Erik Paulsen: Why is government closing businesses?

  • Article by: ERIK PAULSEN
  • Updated: June 10, 2009 - 9:43 PM

Auto dealers and communities are being shut out of a process that affects them directly.

Imagine owning a successful business you've built from the ground up. Maybe you provide several dozen people with good-paying, full-time jobs or are one of only a few businesses left in a small community. You've likely made difficult decisions just to keep your business afloat and employees on staff during these tough economic times.

One day you're given notice that you have 30 days to close your doors; no explanation, no chance to appeal -- just an ultimatum. I'm willing to bet few people would take that directive kindly.

Sadly, this scenario is not a figment of imagination -- it's a very disturbing reality for local automobile dealers across Minnesota.

The President's Auto Task Force recently allowed the planned elimination of over 3,000 dealerships nationwide. The actions are expected to put more than 100,000 people out of work, with many more job losses sure to follow.

With the recent bankruptcy filing by General Motors, the federal government, which has committed $50 billion of taxpayer money to GM, now owns a 60 percent equity stake in the company. Additionally, with Chrysler in bankruptcy over the last several weeks, the government is playing a significant role in the business decisions for both companies.

Auto dealers are threatened because GM and Chrysler are able to bypass state franchise laws that normally restrict what they can demand of and do to them. Most troubling is that the decisions on which dealers are forced to close appear to be arbitrary, and the reasons aren't being shared with the public.

In my district, for example, a longtime dealership, Bill Mason's Chrysler Jeep in Excelsior, was given 30 days to shut its doors. It didn't matter that Mason built the business and provides many good-paying jobs.

Similarly, George McGuire of Shakopee Chevrolet is being shut down despite 19 years as a dealer. No consideration was given to the fact that his dealership is highly profitable, employs 40 people and made several improvements to the facility at GM's request.

No one seems able to explain how these closings would save GM or Chrysler any money, sell any more cars or save any jobs. It's even more baffling considering that dealers shoulder nearly all operating costs, often through personal investment or financing.

The government should not be allowed to pick winners and losers when it comes to local dealerships.

We need input from those affected by these decisions. Local entrepreneurs who have built these dealerships should have the opportunity to fight for their businesses. Employees who have helped make a business successful should have the opportunity to keep their jobs. And taxpayers, who unfortunately now are majority owners of GM and have provided billions to Chrysler, should have the opportunity to express their concerns and ideas as these decisions are made.

I meet with small businesses and entrepreneurs all the time. Typically, the discussion focuses on how I can work on policies to help them grow. Now, I am hearing from several Minnesota auto dealers who are frustrated because the government is arbitrarily forcing them to close.

Legislation introduced this week would address many of the concerns by restoring the franchise agreement between the auto dealers and GM and Chrysler. This would ensure that the dealers themselves, not the government or the big automakers under government control, are able to make the decision. I'm pleased to be working in a bipartisan manner with House Majority Leader Steny Hoyer and several of my colleagues in supporting this measure.

There is no question that domestic auto manufacturers have made poor decisions that require a major reshaping in order to survive. But should that mean the government helps pick winners and losers? Should it be allowed to close the doors on successful business owners and entrepreneurs who have invested everything into their dealerships? And should the decisions come without any without input from taxpayers, businesses or the communities affected?

The answer to each of those questions is a resounding "no."

Erik Paulsen, R-Minn., is a member of the U.S. House of Representatives.

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