GM has disclosed plans to shutter about 1,100.
 
Local dealerships for both automakers said earlier that they are not among the businesses slated for closure.

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Yuma Sun Staff Writer Joyce Lobeck contributed to this report. She can be reached at jlobeck@yumasun.com or 539-6853.