Rusk's 2 new car dealers call it quits

Even though a few cars remained on the lot, Bob Francis Ford closed the dealership for good last Friday. For the first time since the early 1920s, it is not possible to purchase a new automobile in Rusk.

In an unprecedented chain of events, both Greg James Country Motors and Bob Francis Ford announced last week that they are getting out of the new car businesses.

Bob Francis Ford closed its doors for good on Friday. Last month there were 14 employees, but six left for better jobs this month. "We are working with getting employment for the other eight employees. My chief concern now is helping my employees find jobs," Mr. Francis said Thursday afternoon.

While Greg James is parting company with GM as a new car dealer, he plans to reinvent his business as a mo- torcycle dealership for three manufacturers and he will sell used cars and operate a fully equipped service department for many vehicle brands. None of the 15 James employees is being layed off.

"All you have to do is pick up a newspaper and see what's going on in the world economy," said Mr. Francis, who has owned the Ford dealership for the last six years. He said the overriding factor was a lack of consumer confidence.

"We do not know what we will be doing," Mr. Francis said. "God helped us get this dealership in the first place. We (Mr. Francis and his wife, Joan) believe that God has something better for us. However, right now we are just thinking about getting this business closed and the vehicles transferred to another place so they can be sold."

Mr. James said that October 2008 will go on the record books as one of the most dismal for almost all dealerships.

"There's no question that General Motors and GMAC, (the financing arm of GM), are going through some challenges. There is an inability to access capital to make car loans. I was made aware of a national program (to sell the franchise to GM)," he told the Cherokeean Herald Friday. "After 28 years of association with General Motors, and after careful reflection for my family, I decided this was the best decision." Mr. James has owned Greg James Country Motors in Rusk since 1995.

Surviving car dealerships in Cherokee County reacted to the news.

Tim McRae of Bill McRae Ford in Jacksonville said Thursday, "Ford is doing better than the other car companies. Ford Credit is in very good shape. We believe Ford can weather all of 2009 and worse economic times. And, I think after the first three or four months of 2009, things will get better."

"None of the Bacon companies is closing," Sonny Plunk, general manager in Jacksonville said. Bacon dealerships include Bacon Auto Country in Jacksonville; Bacon Auto Ranch, Athens; Bacon Autoplex, Palestine; and Billy Bacon Chevrolet in Frankston.

Dan Lade at Lade Ford in Frankston said, "We are doing fine."

"We are staying open and our sales are not too bad," said J.D. Pearman at Pearman Motor Co. in Alto. "It is sad to see family-owned dealerships close down. We all have to make our own decisions. Our business is a family run one. Our grandfather opened the Dodge dealership in 1938. At one time Alto had three dealerships, Ford, Chevrolet and Dodge. We have to see our way out of this recession and keep the confidence of the people. When we get through this recession, people will feel better and we will begin selling more vehicles. Right now we just hope that our 'Mother Ship,' Chrysler Motor Co., is fine."

With the closing of Bob Francis Ford, city, school and taxing districts can anticipate a loss of income as well. Mike Murray, Rusk city manager, said he has not put a pencil yet to sales tax collections and property tax collections. "It's not insignificant," he told the Cherokeean Herald Friday. Sales taxes are assessed on parts, but not on new cars.

"The loss of jobs will have a negative impact on the city as well," said Mr. Murray. "We're very sorry that the dealerships are closing."

Approximately $13,236 will be lost in ad valorem taxes from Bob Francis' closing and $16,319 from Greg James' closing. However, most of this will not be realized until the end of 2009 because of the personal tax reporting system used for car dealers.

As news of the two car dealerships passed along the local grapevine, Mr. James sold nine new vehicles late last week. "People came in and said, 'I heard you were closing the new car department, and I thought you might be making deals,'" he said. He only sold four vehicles in October.

The Wall Street Journal published an Oct. 28 article entitled, "Auto sellers turn off lights as sales slump, credit tightens."

Kate Linebaugh reported that credit sources have dried up, and new car sales have slumped to a 25-year low. The result is a domino-like effect as dealerships large and small close their doors from New Jersey to California. Greg James Country Motors and Bob Francis Ford are not alone in feeling the economic pain of the nation's troubled economy.

The National Automobile Dealers Association projects that 700 new car dealerships will close by Dec. 31, up from 430 last year. With the closing of the new car dealerships will be the loss of an estimated 37,100 jobs.

Last year new car dealerships accounted for $693 billion in sales, or approximately 18 percent of all retail sales. Wages comprise some 13 percent of the nation's retail payroll.

Industry observers say that GM, Chrysler and Ford will have a difficult time making up the lost sales as the dealerships close.

A 'financial Katrina'

GM recently announced that operating funds will likely run out in early 2009. Contributing factors to the slump in new car sales is the mortgage crisis, which has tightened the availability of credit. High fuel prices and renewed consumer demand for fuel-efficient vehicles has caused what some have called a "financial Katrina."

Congress is debating this week whether to use some of the $700 billion bailout money to assist the big three automakers. Opponents to a bailout say that a chapter 11 bankruptcy reorganization would allow GM to break existing contracts with unions and renegotiate more favorable terms. Critics also say that the original bailout package for mortgages was never intended to be used on automakers.

Supporters of a federal bailout are requesting $25 billion to prop up the auto industry and allow the government to take an ownership position in the industry. At stake are approximately 800,000 manufacturing jobs, concentrated primarily in Michigan, Missouri, Indiana, Kentucky and Tennessee.

Mr. James predicted that the auto industry will be forced to make some drastic changes in the future. "For one thing, the consumer has too many choices," he said, which cuts into the bottom line. He predicted that fewer cars models will be produced in the future, and better fuel efficiency will become a priority.

"The main thing I want to communicate is that I'm staying here in Rusk," he said. "No one is losing their jobs at Greg James Country Motors. We will be allowed to provide warranty service on new cars through Nov. 30."