GM Made 'Mr. Herb' Cry

By Roy Exum (Archive) · Monday, August 23, 2010

In June of last year Herb Adcox got the worst news of his life when a despicable letter from a company he has loved for 51 years told him his Chevrolet dealership had fallen prey to "Dealer-gate," the government-mandated restructuring of General Motors and Chrysler. After he read it, he wept.

He cried not for himself but for the hundreds who worked for him, the tens of thousands of customers who had trusted his good name for half-a-century, and the more than 2,200 other auto dealers across the nation who were also reduced to little more than collateral damage in a ravaged economy.

But his bitterest tears were for the United States itself. Our Federal government, in its misguided effort to help, had not only cost over 100,000 Americans their livelihoods but had clearly shattered the dream of free enterprise, blatantly discriminated against rules against race and age, and foisted the gross mismanagement of General Motors into what is today better called "Government Motors."

Barack Obama called it "shared sacrifice" but Herb, one of the most active auto dealers this country has ever known, has another word for it. "It was wrong," he said several weekends ago, this after he received a paltry buyout for a lifetime of honor, achievement and the undeniable fact the Chattanooga businessman "has never cost GM a penny."

At the time he received his "death notice," Herb Adcox Chevrolet ranked 186 among the largest 300 Chevrolet dealers in the country. If you'll remember, there were actually 4,000 Chevy dealers in the United States so that yardstick allows us to better say that Herb Adcox's dealership was the 186th biggest Chevrolet store in the nation.

"We never cost General Motors a dime. We paid for our cars, our facility, the salaries and benefits of everyone who worked here. We even bought our own brochures. Any national advertising was included in the price of the cars and trucks we bought from the factory. Not one person can justify why, the day I got the letter, that I never got another vehicle," he said.

"My district manager was shocked, my zone manager was speechless, and, for all practical purposes, I was dead," he continued. "It wasn't a 'wind down,' as they promised, but instead an abrupt cancellation."

Herb, who'll be 81 years old in October, soon learned the same thing had happened to his friend Pat Kelly, now in his 80s, who had Kelly Cadillac, Saab, Hummer and GMC. His dear friend Jack Hall, age 78, lost Hall Chevrolet in Cleveland and the classy Don Ledford, also age 80, is still fighting to keep Ledford Buick, GMC, and Cadillac open in Cleveland.

"Don is a prince of a guy and he's hanging on because of what is called 'Paragraph Three' in the dealer agreement. This states that upon your death your franchise will immediately go to another family member. Don's will go to his daughter but, under the guidelines set by Special Inspector General for Troubled Asset Relief Program, any preference was given to minorities and women. Who does that leave out?" he asked.

Herb would have obviously left his dealership to his son-in-law, the quite capable Dana Robinette, but Dana is very much a white male. "I think that is a clear case of discrimination that can now be applied to any business owner in this country."

"The biggest part of the puzzle, of course, is 'Why me?' I've had hundreds of people ask and I tell them if I knew, I could try to explain it, but the absolute truth is there is no reason. That's why there is no answer."

"The free enterprise system was built to reward those who achieve, who are successful. When the car business stalled in 2008, we tightened our belt just like everybody else and our books were solid the day we were informed of the 'shared sacrifice.' This isn't the way America works. You have natural attrition, survival of the fittest, and you do all you know how to support those who make your business a success," he said calmly.

"My worst day, obviously, was the day my son Grant was killed in Atlanta (1989) and the cancer was pretty bad but this is the cruelest thing I have ever known. What's worse is that I can't do one thing about it," he said. "Is this where we are as a nation? I pray to God it isn't but what are my options?"

"Mr. Herb" is changing his company to "Herb Adcox Automotive" but the 13-month "prison sentence," where he was forced to endure without any GM assistance at all, has taxed him. "It has been terrible."

It has been widely reported that before General Motors yielded to giving the government a 61 percent ownership (the UAW union owns 17 percent), GM had assets of $80 billion and liabilities of $170 billion. When GM was forced by the government to declare bankruptcy, the bondholders were paid roughly 10-cents on the dollar. Old General Motors stock certificates became worthless paper.

"With the bailout, GM gets to start over with no outstanding liabilities and about $50 billion clear. The way you sell cars is through dealers. Explain to me how eliminating 2,200 distribution outlets -- dealerships that cost you nothing to sell your product -- makes General Motors more profitable. That is sheer insanity."

"There are reports GM will soon have a big stock offering to pay back the government. I don't know if they can be successful at that. I know I'd have to think long and hard about it before I would invest good money after what I've seen."

Personally, there is something else you need to know. Mr. Herbert G. Adcox has been one of the leaders for domestic cars in the United States for years. He's earned more awards than he has wall space working tirelessly for the industry. He served on the Tennessee Motor Vehicle Commission under four different governors and is known by every car dealer in Tennessee as truly one of its greatest advocates.

But now, presumably because he is white and old and a male, a government panel and a horribly mismanaged General Motors have skewered the man who was a lifelong leader of the National Automobile Dealers Association, who has been a fair and respected merchant, a much-beloved employer, and a fun-filled business owner who has played by the rules his entire life.

Two weeks ago, when GM sent him his buyout check or severance or whatever you call that nasty money, he cried once more. As always, it wasn't for himself.

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