(1992-1995) GM STRONG-ARMS SIGNER TO NEWARK;
SIGNER BUILDS FACILITY THERE UNDER PRESSURE,
FORFEITS FREMONT AUTO MALL INVESTMENT
This section describes GM’s increasing pressure on me to relocate to its proposed illogical site in Newark, which would isolate me from all the high volume dealers at the Fremont Auto Mall I co-developed. The Newark story began developing mid-way through the development of the Fremont Auto Mall, which started in 1987 as described in the prior Expanded Details section, “1987-1992 Cadillac Franchise Pursuit; Signer Co-Develops Fremont Auto Mall & Buys DiGiulio Pontiac-GMC: GM Disapproves Both.” Following is a summary of the Newark-related events in that section:
- GM real estate decision maker Roch McClain led GM’s anti-Fremont Auto Mall stance before any of the local dealers or GM Divisional personnel knew about his secret pursuit of Newark property. There is documented evidence of Mr. McClain’s involvement with Newark in February 1991, with another document suggestiing involvement as early as 1989. GM’s secret Newark pursuit was most likely the reason for GM’s refusal to finance my Fremont Auto Mall property from the beginning, despite Cadillac’s mandate that I relocate there.
- Rumors of GM’s pursuit of Newark property surfaced sometime in mid-1991, which later prompted the Fremont City Manager to write an October 14, 1991 letter to GM Divisional Zone Managers expressing concern about GM’s action that, if enacted, would be highly detrimental to the City of Fremont and me after extensive work and expense by both parties in creating the Fremont Auto Mall.
- Following the aforementioned letter, a front page article appeared in the October 20, 1991 Fremont Argus reporting on GM’s pursuit of the Newark site. I am quoted as finding GM’s pursuit puzzling and illogical, and continuing with my commitment to the Fremont Auto Mall. A map in the article showed a list of dealers planning to relocate to the Auto Mall, which included me, as well as all other Fremont dealers except the other three GM dealers.
- In April and May 1992, the new Buick and Cadillac Zone Managers formally presented GM’s Newark plan to me for the first time. I responded that I continued to plan to move to the Fremont Auto Mall.
- In October 1992, GM representatives met with me to present a ludicrous proposal for me to rent a proposed Newark facility from it, which would provide GM with a 21.92% annual return on its investment. I declined this insulting proposal that would keep me from owning my own facility at the Fremont Auto Mall.
1993: GM steps up Newark pressure with threats and intimidation
As I remained committed to relocating to the Fremont Auto Mall when the time was right, beginning in early 1993, GM stepped up the pressure on me to relocate to Newark instead of the Auto Mall. On January 28, 1993, Cadillac sent me a letter stating that if I did not relocate on a specified timetable, it would be considered terms for non-renewal of my Cadillac Dealer Agreement. As I could not survive on Buick alone, if GM acted on its threat, and I had given up Subaru and Saab as required by Cadillac, it would put me out of business.
In February 1993, GM presented its long-anticipated Project 2000 Plan to its dealers, which formalized its retail brand channeling and revealed its experts’ determination of where each dealer is to be located. The brand channeling involved how GM brands would be housed in dealerships, with a primary focus being the Buick-Pontiac-GMC (B-P-G) channel, in which those three brands would be housed together, as well as Oldsmobile being housed with either Chevrolet. Cadillac, or both. Project 2000 provided each dealer with a notice of where GM’s “experts” determined he or she should be located, which in my case was “near NewPark Mall” (in Newark). On March 10, five GM representatives met with me and, with a nasty tone and belittling approach, placed merciless pressure on me to agree to its Newark plan. In response to my stated preference for the Fremont Auto Mall, the representatives made statements such as, “Maybe we should get a divorce,” and, “We’ll find you a a buyer.” The representatives reminded me of the threat to end my Cadillac franchise. GM offered its Motors Holding Division (MHD) financing for Newark, but not the FAM. As part of GM’s Newark plan, I had to agree to give GM 25 years of “site control”, which meant that I had to continue to sell GM products in the facility for the period. If I chose to sell the facility, I was required to give GM first right of refusal to buy it.
Realizing that GM’s threats left me no viable choice but to succumb to its pressure to relocate to Newark against my will, I attempted to negotiate the best deal I could. I also had to accept GM’s plan of a new MHD-formed corporation, also against my will. I had sought real estate financing, not a business partner. Among other things, the formation of the new corporation caused me to forfeit significant LIFO (Last In First Out inventory accounting) and other tax benefits contained in my original corporation.
It should be noted that in late March 1993, Catellus offered me the possibility of free land in the FAM by way of enhanced Fremont tax incentives. I discussed this with Newark project mastermind GM Argonaut representative Roch McClain, who responded that GM wouldn’t be interested in the Auto Mall even if free, thus depriving me of the opportunity. On July 14, 1993, GM held yet another 5-man meeting to firm up my agreement to its Newark plan.
On August 20, an article appeared in the Fremont Argus announcing my agreement to relocate to Newark. After reading the article, Fremont Mayor Bill Ball sent a scathing 6-page letter to GM President Jack Smith about the way GM had mistreated the City of Fremont in regard to the Fremont Auto Mall. On page 5, the letter states that GM representative Raymond Buttacavoli finally revealed that “GM people” had advised Motors Holding and GMAC not to finance any moves to the FAM. On page 3 of the letter, it is stated that GM’s Roch McClain displayed disinterest in the FAM in 1989.
A December 5, 1988 letter from Pontiac Zone Manager Bob Durand to Pontiac-GMC dealer Rich DiGiulio illogically discouraged his relocation from his poorly located 25-year-old building to the Auto Mall, and notified him of Pontiac’s plan to establish new representation in Milpitas. In driving distance, the was about 8.8 miles from the Auto Mall site, and about 10.1 miles from the Newark site. Driving distances for DiGiulio’s existing facility, and proposed Auto Mall and Newark location are shown. (The address of Billings Chevrolet in Milpitas is used. Second generation dealer Mike Billings relocated from San Jose to GM’s selected isolated location in Milpitas in 1992, and then closed in January 2005. GM never reopened and Pontiac never pursued Milpitas, thus making GM’s Milpitas project a failure, and costing Mr. Billings his family business.) California’s 10-mile radius franchise law (based on straight line) would enable Mr. DiGiulio to protest a new Milpitas point if he were in the Fremont Auto Mall, but possibly not if in Newark. It thus appears that GM’s decision to refuse Fremont Auto Mall financing was selfishly and secretly made at that time in 1988. As Mr. McClain seemed to have full authority, even over the local Buick and Cadillac Zone Managers who knew the market and me well, to determine the fate of my relocation, all my years and money invested from the beginning in the Fremont Auto Mall project never had a chance of bearing fruit for me.
In May 1994, Bob Gee relocated Fremont Pontiac-Olds-GMC (P-O-G) to a new facility he constructed in Newark, at which time GM’s Motors Holding Division bought out Dee Barnes’ ownership share. Motors Holding then became a majority shareholder in Mr. Gee’s dealership corporation, and with its preferred stock, would have voting control until he would someday buy those shares through profits. I began construction of my Newark facility in fall 1994, and then relocated there in July 1995.
