The Rhinelander Daily News - Online news and information for the Rhinelander, Wisconsin region

The one-two punch of high fuel prices and a national financial crisis that froze credit markets caught American automakers off guard, and the combination has taken an especially hard toll on the Ford Motor Co.

On the local front, Rick Karcz Ford of Rhinelander, previously Bergstrom Ford, may be the latest dealer casualty of Ford’s ever-deepening woes. According to a letter circulated to the business’s employees on Nov. 4, Rick Karcz Ford-Lincoln-Mercury-Mazda will close its doors on Dec. 5.

The letter stated, “Based on the unprecedented economic environment, we have made the difficult decision to close Rick Karcz Ford-Lincoln-Mercury-Mazda of Rhinelander effective Dec. 5, 2008. The economic performance of the dealership does not allow us to continue operations. We very much appreciated your positive contributions to the company and wish you the best in your future endeavors.”

A separate memorandum dated Nov. 3 stated that the company would honor all warranties sold at the dealership at other dealers and that it would honor all of its existing financial commitments to customers and vendors.

Karcz, whose family owns a dealership in Pulaski, purchased the business from Bergstrom Auto in August. At the time he was bullish about the prospects of doing business in Rhinelander.

“My family has had a car dealership in Pulaski (near Green Bay) since 1946,” Karcz said. “I’ve been in the business 27 years. Coming to Rhinelander was an opportunity to run a store in the gateway of the north. The Karcz Motor Company (in Pulaski) has done business in a hometown style for years and I think that will work here.”

No one was available for comment at the dealership on Friday.

Meanwhile, Ford Motor Co. announced Friday that it lost $129 million in the third quarter and went through $7.7 billion in cash. The company said it will cut about 2,260 more jobs in its North American salaried work force as it tries to weather the worst economic downturn in decades.

“While Ford has been dramatically affected by the difficult business environment, we remain absolutely convinced that we have the right plan and are taking the right actions to weather this difficult period and emerge as a lean, globally integrated company poised for long-term profitable growth,” Alan Mulally, president and chief executive, told industry analysts during a teleconference.

With the new cuts, Ford has shed around 41,000 hourly workers since 2006, mainly through early retirement and buyout offers, and currently maintains an American workforce of about 46,000 employees.

Ford has not been the only American auto maker affected by the financial crisis. General Motors Corp. said Friday it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009 if the U.S. economic slump continues and it doesn’t get government aid.

Industry analysts say Ford and GM likely are spending around $1 billion a month above their revenue. With credit markets frozen and their credit ratings cut to junk, both have had difficulty borrowing more money, raising the prospect that they could run short of cash.

The exact correlation between the fate of the Big Three and their local dealerships is difficult to measure.

Larry Bembenek, owner of Bembenek Chrysler, Dodge, and Jeep, has a unique perspective on the crisis. To date, his dealership has sold just 21 fewer cars than last year at this time.

“While the national numbers are way down, our numbers are only 21 vehicles behind last year. We’ve kind of gone against the national trend,” Bembenek said.

Bembenek said that dealers of Ford and GM cars have an uphill battle to contend with because of reports have put into question the companies’ futures and taken their toll on consumer confidence.

“The public perception of a product or a model starts to determine what brands and what models will survive,” Bembenek said.

See Autos, Page 8A

Bembenek knows something about survival. He had just started selling cars when interest rates rose to a soaring 21 percent between 1980 and 1981.

“I managed through that and in 1980 and 1981 the economists and media were calling for a great consolidation where manufacturers would disappear,” said Bembenek. “Here we are again and now I really do believe there will be a consolidation.”

Bembenek started his career in auto sales in 1979 and over the past 30 years he has survived as controller, operations manager, general manager, and owner of both GM and Ford dealerships. He sold a dealership in Pulaski to re-locate to Rhinelander.

“I sold that to come up here because I saw this market, that it didn’t have too many Chrysler/Dodge/Jeep dealerships and that Rhinelander is a central location,” Bembenek said.

Bembenek also said that Rhinelander has offered him some insulation from the national credit crunch, because his relationship with local banks has allowed him to avoid dependence on financing through Chrysler Financial. He said his business will weather this storm by cutting costs and relying on its strong ties with local banks.

“You meet with your employees more often to let them know what’s going on and what we have to do,” Bembenek said. “You also try to let the public know that their is money available for loans. The banks and the credit unions here weren’t caught by the mortgage crisis like the national banks were. This type of community helps us. We’re fortunate in this area in that we have those relationships.”

Bembenek said he does expect to see some dealership closures in the Rhinelander area, citing a national forecast that between 700 and 1,000 automobile dealers will close this year.

“It’s hitting our industry where consolidation is happening,” Bembenek said. “As the news states, some areas are over-dealered and some businesses will have to make a decision about whether they want to stay open or not.”

Bembenek compared the situation for auto dealerships with the consolidation of local hardware stores and corner groceries.

“It’s in our industry now,” Bembenek said. “You’ve seen it with corner groceries and with hardware stores. There were too many in a small area and they shut down.”

Bembenek said the consolidation will mean fewer small dealerships.

“I don’t know if you’ll see bigger dealerships in the future, but you’ll see fewer smaller dealers,” Bembenek said.

Bembenek said he has seen a shift in consumer habits from larger trucks to smaller cars and vans.

“There’s been a little shift down-sizing and we’re selling a bigger variety of vehicles across the board,” said Bembenek.

As consumers are shifting their habits, so must auto dealers.

“In times like this what we do, like any other business, is make sure that any dollar spent is a necessity and that it will go to generate a sale of some kind down the line.”

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Comments »

Mike wrote on Nov 10, 2008 4:57 PM:

" The budget for sports in Rhinelander is 2% and declining - Please stop with the athletics first when its simply not the case. If you read the paper the other day it looks like Ministry puts a high value on sports that way they are donating to other school systems not Rhinelander. "

former RHSer wrote on Nov 8, 2008 5:36 PM:

" Wednesday morning the news of the failed referendum hit. My heart was heavy and still is. I was one who voted, "no". I am one who will vote yes on the referendum if the multipurpose facility is dropped. I do care for the kids, I work with them! However, taxpayers owe it to the children to provide an education and in safe buildings, they don't owe them sports facilities or to pay for their extra curricular activities. There have been many academic cuts in the last eight years and my own children are proof of that. There have been job, academic and building/maintenance cuts and yet sports continue on. Who's benefiting? By the way, my children do play sports, but I don't expect taxpayers to cover it. "

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