Premier: Dealer cuts not our idea

"Please know that the government of Ontario and the government of Canada did not ask GM to reduce their dealer network," McGuinty wrote in the July 10, 2009 letter that surfaced in a court case on Wednesday. The federal and Ontario governments provided GM with about $10.6 billion in taxpayer aid to restructure operations and stay alive during the recession and market downturn… The letter contradicts numerous GM statements last year that it needed to cut the dealer network further as part of a survival plan after government requests.

The Toronto Star
February 11, 2010

Premier: Dealer cuts not our idea
McGuinty denies claim governments asked GM to slash its dealer network as par of bailout plan
Tony Van Alphen

DaltonMcGuintyGM.jpg

McGuinty (left) denies GM claims.

Ontario Premier Dalton McGuinty has denied General Motors' claims that the federal and provincial governments asked the teetering automaker to slash its dealer network so the company could gain a multibillion-dollar bailout.

McGuinty says in a letter to an eastern Ontario dealer that GM of Canada Ltd. made the decision to drastically reduce its retail network last year, not the two governments.

"Please know that the government of Ontario and the government of Canada did not ask GM to reduce their dealer network," McGuinty wrote in the July 10, 2009 letter that surfaced in a court case on Wednesday.

The federal and Ontario governments provided GM with about $10.6 billion in taxpayer aid to restructure operations and stay alive during the recession and market downturn.

Federal Industry Tony Clement and a senior official in his office could not be reached for comment on McGuinty's letter and Ottawa's position on dealer cuts and GM aid.

The letter contradicts numerous GM statements last year that it needed to cut the dealer network further as part of a survival plan after government requests.

GM disclosed May 20, 2009 it had advised dealers of a consolidation plan and who would lose franchises at the behest of the governments.

"GM Canada, at the request of the federal and Ontario governments, accelerated its restructuring and released a revised, more aggressive operating plan on April 27, which included plans to reduce the number of GM dealerships in Canada by approximately 42 per cent," the company added in a statement.

"Today, GM Canada will advise Canadian dealers of the specifics of our network consolidation plan including the identification of dealers whose sales and service agreement would not be renewed following expiry in Oct. 2010."

GM gave notice to more than 240 dealers who received a few days to decide whether to accept "wind-down agreements" and close before the end of last year, or continue operating until this fall with no compensation. Most dealers accepted the agreements and some money to help cover shutdown costs.

GM spokesman Tony LaRocca said Wednesday that aid was contingent on a second company plan that demonstrated better viability.

"It was up to GM to deliver what restructuring was necessary to achieve that," LaRocca said. "Rationalizing the dealer network to align with our four brands was one component of that plan."

McGuinty's letter appears as an exhibit in court filings supporting a statement of claim by 12 holdout dealers who sued GM last November for millions of dollars in alleged contract breaches.

They are also seeking a court injunction to stop GM from terminating their agreements for another five years.

GM submitted a motion to move the case from the court to individual hearings under the Automobile Dealers Arbitration Program.

McGuinty sent his letter to Paul Goupil, president of Upper Canada Motor Sales in Morrisburg, who complained to local MPP Jim Brownell about GM's decision to close his profitable store after the company received money from the provincial government.

Goupil, one of the plaintiffs, pressed the government to ask GM to reverse its decision.

In noting that the province did not ask for the closings, McGuinty said in the letter that "my colleagues and I are concerned about the workers, families and communities affected by the closures."

The latest filings include statements by a senior GM of Canada executive who told retailers in a webcast in March 2009 that the company "plans to work closely with its Canadian dealers on further consolidation and rationalization …"

But less than a month later without further consultation, GM announced the plan to cut the network by about 42 per cent, according to the claim.

http://www.wheels.ca/Article%20Category/article/784384


Brought to you by WikidFranchise.org

Risks: 101 ways to terminate a contract, Any pretence will do, Injunction sought to halt termination, Bad faith and unfair dealings, Ontario: population and economic provincial powerhouse of Canada, Opportunism, Opportunism Test: If asset ownership were reversed, would decision likely change?, Lawsuits, group, Political champions, Termination of franchisee, mass, Canada, 20100211 McGuinty denies

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License