A:
And now back to the economy, and to the trouble say the General Motors has the 3rd economic happening of the day.
Gwen Ifill has that.
B:
General Motors posted its 3rd straight years of losses today and announcing a record three eight point seven billion doalls shortfall for two thousands seven.
GM has offered yet another round buyout and the eairly retairment officer to all of it remaining seventy four thousands unionized employees in the United States.
The program was provided the payment as much as sixty two thousands five hundreds dollars for the most skill workers eligible for the retirment.
United other workers member who decade more experiences could also qulity for one time payment one hundred forty thousands dollars if they agree to quit and forego future benefits.
The officer design to cut costs by replacing the higher-paid workers with lower-paid ones.
Now for more on this. We check in with Michelline Maynold, a busniess reporter with the New York Times who has the chronicled fortune in the industry. She is the author of The end of choice : How the big three lost their grip on the american car market.
Glad you can make it. Michelline.
C :
Thanks. Gwen
B :
So every time we talk about this especially about General Motors seems we see more more more losses. What is behind over all this?
C :
I think General Motors is facing to the fundmental problem,which is the american market has changed. um....
MICHELINE MAYNARD: I think General Motors is facing a fundamental problem, which is that the American car market has changed.
When General Motors was at the peak in nineen sixties had all most sixty percent of car market. Today has about tweenty three percent.
When General Motors was at its peak in 1960, it had almost 60 percent of the car market. Today, it has about 23 percent.
Back then the Detroit Auto makers had about ninety four percent of car market now had about fifty percent of car market.
Back then, the Detroit auto makers had about 94 percent of the car market. Now they have about 50 percent of the car market.
And so General Motor's just been on the downward path even trying to control the decline, but they just don't seems get the arms around.
And so General Motors has just been on this downward path. They've been trying to control the decline, but they just don't seem to get their arms around it.
B :
We are talking about three eight point seven billion dollar loss. How does the company begin to even operate efficently the loss like that?
C :
One of things to understand about this large loss, this is largily on paper. About three six billion dollar every it is what they called it non-cash charge.
One of the things to understand about this loss is that it's largely on paper. About $36 billion of it is what they call a non-cash charge.
The reason they has to take the charge they have to be tax credit they allow to keep they think they are going to make the money sometime to download, then they can be private tax credit card off set the lie bill.
The reason that they had to take the charge is that they have these tax credits that they're allowed to keep if they think they're going to make money sometime down the road, then they could apply these tax credits to offset their liabilities.
But earily late last year Santury said "Look, you know, We don't think there is chance of major profit any time soon".
That is why they had to take this kind of charge.
But late last year, they essentially said, "Look, you know, we don't think there's a chance of major profits any time soon." That's why they had to take this kind of a charge.
There is big numbers. But even when you get on the numbers, there are still lossing money in the north America, and that is still the major market that really is where they have to be successful, if they are able to be going to be as much power as they want in the world.
They're big numbers, but even when you get under the numbers, they're still losing money in North America, and that's their major market. And that's really where they have to be successful, if they're ever going to be as much of a power as they once were.
B :
So Still lossing say if you subtract back that one time right off four hundred million dollas last year, that is still not chump change.
C :
Right, and they are still lossing pretty large amount of in north america. Now their loss is lower. they are lost about 6 million dollar year ago or in 2006 excuse me they lost about million and half dollar last year.
But if you think about it company like Toyota made it about two million dollars in north america during two thousand six, perbably make it little bit more than that in two thousand seven.
So you can't make the money in north america,
you can't do it selling a full line of viechles.
You just,General Motors just has't been able to make change it need to get that point.
B :
What is Toyota doing that GM is not ?
C :
One of things they do it is they pretty much build same line of cars our of world.
One of the things that they do is they pretty much build the same lineup of cars all over the world.
They built cars like corolla, camry.
They build cars like the Corolla and the Camry.
They do their engineering ones. So the corolla you are buying in europe , the corolla you are buying in california,
and they do the engineering once, so that the Corolla you buy in Europe, the Corolla you buy in Californa,
And then one of japan came out the same budget.
and the one in Japan came out of the same budget
GM and four or two extender still using the different their car this platform to build their cars.
GM and Ford, to a certain extent, are still using different -- they call these platforms to build their cars.
So everytime you have to re-do somethings whether it is for Buick or Oldsmobile-Oldsmobile has gone excuse me- Buick or Chevrolet or another division and then do it for europe and then somebody else.
So every time you have to redo something, whether it's for Buick or Oldsmobile -- Oldsmobile is gone, excuse me -- Buick or Chevrolet or another division, and then do it for Europe, and then somebody else,
It just customered money the there is not lean enough yet the way Toyata is.
it just costs them a lot of money. They're not lean enough yet the way that Toyota is.
B :
When you are talking about being part of what i do to it cheap that amount net is buyout and some layoff. Is that strategy working?
When you talk about being lean, part of what they do to achieve that amount of leanness is buyouts and layoffs. Is that strategy working?
C :
Well, one of things happened last fall is there is the new way w contract.
Well, one of the things that happened last fall is that there's a new UAW contract.
in that contract for the first time, there's called Two-Two wages system.
And in that contract for the first time, there's what's called a two-tier wage system.
So newly higher auto workers the Detroit company come in about half wages and let generous benefit worker who there are now.
So newly hired auto workers at the Detroit companies will come in at about half the wages and at less generous benefits than the workers who are there now.
The car company is bading that they offer this buyout to senior workers ,
The car companies are betting that they offer these buyouts to these senior workers,
this people believe and then back feel with this fork going making fortine dollar an hour and tweenty eight dollars .
these people leave, and then they backfill with these folks that are going to make $14 an hour, instead of $28 an hour.
But I think the gamble is the higher enough people even fill those jobs.
But I think the gamble is that they'll hire enough people to even fill those jobs.
And if their market shares keep dropping, there is no garantee even need worker who fill in the spot those who left.
And if their market shares keep dropping, there's no guarantee that they'll even need the workers to fill in the spots of those who left.
B :
We started the program tonight rais Ray Suarez talking to Secretary, the Treasury Secretary Paulson fallsan about the ripple effect of the housing decline. And secretary said 'Yes', this is more than just about subprime mortage market.
Is this kind of slump, this kind of report from GM, more than just about the GM's ability to make the bounce the books? that Does it doesn't have a ripple effect in the broader economy?broadly economic.
C :
Well, I think it does, Because you have to remember that, you know, if you use the old rule of thumb see it and blue of some, there is about seven jobs that stamp stem from every manufacturing job at a deroit car maker.
you have the jobs at the parts suppliers. you know, if the plants aren't some building or cars, they don't need the parts.
You have jobs in the steel industry and in the Coal industry, as well as.
And you have the dealers and you have the people at the over Starbucks across the street from the dealers.
So every time you hear about cuts, it affects the fax a lot of people.
it isn't quite like it was back in the '60s or '70s, when the deroit car makers were is such an part of the American economy.
But they are still very important to the American economy.
B :
If you were a worker however who's havng the troble meeting on your mortage payments, and you're being given a choice between staying put without any kind of job secruity and taking a buyout and not knowing non if you have none skills to do soemthing else, What is the rock lock and the hard place here for these workers? if you were worker what are they go ?
C :
It's a very difficult choice. Because a lot of these folks say that they're in their fiftis now. they were hired at the time when you could can get the a job in the plants to 스플라 right out of high-school. When I was young, there wasn't were some kids that I grew up with that would get the summer jobs in the car plants and they never went on to college because they were getting paid so much money
so if you we fast for fast-forward 20 years or so years. that is these this folks. they have to training to work another auto plants but you know when you can't walk work out of a car plant and make out 28 dollars an hour out in an hour and hourly your job. probably you 'll probably make 15 dollas, if you are lucky.
So they've got to do a lot do of personal calculations about but what they think futures will be. Are or they are able to live on the lower amounts of money that they earns as retirees? retire is. Can they get other kinds concern of job?
And so there will probaly the probably will be a lot of people doing a lot of calculations on their computers on their legal pads over the next couple of weeks.
B :
The Do GM officer say, "Okay, just give us another the quarter and we're worn about turn the corner"? Do they see a light right at of the end of tunnel or on coming train?
C :
One of things that GM say has never said it is was when it will would make money again in north America,
and we've always asked that questions, and then they've never really given us an answer.
Now, One of things that they are doing is they're trying to expand very quickly overseas,
They've been investing a lot of money in china.
They are expanding it in Russia, down in Latin it road that in America
And I think what they are betting is that if they can really rev up that engine well up dead engine,
It can sort of consider it make up for the stalling starting in American car industry.
I think the problem is that they could've been doing that faster and sooner.
And they still have these heavy costs to overcome at home sure over come it home.
So if we see a really pumpy bumpy of economy for, say, next year or so,
it's going to be really difficult for all of the Detroit companies.
B :
Micheline Maynard of the New York Times, thanks for making it through that snowstorm for us make it...... that no storm forest.
C :
Thank you. My please,Gwen.
