Latham Report: GM Closures Especially Painful In Rural Iowa

Press Release

In rural Iowa, successful businesses often become fixtures in their communities, providing a steady source of jobs, economic activity and quality service upon which many small communities rely. During difficult economic times, Iowa's dependence on these businesses grows, and the loss of just one of these major employers can devastate a community.

When I hear about the forced closures of Iowa car dealerships as a result of the government-imposed bankruptcies of General Motors and Chrysler, I can't help but think of the pain inflicted on the communities that count on those dealerships as economic engines. These bankruptcies have dealt yet another blow to communities across Iowa - and across the country - that are already dealing with the economic downturn.

In response, I've co-sponsored legislation in the United States House that would require GM and Chrysler to honor the agreements they made with their dealerships before they sought Chapter 11 protection. This measure would guarantee that the right of recourse for dealerships, under applicable state laws, is not lost in the whirlwind conditions of the bankruptcy proceedings.

I also have sent a letter to GM CEO Fritz Henderson reminding him of the economic hardship the GM bankruptcy is causing communities across Iowa. In that letter, I reminded him of the central presence these local dealerships have in their local economies, and the important roles these businesses play as outlets and ambassadors for GM products. In short, the quality service provided by dealers in their respective communities has carried the GM reputation for many years. Because of the money that GM dealers pay out of their own pockets to support their businesses, the argument that a small town dealership is a financial drain on the auto manufacturers does not hold a lot of water from my perspective.

In my letter to GM, I also voice my concern that the government role in the General Motors bankruptcy is not healthy from a business perspective simply because politics inevitably enters the process. As is often the case when government intrudes too deeply into private enterprise, this government-imposed GM bankruptcy has left open the door to government mismanagement and political favoritism.

It makes far more sense to shield the process from politics and allow the realities of the market to determine which dealerships and plants will close and which will survive. This path best serves dealerships in all communities and recognizes that ‘one size does not fit all' when it comes to benchmarks for deciding which businesses should survive.

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