On Friday, May 15, over 6,000 General Motors dealers sat waiting the arrival of a Federal Express envelope -- if it did arrive there was no need to open it for all knew what it was going to say.

It would spell out the impending death of their business for them, their families and the families of all of the dealership employees.

Most had good reason to believe they would not receive the bad news, but considering the fact that some very good, sales-effective, well-capitalized Chrysler dealers had just received similar news a few days before, all at least had to be nervous.

So how did the fate of such a huge group of American businesses and employees, who had nothing to do with creating the current crisis, come to be in this point?

When I started my career in the auto business in 1977, Buicks were making seven miles to the gallon and no one in America had ever heard of a Honda Accord. For the next 30 years I made my living selling those same brands of cars. When the Honda Accord was first introduced, it caught the American manufacturers off guard because, for too many years, Detroit operated on the incorrect assumption that consumers would purchase whatever they produced.

The Big Three completely ignored the warning signs of exploding gasoline prices, startling differences in product quality and engineering breakthroughs on import vehicles. When the economy went into a tailspin in the late 1970s, Lee Iacocca had just been fired at Ford, after bringing to market one of the most enduring vehicles ever produced -- the Ford Mustang. Less than a year later, now president of the struggling Chrysler Corp., Iacocca successfully convinced the U.S. Congress to bail out the company for the first time.

Detroit finally began to learn a little from past mistakes.

Today the disparity in product quality and engineering ingenuity between imports and domestic automobiles has essentially been erased. If one is to compare a five-year-old Buick Regal to a five-year-old Honda Accord, you will find both have held up very well; both will achieve nearly 30 miles to the gallon; both will drive, handle and outperform cars built 10 years earlier; and both produce a fraction of the exhaust emissions of yesteryear.

The one area however, that the Honda Accord, and many other Japanese Imports, continue to absolutely kick Detroit's butt is "resale value."

Some will argue the disparity in resale value between imports and domestics is due to a matter of perception. I will tell you it is a self-imposed prophesy.

Twenty years of round-heeled bargaining with the UAW have had consequences that go far beyond the cost of labor and legacy; it has taken away Detroit's ability to control their own destiny. Although total weighted cost of labor makes up a relatively small percentage of a vehicle's cost, negotiating away your ability to reduce manufacturing output has been the primary cause of General Motors, Ford and Chrysler's ongoing problems.

Labor agreements in the form of the "Jobs Bank" program required the Big Three to continue paying nearly a full wage to a laid-off worker and consequently forced continued production of more cars and trucks than the market could absorb. So Detroit found the need to create demand -- they did so by pushing thousands of vehicles into the rental car market and allowing thousands of "hot-selling" trucks and sport utilities into a black market in Canada.

From this came the Factory Auctions and Canadian Auto Brokers funneling thousands of vehicles back into the U.S. used car market. This combined with Iacocca's introduction of the first consumer "rebate" has been the driving force behind Detroit's ongoing problem of overproduction and reduced resale value of their product.

General Motors, in an attempt to find a way to compete with the Japanese imports, came up with the ridiculous idea of a single import-fighting franchise called Saturn. The money, research and engineering that went into this franchise came at the expense of all other product lines. It was only a few short years ago GM realized its mistake -- all product lines had to be able to compete with the imports!

General Motors was finally heading in the right direction. It began to scale back the rental fleets and future products were being designed to be competitive with gas selling for $6 a gallon. With greatly improved product quality, improving resale values and more economical cars in the pipeline they stood a good chance of turning the company around. Unfortunately, the price of oil moved faster than they anticipated and they found themselves in dire need of working capital.

Unlike Ford, however, which mortgaged everything it owned a few years ago, GM could not borrow money because the final blow was the actions of the U.S. Congress, which destroyed the mortgage and credit markets.

So here we are -- Chrysler and GM dealers and their employees find themselves in a mess they did not create, and even though they do not represent a cost center to the manufacturers, they are being forced to suffer the consequences of poor corporate management and failed government policy.

Mike Grimes has been a franchised auto dealer for the past 25 years in Helena. He still works for the dealership as an automotive consultant.