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CNN Live At Daybreak

Iraq Suicide Bombing; GM's Struggles

Aired May 04, 2005 - 06:31   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: Good morning to you. From the Time Warner center in New York, I'm Carol Costello, along with Chad Myers.
"Now in the News."

There has been a deadly bombing in Iraq in the Kurdish region. It happened just about five hours ago. A suicide bomber blew himself up while standing in a crowd of police recruits in Erbil. At least 47 people were killed, more than 100 wounded.

Despite the violence, the Iraqi political process moves on. Today marks the first fully day of the country's first democratically- picked government. Officials were sworn in yesterday.

New pleas for the release of an Australian hostage in Iraq. Australian officials are urging militants to let Douglas Wood go, saying the 63-year-old contractor has heart problems. A videotape shows Wood with a rifle to his head.

Army Private Lynndie England returns to a military courtroom today for the sentencing phase of her trial. She pleaded guilty to abusing Iraqi detainees. Charles Graner, the man at the center of the controversy and the father of England's baby, will testify on her behalf.

To the forecast center now.

(WEATHER REPORT)

COSTELLO: We begin this hour with another major bombing in Iraq, a suicide bomber, a police recruiting station and death -- a lot of death. This time the bomber struck the Kurds.

Let's head live to Baghdad for the latest numbers and Ryan Chilcote.

Bring us up to date -- Ryan.

RYAN CHILCOTE, CNN CORRESPONDENT: Yes, good morning, Carol.

Well, this was the single-most deadly attack in Iraq in at least two months. This suicide bomber targeting, as you said, a recruitment center in the northern Kurdish city of Erbil, a place that up until now has been comparatively quiet in comparison with other Iraqi cities.

About 300 mostly unemployed young Iraqi men had gathered at this recruiting center, responding to about a two-week media campaign to sign up for Iraq's fledgling police forces. That's when this suicide bomber struck. Not clear how the suicide bomber was able to get through the security measures that had been put in place there.

The governor of the Erbil province is telling CNN that at least 47 people were killed in that attack, at least another 100 wounded -- Carol.

COSTELLO: There has been a lot of violence in the past several weeks. I mean, some reports are saying at least 200 people have been killed just in the last couple of weeks in Iraq, and it was since this new Iraqi government was put into place. Everybody thought security was going to get better once this democratically-elected government was finally put into place, but that's not happening, Ryan.

CHILCOTE: That isn't happening. It's actually been about 200 Iraqis killed since last Thursday, quite unbelievable to even imagine. Two hundred Iraqis killed since last Thursday. That's when Iraq's at least partial government was announced at the end of last week. And this government clearly is going to have to take charge of the security situation. It's an urgent issue.

We saw these stepped-up attacks begin before the government was formed. Then, the line was that the insurgents are trying to discredit the government as it's unable to form itself. Then, after it was formed and before it was sworn in, it was trying to discredit the government.

Clearly, the insurgents are going to continue to go after Iraqi security forces, along with, of course, U.S. troops. The goal is to try and discredit this government, to try and seed chaos in this country and to try and show Iraqis that their government is not capable of providing security -- Carol.

COSTELLO: Ryan Chilcote live in Baghdad this morning.

Here in the United States, was it police brutality? That's the question facing Philadelphia police. They're looking into allegations that an officer used too much force during an arrest. Take a look. A TV news helicopter caught this arrest on tape. The video appears to show the officer striking a burglary suspect, who is already on the ground.

(BEGIN VIDEO CLIP)

COMM. SYLVESTER JOHNSON, PHILADELPHIA POLICE DEPARTMENT: I looked at the video that was supplied to me by Channel 10, and it was disturbing to me, the things that I see. I wasn't present at the time that it happened, but at the same time what we're going to do, again, we're going to do an investigation. We're going to turn our investigation over to the district attorney's office, and we will let the chips fall where they may.

(END VIDEO CLIP)

COSTELLO: The officer has been put in administrative duty pending results of this probe. And, you know, there is sure to be fallout from the arrest video throughout the day.

Bill Hemmer joins us now for a look at what's coming up on "AMERICAN MORNING."

Good morning -- Bill.

BILL HEMMER, CNN ANCHOR: Hey, Carol, good morning to you.

A lot of unanswered questions today. We'll talk to the police down in Philly, too. What happened in the minutes before the tape is rolling? And what will happen to the officer accused of excessive force? We'll get to that story this morning.

Also, prosecutors in the Michael Jackson trial are in an 11th- hour try, Carol, at damage control. They put a detective on the stand who says Jackson's ex, Debbie Rowe, once called Jackson a sociopath, quite different from that testimony that Jackson was a wonderful father, what we heard last week. Will the strategy work?

And also, there was someone they put on the stand yesterday, too, Carol, who says Michael Jackson is in debt to the tune of $20 million to $30 million ever year, totaling up to $250 million. If that's the case -- and you can read all about it today on our Web site, too, at CNN.com -- it goes to this whole theory that Michael Jackson would not want to settle with any accuser because he did not have the money to pay out. That's the theory. We'll talk to Jeff Toobin, our legal analyst, as to whether or not that will hold water with the jury out there. The defense is getting ready, too, in Santa Maria -- Carol.

COSTELLO: It takes a lot of money to run the Neverland Ranch.

HEMMER: See you later.

COSTELLO: Thank you, Bill.

HEMMER: Sure.

COSTELLO: Not guilty. Do not expect that to lead to any plea deal, so say prosecutions in the BTK case. The accused killer, Dennis Rader, did not enter a plea, so the judge entered one for him, and that would be not guilty.

This morning, the lead prosecutor says the only way to determine the case is if Dennis Rader goes to trial. Rader faces 10 counts of murder, but he will not face the death penalty because his alleged crimes took place before 1994. That's when Kansas passed its capital punishment law.

Some of his alleged victims' family members are not so happy about that.

(BEGIN VIDEO CLIP)

STEVE RELFORD, SON OF BTK VICTIM: (INAUDIBLE). It's what I believe should happen to him.

(END VIDEO CLIP)

COSTELLO: That man watched as his parents were killed. The judge set a trial date of June 27, but the district attorney says that's likely to get pushed back.

In other stories across America this Wednesday, Hispanic leaders say Jennifer Wilbanks owes them an apology. The Georgia bride-to-be made up a story about being kidnapped by a Hispanic man and white woman, but it turned out she just had cold feet about her wedding. The head of Hispanics Across America says Wilbanks should apologize to the Hispanic community first, and then to her fiance and family.

In South Carolina, one teenager is actually happy to be back in school. Troy Driscoll and his friend were rescued after being lost at sea in their small sailboat for nearly a week. Classmates treated Troy like a star, clapping for him and plastering his locker with signs.

Fifteen thousand pounds of metal and some Massachusetts middle schoolers managed to move it by hand. They teamed up to move a school bus that had pinned a classmate to another bus. A police spokesman called the feat quite impressive. The trapped student suffered minor injuries.

Still to come on DAYBREAK, the struggles at General Motors. We'll talk about what can be done to turn things around at the car making giant.

But first, here's a look at what else is making news this Wednesday morning.

(COMMERCIAL BREAK)

COSTELLO: The international markets are looking a bit brighter this morning. By the way, Tokyo's Nikkei is closed today, and that's why you don't see the numbers up. That's why that big "closed" thing is up there. The London FTSE down 13, the German DAX almost 19.5 points this morning.

Your news, money, weather and sports. It is 6:45 Eastern. Here's what's all new this morning.

Another suicide bombing in Iraq; this time at least 47 killed, 100 more wounded in the Kurdish city of Erbil. Young police recruits were the target.

In money news, Amazon.com has teamed up with Internet wine retailer wine.com. Amazon will direct consumers to the Web site, which has the technology to deal with various state regulations.

In culture, was the chairman of the board a bagman for the mafia? You've heard it before. Well, now an authorized biography of Frank Sinatra alleges Sinatra had close ties to organized crime. An excerpt is in "Vanity Fair."

In sports, the Washington Wizards play the Chicago Bulls tonight in game five of their playoff series, but without Kwame Brown. The Wizards have suspended the former Georgia high school star.

To the forecast center.

(WEATHER REPORT)

COSTELLO: General Motors is not exactly on fire. In fact, it seems to be in big trouble. And if it gets worse, it could spell more economic doom for tens of thousands of you who work in the manufacturing industry. Take a look at April's sales figures. General Motors is posting a 4.2 percent loss. Just look at how that stacks up against some of the other auto companies. Toyota, for example, up almost 26 percent. Nissan up almost 31 percent -- actually, almost 32 percent.

This news comes for General Motors a day after a major recall;1.2 million GM trucks and SUVs are affected in so-called Salt Belt states. The National Highway Traffic Safety Administration says the brakes on those models are in danger of corrosion.

So, what should GM be doing to get back on track? Automotive analyst Rebecca Lindland has some answers to that question.

Good morning, Linda (sic).

REBECCA LINDLAND, AUTOMOTIVE ANALYST, GLOBAL INSIGHT: Good morning. It's Rebecca.

COSTELLO: I'm sorry. I'm sorry, Rebecca.

LINDLAND: That's OK. It happens.

COSTELLO: I don't know why I said that. But welcome to DAYBREAK. We appreciate your being here.

LINDLAND: Thanks, Carol. Thank you.

COSTELLO: You know, you look at the profit margin, or the profit loss for General Motors, and in the first quarter of 2005 General Motors lost $1.1 billion. How come?

LINDLAND: It's really a combination of things. Consumers have moved from a traditional SUV, like the Chevy Suburban, the Chevy Tahoe, into more kind of fuel-efficient friendlier crossovers, which are basically car-built SUVs. So, they drive nicer. They don't weigh as much. They get better fuel mileage, something like the Ford Escape or Mercury Mariner.

COSTELLO: Well, and on top of all of that, they've had a number of recalls. From 1999 all the way up to 2001, the GMC Tahoe, the GMC Yukon, the Sierra, the Chevrolet Suburban, the Silverado, the Cadillac Escalade all recalled. I mean...

LINDLAND: The list goes on.

COSTELLO: I just don't understand how that could happen year after year. LINDLAND: I know. Part of it is there is just a tremendous amount of pressure to get vehicles to market as soon as possible. That's kind of what they're under right now as they're rolling out all-new versions of those particular vehicles. So, they're coming out next year, and they've already had to move up their timeline.

The other reason they are under such financial pressure is because those big trucks make money for them. They don't make money on cars. So, they pay the bills. And so, that's why Wall Street is so nervous. When they see consumers shifting away from these big trucks, it hits the bottom line harder than if they were to move away from compact cars, for instance, where GM loses money.

COSTELLO: So, is it more their business model the problem? Because every article I have read has put the blame on the union and high health care costs.

LINDLAND: It's certainly a pressure. And the reason the articles oftentimes focus on that, myself included, is because about $1,500 of every single vehicle, whether it's a car or a truck at GM, goes towards paying doctors' bills, medical bills. GM spent more on health care than on steel last year. It's a very poor business model.

The Asian manufacturers don't have that kind of pressures. So, it's an immediate competitive advantage. At the same token, the union argues, hey, if GM put out the right products, consumers would buy them.

So, it's a combination of things, where anytime you have a manufacturer spending more on health care than on steel, you have a big problem. But GM is not entirely innocent in this either.

COSTELLO: So, Rebecca, look into the future for us, if you will. Will General Motors turn around? I mean, it crosses your mind that General Motors is in such big trouble that it might go out of business.

LINDLAND: Don't say that. I don't see it going out of business. I think that they will continue to struggle with market share. We see market share suddenly for GM at about 22 percent. Right now, it's running at about 25.5 percent. Even last year it was at 28 percent last April.

So, every point of market share is 170,000 units of vehicles lost, and it's lost to everybody, not just the Asians. But, you know, Ford is doing quite well this year with their crossovers. Chrysler is doing incredibly well with their Town and Country, their Chrysler 300. So, it's not just GM that, you know, is in the tank here. Other manufacturers are basically taking market share from them.

What we think is going to happen is that they do have some new products coming out, but there is such a shift in demographics as Generation Y comes up that GM has got to respond to that more aggressively than they are doing right now.

COSTELLO: Well, we'll see what happens. LINDLAND: I know.

COSTELLO: Rebecca Lindland, thank you for joining DAYBREAK this morning. We appreciate it.

LINDLAND: Thanks, Carol.

COSTELLO: You are watching DAYBREAK. We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: The high cost of war. "AMERICAN MORNING" continues its weeklong look at this topic. Let's check in with Soledad for more.

Good morning.

SOLEDAD O'BRIEN, CNN ANCHOR: Hey, Carol, good morning to you.

There's a new report out from the joint chiefs chairman. He says U.S. forces are stretched thin. That could limit America's ability to react quickly to other conflicts. The news comes, of course, as the military is struggling to sign new recruits, and they're trying a new strategy. This morning, we take a look at that strategy in our special series. It's called "Battle Fatigue."

Also this morning, a new study explains why teenager drivers are more prone to accidents. Scientists say their brains are wired differently. So, how do you keep your kids safe behind the wheel? We're going to have some tips ahead at the top of the hour in just a couple of minutes on "AMERICAN MORNING" -- Carol.

COSTELLO: All right, thank you.

It's time to give away a DAYBREAK coffee mug now.

CHAD MYERS, CNN METEOROLOGIST: I'm just laughing at their brains are wired differently. Yes, they want to use the vertical pedal instead of the horizontal one in the middle.

COSTELLO: Yes.

MYERS: They all want to go fast.

COSTELLO: That's true.

MYERS: Here are the questions from yesterday and the winner for today's mug. The federal government sold wild horses to Indian tribes for what price? That was $1 each. And where is Hilton's new underwater restaurant? And that is in the Maldives.

And Jim Shockley from Derry, New Hampshire, is our winner today. Congratulations, Jim. You will own a new CNN DAYBREAK coffee mug.

Now your chances for tomorrow. Here we go. How long was the Buffalo firefighter in a coma? And what role did Meinhardt Raabe play in the "Wizard of Oz?"

CNN.com/daybreak. Both of those were answered in this hour. So, no excuses for that.

COSTELLO: That's right.

MYERS: Lots of correct answers today.

COSTELLO: Yes, there were, and thanks for playing, because we always enjoy reading your little comments after you answer you the questions.

You're watching DAYBREAK for a Wednesday.

(COMMERCIAL BREAK)

COSTELLO: "Now in the News.".

A man strapped with explosives detonates himself in the midst of police recruits in northern Iraq. At least 47 killed, 100 wounded.

New pleas for the release of an Australian hostage in Iraq. Australia's foreign minister is urging militants to let Douglas Wood go, saying the 63-year-old contractor has heart problems. A videotape shows Wood with a rifle to his head.

Army Private Lynndie England returns to a military courtroom today for the sentencing phase of her trial. She pleaded guilty to abusing Iraqi detainees. Charles Graner, the man at the center of the controversy and the father of England's baby, will testify on her behalf.

Prosecutors are close to resting their case in Michael Jackson's child molestation trial. They're calling their last scheduled witness this morning. A source familiar with the case says actor Macaulay Culkin will be among the first defense witnesses.

That does it for us. I'm Carol Costello along with Chad Myers. Hey, do you want to say "AMERICAN MORNING" starts right now?

MYERS: "AMERICAN MORNING" starts right now. Stay tuned. Severe weather moving into western Florida.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.


Aired May 4, 2005 - 06:31   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Good morning to you. From the Time Warner center in New York, I'm Carol Costello, along with Chad Myers.
"Now in the News."

There has been a deadly bombing in Iraq in the Kurdish region. It happened just about five hours ago. A suicide bomber blew himself up while standing in a crowd of police recruits in Erbil. At least 47 people were killed, more than 100 wounded.

Despite the violence, the Iraqi political process moves on. Today marks the first fully day of the country's first democratically- picked government. Officials were sworn in yesterday.

New pleas for the release of an Australian hostage in Iraq. Australian officials are urging militants to let Douglas Wood go, saying the 63-year-old contractor has heart problems. A videotape shows Wood with a rifle to his head.

Army Private Lynndie England returns to a military courtroom today for the sentencing phase of her trial. She pleaded guilty to abusing Iraqi detainees. Charles Graner, the man at the center of the controversy and the father of England's baby, will testify on her behalf.

To the forecast center now.

(WEATHER REPORT)

COSTELLO: We begin this hour with another major bombing in Iraq, a suicide bomber, a police recruiting station and death -- a lot of death. This time the bomber struck the Kurds.

Let's head live to Baghdad for the latest numbers and Ryan Chilcote.

Bring us up to date -- Ryan.

RYAN CHILCOTE, CNN CORRESPONDENT: Yes, good morning, Carol.

Well, this was the single-most deadly attack in Iraq in at least two months. This suicide bomber targeting, as you said, a recruitment center in the northern Kurdish city of Erbil, a place that up until now has been comparatively quiet in comparison with other Iraqi cities.

About 300 mostly unemployed young Iraqi men had gathered at this recruiting center, responding to about a two-week media campaign to sign up for Iraq's fledgling police forces. That's when this suicide bomber struck. Not clear how the suicide bomber was able to get through the security measures that had been put in place there.

The governor of the Erbil province is telling CNN that at least 47 people were killed in that attack, at least another 100 wounded -- Carol.

COSTELLO: There has been a lot of violence in the past several weeks. I mean, some reports are saying at least 200 people have been killed just in the last couple of weeks in Iraq, and it was since this new Iraqi government was put into place. Everybody thought security was going to get better once this democratically-elected government was finally put into place, but that's not happening, Ryan.

CHILCOTE: That isn't happening. It's actually been about 200 Iraqis killed since last Thursday, quite unbelievable to even imagine. Two hundred Iraqis killed since last Thursday. That's when Iraq's at least partial government was announced at the end of last week. And this government clearly is going to have to take charge of the security situation. It's an urgent issue.

We saw these stepped-up attacks begin before the government was formed. Then, the line was that the insurgents are trying to discredit the government as it's unable to form itself. Then, after it was formed and before it was sworn in, it was trying to discredit the government.

Clearly, the insurgents are going to continue to go after Iraqi security forces, along with, of course, U.S. troops. The goal is to try and discredit this government, to try and seed chaos in this country and to try and show Iraqis that their government is not capable of providing security -- Carol.

COSTELLO: Ryan Chilcote live in Baghdad this morning.

Here in the United States, was it police brutality? That's the question facing Philadelphia police. They're looking into allegations that an officer used too much force during an arrest. Take a look. A TV news helicopter caught this arrest on tape. The video appears to show the officer striking a burglary suspect, who is already on the ground.

(BEGIN VIDEO CLIP)

COMM. SYLVESTER JOHNSON, PHILADELPHIA POLICE DEPARTMENT: I looked at the video that was supplied to me by Channel 10, and it was disturbing to me, the things that I see. I wasn't present at the time that it happened, but at the same time what we're going to do, again, we're going to do an investigation. We're going to turn our investigation over to the district attorney's office, and we will let the chips fall where they may.

(END VIDEO CLIP)

COSTELLO: The officer has been put in administrative duty pending results of this probe. And, you know, there is sure to be fallout from the arrest video throughout the day.

Bill Hemmer joins us now for a look at what's coming up on "AMERICAN MORNING."

Good morning -- Bill.

BILL HEMMER, CNN ANCHOR: Hey, Carol, good morning to you.

A lot of unanswered questions today. We'll talk to the police down in Philly, too. What happened in the minutes before the tape is rolling? And what will happen to the officer accused of excessive force? We'll get to that story this morning.

Also, prosecutors in the Michael Jackson trial are in an 11th- hour try, Carol, at damage control. They put a detective on the stand who says Jackson's ex, Debbie Rowe, once called Jackson a sociopath, quite different from that testimony that Jackson was a wonderful father, what we heard last week. Will the strategy work?

And also, there was someone they put on the stand yesterday, too, Carol, who says Michael Jackson is in debt to the tune of $20 million to $30 million ever year, totaling up to $250 million. If that's the case -- and you can read all about it today on our Web site, too, at CNN.com -- it goes to this whole theory that Michael Jackson would not want to settle with any accuser because he did not have the money to pay out. That's the theory. We'll talk to Jeff Toobin, our legal analyst, as to whether or not that will hold water with the jury out there. The defense is getting ready, too, in Santa Maria -- Carol.

COSTELLO: It takes a lot of money to run the Neverland Ranch.

HEMMER: See you later.

COSTELLO: Thank you, Bill.

HEMMER: Sure.

COSTELLO: Not guilty. Do not expect that to lead to any plea deal, so say prosecutions in the BTK case. The accused killer, Dennis Rader, did not enter a plea, so the judge entered one for him, and that would be not guilty.

This morning, the lead prosecutor says the only way to determine the case is if Dennis Rader goes to trial. Rader faces 10 counts of murder, but he will not face the death penalty because his alleged crimes took place before 1994. That's when Kansas passed its capital punishment law.

Some of his alleged victims' family members are not so happy about that.

(BEGIN VIDEO CLIP)

STEVE RELFORD, SON OF BTK VICTIM: (INAUDIBLE). It's what I believe should happen to him.

(END VIDEO CLIP)

COSTELLO: That man watched as his parents were killed. The judge set a trial date of June 27, but the district attorney says that's likely to get pushed back.

In other stories across America this Wednesday, Hispanic leaders say Jennifer Wilbanks owes them an apology. The Georgia bride-to-be made up a story about being kidnapped by a Hispanic man and white woman, but it turned out she just had cold feet about her wedding. The head of Hispanics Across America says Wilbanks should apologize to the Hispanic community first, and then to her fiance and family.

In South Carolina, one teenager is actually happy to be back in school. Troy Driscoll and his friend were rescued after being lost at sea in their small sailboat for nearly a week. Classmates treated Troy like a star, clapping for him and plastering his locker with signs.

Fifteen thousand pounds of metal and some Massachusetts middle schoolers managed to move it by hand. They teamed up to move a school bus that had pinned a classmate to another bus. A police spokesman called the feat quite impressive. The trapped student suffered minor injuries.

Still to come on DAYBREAK, the struggles at General Motors. We'll talk about what can be done to turn things around at the car making giant.

But first, here's a look at what else is making news this Wednesday morning.

(COMMERCIAL BREAK)

COSTELLO: The international markets are looking a bit brighter this morning. By the way, Tokyo's Nikkei is closed today, and that's why you don't see the numbers up. That's why that big "closed" thing is up there. The London FTSE down 13, the German DAX almost 19.5 points this morning.

Your news, money, weather and sports. It is 6:45 Eastern. Here's what's all new this morning.

Another suicide bombing in Iraq; this time at least 47 killed, 100 more wounded in the Kurdish city of Erbil. Young police recruits were the target.

In money news, Amazon.com has teamed up with Internet wine retailer wine.com. Amazon will direct consumers to the Web site, which has the technology to deal with various state regulations.

In culture, was the chairman of the board a bagman for the mafia? You've heard it before. Well, now an authorized biography of Frank Sinatra alleges Sinatra had close ties to organized crime. An excerpt is in "Vanity Fair."

In sports, the Washington Wizards play the Chicago Bulls tonight in game five of their playoff series, but without Kwame Brown. The Wizards have suspended the former Georgia high school star.

To the forecast center.

(WEATHER REPORT)

COSTELLO: General Motors is not exactly on fire. In fact, it seems to be in big trouble. And if it gets worse, it could spell more economic doom for tens of thousands of you who work in the manufacturing industry. Take a look at April's sales figures. General Motors is posting a 4.2 percent loss. Just look at how that stacks up against some of the other auto companies. Toyota, for example, up almost 26 percent. Nissan up almost 31 percent -- actually, almost 32 percent.

This news comes for General Motors a day after a major recall;1.2 million GM trucks and SUVs are affected in so-called Salt Belt states. The National Highway Traffic Safety Administration says the brakes on those models are in danger of corrosion.

So, what should GM be doing to get back on track? Automotive analyst Rebecca Lindland has some answers to that question.

Good morning, Linda (sic).

REBECCA LINDLAND, AUTOMOTIVE ANALYST, GLOBAL INSIGHT: Good morning. It's Rebecca.

COSTELLO: I'm sorry. I'm sorry, Rebecca.

LINDLAND: That's OK. It happens.

COSTELLO: I don't know why I said that. But welcome to DAYBREAK. We appreciate your being here.

LINDLAND: Thanks, Carol. Thank you.

COSTELLO: You know, you look at the profit margin, or the profit loss for General Motors, and in the first quarter of 2005 General Motors lost $1.1 billion. How come?

LINDLAND: It's really a combination of things. Consumers have moved from a traditional SUV, like the Chevy Suburban, the Chevy Tahoe, into more kind of fuel-efficient friendlier crossovers, which are basically car-built SUVs. So, they drive nicer. They don't weigh as much. They get better fuel mileage, something like the Ford Escape or Mercury Mariner.

COSTELLO: Well, and on top of all of that, they've had a number of recalls. From 1999 all the way up to 2001, the GMC Tahoe, the GMC Yukon, the Sierra, the Chevrolet Suburban, the Silverado, the Cadillac Escalade all recalled. I mean...

LINDLAND: The list goes on.

COSTELLO: I just don't understand how that could happen year after year. LINDLAND: I know. Part of it is there is just a tremendous amount of pressure to get vehicles to market as soon as possible. That's kind of what they're under right now as they're rolling out all-new versions of those particular vehicles. So, they're coming out next year, and they've already had to move up their timeline.

The other reason they are under such financial pressure is because those big trucks make money for them. They don't make money on cars. So, they pay the bills. And so, that's why Wall Street is so nervous. When they see consumers shifting away from these big trucks, it hits the bottom line harder than if they were to move away from compact cars, for instance, where GM loses money.

COSTELLO: So, is it more their business model the problem? Because every article I have read has put the blame on the union and high health care costs.

LINDLAND: It's certainly a pressure. And the reason the articles oftentimes focus on that, myself included, is because about $1,500 of every single vehicle, whether it's a car or a truck at GM, goes towards paying doctors' bills, medical bills. GM spent more on health care than on steel last year. It's a very poor business model.

The Asian manufacturers don't have that kind of pressures. So, it's an immediate competitive advantage. At the same token, the union argues, hey, if GM put out the right products, consumers would buy them.

So, it's a combination of things, where anytime you have a manufacturer spending more on health care than on steel, you have a big problem. But GM is not entirely innocent in this either.

COSTELLO: So, Rebecca, look into the future for us, if you will. Will General Motors turn around? I mean, it crosses your mind that General Motors is in such big trouble that it might go out of business.

LINDLAND: Don't say that. I don't see it going out of business. I think that they will continue to struggle with market share. We see market share suddenly for GM at about 22 percent. Right now, it's running at about 25.5 percent. Even last year it was at 28 percent last April.

So, every point of market share is 170,000 units of vehicles lost, and it's lost to everybody, not just the Asians. But, you know, Ford is doing quite well this year with their crossovers. Chrysler is doing incredibly well with their Town and Country, their Chrysler 300. So, it's not just GM that, you know, is in the tank here. Other manufacturers are basically taking market share from them.

What we think is going to happen is that they do have some new products coming out, but there is such a shift in demographics as Generation Y comes up that GM has got to respond to that more aggressively than they are doing right now.

COSTELLO: Well, we'll see what happens. LINDLAND: I know.

COSTELLO: Rebecca Lindland, thank you for joining DAYBREAK this morning. We appreciate it.

LINDLAND: Thanks, Carol.

COSTELLO: You are watching DAYBREAK. We'll be right back.

(COMMERCIAL BREAK)

COSTELLO: The high cost of war. "AMERICAN MORNING" continues its weeklong look at this topic. Let's check in with Soledad for more.

Good morning.

SOLEDAD O'BRIEN, CNN ANCHOR: Hey, Carol, good morning to you.

There's a new report out from the joint chiefs chairman. He says U.S. forces are stretched thin. That could limit America's ability to react quickly to other conflicts. The news comes, of course, as the military is struggling to sign new recruits, and they're trying a new strategy. This morning, we take a look at that strategy in our special series. It's called "Battle Fatigue."

Also this morning, a new study explains why teenager drivers are more prone to accidents. Scientists say their brains are wired differently. So, how do you keep your kids safe behind the wheel? We're going to have some tips ahead at the top of the hour in just a couple of minutes on "AMERICAN MORNING" -- Carol.

COSTELLO: All right, thank you.

It's time to give away a DAYBREAK coffee mug now.

CHAD MYERS, CNN METEOROLOGIST: I'm just laughing at their brains are wired differently. Yes, they want to use the vertical pedal instead of the horizontal one in the middle.

COSTELLO: Yes.

MYERS: They all want to go fast.

COSTELLO: That's true.

MYERS: Here are the questions from yesterday and the winner for today's mug. The federal government sold wild horses to Indian tribes for what price? That was $1 each. And where is Hilton's new underwater restaurant? And that is in the Maldives.

And Jim Shockley from Derry, New Hampshire, is our winner today. Congratulations, Jim. You will own a new CNN DAYBREAK coffee mug.

Now your chances for tomorrow. Here we go. How long was the Buffalo firefighter in a coma? And what role did Meinhardt Raabe play in the "Wizard of Oz?"

CNN.com/daybreak. Both of those were answered in this hour. So, no excuses for that.

COSTELLO: That's right.

MYERS: Lots of correct answers today.

COSTELLO: Yes, there were, and thanks for playing, because we always enjoy reading your little comments after you answer you the questions.

You're watching DAYBREAK for a Wednesday.

(COMMERCIAL BREAK)

COSTELLO: "Now in the News.".

A man strapped with explosives detonates himself in the midst of police recruits in northern Iraq. At least 47 killed, 100 wounded.

New pleas for the release of an Australian hostage in Iraq. Australia's foreign minister is urging militants to let Douglas Wood go, saying the 63-year-old contractor has heart problems. A videotape shows Wood with a rifle to his head.

Army Private Lynndie England returns to a military courtroom today for the sentencing phase of her trial. She pleaded guilty to abusing Iraqi detainees. Charles Graner, the man at the center of the controversy and the father of England's baby, will testify on her behalf.

Prosecutors are close to resting their case in Michael Jackson's child molestation trial. They're calling their last scheduled witness this morning. A source familiar with the case says actor Macaulay Culkin will be among the first defense witnesses.

That does it for us. I'm Carol Costello along with Chad Myers. Hey, do you want to say "AMERICAN MORNING" starts right now?

MYERS: "AMERICAN MORNING" starts right now. Stay tuned. Severe weather moving into western Florida.

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