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GM Calls Bankruptcy a New Beginning; Air France Flight Missing Over Atlantic; Soldiers Shot in Arkansas Drive-By

Aired June 01, 2009 - 13:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Well, CNN's Sean Callebs is at a GM plant that was built to be a model for the industry. Now it's being idled. And Ali Velshi charts the carmaker's one-way journey to an uncertain future, but even uncertain would be an improvement.

Let's go ahead and take a look at this map. Each dot is a GM factory or parts center that's actually being closed in Chapter 11. All but two are new additions to the downsizing plan.

Three GM plants are shutting down for now but could reopen down the road. That list includes the former Saturn plant in Spring Hill, Tennessee. CNN's Sean Callebs is there.

And Sean, this must come as a particular blow to Spring Hill, because this community formed because of this plant.

SEAN CALLEBS, CNN CORRESPONDENT: Exactly. If you talk to people, as we have done for the past 48 hours here, people, they came from a Van Nuys plant in California that shut down. They came here from Flint, Michigan, a GM plant that shut down. People who transferred here. They've been here for 20-plus years. They've built lives here. They've had their children here. They own homes here. A lot of people have collectively been holding their breath over the past few weeks, wondering what was going to happen.

As one employee told us, "Look, it wasn't the worst news." They aren't definitely closing it. But they are going to use these two words that we now are going to know, this "stand by." It is going to shut down. And hope the economy gets better. And if it does, then theoretically, this Saturn plant could reopen and begin turning out cars once again.

We had a chance to speak with Eric Sasaki a short while ago. He was a Van Nuys transplant who's been here 19 years. A very bitter pill for him. Now he has to decide, do I follow the job or do I try to make a go of it here where I built my life?

(BEGIN VIDEO CLIP)

ERIC SASAKI, GM WORKER: When we had no news or we didn't know anything. It's causing a lot of anxiety for me and, I think, for a lot of other people in the plant. I think the announcement today, at least we know that we're going to have to make decisions and we have information now to make those decisions.

And, of course, I'm going to have to, and those especially with families are going to have to try to decide what the best opportunity is in the long term.

(END VIDEO CLIP)

CALLEBS: Look behind me. You see that Saturn sign. This was going to be the shiny new symbol. GM was going to compete with foreign imports. They were going to be fuel efficient. They were going to take back some of the market they lost.

Well, the hype over Saturn never really matched what the final product was. And two years ago, they stopped making Saturn at this plant. In fact, now it's called the GM Spring Hill Manufacturing Plant.

There are 3,000 jobs here; 2,500, Kyra, are going to be gone by the end of the year.

I want to talk about one thing real quickly, however. A lot of these union employees, once they lose their jobs, are going to get a certain amount of benefits. With their unemployment and with pay, they're going to get from the contract, they're going to get about 80 percent of their full pay, if they have been here more than 20 years.

Now, if they've been here ten years they'll get a percentage, less than ten years a smaller percentage after that. There is some kind of stop gap in there. But it is going to be tough. Unemployment in this area is already about 15 percent -- Kyra.

PHILLIPS: And we're going to keep following up with the story. Sean Callebs, thanks so much.

Next hour we're going to check in with CNN's Deb Feyerick. She's at a GM plant in Warren, Michigan, that so far, at least, is being speared.

CNN's Ali Velshi knows how the wheels came off. That's for sure. He joins me now from Toronto with how GM is retooling for a leaner future.

I guess, Ali, first off, what other GM plants are confirmed to be closing?

ALI VELSHI, CNN CORRESPONDENT: Well, take a look at that map again that you had up there. You can see the heavy, heavy concentration in the Midwest, in the Michigan area where -- where a lot of these plants are closing. So again those areas that are already hit are being hit yet again.

There are a number of plants closing; 12 of them closing -- 12 new plants that have not been added before, including parts centers and manufacturing plants. Those are assembly plants, stamping plants. I mean, the bottom line is they are cutting out capacity. They need to be a smaller company.

Again, you look back at what Ford did. They started this in 2005 with its company without being under bankruptcy. But they refinanced and retooled their company at a time when you could still get credit, when people were still thinking it's a good bet.

General Motors has a much tougher road ahead of it. That's why it's taking that much money. The important thing is who owns this company? I think maybe you've got a pie chart of the. But the U.S. company -- the U.S. government owns 60 percent, or will own 60 percent of General Motors. The Canadian government will own a little better than 12 percent. The bond holders, who are the people who loaned GM money, 10 percent. And the United Auto Workers 17.5 percent.

These are all people that who don't want to own shares in General Motors. They'd like to get their money out. So the silver lining here, Kyra, is that they may all come together in a way that you've never seen before, because they've got to make this company smaller and leaner and meaner, making the cars people want to buy so it can become profitable again and everybody can get their money out of it.

PHILLIPS: Well, you look at the U.S. government and you look at 60 percent. And you think, OK, how can the Obama administration, you know, basically run the auto industry and run the country?

VELSHI: Yes. And they're going to make -- they've made a very clear point that they don't want to run the industry. They've hired a consultancy that will try and find the right people to be part of GM, will try and keep it on track.

The government said -- you heard President Obama say several times he does not want to be involved in the day-to-day running of the company. There are a lot of people that fear the government is not a good manager. The government is not a good business partner, and they're understanding that.

Keep in mind that the American people don't want the government involved. The government doesn't want the government involved. This is very different from forced nationalization, where the government takes over the company because they want to control the resources or they want to control and dictate the policy.

This is sort of a worst-case scenario. And I think that everybody wants to get out of it fairly soon. I don't know that that will happen, Kyra, how long it will take the taxpayer to recover their investment. But that's the -- that's the goal.

PHILLIPS: All right. Ali Velshi, we'll keep talking. Appreciate it.

And before we move on, you should know that we're going to crunch the numbers in just a few minutes with GM's chief financial officer, Ray Young. That's at half past the hour right here in the CNN NEWSROOM.

Now let's turn to the disappearance of an Air France plane with 228 people on board. Flight 447 was en route from Rio de Janeiro to Paris when it lost contact with ground controllers.

The head of Air France says the plane is likely the victim of a huge catastrophe. An Air France spokeswoman said that the plane may have been hit by lightning when flying through strong thunderstorms over the Atlantic Ocean.

The plane sent an automatic message about four hours ago into the flight, indicating that it had suffered major electrical problems and had lost pressure.

The Brazil air force has launched a search over the Atlantic for any sign of that aircraft.

More on the weather factor now of the disappearance of that Air France flight. Let's bring in our severe weather expert, Chad Myers at the CNN Weather Center.

I know you've been tracking it for a number of hours now, Chad.

CHAD MYERS, CNN METEOROLOGIST: I have. A lot of calculations. How fast the plane was flying, when it lost radar contact. It was actually away from the radar, too far away from the radar off Brazil to even be on radar for that blip to go away.

It had flown out of the signal range for at least 30 minutes. We knew where it left signal range. We knew when it sent out the beacon. So you kind of multiply by 500 miles per hour.

We do know what the flight tracks look like across the Atlantic. There's Rio. Up here would be Charles de Gaulle. And then it flew out into the ocean and, as it did, that's when the radar was just too far away for it to see.

This is about 1,800 miles from when it took off. You do the addition, you do the subtraction. About 3 hours and 45 minutes worth of flight time when this automatic signal went off.

So there's no reason to think that this is a catastrophic event where no one could survive. We know what happened there in the Hudson River. Planes can land in water. They can land in water safely. There are floats in the plane. This is a very deep part of the ocean.

But here's where it lost radar contact. This is the last radar in Brazil. It was expected to find some kind of contact here up from Dakar in -- right over here, this is Africa. It never made it to this TRACON center. It never made it right along this line, somewhere in this vicinity. And this is a very big ocean. Somewhere in that vicinity is where that plane actually hit the water.

But there's no reason to think that those people couldn't be out there in a life raft somewhere. And the people down there in Brazil and all -- everywhere I know of, all -- even Hercules airplanes out there looking for survivors, flotsam, jetsam, anything that might be in the water now, Kyra.

PHILLIPS: I think that's what everybody's hoping for.

MYERS: Yes.

PHILLIPS: Chad, thanks.

MYERS: Sure.

PHILLIPS: Developing story now just into CNN. Two soldiers in Little Rock, Arkansas, have been shot in a drive-by shooting. It actually happened outside an Army Navy recruiting center. Police tell CNN now that one suspect is in custody.

Joining me now on the phone, Police Lieutenant Terry Hastings.

Lieutenant Hastings, do you know the condition of the victims at this point? I understand one may have been killed.

LT. TERRY HASTINGS, LITTLE ROCK POLICE (via phone): One of the victims here was wounded gravely. He died a short time ago at an area hospital. The other one will survive. His injuries are not life- threatening.

PHILLIPS: All right. So can you tell us about these -- these two individuals? I was reading -- and I'm not sure if this is true or not, that they had come back from serving in the military, and they were acting as recruiters there outside the post. Is that right?

HASTINGS: No, that is not correct.

PHILLIPS: OK.

HASTINGS: They are two individuals that had finished their basic training and were here recruiting. So they were recruiters. They were here for an unknown amount of time. I've not confirmed that with the Army, the length of time they were actually here recruiting.

But they have not been in the active service just yet. They are active, but just have not been to Iraq or any other facility just yet.

PHILLIPS: OK. So Lieutenant, what do we know about the suspect?

HASTINGS: Right now we know very little about the suspect. We have him in custody. He's at our detectives, where he's being questioned. We have the vehicle. The vehicle did have an assault rifle in it. There's also two bags in the backseat. So we've asked our bomb squad to look at those packs to make sure that we don't have any type of explosive device in there.

Once we get that out, then we'll process the vehicle, as we would any homicide. And then we'll start questioning the suspect. He -- he was seen driving east. Our officer stopped. He gave himself up without incident. So he -- he is in our custody. And we'll know a little more as the day...

PHILLIPS: Lieutenant, are you still with me?

HASTINGS: I'm here.

PHILLIPS: Sorry about that. I thought I lost you. Do you know if he in any way is anti-military, anti-war? Did he -- did he say anything during that shooting or after he was taken into custody? HASTINGS: I do not have that information just yet. That's something that -- that we'll be questioning him about as we go. Most of our investigators here are on the scene, the two scenes, working through that. He has not been officially questioned just yet. We'll -- we'll hold him for a short time in a cell. And then we'll begin questioning once most of our investigators get back to our -- to our detective office.

PHILLIPS: All right. We'd sure like to get all that information as soon as possible.

Lieutenant Terry Hastings, I appreciate your time.

HASTINGS: OK.

PHILLIPS: Well, he was a target for most of his career. A doctor who did late-term abortions shot again, this time in church, and this time fatally. The suspect's in custody. We're going to tell you what we know about him, as well.

(COMMERCIAL BREAK)

PHILLIPS: Laid off as she lay in a hospital bed. A teacher fighting for her life loses her job. It's our first "what the...?" of the week.

(COMMERCIAL BREAK)

PHILLIPS: Just got a shot of the suspect who is now in custody for the shooting of two Army recruiters in Little Rock, Arkansas. We're being told now that one of those recruiters has died. There he is right there. There's the suspect, being taken out of the police car, being brought in for questioning. It happened just outside the Army/Navy recruiting center there in Little Rock. He is now being questioned. We don't know anything about his background, why he did -- his motives behind that drive-by shooting.

But once again we're able to talk to Police Lieutenant Terry Hastings there in Little Rock. And he did confirm that one of those recruiters has been shot dead. The other, the wounds are serious, we are told, but not life threatening.

Once again, this is the suspect right now in custody. Trying to work more information on why he would open fire on two Army/Navy recruiters just outside the recruiting center there in Little Rock, Arkansas.

All right. Let's get a look at the markets right now. Dow Industrials on the big board. Looks like it is up almost 3 points. Two companies that have received billions in government aid are now being dropped -- from the Dow. General Motors, Citigroup. They're going to be replaced on the 30-stock list by Cisco Systems and Travelers.

GM has been on the Dow list for 83 years, second only to General Electric. GM also is being dropped from the New York Stock Exchange effective tomorrow, although it does have the right to appeal.

All right, so here's a "how does all this affect me" moment. Say that you still have a Chevy or a Buick in the driveway. Does GM still have your back? Or maybe you want to trade in your old Tahoe for a sweet new Escalade. Is that such a good idea? Let me ask CNN's personal finance editor, Gerri Willis -- Gerri.

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hi there, Kyra.

Well, the takeaway here is don't panic. Even if GM is this bankruptcy, the company continues to operate. Cars will still be sold. You'll still be able to get parts and service.

And if you own a GM car, life won't change too dramatically. The government has already stepped in and said it would guarantee warranties from companies in bankruptcy during the restructuring period. GM has said it will honor warranties if it goes into bankruptcy.

If you own a Saturn, a Saab or a Hummer, car models that GM is trying to sell, the new owner will probably take over those warranties. The contract doesn't usually change. That's according to "Consumer Reports." But going forward, there may be modifications to these warranties.

Now, if you bought a dealer-specific warranty instead of a factory warranty for your GM car, your risk is bigger, because dealers go out of business more easily. But experts say there's little chance that GM will liquidate -- Kyra.

PHILLIPS: All right. So what should people be concerned about then?

WILLIS: All right. Well, let's look at the impact of a GM bankruptcy here. First of all, your dealership clauses. This is more of a convenience issue, but if you're used to going to a specific dealership, you're going to have to go somewhere else, and it may take longer to get your car serviced.

But those closings won't happen for at least a year, so you can plan ahead. Some parts may be harder to find. Specific factory parts for certain models may be harder to find, because auto parts makers aren't seeing the same demand, and they're having their own financial problems right now. Routine items like brake pads should still be out there.

OK. Car depreciation becomes faster. A new car depreciates 20 percent once you drive it off the lot. But a car from a troubled automaker like GM may depreciate much faster, say 30 percent. So if you like to trade in your GM car every few years, this is a risk you're taking, if you decide you want to buy one of those cars.

PHILLIPS: All right. So what can you do if your dealership closes?

WILLIS: Find a new place to get your car serviced. Go to GM's locator tool on its Web site. But if it's just routine maintenance you need, like oil changes, just go to an independent shop for that. Not only will it be more convenient, but it's usually less expensive than dealerships. Just make sure you copy your receipts, have them on hand just in case you need them -- Kyra.

PHILLIPS: All right. Gerri Willis, I was struggling over the new look at the big board. Usually we go to Wall Street, you know, and...

WILLIS: That's right.

PHILLIPS: Got a fancy new board here. So actually Dow industrials are up 210. I didn't read it properly. So I want to apologize for that.

So when did this happen? We got a new little -- a new graphic here?

WILLIS: Yes. I think it happened late last week. You know, and the beauty of this is it's a little bit easier to read, right? It's a little more consumer-friendly. You've got to be thankful for small gifts. Right?

Even though it changes up, but the Dow up about 2 1/2 points here. Big surprise on the day that GM files Chapter 11. You've got to think that the expectations might have been that the Dow might fall. But, of course, as we know, GM out of the Dow industrials, the 30 Dow industrials for the first time in many, many years.

PHILLIPS: All right. Gerri, thanks.

WILLIS: My pleasure.

PHILLIPS: So how is the Obama administration going to pull this off? How do you save an icon and keep your day job? We're going to go to the White House, ask an insider. We're also going to run your questions by him. E-mail us: MailToTheChief@CNN.com.

(COMMERCIAL BREAK)

PHILLIPS: So you want to trade places with the White House right now? Not only is trying to save an icon; there's also a superpower to run. Jared Bernstein is the vice president's chief economist and member of the auto task force.

Jared, GM met your deadline to restructure or file for bankruptcy. So how do you make sure that something like this never happens again?

JARED BERNSTEIN, BIDEN'S CHIEF ECONOMIC ADVISOR: Well, there's nobody that can make sure that something like this doesn't happen again. What we feel quite confident about, though, and you mentioned the bankruptcy, is that we have Chrysler moving quickly towards coming out of the bankruptcy plan with a much more competitive structure. We believe the same thing is in the future for General Motors. And I remember standing out here a month ago -- actually we're inside now, but I was outside then, talking about the Chrysler bankruptcy probably taking around 30 to 60 days. That turned out to be an accurate prediction.

And one of the reasons that that occurred, I believe, Kyra, is because of all the legwork that was done beforehand. We have more than half of GM's bond holders agreeing for an exchange for equity in the company. Those kinds of agreements between stakeholders -- the union, the shareholders, the company -- really help to grease the skids of the bankruptcy procedure and help this to become come out leaner, more viable, more competitive on the other side.

PHILLIPS: So let me ask you, then. What if you partnered with someone like Warren Buffett or an equity firm, like you were mentioning there, to operate the business for a generous share of the profits, right? So the government gets the money back first. I mean, is that a viable option? Is that a smart way to go?

BERNSTEIN: Look, that doesn't strike me as a pretty complicated framework compared to what we have here.

See, we don't think the government, we don't think any particular hedge fund, which is the case with Cerberus, by the way, necessarily can run car companies. The folks that can run -- run a car company, a restructured car company in this case, are going to be the board, the management, the workforce of General Motors.

Now, that board and that management team, we're going to play a role in making sure the best folks are there who can help to ensure that this significant investment by U.S. taxpayers is carefully...

PHILLIPS: Jared, some would say the Obama administration will be running this company, when you look at, what, 60 to 75.2 percent of GM corp is going to be under the control of the Obama administration.

BERNSTEIN: Right. And so that's the initial up-front kinds of actions the president talked about today, regarding -- regarding the board, regarding upper management. All of that is where we believe protecting the taxpayers' investment is critical.

Where we also believe protecting their investment matters is not managing day to day, not micro managing, not pretending that we know how to run car companies. That's for them to figure out, how to -- sort of which -- which plants need to be shut down, which plants need to be built up, dealerships, things like that, basically the kinds of lines, and the decisions that you make on a daily basis to run an auto company. That's not the kind of insider perspective that you are going to bring to the table.

That way -- we think these companies become most profitable, most quickly, we can get out of this investment and let them stand on their own.

PHILLIPS: Well, and we're getting a number of tweets. SunDevilSal says, "What's the White House exit strategy to get out -- to get GM out? Is there a time table?"

BERNSTEIN: You know, it would be completely impractical and impossible to give a timetable. What we've said today, though, is that we believe that if we engage in the kind of restructuring that we're talking about today, where the company that comes out on the other side is a leaner, more competitive company with a board and management that can shepherd U.S. taxpayer dollars most efficiently, that this company will begin to be profitable again, will begin to sell cars, will begin to make cars here in America and sell those cars.

Once they're back up on their feet, running on their own, we'll get out as soon as it's practicably possible to preserve the taxpayers' investment.

PHILLIPS: Now interesting. You say here in America. How are you going to make sure, when the administration has such a huge investment here, that those jobs don't go overseas? I mean, GM has been very successful in China. And I think there's a lot of workers here saying, "Wow, as a taxpayer, why should I be supporting this bailout and all the money that the government's giving to the company when those jobs may go overseas?"

BERNSTEIN: Look, we're not going to micro manage those kind of decisions on a day-to-day basis. And I want to be very clear on that point.

What we have heard from the company is that they will maintain their U.S. share, which is of production and sales of 66 percent right now, and go further. The company has announced that they're going to reopen an idled plant wherein they will make 160,000 units of a -- of a new smaller car. That brings the domestic share up from about two- thirds, where it's been for quite a while now, up to about 70 percent. So we believe them when they tell us they're going to continue to produce domestically and, in fact, ratchet that up a bit.

PHILLIPS: And we'll put those questions to the CFO of GM, coming up in just a little bit. Jared Bernstein, thanks so very much.

Well, that's the word from the White House insider. Now we've got a GM insider on the deck. We're going to ask him how the company does plan to get out and stay out of the ditch.

(COMMERCIAL BREAK)

PHILLIPS: President Obama says that the hard times likely aren't over for General Motors, or America, for that matter. But Chapter 11 will give GM a chance to rise again.

Court papers filed this morning in Manhattan show the down and out automaker has $82 billion in asset and $172 billion in debt. It will now receive another $30 billion from the U.S. Treasury and taxpayers will get 60 percent ownership in the new GM.

The company is closing or idling several more factories and warehouses on top of those already announced. Now, some 20,000 more GM workers will lose their jobs.

So to push this story forward, we need to take just a moment here to look back. The history of General Motors is very much the history of America in the 20th century, and our Christine Romans shows us how.

(BEGIN VIDEOTAPE)

CHRISTINE ROMAN, CNN CORRESPONDENT: Henry Ford started at the beginning of the last century with four wheels and a running board. 1908 was the birth of American car culture.

That same year, General Motors was formed in Flint, Michigan. It wasn't until 1925 when the big three was complete with the formation of Chrysler Corporation.

JOHN DAVIS, HOST, "MOTORWEEK": When the big three emerged, they not only emerged as rivals that really gave Americans much better automobiles at the time, but they also cemented the American automobile as a world standard.

ROMAN: "As goes General Motors, so goes the nation." That phrase defined America's economic power for much of the last century.

PETER MORICI, ECONOMIST, UNIVERSITY OF MARYLAND: So many folks were employed either at General Motors or the other two major carmakers making steel and all the other components that go into cars, it just meant that if the automobile companies were prospering, the country was prospering, too.

ROMANS: Today there are 74,000 rank and file GM workers in the U.S. But in its heyday, GM was the largest industrial car company in the world, a technology leader. By 1979, 600,000 people worked for GM. Those good jobs helped build America's middle class.

DAVIS: It also allowed us to migrate out from the cities, to have that corner lot in a suburb, to basically get away from a lot of the congestion of the metropolitan areas.

ROMANS: General Motors was the company that revolutionized what we drove, how we thought about our cars, and how we paid for them. GM invented auto loans and the model year. It was the first to hire designers instead of engineers to create new car concepts -- think big fins and chrome of the 1950s and '60s.

And everything changed. Ford adopted flashy fins with the Ford Fairlane, as did Chrysler with the popular Desoto.

Automobiles from the big three put their stamp on popular culture, from music to movies to television. What's considered to be first rock 'n' roll song ever recorded was "Rocket 88" by Ike Turner about a GM product.

The Pontiac GTO, considered by many to be the first true muscle car, was showcased in the song by Ronnie and the Daytonas.

The Corvette on Route 66, the 1948 Ford in the iconic movie "Grease," the Trans-Am of "Smoky and the Bandit," and Archie Bunker's old LaSalle.

ROMANS: So what happened? How did the wheels come off?

(END VIDEOTAPE)

PHILLIPS: Once again, that's our Christine Romans.

Everything that happens before today at GM is now officially the old days. Let's talk about the new days, new days that will see a number of plants close and others that will go quiet but might be coming back.

Ray Young is the company's chief financial officer. He joins me now live from New York. Ray, thanks for being with me.

RAY YOUNG, CHIEF FINANCIAL OFFICER, GM: Good afternoon, Kyra.

PHILLIPS: Let's start by talking about the latest news on these closures. How exactly did you decide which plants were going to close and which ones were going to go on stand-by?

YOUNG: We evaluated our total capacity here in North America based on our assessment of our industry demand over the next couple of years. As you know, as part of our viability plan, we need to create our capacity rates well over 100 percent.

So we've looked at the efficiency of the plants, we looked at the different products that we felt would be appropriate for the portfolio of North America goal-future based upon the brand strategy. And we had to make these difficult decisions.

One of the things, Kyra, is that in General Motors right now there really isn't a bad plant. So it was really a tough decision on our part. But unfortunately, we do --

PHILLIPS: So when you -- I'm sorry. So when you say there isn't a bad plant, what do you mean by that, because you're shutting them down because they're not making money, right?

YOUNG: Unfortunately, we just had excess capacity, Kyra.

PHILLIPS: So people aren't buying the cars?

YOUNG: Well, the level of industry demand here in North America, here in the United States has come down dramatically over the past couple of years.

The recovery towards trend volumes would take a long time. And, hence, we made the difficult call to reduce capacity.

At the same time, as Fritz Henderson announced, we will be adding, or taking one of our idle facilities in order to build new a small cars here in North America. So that's something --

PHILLIPS: Yes, let me ask you about that specifically, if you don't mind. Is that what it's going to take to save this company? Is it that future small car that you guys are raving about that will start being built in one of these stand-by facilities?

YOUNG: What it's going to take to save General Motors and make General Motors prosper is a combination of making our cost structure even more competitive, plus making sure that we add new products to our portfolio, including additional fuel efficient vehicles, such as the new small cars that we will build here in North America.

PHILLIPS: Well, as you know, there are hundreds and hundreds of workers that really got punched in the stomach today when they found out about those closings and about these facilities that will be on stand-by.

So when you talk about the future of this small car company, you say you'll be utilizing a plant on stand-by capacity supported by a stamping plant that is on stand-by as well.

So let me ask you. The plants right now that are on stand-by, the Spring Hill Tennessee and also the Orion, Michigan plant, will it be one of those that will be this future site of where this small car will be created?

YOUNG: No. Three of our assembly plants that we have named as stand-by will be the plants that we will evaluate in order to determine which of those plants we will make that investment in this new small car.

By the way, Kyra, we're not going to be a small car company in the future. Clearly, we're going to continue to have a very, very broad-based portfolio going forward.

But we do believe that in the future, fuel prices will eventually increase again, and, hence, the importance of adding small cars to our portfolio will be critical for our success in the future.

PHILLIPS: Ray, we've gotten to know a family, the Green family. They're three generations of GM workers. Mike Green is actually a union rep for a couple of the facilities in Lansing, Michigan. I asked him to call in, if you don't mind. He had a question about investing in America.

Mike, go ahead and ask Ray your question.

MIKE GREEN, GM EMPLOYEE: Hi, Ray, this is Mike Green.

YOUNG: Hi.

GREEN: I just wondered if on the dual product source about bringing work back into to the U.S. and supporting not only the auto industry but actually helping the U.S. economy. What's your long-term plan on that?

YOUNG: Well, the fact that we're going to make that investment in this new small car in the United States represents our commitment towards the United States.

As you know, right now, over two-thirds of the vehicle that we actually sell in the United States are built in the United States. With the addition of this new small car, we expect that percentage to go up.

When we think about our strategy, I mean, we are an American car company, and we have a commitment towards ensuring that we build cars here in the United States for sale here in the United States.

In fact, we make money that way, by building where we sell. That's been our strategy globally.

PHILLIPS: And you make a lot of money overseas as well, China in particular. So how can families like the green family and other workers be sure that those jobs aren't going to go overseas?

Because you're going to go where you're making money and where you're successful, and it's not happening here and it is happening overseas, it seems only logical that you'll go there. So can you say to me that you won't take these jobs overseas as these facilities are shut down?

YOUNG: What's interesting, Kyra, right now is in China, over 99 percent of our production in China is for the China market. It's a growth market there so therefore we're building where we're selling.

That's a general philosophy of General Motors, for the most part is we build where we sell. So with respect to the North American market or the United States market, we expect the market to recover. And with the market recovering over the next five, seven years, we'll continue to add more products to the plants here in North America.

So from our perspective, we do have a commitment to the United States as part of being an American car company here.

PHILLIPS: Ray Young, CFO of GM. Thanks for your time.

YOUNG: Thank you very much.

PHILLIPS: And you just heard from Mike Green as well. Actually, we'll talk with him, his father and his son. They'll all join us next hour. All of them work or have worked for General Motors.

And we want to know, what do you do when such a huge part of your life changes forever? How do you roll with this one? We're going to ask all three of them next hour.

And we're learning more about the man accused of killing a Kansas abortion doctor yesterday. People close to Scott Roeder confirm that he's a long time anti-abortion activist. And his brother told a Kansas newspaper Roeder suffered on and off from mental illness.

Police arrested Roeder just hours after Dr. George Tiller was gunned down at church yesterday. Tiller was one of the few doctors in the country who performed late-term abortions. He and his clinic had been targeted several types before.

Attorney General Eric Holder has just ordered U.S. marshals to boost security for some other abortion providers.

Dr. Tiller's shooting is the latest in the history of violent attacks and vandalism committed against abortion providers. Here's a look at just some of those cases.

In April, 2007, a homemade bomb was placed in the parking lot of a woman's health center in Austin, Texas. A bomb squad defused the device. Nobody was hurt.

Then in October, 1998, an abortion opponent killed a doctor at his home in Buffalo, New York.

In January 1998, a bomb outside a clinic in Birmingham, Alabama, killed a police officer and injured several other people. And in December, 1994, two receptionists were killed when a man opened fire inside two Boston-area abortion clinics.

Pushing forward now on the effort to enact sweeping overhaul of healthcare, Senator Edward Kennedy is meeting with Democrats from his health committee today to start talk about how to extend healthcare to all.

The Senate Finance Committee will also meet to work on that same issue. And health industry groups are expected to deliver specific plans to the White House today backing up their recent pledge to curb their own costs by $2 trillion over ten years.

I'm sure there's no good time to be laid off, but between bouts of chemo in your hospital bed, this one makes your heart sick.

(COMMERCIAL BREAK)

PHILLIPS: "How's the chemo? And, by the way, you're fired." Unbelievable what happened to a young teacher battling leukemia. It's our outrage story of the day. Details from Aaron Kellogg of our affiliate WMUR.

(BEGIN VIDEOTAPE)

AARON KELLOGG, WMUR: Sarah Robator says the Manchester school district knows about her leukemia because the human resources department called her at her hospital bed to tell her that she's getting a pink slip.

SARAH ROBATOR: The positive focus was to get back to my students, to get back to the semester at school. And when I found out I got pink slipped, it was just devastating.

KELLOGG: Sarah started teaching at the Smith Road Elementary School two years ago. An energetic 27-year-old who played two sports in college had no idea life would take a dramatic turn.

ROBATOR: All of a sudden waking up one day on the way to school and having pain in my chest and being diagnosed with leukemia. It was a huge shock. KELLOGG: Her coworkers, her students, and their parents rushed to support her. The sign advertising a blood drive in her name is hanging on the front door of the school.

Lisa Bliven helped to organize the drive and has a son in Sara's class.

LISA BLIVEN, PARENT, ORGANIZED BLOOD DRIVE: She said, do you think that they can pink slip me wilt I'm out on medical leave? I was talking with her and her parents. And I said I have no idea.

KELLOGG: The district plans to let teachers like Sarah go because they're recently hired.

ROBATOR: I do understand it's a budget thing. It's numbers. It's nothing personal.

KELLOGG: But laying Sarah off puts additional pressure on her healthcare coverage, and finding a job somewhere else is not an option.

ROBATOR: That's my problem right now, is that I'm not very marketable.

KELLOGG: Lisa hopes the district reconsiders.

BLIVEN: It just seems like a little humanity should have been given in this particular incident.

KELLOGG: Sarah hopes she can battle her leukemia now that it looks like her job, the one thing she hoped would carry her through, won't be there.

ROBATOR: I think they felt horrible. I mean, it's a horrible situation for anyone.

(END VIDEOTAPE)

PHILLIPS: Well, you just heard Sarah say that she knows it's nothing personal. And, yes, maybe not. But come on, Manchester schools, Sarah told us that her treatment costs over than $1,000 a day. Can you do anything for her, extend her health insurance benefits? Let us know. We would be glad to have somebody from the district on our air.

Prom night -- corsages, tiaras, tuxes, a celebrity singer, a big night for kids who otherwise might not experience this rite of passage.

(COMMERCIAL BREAK)

PHILLIPS: We're pushing forward on GM's bankruptcy. At the top of the hour from every angle, the view from dealers, auto workers and analysts -- your questions, their answers.

Also next hour, did this breakout star have a breakdown? Susan Boyle's rollercoaster ride takes a big dip.

Every spring, young people across America get dressed to the nines to go to their prom. Children living with disabilities sometimes can't share in that experience.

But the good news is a Virginia-based nonprofit organization called the House Inc. makes sure that these kids have their special night. Check out this weekend bash in D.C., complete with celebrity and all.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Hi. There you go.

HELEN MCCORMICK, PRESIDENT, "THE HOUSE, INC.": The House Inc.'s fourth annual Cinderella Ball. And this is about students with disabilities who don't get invited in springtime to go to their own prom.

ALEX GONZALEZ, 13 YEAR OLD: It's exciting. I'm excited to be here. This is my first year, so I didn't know what to expect.

MCCORMICK: The children that will be coming tonight are various disabled, with kidney -- children that are literally terminally ill, children that are having disabilities of cerebral palsy, Down syndrome, autism.

JORDIN SPARKS, SINGER: I do think it's Sad that there are some kids who can't go to a regular prom just because there might not be the facilities to help them be able to do this. So with this event, I just think that it's amazing that somebody is taking the time out to give them that opportunity, to give them that experience.

Hello. How are you guys? You good?

VICTOR PADGET, FATHER: It's special, for one thing, because being a special needs father, she can't participate in all the other activities that normal kids her age participate in. So when you have something like this, you want to take full advantage of it. And she's really having a nice time.

VICTOR PADGET: You going to dance with me?

UNIDENTIFIED FEMALE: Yes.

VICTOR PADGET: OK. Are you going to shake your butt?

UNIDENTIFIED FEMALE: Yes.

GONZALEZ: For other kids like me who went to an event like this, I think it's a great experience.

SPARKS: Even if they are faced with challenges like that, I definitely think that for this one night, it's going to be one of those times when they can just forget about it and they can just be kids and they can be young and just have fun. (END VIDEOTAPE)

PHILLIPS: Definitely doesn't get much better than that. That's for sure.

Straight ahead, he risked his life flying combat missions for the country that he loves. Now the U.S. military is paying him back, marking him as another victim of don't ask, don't tell. We will hear from Lieutenant Colonel Victor Fehrenbach, next.

(COMMERCIAL BREAK)

PHILLIPS: He was a military brat, born on a military base, growing up as a man with all the right stuff. Air force Lieutenant Colonel Victor Fehrenbach has been decorated for bravery as a combat jet pilot.

Today, the life he loves has apparently come to an end. Fehrenbach is gay, his deeply held secret revealed to the top brass by an acquaintance. And that apparently will cost him his job.

His letter from the Department of Air Force reads in part "I'm taking this action because you did, or at near Boise, Idaho, or on or about May 12, 2008 engage in homosexual acts with another man."

Colonel Fehrenbach joins us now from our Washington studio. Colonel, it's even complicated to read the language, let alone understand why they would want to go forward and do this.

I guess my first question is what did it feel like to be outed like that, something that was extremely private and personal to you?

LT. COL. VICTOR FEHRENBACH, U.S. AIR FORCE: Absolutely, Kyra. As I mentioned before, I was utterly devastated. The life I knew, the life I loved, serving my country in the Air Force for 18 years, was essentially over as I knew it.

PHILLIPS: Did your squadron know that you were gay?

FEHRENBACH: Absolutely not. And, in fact, for 18 years, I kept my private life extremely private. And for the last year, even though this came to light, I have been able to go to work every day. So about 4,000 people on Mount Home Air Force base, probably about ten even knew of the entire case.

PHILLIPS: So let me just play devil's advocate for a moment, because I've had a chance to be on a carrier and sort of see how squadrons work.

And they know everything about each other, you know, how they joke around and they give each other a hard time, and they know the ins and outs of every part of their life.

So did you feel that you had to keep it private because they would judge you, that maybe they wouldn't treat you the same, specifically in combat? FEHRENBACH: No, Kyra, I didn't think that at all. In fact, the bond you build in the military and especially in combat with basically the brothers that you fly with, it's a deep bond. And I knew they would never judge me or think of me differently.

The way I looked at it, I was protecting them along with my family. I wouldn't want them involved in any of this or to be questioned at any time, even if they suspected it. I just wanted to keep my private life private, and I thought it had no place especially in a military combat environment.

FEHRENBACH: And, Victor, let's just point out, looking at your bio. You were hand-picked to patrol the air space over D.C. after 9/11. That's a huge task. You have 400 combat hours, 88 combat missions. You have taken part in seven major combat operations from Kosovo to Iraq. You have nine air medals.

I mean, what's hard for me to understand is how can anyone say, eh, ignore all that. You're gay. You can't be in the military?

FEHRENBACH: It's hard for me to understand, too, Kyra. I understand that it is the law and it is policy.

But I went through a board of inquiry, basically, it's an administrative discharge board. And even though we brought evidence forward that showed I have been able to go to work even under these charges for the last year with absolutely no impact on morale or discipline or unit cohesion, the board found, to the contrary, that my mere presence in the unit was detrimental to the good order of discipline, morale, and unit cohesion.

PHILLIPS: And that's what's hard to understand, because when you look at your accomplishments and you look at your reputation as an aviator, I mean, is there any way that someone could look at you and say nope, can't be effective in the military, can't be an effective flyer. You break all the stereotypes here.

FEHRENBACH: Right, Kyra. And that's one of the reasons I wanted to step forward.

There have been 12,500 brave service members discharged under this unconstitutional law for the last 15 years. And I hoped that I would be able to speak for them because I'm just one just one small example of those 12,500, and just one story and one dream that's been ended under this policy.