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How One GM Dealer Refused to Be Wound Down

June 23, 2010
In The News

By: George O'Brien, Business West Online
Published: June 23, 2010

From the minute he read the letter from General Motors telling him that the dealership started by his father 32 years earlier was essentially going to be shut down, Don Pion knew the decision was unfair and unjust and that he would fight it. It was a nine-month battle marked by deep frustration and some hard emotional swings. In the end, Pion, with some help from Congressman Richard Neal and his counsel, prevailed, meaning that now, his biggest problem is getting cars on his lot to sell.

Don Pion remembers being rather calm considering what day it was and what was happening at General Motors dealerships across the country.

May 15, 2009. That’s a date that everyone who was selling GM products at the time will forever have etched into their memories. That was the day the embattled carmaker, just two weeks away from declaring the largest bankruptcy in the nation’s history, was to deliver so-called ‘wind-down letters’ to 1,100 dealers, telling them, in effect, that their days of selling Chevrolets, Buicks, Saabs, GMCs, Cadillacs, Pontiacs, Hummers, or combinations of the above were numbered.

Pion, whose family had been selling GM offerings, starting with Pontiac, for 32 years, never thought he’d receive such a letter. Anything was possible, because the auto industry, and especially GM, was in its most chaotic state ever, but Pion was quite confident he wouldn’t be getting a big envelope from FedEx that day, because his dealership didn’t fit any of the criteria — from questionable branding to poor location to a spotty sales record — that GM had set for being chosen to wind down.

“One of the television stations sent a reporter over; he got here around 3 o’clock,” Pion recalled. “He asked, ‘do you think you’re OK?’ I said, ‘yes, I think we’re OK.’ He said, ‘if anything changes between now and 5 o’clock, call me.’”

FedEx never showed, so Pion, his father, Bob, who started the business and still has his name on the door, and his two sons who worked beside him started feeling a little better about their situation.

As it turned out, what happened on May 15 — or didn’t happen — would be one of several cruel and ironic twists in a story that played itself out in hundreds of dealerships across the country.

That’s because one of those FedEx letters did arrive at the Pion dealership 17 days later, or roughly 24 hours after bankruptcy was filed, when no one was expecting it.

“I was in my office shooting the breeze with an old friend and Pontiac dealer when my parts manager brought it to my office,” said Pion, who still has the envelope, although he’s not really sure why. “I read this letter … I was in shock. I couldn’t believe it.”

Thus began more than eight months of living hell that ended with a phone call from a GM executive saying that Bob Pion Pontiac Buick GMC could remain open and start ordering cars again. In between those moments, seemingly frozen in time for Pion, were countless ups and downs, hard emotional swings, seemingly endless frustration, and more than a few other dates that won’t be forgotten. There were also some moments, and people, that helped shape how this story would eventually unfold.

What Pion remembers most is a two-hour meeting that his father, who took GM’s letter in stride, but also with a determination to fight, had set up with Congressman Richard Neal and his counsel, Bill Powers, on Sept. 4. Both men expressed shock and surprise that GM would choose to close the dealership, and it was Powers — soon to be on Pion’s speed dial — who would play a key role in changing the fortunes of the business.

“In the weeks after that meeting, I probably talked to Bill Powers more than I talked to my wife,” said Pion, who credits everyone from his father to his loyal employees for seeing the company through to the joyous phone call on March 29.

Powers told BusinessWest that the fight waged to save Pion from winding down was a very satisfying one because, from the start, it seemed there was no rhyme or reason for targeting the dealership.

“For us, this was a matter of right and wrong, and this was clearly wrong,” he said. “We almost felt as if GM put up a dartboard on Western Mass. and threw a bunch of darts to determine who would close. We felt it was done in a very haphazard way.”

For this issue, BusinessWest takes an indepth look at how a wrong was eventually righted, why this fight (which typified what hundreds of dealers were going through a year ago) was so long and complicated, and what lies ahead for a dealership that had the will to fight — and won.

Not a Model Year

Pion remembers that he didn’t tell his father about that fateful FedEx letter until a few weeks after it had arrived, and several days after an unsuccessful and thoroughly frustrating appeal attempt that came in early June.

“It took me a few days to be able to work myself up to do that,” he said. “That was the toughest thing I had to do. Here’s this guy who’s devoted his life to building this. He handled it very well, but like everyone else, he just didn’t feel it was right.”

That’s because the three generations of the family had built a solid business that had become part of the fabric of the local auto-sales sector.

And while there were some dark times during those first three three decades in business — the recession of the early ’90s was particularly rough — business was generally good for the Pion family, who built up a loyal base of customers in Chicopee, Ludlow, Holyoke, Springfield, and well beyond.

But then came the fall of 2008, when the roof started falling in on the economy and especially the auto industry. The recession and stock-market collapse collided to bring people to think about what was, until then, unthinkable — GM going bankrupt.

Actually, most all auto makers were in chaos, and by year’s end, plants were closing, famous nameplates — Pontiac, Saturn, and Hummer, for example — were being discontinued, and the future looked quite uncertain for many dealers.

Still, for the Pion dealership, most of the pain was more emotional than anything else.

“We started with Pontiac,” said Pion. “We still had Buick and GMC, and we thought that still gave us pretty good coverage of the automotive market. But we had been Pontiac dealers for 30-something years, we had a lot of loyal Pontiac customers, and that brand had a special place with us.”

But on June 2, there was much more to worry about than the loss of a beloved nameplate.

FedEx packages arrive at the dealership on an almost-daily basis, but Pion didn’t have to open the one that arrived that afternoon to know it meant big trouble. It was from GM, and ‘Personal and Confidential’ was stamped on the front. As he scanned the words on the letter inside, Pion couldn’t believe what he was reading.

And soon, shock and disbelief were replaced by deep frustration that would linger for months, because Pion couldn’t understand why he was sent a wind-down letter and, even more tortuous, couldn’t get anything approaching an answer to that fundamental question.

“Once you got the letter, you couldn’t get anyone to talk to you,” he explained. “We couldn’t get a reason why were included. For this supposedly very transparent process that GM was having, they wouldn’t tell you why.”

Finally, more than six months later, on the heels of legislation mandating that GM explain its decisions, Pion would have an answer, if one could call it that.

“The crux of it was, ‘the criteria used are as follows: Buick-GMC dealer-network viability and throughput issues impacted by the Pontiac phaseout,’” he said. “I’ve read that 100 times since I received it, and I’m still not quite sure what it means. It’s a bunch of words that don’t say anything. They’re not saying, ‘your sales performance is poor, your service satisfaction is poor, your facility is inadequate, your location is bad.’ This didn’t say anything.”

Making things more difficult in some ways was the fact that Pion felt he couldn’t talk to anyone, and especially the press, about the letter out of fear of what it would do to business.

“We still had 40 new cars on the lot to sell,” he said, adding that if word got out that, the dealership was on GM’s hit list, it would be much more difficult to sell them.

Dealerships that were sent wind-down letters had an opportunity to appeal, and Pion did just that, but the e-mail telling him, in effect, that the appeal had been turned down was vague, terse, and created even more frustration. Still, even with the e-mail, Pion didn’t believe his fight was over.

And this was the main reason he didn’t tell most employees about the wind-down letter until August.

“Like us, they were shocked,” he said. “Going forward, we couldn’t make them any promises — we didn’t know what the future was going to hold. We told them we’d keep them informed and apprised of what was going on, and be up front and honest with them, which we were, through the whole process. And they were awesome.”

There were a few layoffs and some attrition, he continued, but by and large the staff stayed intact because three of the four main revenue streams this and other dealerships rely on — new cars, used cars, service, and parts?— remained strong.

And while working to make do without new-car transactions, which drive all of the others, Pion continued to fight GM’s decision.

“I always thought that, if I could get to someone, if I could talk to someone, I could change things,” he said, adding that it would be several more months before he would really have that opportunity.

Fighting Words

As the summer of 2009 dragged on, Pion, while still fighting his wind-down notice on some levels and keeping news of the letter under wraps, was also examining other options for his dealership and his real estate.

There was always the possibility of making this a used-car business — the company had always done well in that realm — while there were also discussions with other manufacturers about becoming a dealer for them.

That list would eventually include Mitsubishi, Acura, Infiniti, Mercedes, Mini, and others, said Pion, adding that some makers said ‘no’ rather quickly, and nothing really materialized with any of the others. Meanwhile, other options were considered for the property. Indeed, talks were conducted with some restaurateurs about the back corner of the lot where Admiral DW’s once stood before Pion bought the parcel and tore the building down to make room for used cars.

Ultimately, though, the three generations of the Pion family decided they wanted to stay in the car business and, specifically, as a dealer for GM. “When we were looking at all these other possibilities and alternatives … deep down, we’re GM guys,” said Pion. “We like the cars, it’s what we know, it’s what our customers want.”

In other words, they weren’t done fighting.

And this is what brought Bob and Don Pion to Neal’s office on the Friday before Labor Day.

Powers, who, like most everyone else, didn’t know the Pion dealership had been sent a wind-down letter, said that decision just didn’t jibe with the numbers the Pions were presenting, and with the case they had built for themselves.

“The wind-down notice didn’t make any sense to them, and it didn’t make any sense to us either,” said Powers, noting that GM scores its dealerships on sales of the franchises in question, and Pion’s numbers were solid.

Like Pion, Powers said he felt GM made many of its decisions about which dealerships to wind down in haste and without any solid basis, and that, if representatives of the Pion family could somehow state their case effectively, then the verdict could be overturned.

But finding the right people to talk with and getting the needed points across was becoming a Sisyphean task due to the chaos within the organization, staff turnover, and reassignments of personnel.

“You had people making decisions in the midst of a bankruptcy filing that weren’t necessarily based on market share or capitalization,” said Powers. “Instead, they were based on thinking like ‘we need to cut X number of dealers; where are we going to do it? And when you have that kind of mandate by the bankruptcy trustee, I don’t think the best decisions were made.

“And then to get through to General Motors that they made a mistake … well, that’s like telling the federal government it made a mistake,” he continued. “It was a very difficult process.”

By the end of 2009, Pion was moving forward with a plan to take the matter to arbitration, a path opened to all dealerships slated to be wound down. Meanwhile, Powers was doing whatever he could to avoid that eventuality.

“Arbitration is not where we wanted this to go,” he told BusinessWest. “That route is lengthy, it’s expensive … he [Pion] was expending vast amounts of capital trying to defend his way of life. It was extremely upsetting to us that he was being treated like this. It was unfair; we really saw this as a right-and-wrong issue, and this was wrong.”

Whatever discussions Powers could have with GM officials were aimed at placing Pion Pontiact Buick GMC on a list of dealerships that would be reinstated. When that list came out in early February, and Pion wasn’t on it, Neal’s office swung into high gear.

“That’s where the rubber met the road,” said Powers. “Congressman Neal really put their [GM’s] feet to the fire. He was sufficiently aggravated by their inability to look at simple arithmetic.”

And by February, Powers thought he and Neal were finally talking to the right people.

“And I think that had a lot to do with the new CEO of General Motors,” said Powers. “He realized that they’re not going to sell 12 million cars if they don’t have the dealer network to do it. That’s where it all ended up.”

Striking a Deal

Recalling the winter of 2009-10, Pion said it was a very difficult time for all those at the dealership. There were a number of emotional pendulum swings and great uncertainty.

Still, there was a good deal of optimism that the matter would be resolved favorably.

Pion, like Powers and Neal, was confident that his dealership would end up on the reinstatement list. When it wasn’t, there was more anguish and incredulity, but also hope in the form of binding arbitration.

But that road was, as Powers predicted, proving long, bumpy, and costly. Had it gone to its conclusion, arbitration would likely have come with a price tag of $100,000 or more, said Pion.

“There’s nothing that moves fast in this process,” he said, referring to everything from filing paperwork to getting both sides to agree on an arbiter. “It took weeks just to gather all the documents that GM wanted.”

Through all the behind-the-scenes maneuvering, said Pion, employees kept coming to work and giving 100%, something he considers fairly extraordinary given the circumstances.

“We’re keeping them in the loop and just asking them to come to work and do their jobs,” said Pion. “I said, ‘I’ll worry about this stuff, and you do your jobs, because we’ve got customers coming in the door who want to buy cars, and we still have people who need service.’ They did, and they were great; we couldn’t have gotten through this without them.”

Meanwhile, the lot was becoming increasingly sparse as the dealership, unable to get any new inventory because of its status on the wind-down list, sold off virtually all of its new cars. It could locate vehicles for customers at other dealerships and arrange sales that way, he continued, but it couldn’t order any cars for clients.

It became increasingly apparent to many visiting the dealership that something was clearly wrong. Pion and others didn’t freely admit that the company was being wound down; instead, they found other ways to answer curious customers.

“We told them that we are GM dealers and plan on being so in the future,” he explained. “We told the customers that we were in ongoing talks with GM and were hopeful that we would have a favorable resolution.”

Soon, there would be different, much better information to share.

Indeed, while Pion was still working toward an arbitration hearing scheduled for late May, Powers and Neal were finally making some headway with GM officials.

On March 10, the first of what Pion called “settlement talks” were held at the dealership. They didn’t start out well, but they ended that way.

“A GM representative sat with my sons and I,” said Pion. “The first discussions were mostly about the monetary compensation offered in the wind-down agreement; it was very small and very inadequate for taking away someone’s business. He wanted to know if we were looking for more money and thought that maybe he could get us more.

“I looked back at him and said, ‘my two boys are sitting here. We’ve got a third generation that’s working in this business now, and I’ve got 25 loyal employees downstairs that have stayed with me. How much money does it take to make everyone whole? You can’t get enough money.’

“He said he understood how we felt,” Pion continued, “and while he didn’t give any guarantees or put anything in writing, he said ‘I think we can come to an agreement to get you reinstated.’”

On March 29, or “20 nail-biting days later,” as Pion put it, he got the phone call he had been waiting for since he first read that letter in the FedEx envelope.

“He said GM would be reinstating us and that the paperwork would follow,” said Pion. “It’s funny — when they send me a letter telling me I’m out, it takes a day, and when they send me the paperwork to tell me I’m back in, it takes two weeks.”

Powers wanted to stage a press conference announcing reinstatement the day the phone call came, but Pion wanted to wait for the official documentation. “Bill Powers said, ‘they told the congressman you’re going to be reinstated — it’s going to happen.’”

So the press was told on March 31. Pion didn’t wait a second to tell his employees, and by all accounts, it was a very emotional announcement.

Pedal to the Mettle

As he talked with BusinessWest about his long ordeal, Pion was anxiously awaiting the arrival of car carriers with new inventory.

The dealership started ordering cars weeks ago, but with fewer plants producing vehicles, Pion, like most dealers, was going to have to wait and hope that this might be the day.

“It’s going to be pretty exciting when that first truck rolls in here,” he said, pausing for a moment as if to reflect on all that has happened over the past 13 months. “That’s a moment we’ll all cherish around here.”

A moment that seemed like it might never come.