GWEN IFILL: Now, should Washington throw automakers a lifeline? That was the question on Capitol Hill for a second straight day, as the chiefs of the big three returned to make their case.
NewsHour congressional correspondent Kwame Holman begins our coverage.
KWAME HOLMAN: The CEOs of General Motors, Ford, and Chrysler told the House Financial Services Committee that they were victims of the credit crisis, the summer’s high oil prices, and the worsening economy.
Alan Mulally of Ford.
ALAN MULALLY, CEO, Ford Motor Company: We have taken decisive action to deal with the current new crisis. We have reduced production to match the dramatically lower demand. We have further reduced employment, and we have eliminated all raises and bonuses for 2009.
We took these measures while protecting the new vehicles that will secure our future.
Now, we believe we must join our competitors in asking for your support to gain access to an industry bridge loan that will help us navigate through this difficult economic crisis.
KWAME HOLMAN: That bridge loan would be $25 billion from the federal government. But many in Congress say the crisis in the U.S. auto industry largely is of its own making: a failure to innovate; an over-reliance on low-mileage SUVs and light trucks, sales of which now have cratered; and the heavy costs of the pensions and benefits of workers have the three companies burning through billions.
Some in and out of Congress have suggested the domestic carmakers should be allowed to fail and go into bankruptcy.
Robert Nardelli of Chrysler, which was taken into private hands last year.
ROBERT NARDELLI, CEO, Chrysler: Independent research firms have quantified the fallout of a domestic automaker bankruptcy to the overall economy, and the impact would be devastating.
REP. JOHN CAMPBELL (R), California: Gentlemen, before I lost my mind and went into politics, I spent 25 years in the retail car business, most of that time as a dealer principal and dealer owner.
KWAME HOLMAN: California Republican John Campbell brought some of his own automotive experience to the hearing and asked how the automakers would change in the future if given a bridge loan.
REP. JOHN CAMPBELL What are you going to do differently than was your plan to change the other side of that bridge?
ALAN MULALLY: In the automobile business, it’s just so important that we are making the vehicles that people really do want and they really do value, most important thing.
And with the fuel prices moving up and the awareness about energy security, energy independence, sustainability, the consumer has moved up fuel economy right up there next to the top on their purchase decision.
KWAME HOLMAN: United Auto Workers Union President Ron Gettelfinger was asked whether his members, who agreed to wage and benefit concessions last year, would make more.
RON GETTELFINGER, United Auto Workers President: We have those negotiations ongoing all the time. And I might add also that the UAW can’t be the low-hanging fruit, the men and women, the only ones at the table.
And so, while we’re at the table, we would respectfully request that others come in to the party and sacrifice as well, because we certainly believe that the men and women, both active and retired, have sacrificed, sir.
KWAME HOLMAN: While several members from Rust Belt states were supportive of the plan, others questioned the CEOs’ commitment to substantial reform. New York Democrat Gary Ackerman noted the auto CEOs came to Washington on private jets.
REP. GARY ACKERMAN (D), New York: There’s a delicious irony in seeing private luxury jets flying in to Washington, D.C., and people coming off of them with tin cups in their hands, saying that they’re going to be trimming down and streamlining their businesses. It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo.
KWAME HOLMAN: Texas Republican Randy Neugebauer said the companies should fend for themselves in the marketplace without help from the cash-strapped federal government.
REP. RANDY NEUGEBAUER (R), Texas: Where does this stop? And why should we give you money, quite honestly, we don’t have?
ROBERT NARDELLI: This isn’t about losing a company. This is about losing an industry, an industry that has an overarching effect on literally thousands of small businesses, to your point — we call them dealers — literally thousands of suppliers, for example, the tanning company that provides the leather for our cars.
So I think this isn’t about just a single company and making a decision to let it go down.
KWAME HOLMAN: With time running out in this pre-Thanksgiving congressional session, hopes were dim for action on helping the automakers this year.
GWEN IFILL: And now to our Newsmaker interview with General Motors’ CEO Rick Wagoner. He sat down with Judy Woodruff at G.M.’s Washington office earlier today.
Tough criticism of automakers
JUDY WOODRUFF: Rick Wagoner, thank you very much for talking to us on the NewsHour.
RICK WAGONER, CEO, General Motors: Great to be with you, Judy.
JUDY WOODRUFF: How do the prospects look right now for help from Congress for what you need?
RICK WAGONER: Well, a little tough for me to handicap the outcome. I do feel like over the last two days of testimony, we had a chance to tell our story. We got a lot of questions, some tough.
And my sense is a number of the senators and congressmen that we've talked to did recognize, I think, the importance of the industry and indicated an interest in finding a way to support it.
So I felt that there was some positive messages there, though there were obviously some who were against it. And the process by which the funding might be forthcoming I think still sounds like it's going to have to be worked some.
So I'm hopeful, but at this point I really can't handicap.
JUDY WOODRUFF: I listened to some of the testimony today and yesterday, pretty tough reaction to what you and the other auto industry leaders were saying.
One of the thrusts of these questions is, why should we help the American auto industry when you were -- for so long, you refused to do the kind of retooling to make the kind of cars that the American people need and want?
RICK WAGONER: Yes, you know, I don't think -- people say you didn't make the kind of cars that people need and want, but, in fact, we -- generally our products are considered to be quite successful.
Take a product like the Chevy Malibu or take a product like the Cadillac CTS that won car of the year. I think, to be honest, that we do have very good products.
We certainly made a big commitment to advanced propulsion technology. For example, right now, G.M. offers -- or this model year will offer 20 products that get more than 30 miles per gallon on the highway, twice as much as any competitor.
So I appreciated the chance to tell the story that we do make great products and we're very much into the focus on the direction we want to go leading to eventually energy independence.
So, hey, maybe there's some history there. You know, for that, I can't change it, but I can tell you, you know, in the recent past and heading forward, that we're going to contribute to what I think is an important aspect of this country's future.
Industry's weaknesses exposed
JUDY WOODRUFF: But I think a big part of the criticism is that it took so long for the industry to begin to take this seriously, the need to move in a fuel-efficient direction.
RICK WAGONER: Well, I mean, you know -- I think it's, frankly, challenging during a period when energy was so cheap. I mean, what we do is we sell cars to individuals, as you know. And people vote with their dollars every day and decide what kind of cars they want to buy.
And over a period when energy was very cheap, you know, I think it's fair to say a lot of people moved into product categories that weren't particularly fuel-efficient. If we could replay that again, sure, particularly now that energy prices have moved up.
But it's fair to say, over the last three to four years, it was clear to us, based on growth in places like China and India, that we were in a long-term secular growth in energy prices. And so that's why, here in the U.S., 13 out of last 15 launches, new products have been cars or crossovers. And for us, 18 or 19 of the next car products that we launch are going to be cars or crossovers.
It's fair to say we have that message and we're moving very aggressively in that direction now.
JUDY WOODRUFF: The other thrust of the questions I was hearing from the members of Congress was, why should we help the auto industry when there are so many other American industries that are out there now that need help, especially with this downturn that we're in?
RICK WAGONER: Yes, I think two primary reasons. First of all, after housing, I think it's fair to say that the industry that's most heavily involved in the importance of good credit flow are autos, because so many people borrow money to fund their auto purchases.
And so, from that perspective, I think, as housing has been very badly hurt by the credit crunch, autos have, as well.
And, second of all, the industry has got a huge footprint. We're the biggest purchaser of so many commodities, everything ranging from textiles to computer chips to steel. So we have a huge impact on the rest of the economy.
The industry is also highly interrelated. We have a lot of the same supply base, which isn't, I think, surprising.
And so I think if we began to see not being able to make it, one of the domestic companies, that has a very high risk of a domino effect across the industry and then a huge impact on the economy as a whole.
JUDY WOODRUFF: Well, picking up on that, there are people who say, "Why shouldn't we go down to -- if that's what the market will bear is two or even one domestic automaker, why shouldn't we go in that direction?"
RICK WAGONER: Well, my view is that -- I'm not sure one could choose it that way. I think, because we have such an interrelated supply base that if probably any one of the Detroit-based companies -- and certainly if two -- had to go into bankruptcy, I suspect the weight on the supply base would drag the whole industry down.
JUDY WOODRUFF: When you say "supply base," what do you mean?
RICK WAGONER: I'm talking about -- well, we have a huge number of suppliers, particularly our U.S. domicile suppliers, which have a tremendous amount of business with all three of us, in many cases, G.M., Ford, and Chrysler.
And so if you're Supplier X and you lose, from one of the companies, a third of your business, then your own competitiveness, your ability to survive will be in question. We've dealt with this with Delphi in bankruptcy now for three years.
And it's very expensive for a manufacturer to have to be able to support that. So I think it's reasonable to expect that, if we began to see one OEM move into bankruptcy...
JUDY WOODRUFF: OEM meaning?
RICK WAGONER: Oh, sorry. The original -- G.M., Ford, and Chrysler -- move into bankruptcy, then the risk could be that it could roll across into the supply base and then into other manufacturers, as well.
Over time, would it make sense to have further consolidation in the industry? I think that's a direction that it's going to go into. But now, at this time of tight liquidity, you know, it's not on the front burner for anyone.
Some suggest bankruptcy
JUDY WOODRUFF: What's your reaction when you hear serious people out there say, "Just let them go under. They had a chance to make a change. They didn't do it. The country's in -- our fiscal condition is very difficult right now. Why should we spend billions of dollars right now? Let them go"?
RICK WAGONER: Yes, what I would tell them is, first of all, we built the business model that's going to be very successful in the future, because we've radically cut back our costs.
You know, G.M. spent $103 billion over the last 15 years funding pensions and post-retiree health care, but those are now funded. We have almost all of that behind us now. So that sets the stage for tremendously greater competitiveness in the future.
The industry brings a huge amount of technology. We're basically the backbone of the manufacturing base. And so if we want to look at the health and viability of the economy going forward, I think a domestic auto business is going to be critical to that.
And so just as -- because of the extraordinary circumstances, the government injected massive funding into the financial system, I would argue that a significantly smaller amount of funding to support the manufacturing base in Main Street is appropriate.
JUDY WOODRUFF: Somebody pointed out to me that you made a speech in July where you said you had no thought whatsoever at that point of bankruptcy. You thought your financial position, your cash position was going to remain robust through the rest of the year.
The question is, if you were wrong then, how do people know -- how can people believe that you're right now?
RICK WAGONER: Well, at that point, that was when we announced a number of actions to generate $15 billion of additional cash to get us through the end of '09.
And I guess what I didn't see at that point, Judy -- and I don't think I'm the only one -- was that the entire global financial system would go into a meltdown and credit availability, which we and our customers and our dealers and our suppliers have relied on for the last, what, 70 years, all of a sudden pretty much evaporated.
So that has changed the circumstances. It is my hope that, you know, the measures being taken to improve the financial system will eventually become into effect and improve the liquidity, in which case, you know, I think our outlook is going to be much, much better.
Obama wants aid with conditions
JUDY WOODRUFF: Conditions. President-elect Obama gave an interview over the weekend in which he said we do need to help the auto industry, but it can't be a blank check. What else are you prepared to give up in order to get assistance?
RICK WAGONER: Well, we've been candid. We understand that, if we ask for this kind of support, we've got to expect that the taxpayers are going to request oversight. They're going to request security in the money that they loan us. They're going to expect a fair return on their investment.
They're going to expect that our business practices are the kind that the American taxpayer would support, so appropriate controls on our -- limitations on compensation, things of that sort, all of which we said, you know, we're wide open.
I think President-elect Obama has talked about contributions to the future energy policy, which, you know, we have some stuff that is really pretty big for us over the next 12 years, but those could be other issues where we could contribute.
JUDY WOODRUFF: Even new management?
RICK WAGONER: I don't think that's the right answer personally. If anything, during a difficult time, you need the best possible management team. And I think at G.M. we've got a management team that I think is very good and has taken on the tough issues.
And we've talked a lot about taking on tough issues in the U.S. We've also shown good ability to grow in the growth markets around the world.
So I think that's -- you know, I think that's the best way that we can serve the future shareholders of the company, the current shareholders and taxpayers, if we can get this funding.
JUDY WOODRUFF: If you don't get help from Congress now, if you have to wait until late January when the new president comes in, can you make it that long?
RICK WAGONER: Well, I think the risk profile goes up significantly. We've seen a lot of deterioration in the market just in the last 30 days. I hope that doesn't keep heading down. It can bottom out, but I can't guarantee that will happen.
And so what we've been doing is really coming up with cash every way we can to ensure that we can keep our payments on time, which, by the way, we've continued to do.
Earlier this week, we sold shares in Suzuki, a good partner for many, many years, and we'll continue to work with them, but we're just going to keep trying to generate the cash, you know, to hang in there.
But I think it's risky. And, therefore, we think action now is really prudent and essential to ensure that we don't get in a situation that runs out of control.
JUDY WOODRUFF: Final word. If somebody is watching this and they're just looking at you with very little, if any, sympathy, what do you say?
RICK WAGONER: Well, I'd say the U.S. auto industry has made great contributions to the growth of the country over the years. We've, you know, employed many people. We've provided many benefits. We've brought a huge number of technologies. We've been a huge portion of the manufacturing base.
And I think, for the next 100 years, it's very important for this country to continue to have a manufacturing technology base, and that is hugely driven by a successful domestically owned auto business.
So I think it's in the interest of all of us, and we'll work hard to make sure that we can be successful and not require dramatic additional funding or anything like that like we've seen in some of the cases in the financial markets.
But this is an important pillar for the future of the U.S. economy. And so I think, in this time of unusual circumstances, we hope that Congress will give consideration to what we've requested.
JUDY WOODRUFF: Rick Wagoner, General Motors, thank you very much for talking with us.
RICK WAGONER: Thank you, Judy.