#47 - Gordon Tormolen - National Policy Conference 2019

Hello and welcome to this week's episode of the Independent Dealer Podcast. Today we have Gordon Tomolen with us. He's going to join us by cell phone. We yanked him out of his meeting. He's in D.C. right now. He's battling for us. The NIADA National Policy Conference is going on this week, Luke.

It's an awesome event, and Gordon's going to go through everything that goes on there, what we're lobbying for, what it's about, and it's just going to be very educational. Stick around, guys.

Welcome to the Independent Dealer PODC podcast for auto dealers to learn and grow together. Here are your hosts, Luke Godwin and Jeff Watson.

All right, we have a special guest today, really a remarkable fellow, Real asset to our industry, Mr. Gordon Tomolin. Did I say that right, Gordy?

You did.

Good job. Well, great. And for those who don't know, Gordon is in the Wisconsin Chicago area. Is that kind of where you are, Gordy?

Yeah, hometown is Freeport, Illinois, which is a small place about 15 minutes from the Wisconsin line. So.

Okay. And Gordy is the treasurer of the NIADA Executive committee, and he's been involved with many positions on niada's executive committee and other. Other parts of that for a while. And just. Gordon, thank you for all you do for all of us. All of us dealers out there.

Rest assured, it's a privilege, trust me.

Yeah, well, Gordon, key us in here, man. Tell us, you know, we want to talk about what you're doing out in D.C. this seems like a horrible time to be out there, but I don't know how you. I mean, the whole place is on fire right now, but when you're dodging the flames and the bullets, what are you guys doing out there? Help those of us that don't know what you're doing, why you go to dc, what this week is all about. Just maybe give us kind of a little, you know, summary of what it is.

You bet, Jeff. Sir. Happy to do it. First of all, I'll tell you what, it's kind of fun to be out here in D.C. at a time where their hair is on fire and not ours, which makes it very interesting. So we're. We're out here for the NIADA National Policy Conference, and this is an event that's lasted. I think this is our eighth year now, if memory serves me right. And it really goes back to Niada's purpose back in 1946. The reason we have this association was because legislation was proposed nationally to do price fixing on cars. And so here we are again, and for quite some time, the legislative committees have been less active. About eight years ago, they fired it up again. And we've been coming out to our nation's capital annually ever since. And the purpose is if you come out and back to the hair on fire issue, if you come out and something bad's happening to you and it's a crisis, they're not as prone to listen to you because they just presume you want something. But if you're out here on a regular basis, it's just like selling cars. You establish a relationship and now they know you when you come out and you really do have an emergency or an issue that's got to be dealt with. So the real purpose of this policy conference is to establish a relationship with our nation's regulators and legislators before something happens and hopefully provide our input which makes this them do their job better and helps us as a body of dealers to get done what we need done in Washington. So that's its purpose in terms of what happens while we're out here. It's really about a three day affair. The first day primarily focuses on internal issues within the association. So we've got a meeting of the legislative committee, a meeting of the Nieda foundation, meeting of the buy here, pay here commission. All of that information is gathered and it's a good time for everybody to get together. Anyways, the following day is what I call Alphabet soup day. And what we do is Sean Peterson has done an excellent job of bringing in regulators. So this is the Federal Trade Commission, the cfpb, folks like that, who we can interact with, you know, they put a brief presentation on, but also we as dealers can interact with them and give them our input in terms of what they're doing. So if they see that we're not some, you know, just innocuous blob of dealers trying to take people's money. But actually we're business people, we're entrepreneurs and we're trying to eke out a living for ourselves and for our employees and serve consumers at the same time. Then the last day is when everybody hits the Hill. We put on our suits and so forth. And this year I thought it was really cool. We had about 230 people come out for NPC this year from all states across the nation. And they formed, I think it was 19 teams. And between us we made a little over 150 contacts directly with senators and congresspeople and told them on our hot issues, how we feel about it in terms of what they're doing and how it impacts our industry.

I'm lucky enough to have gone, I think, to six of those. I was not able to make it this year. And Gordy, I tell you the difference that it's made from the first time we, we were up there and people didn't know who we were and you know, last year, just how the reception was so, so much better and the people we were able to actually speak to and I mean that by congressmen and senators and Congress ladies and just to have a chance to talk to them, the job and dealers out there, you, this is really needs to be told. But the job that Sean Peterson and the leadership of NIADA have done with this event and with our legislative activity is amazing. Y' all have just done a wonderful job.

Gordon. Well, Luke, what's important about this is that now we walk in their office and they know us. Oh, yeah, sure. And knowing us is part of respecting us. They understand that we're not there just about making more money or whatever. But, you know, hey, we understand that Democrats and Republicans have different points of view, but they all should want the nation to work better and things to work better for consumers as well as business people, because that's, that's what drives our country forward. When they see that that's what we're about, it makes a difference.

Was there any antidotes from this year that you saw where. I know in past years, you know, we've kind of educated so many legislative people on what we do. Is there anything from this year that just made you go, wow, they didn't know that. That we did this for the consumer.

Or, you know, there always is a little bit. This year was particularly interesting because with everything happening in the last few days, at least in my team, we're from the People's Republic of Illinois, so we've got a bunch of Democrats. We had a token Republican that we talked to, and all of them were out and about and dealing with this impeachment thing and all the rest of it, which is a farce, but I won't go there. We got with a lot of legislative aides. Now, legislative aid is a very important person in a senator or congressperson's office because this is the person that actually does the digging and gets the details and then translates it for the congressperson or senator so that they understand exactly what they're voting on and what the issue is. So these are very important people to make contact with. And a lot of them are very young. They're intern age. You're talking about people that are anywhere from 19, 20 years old out to maybe 35. And a good number of them have lived in city environments. They may have never even bought a car. When you say independent dealer, they're like, what, what's that? Is that like a used car dealer? And so there's. It's a really interesting educational curve just to explain to them what we do and that the independent business person does the same thing a franchise does. But we do our own. We create our business model. We have to make our living based on how we set it up rather than just, you know, sticking a Chevy sign out there and hoping people will come.

When you've seen it from both sides.

Gordon.

Because people don't know. Yeah. Gordy was you and your dad, I think were a new car store, right?

Yeah. Actually our family, we're in our 80th year in business. My dad was a Hudson dealer, a Chevy dealer and he and I were partners in Chrysler store for 20 years. Wow.

What do you see the difference in the way. And I know last year just so happened that nada was on the Hill the same time we were. And I was very surprised at how we were probably more representative than the new car side. But can you speak to the difference in when we talk to them and maybe when the new car side lobbies them?

Well, new car guys have a whole different set of issues very often. For example, this year we had some common issues with regard favorably representing the USMCA and trying to get that accomplished and the FAIR act, which deals with mandatory arbitration and so forth. So some of those were able to dovetail together. But this is the interesting thing and having been a former new car dealer, I will just share with you because when you're a used car dealer, it sounds like you want to have the franchise. When you have the franchise, you wish you could get the heck out and have an independence. And you know these guys, there's a certain amount of ego that goes with new car store. And so if they've not been to the halls of Congress before and they come up and they, you know, they want to sit down that congressman go listen usob, I'm going to tell you what we got to do. And away they go. And they have actually less respect than we as independents. We come in, we're small business people, which is a very important thing to all the senators and congress people. They know that's what drives their local economy forward. And we've been doing it consistently. We've kept a low key tone with those folks. So that works out very well, and we're not getting in their face about things, but we just bring things to the fore that are important. When we talk about the industry, we also talk about how the issues that are important to us are important to our new car brethren because they're step one in a supply chain, and we're step two, three, four, and five, depending on how that marketplace works. So that's been very successful. And actually, you very often go into a congressperson's office where they might be aware of the fact that the new car guys were there the week before, whatever the case might be. And so they have some familiarity with the issue, but we're able to dig a little deeper and explain it to them. And they actually. They know Niada more than they know nada. So it's a real critical thing.

What were the main talking points this year? I know that we always. Sean does a great job of keeping us on target, so we don't go into one of those offices and just, you know, go crazy. What were the. What were the key things we were lobbying for this year?

Really? There were four things that we were really concerned about. The first one is one that has reappeared for at least the last five years, and it's the issue of recalls. And Senator Blumenthal for many, many years, has put forth a piece of legislation that would require the ceasing of sales on vehicles that have open recalls. Them. This obviously just kills us. You think about the dollars of inventory and capital tied up, just parked because you're waiting for parts where the case might be. In addition to that, rental car companies just. I mean, they'd lose half their fleet if they did that. So it's a terrible issue from the standpoint of capital tied up. And so we go in there and we're, you know, as an industry, we are in favor of full notification of the consumer. We want people to know that there's recall open. We don't necessarily want to park that car and tie up the capital and hurt the economy that badly. And there are a number of things in our favor when we're able to explain to them that, you know, the new car franchisee has to do repair on the vehicle and that he's my competitor. And, you know, if a customer comes in with that car for trade and I've got to look at tying it up for 90 days before I can get it fixed and resell it, I don't want to take the trade. When you talk in those terms, they're very receptive, and we've been 100% successful in previous years in getting this thing knocked down for that reason. The next issue is the Fair Act. And the Fair act has to do with a proposed elimination of mandatory arbitration on sales contracts and employment contracts. And we've really got an ally, believe it or not, in the cfpb. The CFPB did a study a few years back and they found that arbitration is not only more cost effective for dealers, but it's also far more expedient for consumers. And the consumer gets a larger settlement in their favor in the instance where the dealer has actually done the wrong thing. So the consumer gets $3,100 on an arbitration settlement on average. Whereas if they go class action lawsuit, which we all want to avoid, the lawyers get fed, but the consumer gets an average of $33.

Yeah, they get the scraps at the end of the day.

Yeah, that's exactly right. You're feeding an attorney is all you're doing. Yep. Understandably, legislators want to feed the attorney. That's just, you know, and they're a strong lobbying group on their own behalf. But we, what we went up and argued was that regarding the Fair act, we believe it should be defeated because there is a place in the marketplace for class actions, but there's also a very critical role that arbitration plays as well. And we found very good reception to that, even amongst the Democrats when it was expressed in those terms. They hadn't considered it that way before. They just, they just thought it was way for business people to take advantage of consumers, which really, that's not a long term, not in our interest either. So then the next issue is what we call Cecil and Ken Sholson being a cpa. Just love this piece. But it's, it's the, the current expected loss write off. And so just with banks and with the buy here, pay here dealers, lending companies and so forth, what the focus of cecl, this was a standard that came through the American association of CPAs and they're taking a look at what is a generally accepted accounting practice. And they're proposing that for the lifetime of a loan, as long as it's on the books, that there be a certain percentage written off as an expected loss to be held on your books. What it does say, for example, you're a buy here pay here dealer and you're averaging up to two years. Most of us will write it off when the loss happens, or maybe we'll attribute a percentage or a dollar amount per contract that we write into a loss reserve. Okay, that's A common practice at this point in time, what CECL would require is that you take that for the life of the loan. So if it's a two year loan, you're gonna take two years worth of loss on it instead of one on the face. It doesn't make a great deal of sense. What it does, in essence is it reduces your asset base on your balance sheet, which makes it more difficult for you to justify getting loans from capital providers and so forth. If you take that a step further and you take a look at CECL and what it does to the lending institutions that we get money from when they take a look, and particularly community banks, this is a big, big issue. If community banks had to employ CECL at this point in time, it's estimated that 30% of them would technically be insolvent. Oh, so clearly this is, this, this is an issue that caused, can cause a huge uproar. Because of that, it's already been deferred and delayed for a couple of years in terms of implementation. The Cecil bill that's on Capitol Hill at this point in time would delay implementation of this indefinitely until an actual market impact study can be done. So you got to get the facts first. You can't just make these decisions. So the market survey would be conducted, I think by cfpb, if my memory serves me right. And that would take plenty of years in order to determine just how deep an impact it would have on our economy before we just jump ahead and do this thing. And we were, we had good reception on that. It's actually a bipartisan issue at this point in time. Right. So we're positive about that. The last and fourth piece was just very supportive of getting something done on the USMCA that's been delayed in our do nothing Congress now for quite some time. USMCA is the Mexican Canadian Agreement for free trade. It replaces nafta. It's been negotiated by our President. There are some finite pieces that Congress wants to put their signature on and so forth. But what we found out was that even amongst Democratic circles there is some interest in getting that done this year. My fear was that going in and seeing that as an issue on the table, perhaps the Democrats might want to hold that back so that Trump didn't get credit for getting that done because it will be a tremendous booster to our economy. But as it turns out, they'd like to get reelected. So they don't want to be targeted with holding that puppy up. So I think that's going to get done by the end of the year they seem to be very positive about it despite the fact that nobody was getting along yesterday.

Those seem like four really good pieces of legislation that I think we all can get behind. No matter what side aisle you sit on.

Absolutely. And that's the way Sean has constructed this thing. So these are issues that really shouldn't be difficult for these people to get behind. And we've had some real wins of that.

The one last thing that I think needs to be talked about is the pack. Can you explain to us dealers out here that don't know what a pack is and how it influences what we're able to, who we're able to see and what we're able to do up there?

Well, Luke, I can only give you that information if you promise to make your donation to Region 3. But other than that. So alright for a probably out there, and trust me, I'm a business person, I hate cutting checks. It's just normal behavior. But a PAC is a political action committee and while they get a bad name, sadly enough money is the mother's milk of politics. And so if we're going to get the attention and be respected, the politicians out here and state, in your state organizations need to know that you support them financially too. Sometimes you get a good, good legislator that can lose an election because of they don't have enough money to fund their campaign and so forth. So the NIADA Political action Committee has what they call a PAC cup. And it's a competition between the four regions of Niada. And throughout the year we take donations from dealers and there's just, there's a hundred ways of doing it. I mean, $10 helps. Many dealers will pledge $100 a month and expense it out. It does have to be a personal donation. It cannot come from your corporation. Other guys will come out and they'll donate $500 here or there. The maximum that you can do per person is $5,000. A lot of husbands and wives will give 10 that way. But what we do is we take that money, we pool it and we save it for election time when good representatives and legislators who represent what we do and appreciate the car business need some help. And I'll tell you something that Steve and Sean have done that I think is pure genius. When they give one of those big checks to one of these fellas, they don't give $5,000, which is that maximum donation. They get $49.95 because doggone, we're car dealers. And that's the way it ought to be. We have A lot of fun with it. We've gotten a lot of attention there. There is a transportation subcommittee and a group of vehicles that are there, a group of legislators that support the vehicle industry. And we've had really good reception to that. There are a handful of car dealers in Congress and they've helped assemble some of these folks around the issues that are important to us. And for the second year this year, we gave out our Automotive Legislator of the Year award. The initial recipient was Roger Williams out of Texas. This year was Blaine Luekermeyer out of Missouri. But these are folks that really go to bat for auto dealers year round in Congress. So it's an important thing.

So, Gordia, how can we all get involved? I know we need, we need more people involved. What, what should we do locally as car dealers with our state legislative and what can we do nationally to stay involved and make sure, you know, what's done right is done, what's done in the state houses, in the national legislation is done for the benefit of us and for the benefit of the consumer. What can we do?

Well, as Sean is fond of saying, when it comes to legislation, everybody's invited to dinner. But what you want to do is make sure that you're not on the menu. And really what he's talking about is you have to stay involved. Every state has an executive that is an overtaxed and overworked individual. You've got boards of directors that are spread thin. What you want to do is you want to volunteer for those legislative committees and get involved and find out what your state's doing, get involved with your lobbyists and so forth and take place when there's a meeting, volunteer to meet with your local legislator, talk to those folks and local senators and state reps and so forth, and just start to get used to what it's like to talk to these people, make friends with them, maybe even donate a hundred bucks here or there to them, because those are the folks that you need to know when something comes up and when there's legislation involved. A prime example is what's occurred in the state of Illinois. Our state has had a small dealer body that has not been involved with quite some time. And as a result, we've had tax increases, doubling of gas tax, title fees have gone up, all of that in the last six months because our legislature is hunting for money. And it's now it's on us to get involved and help these folks get it straightened out before they hurt the economy of their own darn state. That's My question for you, Gordon, national level, I don't.

You know, my state had not. We don't have an active state association at all. You know, I've reached out to the director and he's kind of, you know, let me know that there just hasn't been a lot of interest from the dealers. Is there any tips or ways. I mean, I look at some of these states that have really active associations. Is it just because they finally got poked so many times that they finally rose up and kind of fought back and created this group? Or does it just take a handful of guys to really get active and then it kind of piles everybody else in?

Well, like anything else in life, there's two ways of approaching it. If there's a crisis, you need to. You need to step up and do what you need to do to protect your industry. And certainly situations like that can be beneficial to building a team like this. But the other thing that I think dealers can do, and I find it to be a very, very wise thing, is you can start that relationship before something bad happens. So for years I've kept relationships with my local state reps and my senators and so forth. And it's beneficial just to know these guys so that when something does occur, they can put input on your behalf. And I've had very good luck with that. You know, they're willing to sit down and talk at any point in time. You can get them while they're in their local office, sit down for half an hour, just tell them what's going on in your business and what things are affecting you and so forth, and that helps greatly. Once you got the relationship, then when something happens, you can. You can use it to your benefit.

Yeah, I think that's one thing that all of us little independents need to know. Sometimes we think that we're just working in a little. A little box and nothing really affects us or we can't affect anything else and we're just gonna not. Not put our head up. But we got to be involved, right? You got to get out there. You got to be active. It's the same thing with education. You know, don't know what you don't know. You got to get out there.

No, that's absolutely true. And yet the other piece of that, that's really important. I sat down with my local state rep not a month ago, and I had this issue of state sales tax that they've increased and so forth on us. I wanted to talk to him about that, but I spent a half an hour explaining to him the criteria for becoming a dealer in the state. He's supposed to be representing the state, but he had no clue what we had to do in order to qualify to get a dealer's license. And so when you presume that they just understand what you do, don't make that assumption. Some of them are utterly clueless about how difficult it is to be an entrepreneur and run a small business in your own community.

I think that's probably the norm, Gordy. People just don't know. And then they're the people making the rules. So we definitely have to have to be in front of that.

Absolutely.

Anything else, Jeff?

No, I think that's great. I think, I mean, obviously we would say anyone that wants to get involved, you know, definitely get involved with your state association, make sure you've joined. I mean, Luke and I, we don't, I mean get involved anywhere really. Obviously your local state, your NIADA is, I think they are the voice of independence. We're not associated with them, we're not on the board, we don't do anything with them. But we do expect you guys to get, get active and get out there. Gordon, I don't know, what, are you just gonna lay low the rest of the week or do you just scramble out of there as quick as you can or what?

No, you may have heard a little bit of background noise. We're in the midst of an NIADA board meeting that we always use this occasion to get the whole, all the boards together services, foundation, all of that. And so we've got a full day of meetings revolving around everything NIADA does and reviewing financials and minutes and the whole nine yards. So we'll be doing that after that. Being a car dealer, I'm leaving tomorrow morning at about 3 o' clock in the morning for Michigan and I bought a car in Detroit from a dealer buddy of mine. I'm on travel up to Northwood University. I also sit on their curriculum committee for the automotive advisory panel. So they've got a student run auto show and then we're going to talk curriculum and some good things in terms of educating younger people about the automotive industry as well. So I've got a full weekend. I'm hoping to see my lovely wife and dog come by sometime by Sunday afternoon.

Well, thank you so much for what you do, Gordon, all of you up there and keep fighting a good fight for us.

Well, thank you for having me on, guys. I really appreciate it. Just, just remember this and for all the dealers that the more you get involved, the stronger you will be as an entrepreneur and as a dealer. So. So don't ever think twice about it. If you can afford a little bit of time, you can. You can learn about your association and your industry and be stronger for it. Thanks for having me, guys. Thanks, Gordon.

Thank you, Gordon.

Have a great day. Sam.