[Congressional Record (Bound Edition), Volume 155 (2009), Part 11]
[Senate]
[Pages 15351-15356]
[From the U.S. Government Publishing Office, www.gpo.gov]




            TRAVEL PROMOTION ACT OF 2009--MOTION TO PROCEED

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of the motion to proceed to S. 1023, which the 
clerk will report.
  The legislative clerk read as follows:

       A motion to proceed to the bill (S. 1023) to establish a 
     non-profit corporation to communicate United States entry 
     policies and otherwise promote leisure, business, and 
     scholarly travel to the United States.


[[Page 15352]]


  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. Madam President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                             Paris Air Show

  Mrs. MURRAY. Madam President, I rise today to draw attention to an 
event that is going on across the Atlantic Ocean and how it impacts 
thousands of good-paying family-wage jobs right here in the United 
States.
  As some of my colleagues know, the Paris Air Show kicked off this 
week. The air show showcases many impressive displays of aviation, 
technology, and innovation.
  But there is something else that is going to be on display at this 
year's air show: the fruits of some 30-plus years of direct cash 
advances and illegal subsidies to the European aerospace company 
Airbus.
  For more than three decades now, the European governments that 
created Airbus to specifically compete with the United States have 
aggressively funded, protected, and promoted their venture.
  Since 1969, the European governments of France, Germany, Spain, and 
the UK have supported--the governments have supported--Airbus's 
commercial aircraft development with over $15 billion in launch aid. 
Those are high-risk loans at no- or low-interest, with repayment 
contingent on the commercial success of the aircraft.
  According to the USTR, the amount of launch aid Airbus has received 
during the lifetime of that company--if it was repaid on commercial 
terms--is well over $100 billion.
  Such massive, market-distorting subsidies to a private company are 
today allowing Airbus to offer incentives for airlines to buy their 
planes. Airbus is a mature company, with more than half of the market 
for large commercial aircraft. But Europe is still treating it as a 
company with kid gloves.
  In fact, last week, Bloomberg News reported that Airbus is seeking 
approximately $5 billion in launch aid from the governments of France, 
Germany, Spain, and the UK to now fund the development of the Airbus 
A350. Reports indicate that the deal could be completed within the 
month.
  If we want to keep a strong aerospace industry in America, we cannot 
let that happen. Every time European governments underwrite Airbus with 
subsidies, our American workers get pink slips.
  If we want to lead the world in commercial aerospace, our message to 
Europe has to be strong and clear: No more illegal subsidies to prop up 
Airbus. And Airbus has to compete in the marketplace just like 
everybody else.
  I am deeply troubled that Airbus is considering pursuing now 
additional illegal, trade-distorting subsidies that, in effect, have 
caused adverse effects on the American aerospace industry at the same 
time the European Union is being sued in the World Trade Organization 
for those such practices.
  That is why I am writing to Ambassador John Bruton urging the EU to 
show it is serious about pursuing fair trade practices with the United 
States by ending any discussion or movement forward on those subsidies.
  The message sent by the U.S. Government is very clear.
  On April 11, 2005, this Senate unanimously adopted Senate Concurrent 
Resolution 25. That resolution called for European governments to 
reject launch aid for the A350.
  Launch aid for the A350 or any other form of preferential financing 
for Airbus is unacceptable. We will not tolerate another round of 
subsidies that kill our American jobs.
  In addition to the trade-distorting subsidies now being talked about 
in Paris, there are other distortions showing up in the news accounts 
as well.
  Several weeks ago, I had the opportunity here in the Senate to 
question Air Force Secretary Michael Donley at our Defense 
Appropriations Subcommittee. I told him about my concerns for the 
future of our domestic industrial base and how I believe the future 
capabilities of both our domestic workforce and our military must be 
taken into account as we work to reform our procurement process.
  Secretary Donley agreed that the Pentagon has an interest in ensuring 
that our industrial base issues are taken into account.
  That response now has some of Airbus's top executives upset and once 
again distorting the facts. In newspaper reports over the weekend, the 
chief executive of EADS--which is Airbus's parent company--Louis 
Gallois, claims that if Airbus is selected to build the next generation 
of military refueling tankers, they would create more jobs than 
competition for the U.S. aerospace industry.
  That is pretty hard to swallow. In fact, a year ago, in June 2008, an 
independent, nonpartisan Economic Policy Institute study concluded that 
the now-overturned decision to award the tanker contract to Airbus 
would have actually cost the United States 14,000 jobs.
  The truth is, Airbus does not even have a plant here in the United 
States and their well-documented plan is to build their tanker airplane 
in Europe and then ship sections over here to the United States to be 
assembled.
  The Boeing tanker, however, would be built in Everett, WA, and 
military capabilities would be added at the company's defense plant in 
Wichita, KS.
  Suppliers in States across America would be supported by that 
contract. A Boeing-made tanker is estimated to support and create twice 
as many American jobs as an Airbus plane.
  But it is not just about jobs. This is about the future of America's 
domestic industrial strength. Our government depends on our highly 
skilled industries--our manufacturers, our engineers, our researchers--
and our development and science base to keep the U.S. military stocked 
with the best and most advanced tools and equipment available.
  So whether it is our scientists who are designing the next generation 
of military satellites or our engineers who are improving our radar 
systems or our machinists who are assembling our planes, these 
industries and their workers are one of America's greatest strategic 
assets.
  We ought to ask the question: What if they were not available 
anymore? What if we here made budgetary and policy decisions without 
taking into account the future needs of our domestic workforce?
  That is not impossible. It is not unthinkable. It is actually 
happening. And it is time to have a real dialog here about the 
ramifications of these decisions before we lose our capability to 
provide our military with the tools and equipment they need. Because 
once our plants shut down and our skilled workers move to other fields, 
and once all the infrastructure we have here is gone, it cannot be 
rebuilt overnight.
  As a Senator from Washington State, I represent five military bases 
and many of our military contractors and suppliers, and, believe me, I 
am keenly aware of the important relationship between our military and 
the producers who keep them protected with their latest technological 
advances.
  I have also seen the ramifications of the Pentagon's decisions on 
communities and workers and families. As many of my colleagues know, I 
have been sounding the alarm about a declining domestic aerospace 
industry for years. The American aerospace industry has taken hits from 
the economic climate, but it is also being undermined by unfair trade 
practices and these illegal subsidies of the type that are now being 
talked about this week in France.
  This isn't just about one company or one State or one industry; this 
is about our Nation's economic stability, it is about our skill base, 
and it is about our future military capability. We have watched as our 
domestic base has shrunk, as competition has disappeared, and as our 
military has looked overseas for the products we have the capability to 
produce from scratch--not just assemble but produce from scratch--here 
at home.
  Last month, I worked with some of our colleagues in the Senate to 
include a provision in the Defense Acquisitions Reform Act that has now 
been signed by the President. My provision draws

[[Page 15353]]

the attention of the Pentagon leadership to consider the effects of 
their decisions on our industrial base and its ability to meet our 
future national security objectives. These decisions should not be made 
in a vacuum without regard to the long-term capabilities of our 
industrial base and the workers who are its backbone.
  Last weekend, EADS head Louis Gallois said:

       We will see at the end of the day who is creating more 
     jobs. We are starting from scratch in Alabama. We have to 
     create an industrial base.

  Well, America has a highly skilled aerospace industrial base. It has 
taken a very long time to build it. We have machinists today who have 
past experience and know-how down the ranks for over 50 years. We have 
engineers who know our mission and know the needs of our soldiers and 
sailors and airmen and marines and they have a reputation for 
delivering for our U.S. military.
  I believe we need to move forward with a fair and transparent rebid 
of the tanker contract. The comments and the actions coming out of 
France this week have been anything but. But, again, this isn't just 
about one contract; this is about our Nation's economic stability, it 
is about our military capability, and it is about ensuring that our 
workers are a consideration in the decisions we are making on major 
defense contracts.
  It took us a long time to build our industrial base, and it is built 
on the best America has to offer: Our innovative spirit, our dedication 
to this country and, most importantly, our Nation's workers. We have to 
work to preserve it, and we need to stand against unfair and illegal 
trade practices such as the ones that are being talked about at the 
Paris Air Show this week.
  The Presiding Officer and I both know we are in the middle of a 
recession. We are engaged in wars abroad. These are two separate but 
not unrelated challenges. We have the ability in America to provide our 
military with the equipment they need to defend our Nation and project 
our might worldwide. But I fear, unless we stand for our industrial 
base today, we stand to lose the backbone of our military might, some 
of our best-paying American jobs, and our economic strength in the 
future.
  Now is the time to take this stand and stand for our military and for 
our workers. It is critical to preserving America's future strength.
  I thank the Chair. I yield the floor and I suggest the absence of a 
quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mrs. HUTCHISON. Madam President, I ask unanimous consent that the 
order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                     Auto Manufacturers Bankruptcy

  Mrs. HUTCHISON. Madam President, I rise today to speak about the 
update on the Chrysler and GM bankruptcy and their impact on the auto 
dealer community.
  Almost 4 weeks ago, when we were considering the supplemental 
appropriations bill, I offered an amendment to provide at least 60 days 
for any dealer being terminated by an auto manufacturer receiving TARP 
funding to wind down its operations and sell its inventory. My 
amendment was in response to the letter sent to 789 Chrysler dealers 
May 13, 2009, informing them they were being terminated on June 9--3 
weeks later--with no assistance for auto inventory, parts, or special 
tools. I found that unacceptable. And you know, a number of the people 
who heard my amendment on the floor stepped up and said: I want to 
cosponsor that amendment. By the end of the day, we had 38 bipartisan 
cosponsors on the amendment to give these valued members of our 
communities at least 60 days to wind down their businesses. As a result 
of that amendment and thorough discussions with Chrysler president Jim 
Press and the Auto Task Force, Chrysler responded with a commitment to 
facilitate the transfer of inventory and parts for the terminated 
dealers.
  As soon as we returned from Memorial Day recess, Chairman Rockefeller 
and I called a Commerce Committee hearing specifically on the impact of 
the Chrysler and GM bankruptcy on the auto dealer community. This 
hearing provided the first outlet for dealers to express their opinions 
on how they were being treated in this process, and it gave Chrysler 
and GM CEOs the opportunity to explain their reasoning for the 
termination of literally thousands of dealerships across the country. 
We pressed the auto manufacturer executives to reconsider how they were 
treating these independent business men and women, and we sought 
progress reports on their commitments to me, our committee, and this 
body to provide a softer landing for terminated dealerships.
  In response to the concerns we raised in that hearing, Chrysler did 
take another step forward on behalf of its terminated dealers by 
formally guaranteeing that every piece of inventory at these 
dealerships would be purchased at cost, minus inspection and 
transportation fees. So they made the promise after the Memorial Day 
recess that they would buy every car.
  This reassuring news, of course, was welcome to the dealer body, but 
we still had concerns. I continued to push Chrysler for assurances 
regarding parts and equipment. The Commerce Committee sought additional 
answers on transparency, dealer reentry, rural access, and continuation 
agreements in both Chrysler and General Motors. On Monday, I received a 
letter that I thought was very positive from Chrysler, acknowledging 
the need for assurances on parts. They have now guaranteed 100 percent 
of the parts inventory for terminated dealers.
  So we have a situation here where they did listen. They eventually 
said they would buy all of the cars that were still left in inventory, 
and now, of course, they are going to buy the parts. Of course, the 
dealers that were being terminated had no use for the parts which they 
had already purchased, and so I think that was a fair ending to that 
dilemma.
  I also wish to point out another part of the answer to the Commerce 
Committee letter, which is on dealer terminations and market reentry. 
One of the things that came out in our hearing is that in some places 
all of the dealerships in the area were being closed, yet we had word 
that there were new people coming in seeking financing or a new 
dealership in the same place. That didn't quite ring right with us, and 
so we did ask for assurances that any dealer that was terminated would 
have some ability to come back in if another dealership was going to be 
put in that area. And here is what Mr. Press said in the letter of June 
12, 2009:

       Chrysler Group LLC will commit to provide nonretained 
     dealers with an opportunity for first consideration of new 
     dealerships that the company may contemplate.

  We sent the same request for information to the General Motors CEO, 
and his answer was:

       You have asked about situations where GM will authorize the 
     establishment of a new dealership near the location where a 
     current, profitable dealer has been asked to wind down 
     operations. It is not our plan for current dealerships to be 
     wound down only to open up new dealerships. Rather, our plan 
     is to reduce overall dealer count. However, in those rare 
     instances where we do open a new dealership, in an area 
     previously served by a winding down dealer, we commit to 
     provide advance notice to former dealers and allow them an 
     advanced opportunity to apply to run the new dealership.

  I think that is a step in the right direction, and I hope that will 
be followed through on in a legitimate and positive way because it 
would be the most cruel cut for a dealer that has been closed--a dealer 
that is profitable--to all of a sudden have a new dealer come in and 
open on the same ground or in the same area as the dealer that was 
closed at great loss.
  Remember, we have a dealer now with a huge piece of real estate. 
These auto dealerships are big lots because they have all these cars on 
them. So they are big pieces of real estate, and they are big buildings 
that are generally suited just for the purpose of an automobile 
showroom, and they have been left or sort of stuck with this real 
estate and stuck with all of the other

[[Page 15354]]

equipment and things you have to have to run a business. So I think it 
is untenable for us to just close that person down and then 3 months 
later suddenly have a new person come in without all of those expenses 
and have the opportunity to open a new dealership.
  So I thought that was a very important part of the letter and 
commitment that is being made. But, of course, the commitment has to be 
followed through with--a responsible advance notice and a fair hearing 
for the dealer that has gone out of business to be able to come back 
in.
  I commend Chrysler for heeding the calls of Members of Congress and 
the dealer community and responding in a way that does give additional 
support to the dealers.
  General Motors, meanwhile, did sit down with the National Auto 
Dealers Association after our Commerce Committee hearing to work out 
concerns with the supplemental agreements continuing dealers were asked 
to sign. I commend GM for making concessions during those discussions, 
and I hope they will continue that positive dialog and interaction as 
the GM dealer network seeks additional information, support, and 
assistance.
  I will continue to work with the auto manufacturers to provide our 
dealer communities with the support and assistance they need in this 
very challenging time.
  I am worried about what is happening to many communities in my State 
and all over America because so often auto dealers are such a pillar of 
the community. They are very community oriented. They advertise, they 
support the Little League, they support the United Way, and they 
support the high school football programs. They are community citizens, 
and they are always the first one to step up when the community needs 
something.
  It has been stated that closing these dealerships is necessary, even 
where it is the only dealership in town and even when it is profitable. 
But the dealer takes all of the risk. They buy the cars, they buy the 
parts, they buy the special equipment, they have the real estate costs. 
They take the risks, not the manufacturer.
  I am not convinced that cutting down on the number of dealerships is 
the most productive thing for this economy today. We are trying to keep 
jobs. We are trying to keep communities going. We are trying to keep 
our economy steady and growing. Why we are closing down dealers and 
putting people out of jobs when they are profitable and contributing to 
the community is, frankly, lost on me. In fact, I asked Mr. Ron Bloom, 
who is a member of the Auto Task Force, at a Banking Committee hearing 
after the Commerce Committee hearing. I said: Why did the task force 
ask both GM and Chrysler to go back to the drawing board and eliminate 
more dealerships than their original plan?
  He acknowledged they did this. Again, he gave us the argument that 
fewer dealerships will be better for sales of these cars and trucks.
  I still, I am honest to admit, do not understand why he believes 
that; why Mr. Bloom or the Auto Task Force or GM or Chrysler believe 
when the dealers take the risk, and they are profitable, that it will 
increase sales to eliminate those dealerships. I certainly do not 
understand how the task force, which is part of the White House, would 
not see that this is going to hurt the economy in the long run--putting 
people out of jobs, thousands of people out of jobs. It is 
counterintuitive to me.
  However, it is being done. All we are trying to do is help the people 
who are being shut down to have the first rights to new dealerships 
that would open, and to make sure they are treated as fairly as 
possible. You cannot say it is fair because getting 3 weeks' notice to 
shut down an auto dealership is not fair. GM has given a longer time 
period, but although the GM company is saying: You will have until next 
year, 2010, to shut down your dealerships, yet the ones that have 
gotten the notice that they are going to be closed under GM are being 
told they cannot buy any new cars to sell. They can wind down the 
inventory they have, but they cannot stay in business until 2010 if 
they cannot get access to new automobiles and parts.
  It does not seem as though that is going to work very well either. I 
am hoping GM is going to also be a little more responsible in trying to 
help those that are being closed, with some ability to wind down in a 
more constructive way.
  As we continue these discussions between the dealer community and the 
auto manufacturers, I certainly hope we will be able to keep track of 
the progress. I would like to continue to get the progress reports, to 
see how these automobile companies are doing, and to get input from the 
dealers. It has been a very tough blow to them, especially those that 
did not see it coming because they were profitable, or like one of my 
constituents who had a profitable dealership in a location in Galveston 
County for years and years and years and then was told that he was 
going to be closed, even though he has dealerships in other parts of 
the Houston area, he was being closed in Galveston County and, of 
course, Galveston was struck by a terrible hurricane--Ike--last year 
and his business was down in the Galveston location. That is not 
surprising.
  Many people have not been able to move back to Galveston County 
because their homes were destroyed and they have no ability to live in 
Galveston County anymore. At least until very recently there was no 
opportunity for my constituent to appeal to General Motors because they 
were going to lose all their rights, if they appealed, to any of the 
concessions that were being made to closing dealers. It is a very 
troubling situation.
  I think we are making progress. I think GM and Chrysler are doing 
better with regard to the dealers, and I hope they will continue to 
understand these are important parts of communities all over America, 
these franchises that they have put out. They have been encouraged to 
buy inventory to try to help the companies not to go into bankruptcy, 
and then when they did go into bankruptcy they were sort of left high 
and dry. I think it is our responsibility--particularly in the case of 
GM and Chrysler, because they are getting taxpayer dollars--that they 
should have a little more concern about the overall economy because it 
is tax dollars that are propping them up.
  I ask unanimous consent the letters that Senator Rockefeller and I 
received from Mr. Henderson and Mr. Press, of GM and Chrysler 
respectively, be printed in the Record, and I yield the floor.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                   General Motors Corporation,

                                       Detroit, MI, June 12, 2009.
     Hon. John D. Rockefeller, IV,
     Chairman, Committee on Commerce, Science and Transportation, 
         Hart Senate Office Building, Washington, DC.
     Hon. Kay Bailey Hutchison,
     Ranking Member, Committee on Commerce, Science and 
         Transportation, Russell Senate Office Building, 
         Washington, DC.
       Dear Mr. Chairman and Senator Hutchison: Thank you for your 
     letter regarding rationalizing of the General Motors dealer 
     network. I appreciate the time that you have devoted to 
     understand the issues facing GM and the efforts we are 
     undertaking to restructure the company for future viability. 
     I appreciate the thoughtful questions and comments concerning 
     how we decided which dealers should remain with the new 
     company and the impact of those decisions on the dealers and 
     the communities in which they operate.
       Dealers are critical to the future of GM. Strengthening our 
     dealer network will make that future possible, and preserve 
     over 200,000 jobs at GM's remaining dealers, along with 
     hundreds of thousands of jobs with GM's direct manufacturing 
     and supplier network. As I stated in my testimony, 
     restructuring our dealer network is quite painful--for us, 
     and especially for our dealers. Many of our dealers operate 
     businesses that have been in their families for generations. 
     Our actions affect them personally as well as financially. 
     They also affect the communities and states where our dealers 
     live and work.
       That is why we are conducting our GM dealer restructuring 
     thoughtfully and objectively and in consultation with our 
     dealers. We decided not to outright terminate dealers, and 
     instead developed a unique wind-down process that we believe 
     is considerably more equitable.
       The issues that you raise generally result from our 
     bankruptcy. I have stated on many

[[Page 15355]]

     occasions that bankruptcy was not the preferred option for GM 
     to restructuring itself for future viability. Many in and 
     outside of Congress called for a GM bankruptcy, and urged the 
     company to use a court administered bankruptcy process. As 
     economic conditions worsened, and we face the equivalent of 
     an economic depression in the auto market, bankruptcy became 
     the only option for GM to restructure and survive.


                 Wind Down and Participation Agreements

       During the hearing, many issues were raised about the 
     agreements GM asked its dealers to sign, either to wind down 
     operations or continue with the New GM. GM crafted these 
     agreements to provide dealers with more options than they 
     would otherwise have.
       With respect to the wind down agreements, we carefully 
     drafted them to provide the dealers financial assistance, 
     flexibility and choice regarding the time they take to 
     orderly wind down their business. We did not terminate any 
     dealers, rather providing them with options to sell and 
     service vehicles for up to 16 months. This approach is in 
     stark contrast to what happens to most contracts in 
     bankruptcy, where contracts are typically simply rejected 
     with no assistance.
       With regard to the participation agreements, we continue to 
     respect and follow state franchise law and provide a new 
     operating approach that will benefit both the dealer and GM. 
     We respectfully disagree that the participation agreements 
     are onerous or otherwise improper. At the hearing, the 
     National Automobile Dealers Association witness and some 
     Senators raised questions about the participation agreements. 
     I committed to you that we would quickly meet with NADA to 
     better understand their concerns. We are pleased to report 
     that GM and NADA, as well as representatives of the GM 
     National Dealer Council, reached an understanding of the key 
     issues and as a result, on June 9, GM sent a letter to each 
     dealer we had asked to sign a participation agreement which 
     clarified the important issues, including that the dealers 
     retained certain rights afforded by state law. I have 
     attached for you a copy of the dealer letter as well as the 
     GM and NADA press releases on these clarifications. I can 
     assure you that GM respects the rights of dealers and 
     consider them key and critical to the success of the New GM.


                         Dealer Market Re-Entry

       You have also asked about situations where GM will 
     authorize the establishment of a new dealership near the 
     location where a current, profitable dealer has been asked to 
     wind down operations. It is not our plan for current 
     dealerships to be wound down only to open up new dealerships. 
     Rather, our plan is to reduce overall dealer count. However, 
     in those rare instances where we do open a new dealership, in 
     an area previously served by a winding down dealer, we commit 
     to provide advance notice to former dealers and allow them an 
     advanced opportunity to apply to run the new dealership.
       When rationalizing our dealer network we looked at several 
     factors, including profitability. Over two thirds of the 
     dealerships that received wind down agreements were not 
     profitable. Profitability is only one measure of a dealer's 
     suitability for a future dealership opportunity. Equally 
     important are the dealer's prior sales performance, customer 
     satisfaction performance, needed funding and ability to 
     provide acceptable dealership facilities. While a profitable 
     dealer may provide high levels of customer service, it is not 
     always true, and unfortunately a profitable dealer may rank 
     among our poor performers. Even after the dealer 
     rationalization General Motors will continue to have the 
     largest and most extensive dealer network in the U.S.


              Litigation Pending Before Bankruptcy Filing

       The treatment of lawsuits and other claims is an important 
     issue. All claimants will have the opportunity to submit 
     their claims and have them resolved as provided by the 
     Bankruptcy Code and other applicable law, both as to amount 
     and priority. We understand that the Bankruptcy Court 
     routinely addresses these issues, taking into account the 
     concerns of the claimants and the bankrupt company. An 
     unfortunate consequence of bankruptcy is that many claims do 
     not receive the priority that the plaintiff would prefer.


                         Service in Rural Areas

       We also carefully considered our dealer network coverage in 
     rural areas and small towns versus urban/suburban markets. We 
     know that our strong presence in rural areas, small towns and 
     ``hub'' towns gives us a strong competitive advantage on 
     average of more than 10 points in market share, and we would 
     like to maintain that advantage. When our rural and small 
     town dealers perform to our standards, they are a huge asset, 
     and so we intend to retain an extensive rural network of 
     1,500 dealers nationally. With this comprehensive network in 
     place we are confident we can continue to provide all of our 
     customers with reasonable access to dealers and service, 
     obviating the need for ``service only'' outlets. However, we 
     will conduct market analyses to ensure that there is 
     sufficient representation of GM dealers so that we meet the 
     needs of customers, especially in rural areas.


                        GM Technician Placement

       GM is proud of the dealer technicians who service GM 
     vehicles. Many of these technicians are highly trained and 
     possess multiple technical certifications. Factory trained 
     individuals with these skills and credentials are highly 
     sought after in the industry. GM shares your concern that 
     these technicians may lose their current positions. In 
     response to your letter, we commit to taking actions, such as 
     by making training records and certifications available, with 
     technician consent, to employment services and resume sites. 
     In addition, we have already begun a review with our National 
     Dealer Council to develop ideas on how GM can help the 
     dealers' technicians transition to other dealers.
       General Motors appreciates the support of Congress and 
     President Obama and takes very seriously our responsibility 
     to create a healthy GM for generations to come. Thank you for 
     the opportunity to respond to your concerns.
           Sincerely,
                                           Frederick A. Henderson,
     President and Chief Executive Officer.
                                  ____



                                                 Chrysler LLC,

                                  Auburn Mills, MI, June 12, 2009.
     Hon. John D. Rockefeller IV,
     U.S. Senate,
     Washington, DC.
     Hon. Kay Bailey Hutchison,
     U.S. Senate,
     Washington, DC.
       Dear Chairman Rockefeller and Ranking Member Hutchison: 
     Thank you for the opportunity to respond to the concerns 
     raised in your June 9 letter. As I highlighted last week at 
     the Senate Commerce Committee hearing, it is critically 
     important that the new Chrysler Group have a viable, 
     realigned dealer network on day one. Despite a painful 
     restructuring, Chrysler Group LLC will retain 86% of Chrysler 
     dealers by volume and 75% by location. I can empathize with 
     the dealers who were not brought forward into the new 
     company, and can understand their disappointment. This has 
     been the most difficult business action I have personally 
     ever had to take.
       The concerns you have raised are addressed in order below:


               vehicle inventory, parts and special tools

       Regarding the concerns you have outlined relative to 
     inventories, parts and special tools, Chrysler has made a 
     commitment to its discontinued dealers that 100% of the 
     inventory on their lots will be purchased at cost minus a 
     $350 inspection, cleaning and transport fee. Through a letter 
     dated June 5, 2009 Chrysler informed all discontinued dealers 
     that we will guarantee the re-distribution of 100% of 
     eligible vehicle inventory. We have successfully found buyers 
     for 100% of the outstanding vehicle inventory, and dealers 
     requesting our assistance have received commitments for 80% 
     of their parts inventory.
       We will continue to work with the discontinued dealers to 
     redistribute their parts inventory for the next 90 days. 
     After that time we will commit to repurchase remaining 
     qualified parts inventory from those dealers at the average 
     transaction price for all parts already redistributed. We 
     will also continue to work to redistribute all remaining 
     special tools.


                Dealer Terminations and Market Re-entry

       While some profitable dealers were not retained by 
     Chrysler, it is important to note that profitability alone is 
     not an adequate measure and is one of several elements that 
     determine a dealer's viability and value to Chrysler. The 
     factors we considered in making these decisions included:
       Total sales potential for each individual market
       Each dealer's record of meeting minimum sales 
     responsibility
       A scorecard that each dealer receives monthly, and includes 
     metrics for sales, market share, new vehicle shipments, sales 
     satisfaction index, service satisfaction index, warranty 
     repair expense, and other comparative measures
       Facility that meets corporate standards
       Location in regard to optimum retail growth area
       Exclusive representation within larger markets (Dualed with 
     competitive franchise)
       Opportunity to complete consolidation of the three brands 
     (Project Genesis)
       Dealers may be profitable while not meeting their Chrysler 
     new vehicle ``minimum sales responsibility'' level. For 
     example, a dealer may focus on maintaining a low cost 
     structure through a lack of modernization, a heavy emphasis 
     on used vehicles, lack of investment in training and 
     capacity. Therefore, a dealer could be profitable while not 
     meeting their new vehicle sales and customer satisfaction 
     obligations.
       Also, we understand and value the loyalty and experience 
     represented in many of the discontinued dealers. As we 
     consider market re-entry or expansion in the future.
       Chrysler Group LLC will commit to provide non-retained 
     dealers with an opportunity for first consideration of new 
     dealerships that the company may contemplate.


         Providing Transparency in the Decision-making Process

       To achieve the necessary realignment, we used a thoughtful, 
     rigorous and objective

[[Page 15356]]

     process designed to have the least negative impact while 
     still creating a new dealer footprint scaled to be viable and 
     profitable for the long-term. Factors in the decision-making 
     are outlined in the second question above.
       Upon request, we will share with any dealer the rationale 
     and specific data used in making the decision on the dealer 
     separation.


                          Consumer Protection

       Bankruptcy is a very difficult process requiring hard 
     choices and painful decisions. The bankruptcy process has 
     impacted all existing stakeholders. With a failed enterprise, 
     there are many who suffer significant losses. Traditionally 
     in a bankruptcy, liabilities such as product liability claims 
     are not carried forward into the new enterprise. The judge 
     found this decision to be within the debtor's sound business 
     judgment, and it is a customary bankruptcy outcome. Any 
     product-related claims arising from vehicles sold by the New 
     Chrysler will be addressed by the new company. This is 
     consistent with the goal of a Chapter 11 bankruptcy, which is 
     to create a framework enabling a vibrant, sustainable new 
     company to emerge.


               Consumer Access to Service in Rural Areas

       There will be over 2,300 remaining Chrysler, Jeep and Dodge 
     dealerships conveniently located with the parts and trained 
     technicians to service consumers' vehicles. Based on 
     registration data, our customers reside an average of 6.28 
     miles from the nearest Chrysler, Jeep or Dodge dealer now; 
     this distance will increase to 6.80 miles after the 
     consolidation. With regard to rural dealers, the distance 
     increases from 9.72 to 10.70 miles. Even with the 
     consolidation, our dealers on average are more conveniently 
     located to customers than Toyota or Honda dealers are to 
     their customers.
       Additionally, we will consider companion facilities to 
     address potential sales and service issues in areas of 
     concern. Chrysler will send a letter to all customers 
     notifying them of the four nearest dealers who can provide 
     service. It is not in Chrysler's interest to abandon existing 
     customers to the detriment of future parts and new vehicle 
     sales.

                                                             CUSTOMER CONVENIENCE COMPARISON
                                         [Average distance in miles a customer must drive to reach a dealership]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Old          New         Change
                                                                 Chrysler     Chrysler     chrysler      Toyota       Honda        Chevy         Ford
--------------------------------------------------------------------------------------------------------------------------------------------------------
Metro........................................................         4.45         4.82         0.37         5.01         5.11         4.10         4.23
Secondary....................................................         6.08         6.44         0.36         7.38         7.58         5.69         5.76
Rural........................................................         9.72        10.70         0.98        19.27        24.27         8.04         8.69
                                                              ------------------------------------------------------------------------------------------
    Total....................................................         6.28         6.80         0.52         9.11        10.31         5.58         5.81
--------------------------------------------------------------------------------------------------------------------------------------------------------

             Placement Assistance for Chrysler Technicians

       Chrysler is sensitive to the job loss associated with the 
     non-retained dealers. In an effort to assist employees, a job 
     posting website is currently being developed in partnership 
     with Careerbuilder.com. This website will list jobs that are 
     available at Chrysler dealerships nationwide to the extent 
     such information is provided to us. Additionally, there will 
     be a resource section to provide ``how to'' tips on items 
     like resume building and job interview techniques.
       Again, I appreciate your concerns and want to assure you 
     that we are doing everything we can to support the dealers 
     that are not going forward and to ensure that the new company 
     going forward is successful.
           Sincerely,
                                                   James E. Press,
     Vice Chairman & President.

                          ____________________