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The Roundup May 14

Now the blood starts to flow in the auto industry . . .

In a court filing today, Chrysler asked U.S. Bankruptcy Judge Arthur Gonzalez to reject dealer agreements for 789 dealers throughout the United States in a effort “to conserve cash and pursue transactions that maximize value

(“Chrysler seeks to dump 789 dealers,” Detroit Free Press, May 14) Yesterday in The Roundup, we talked about why it makes sense for GM and Chrysler to cut dealers, even though they are independently-owned businesses that technically cost the car companies zero. Now that the first cuts have been made, the real long-term news is how the slaughter of dealerships (GM will probably cut 1,500 and other automakers are considering the move) will remake American business. Auto dealerships are the bedrock of location-based business. They account for an average of 20% of the taxes states collect and, in some areas, represent 1/3 to 1/2 of the local sales tax revenues. There are municipalities that literally make their living off of their dealership rows. What we’ve seen over the past 60 years is the steady erosion of business “location,” of business rooted in a community. Chain restaurants, big box stores, supermarket conglomerates, all severed the traditional ties between business owners/managers/employees and the community they lived in. Safeway doesn’t care about Mountain View or Santa Clarita or Bend. Wal*Mart is indifferent to Palmdale or Anoka or Puyallup. Auto dealerships are the last major center of business “citizenship,” if you will, in the sense of belonging to, participating in, and supporting the local community. We haven’t yet charted what the loss of business citizenship means economically, politically, or socially, but at one time it was a valuable source of quality of life and customer service. So, as 40,000 people in Chrysler dealerships nationwide start doing their unemployment paperwork, it behooves us to think about what we’re going to replace business citizenship with in the next few decades.

We now have a date when California will go out of business. Stock up and save now!

California could run out of money as soon as July, the Legislature’s chief budget analyst warned Thursday, as a new poll showed voters poised to reject five budget-related measures on the May 19 ballot.

(“California could be broke by July, state official warns,” Los Angeles Times, May 14) My suggestion, boys and girls in the legislature, is that you start working on this today.

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