Mr. Kaltschmidt goes to Washington
Don Kaltschmidt
By RICHARD HANNERS
Whitefish Pilot
A Whitefish car dealer traveled to Washington, D.C., last week to lobby Montana’s Congressional leaders on behalf of America’s century-old automobile industry.
About 700 U.S. car dealerships have gone out of business since the Wall Street meltdown and credit crisis, including three in Montana, said Don Kaltschmidt Jr., the owner of Don K Chevrolet in Whitefish.
“Four thousand people are employed by Montana auto dealers, and 75 percent of them sell GM, Ford or Chrysler vehicles,” he said. “We’re not on the ropes yet, but we’re struggling.”
Kaltschmidt said he was one of about 150 auto dealers from small states across the U.S. who were asked by the National Automobile Dealers Association to make the trip.
He joined Billings car dealer Bill Undereiner, who is director of the Montana Association of Automobile Dealers and knows Rep. Denny Rehberg and Sens. Max Baucus and Jon Tester.
General Motors claims it needs $11 billion to $14 billion to keep operating. Both GM and Chrysler said they could go bankrupt by the end of the year without federal aid. Things could get worse after that if customers are unwilling to buy cars from a bankrupt company.
Some experts predict an economic domino effect. One estimate is that 2.5 million jobs could be lost if GM closes its doors — about 240,000 at auto manufacturers, 800,000 at suppliers and another 1.4 million at businesses that rely on spending by automakers.
“The effect of losing our manufacturing base would be huge for the U.S.,” Kaltschmidt said, “but so would the lost jobs and businesses.”
Supporters of a bailout say the auto industry is another victim of the global financial crisis and should get the same assistance as financial companies — including a piece of the $700 billion package Congress passed in September. Millions of lost jobs could add up to $100 billion in lost wages, they say.
Opponents say the automakers’ problems result from their own bad business decisions, noncompetitive labor contracts and producing vehicles that Americans won’t buy. Bailing out the Big 3 would only delay the inevitable, they say.
Kaltschmidt said he flew to Washington on Dec. 8 and stayed four days. He and Undereiner visited the Montana delegates and met with different perspectives from each of them.
“Congressman Rehberg wants them to go bankrupt and reorganize. Of course, we have a different feeling on that,” Kaltschmidt said. “He’s been a good friend of auto dealers up to now, but he wanted the unions to give up more concessions.”
Tester, who sits on the Senate Banking Committee, normally supports auto dealers, especially rural ones, Kaltschmidt said, but he had concerns about part of the bill. Baucus, who sits on the Senate Finance Committee, indicated he would reluctantly vote for the bill, but he had an issue with one of the bill’s provisions.
After listening to top executives from the Big 3 automakers, the House passed a $14 billion aid package on Dec. 10 by 237-170. That was about half of what the executives asked for the second time they came to Washington. The Senate rejected the House bill the next day by 52-35, short of the 60 votes required.
All three members of Montana Congressional leaders voted against the $14 billion aid package. Only one other Democratic senator voted against the bill.
“GM and the unions have been working on this for more than a decade, while the market share fell from 50 percent to 25 percent,” Kaltschmidt said. “It’s hard to turn a big ship around.”
The reason why GM needs a bridge loan is because the national credit crisis hurt car sales, he said, but local banks and credit unions are in better financial shape.
“There’s no credit problem here,” he said. “This is a great time to buy a car. It’s a deflationary period. The smarter people are taking advantage of the situation.”