“Big 3” bailout. Perspective from Mr. Beau Boeckmann of the Galpin automotive group.

Following is an email indirectly received from Mr. Beau Boeckmann of the Galpin Automotive Group. While I have not seen it before I am told that the original was sent to FOX News. Although I oppose the proposed bailout, to offer opinions from both sides of the debate I am posting Mr. Boeckmann’s data without any commentary from myself. That said, after reading this post, your comments are requested. Thank you! Larry G.

“Thank you for taking the time to speak with me today.  As I mentioned, I have been extremely frustrated and upset over the misinformation about the American automotive industry, and the lack of willingness of many Government leaders and media to really understand the problems and the impact of their actions or inactions.

I believe there are a few key parts of the story being overlooked:

1.Why bankruptcy equals death

2.The bright and exciting futures of these companies

3.Why Senator Shelby is a traitor

The problem with bankruptcy:

Many seem to think that bankruptcy is the answer for these three “dinosaurs” as Senator Shelby calls the Detroit automakers.  But no one seems to go beyond that.  As a customer driven industry and company, we look at how things affect the customer first and foremost.  Yet, nobody is asking,

“Would you buy a car from a bankrupt car company?”

“If you ran a bank, would you loan money for someone to buy a car from a bankrupt company?”

An automobile purchase is different from any other purchase.  It is often the largest purchase, next to a home, that a person will make in their lifetime.  Why would someone who depends on their car take such a risk as to purchase from a bankrupt auto company?  The perception of people is that bankruptcy means going out of business, not restructuring to become stronger.

Here is what the customer would be risking:

·No warranty – if the car has a problem, they pay for all of the repairs

·No parts – even if they pay, where will they get the parts to fix the problem?

·Massive loss in resale value

The fact is bankruptcy is not an option because in order to stay in business, you need customers.  This industry’s infrastructure is based on continual sales – we can’t just stop and start over again.

Senator Shelby:

Senator Shelby and the state of Alabama have given over $650 million dollars to Mercedes-Benz, Honda and Hyundai.  Not a loan, a gift.

So why does someone who is obviously biased against the success of Detroit have such a loud voice?  In the hearings, it was obvious by his questions and statements that he had not prepared by studying the proposals from Ford, GM, and Chrysler.  I doubt he ever read them.  What was more important than this issue? What was he spending his time doing while millions of jobs and our entire economy hangs in the balance?  He calls them “dinosaurs” who build inferior products that no one wants, and that haven’t kept up with the times by not restructuring.  Fortunately, none of this is true; Mr. Shelby chose not to find out the truth; instead, he has chosen to protect his special interests.  In my opinion, Senator Shelby is nothing short of a TRAITOR!

The reality of these three very different companies:

Ford:

Since Alan Mullaly came to Ford in 2006 from Boeing, he has done nothing short of an amazing job restructuring Ford, securing cash, and focusing the brand.  The Ford Product Committee is a team of about one dozen dealers who advise Ford on all aspects of their future products.  For over five years I have been on the committee – peaking “behind the curtain” on future product development, design, technology, engines, color and trim, and overall strategy.

During that period of time:

·The U.S. Global Quality Research System (GQRS) has put Ford quality in a virtual tie with Toyota and Honda

·Consumer Reports has called Ford “on par with Japanese automakers”.

·J.D. Power put Ford Fusion’s quality ahead of Toyota Corolla and Honda Accord

·The Insurance Institute for Highway Safety awarded Ford 16 top Picks – more than any other manufacturer!

I have seen the future of Ford – and, believe me, the future is incredibly bright! Style people will love; engines that get leading gas mileage while maintaining performance; technology that is nothing short of revolutionary.  And it’s all coming – some of which is already here.  All I can say is watch out, Toyota – the Ford you once feared is coming back!”

GM:

“As GM goes, so goes the country.”

This statement is as true today as anytime in history.

Let’s be clear.  Bankruptcy = death. GM in bankruptcy would cause a real implosion of this industry.  This is real, not a scare tactic.  The reason is the sharing of suppliers.  You can’t build a car without EVERY part!  Most of these suppliers supply not only the Detroit 3, but all automotive manufacturing in this great country.  A failure of GM would cause a domino effect of bankruptcy among suppliers.  This would bring down the industry.  Millions of jobs are lost.  Every dealership would close.  This would cost many times the amount of the loans; some estimates are in the hundreds of billions of dollars.  Suddenly, the bailout loan looks cheap!

Chrysler:

Chrysler has another completely unique set of problems.  Since Iacocca secured  the loans in 1980 to save Chrysler, they paid back the loans with interest, and became the most profitable mass-market auto manufacturing in the world in the 1990’s!  They were then acquired by Daimler (Mercedes-Benz) who brought most of the talent back to Germany, and then subsequently sold to CerberusCapital Management, one of the largest private equity investment firms in the United States, in May 2007.

The challenge here is how do we save Chrysler while not bailing out Cerberus?  They made a very naïve and poor business decision by purchasing the auto company, and frankly don’t deserve to profit from this.  It’s obvious at this point that all they want is “out”.

National Security:

How soon we forget that during WWII these 3 American Companies were converted to build airplanes, tanks, and military vehicles which helped save this great nation.  Under the worst case scenario, we will need them again.   As a matter of fact, after the tragic attack of 9/11, Ford, GM, and Chrysler donated a combined total of over 30 million dollars to the victim’s fund. The combined total of donations from Toyota, Honda, Nissan, BMW, Fiat and others was exactly Zero.

If you can build a car, you can build anything. Are we just going to stop manufacturing in this country?  Are we going to import everything – including technology?  This country would be it’s weakest since the American Revolution.  We would be at the mercy of the world – not the lone superpower!

We all know the importance of becoming energy independent.  These companies have spent billions on developing technologies that can lead the world in fuel efficiency and bring us to our goal.

The Future:

The other thing that no one is talking about – What if this auto loan is successful?

First of all, those who say we can’t save these companies are dead wrong and are not interested in knowing the facts.  It is nothing short of Anti-Americanism to say America can’t do it, but the Japanese, Koreans, and Germans can!

These companies have the talent, infrastructure, and the drive to succeed.  Of course, they have made mistakes, all to varying degrees.  But they have also had tremendous outside forces which have hit them when they’re down.

These companies will emerge from this once again as the strongest companies on Earth.

America CAN building the highest quality cars and trucks in the world.

America CAN build the most exciting and fuel efficient vehicles on the road.

America CAN solve our dependence on foreign oil through technology.

They will repay the loans and thrive again – and the rewards will be staggering – taxable revenues in the hundreds of billions – the creation of even more jobs, and the technology that will lead America into energy independence and the strongest economy on Earth.

Senator Shelby may have given up on America, but I haven’t.  Neither should the Senate!
___________________________________________________________
Beau Boeckmann

President, GalpinPremier Collection
President, Galpin Auto Sports LLC

Background for Beau Boeckmann:

My father, Bert Boeckmann, started at Galpin Ford as a salesperson in 1953 and grew it to be the #1 volume Ford dealership in the World, as well as being regarded as one of the best dealers in automotive history.

After graduating from USC in 1992 with a B.A. in business administration, I have worked full-time in the family business, working at just about every job in the dealership, to my current position as V.P. of the company as well as President of our Premier Brands and Galpin Auto Sports.

I currently serve on the Ford Product Committee, a group of a dozen dealers that advises the company on future vehicles – from conception to production.  We advise on all areas such as design, technology, engine development, etc.  We are under strict confidentiality as we are looking at vehicles that are coming to the market years in advance.