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State of the Union

Interview With GM CEO Fritz Henderson; Interview With Jack Welch

Aired April 05, 2009 - 11:00   ET


KING: And I am John King and this is our STATE OF THE UNION report for this Sunday, April 5th. North Korea makes good on its threat and launches a rocket. The United States says it was a missile with long-range capability. President Obama says the move demands an international response. How the president's confronting his first big global security crisis, from senior White House correspondent Ed Henry. More job losses in March put the nation's unemployment rate at a 25-year high. But could the economy finally be bottoming out? Some insight from former General Electric CEO Jack Welch.

And the White House is now in the car business. But did the president go too far by effectively firing the top boss at General Motors? This morning's, GM's new man in charge, face to face. What Fritz Henderson says needs to happen and fast. That's all ahead in this hour of STATE OF THE UNION.

The president's goals on his first overseas trip were to try to deal with the global economic crisis and to ask for NATO help in Afghanistan. And with an early morning wake-up call came a reminder presidents don't always get to pick their challenges. So his big speech in Prague went to rewrite, to add condemnation of North Korea's missile launch.


OBAMA: Violations must be punished. Words must mean something. The world must stand together to prevent the spread of these weapons. Now's the time for a strong international response.


KING: One of the few American diplomats to look the North Korean president in the eye says the reclusive dictator is not just trying to get the world's attention.


SHERMAN: He wants to solidify his own position as the leader of his country following a stroke. He wants to tell his military that it's a military-first economy because, in fact, they get money, funds, from the sale of the missile technology and he wants to say to the Obama administration, pay attention to me, I'm serious.

(END VIDEO CLIP) KING: The debate over what to do next now moves to the United Nations' Security Council and the administration's point person there says the world has to do something to get North Korea's missiles off the market.


SUSAN RICE, U.S. AMBASSADOR TO U.N.: We view North Korea as a proliferation threat. Its actions today underscore our concern about its development of not only a nuclear weapons capability, but the capability to deliver it. That's what we're most concerned about preventing and preventing North Korea from sharing that technology.


KING: And here at home, the new CEO of General Motors is rushing to come up with a new business plan that satisfies the Obama White House. While wishing him well, one Republican senator with a GM plant in his state says the White House went too far in pushing out the former CEO.


SEN. BOB CORKER, R-TENN.: But the fact is that, I do disagree with the government just coming in and taking over a company like this. I think that was heavy-handed.


KING: As you can see, as always on Sundays, we've been watching the other talk shows so you don't have to. Let's turn to someone who knows quite a bit about business and the ups and downs of corporate America, former General Electric chairman and CEO Jack Welch. Jack joins us from New York.

Jack, I want to get to the economy in a second. But first, you were the CEO of GE at a time you're trying to crack tough Japan markets, trying to crack tough South Korean markets and seeing the opportunity in the opening of Chinese markets. I'm just wondering when you sat around in the boardroom looking at Asia, what did you talk about when North Korea came up?

JACK WELCH, FORMER CHAIRMAN & CEO, GENERAL ELECTRIC: Not much. We never -- we had a discussion about it. It never hit the radar screen, John. It was something that was there, never really discussed, and --

KING: Because you knew you couldn't get in there?

WELCH: There was nothing there to get into.

KING: All right, now let's talk about the economy here at home. And I'm going to get up, Jack, and walk over to the wall because as Americans watch this economy, they're getting pretty mixed signals.

I want to start, I'm going to pull out a chart here that shows the Dow. And we have had four consecutive weeks of the Dow not dramatically, but at least going in the right direction, closing above 8,000 this past week. That's good news for Americans after a big stretch of bad news. However, at the same time, they're seeing progress in that front Jack, they see this, which is quite sobering.

Not since 1983 has the unemployment rate been up at 8.5 percent. That rate continues to go up. Some economists think it might crack 10 percent. Help us Jack Welch understand, from your perspective, which number should the American people follow? Is the market telling us we've hit bottom and we're coming back or is the unemployment rate telling us still a lot of pain to come?

WELCH: Well historically, the market has in fact been a leading indicator. And the employment statistics a lagging indicator. I think we're going to see, tragic as it is, some more tough economic news on the employment front. And I don't disagree with those who think we can crack 10 over the next two or three quarters.

KING: And is there anything else the government can do, anything, weapon it has in its quiver? You passed the stimulus plan. That's in the pipeline already. Does the government need to do more or does it simply need to wait it out?

WELCH: Well I think the administration has done a lot, done the TALF plan. The Fed has put lots of money in the system and I think we're really making real progress. Now over the last eight weeks, John, auto rates and the number of businesses that I work in in private equity have in fact bottomed out.

Now, that means sequentially they haven't gone down. January is about equal to February and March. That's the first time since May of the prior year that that has happened. So there is, in fact, some, if you will, threat of good news. We don't see a big turn up by any means. It's operating at a very low, low level but it's not going down.

KING: So then help the families sitting around the table this morning watching this program deciding we've got a little bit of money but boy, I got punished in the stock market last year. What's Jack Welch doing with his money? Will you go back to the market at this point?

WELCH: Look John, I wouldn't ask me for advice on the stock market. There are a lot of better people than me, I'll tell you that.

KING: Let's -- I want you to look, you were the CEO of a major American corporation. We saw this past week something extraordinary. General Motors presents its plan to the government. It obviously is taking federal bailout money. The administration says if you want more, you have to show us you can be viable. They come with a plan. Rick Wagoner, the CEO, walks into a meeting. The White House says not only is your plan not good enough, Mr. Wagoner, you need to go.

Is that an appropriate role for the government of the United States, the White House, to be telling a corporate CEO of a private company, you're gone? WELCH: Well the government, in this case, John, kept the company alive. All the players who went for the money knew the government was keeping the company alive and so the board -- I mean, the government is just acting like a board of directors would in a case like this and they made a tough decision. But we all knew they were forming a car task force, an automotive task force. The task force went in and the task force made a decision. I don't think it's a shock to anyone that they did that.

KING: Would you ever think you'd have the day where a Democratic president of the United States elected with the support of labor unions would go out and publicly tell the unions look, you're going back to the table and you have to give up more?

WELCH: Well, I'll believe that when I see it.

KING: Why the skepticism?

WELCH: Well, I mean, look, just for the reasons you pointed out. Labor spent a lot of money to get this president elected. Labor has been a partner of his. And obviously he has asked everybody to come to the table, the bond holders and labor. I'd like to see everybody take a haircut here. We'll see how much labor takes.

KING: Let me ask you a question. From the perspective of a guy who has been the CEO, imagine that you are the CEO of Ford at this moment. Ford decided we're going to try to get through this without taking any government bailout money. But now you have the president of the United States essentially saying publicly, look, we'll back up a GM warranty, don't worry if GM goes into bankruptcy. Buy a GM car. The government will back up the warranty. He's pushing the unions. You say you're skeptical, but he's pushing unions to go back to the table. If this happens and they go into a controlled bankruptcy with the federal government support, has the government of the United States created an environment that is disadvantageous to Ford?

WELCH: Well, I think Ford is going to be able to offer the same benefits. Ford was not able to knock out their competitor, that's all that's saying. And they're going to have the same competitive playing field they've had all along. So I don't think it's a surprise to Ford. They happen to be in better shape at this moment. But I think it is what they expected.

KING: Is it America?

WELCH: Well, America's in a very different spot now. Capitalism has gone off the rails and government has had to step in. And once you allow that, because you have to, you're not allowing it, you're begging for it once you get that help, you get all that comes with it, John.

KING: You get all that comes with. Let's rate the president's trip overseas and let's start with the G-20 summit, where he was trying to get international coordination when it comes to the global economy. Anything out of that meeting that you think will bring progress in the short term to the troubled economy? WELCH: No. But I think a lot of good things happened there. I think the IMF funding was a good deal for the developing countries. And I think the idea of protectionism being knocked down was a big takeaway. I also think, on this trip, the president was remarkable. He has -- he didn't make one misstep. I thought his press conference yesterday in Strasbourg was a Tour de France, was an incredible job. The idea of explaining American exceptionalism in the context of Europe was as masterful a speech as I've ever heard.

KING: I was going back through your political contributions over the years and when it comes to presidents, you're a Republican. You supported Mitt Romney and Rudy Giuliani back in the last campaign. You have high praise for this president. Let's close by I want you to go on a little bit more on about that. When you watch him on this first overseas trip, so many opportunities to be on the leadership stage, what's he doing right? And do you see anything he's doing wrong?

WELCH: Well, look, there are a lot of policies I don't agree with. My wife and I are writing a column this weekend. And we end up giving the lead away by giving him an "A" in terms of leadership, that doesn't mean we like his policies but we like the way he's expressing a vision, the way he has brought a team together, I think the way the economic team is working with egos subdued, I think the terrific job Mrs. Clinton is doing with his support, that team is together.

And so, he has done the vision thing, he's a great communicator, and he has got a team-building skill that is really working. So from the leadership standpoint, I wish he were pushing policies that I liked more, but in the end i give him an "A" for leadership.

KING: And, Jack, I want to circle back with one more question. If we have a conversation in three to five years, will there be a viable General Motors and Chrysler that are competitive in the world market?

WELCH: John, I don't know the answer to that. I think that with the help we're giving him, I've seen this new fellow, Mr. Henderson, on television a couple of times, I don't know him, he seems determined to take action. Look, I don't know the answer but I would bet on it.

I bet America is going to come back in the automotive business if everybody makes concessions they have to make, everybody.

KING: Jack Welch, as always, appreciate your thoughts and your insight. And we'll hear from Fritz Henderson right here on STATE OF THE UNION in just a few minutes. Jack Welch, thank you.

And up next, CNN's Ed Henry on the White House response to North Korea's missile launch. Stay right there, STATE OF THE UNION will be right back.


KING: The Obama team is confronting its first big global crisis today. A defiant North Korea ignored warnings and launched a rocket at 10:30 last night Eastern time. NORAD says the Taepodong 2 missile passed over Japan with part of it falling into the Sea of Japan and the rest, including the satellite landing in the Pacific Ocean. But North Korea maintains it launched that satellite into orbit. Senior White House correspondent Ed Henry is traveling with president and joins us from Prague.

Ed, one of those moments most presidents face, a surprise in the middle of the night.

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right, John, that 3:00 a.m. phone call that Hillary Clinton talked about so much in the campaign finally came, except it came at 4:30 a.m. here in Prague, and it was in the form of Robert Gibbs, the White House press secretary, waking up the president in the middle of the night to inform him.

The president certainly not surprised by this. They had been expecting that it was a real possibility. Also interesting to note obviously that now Secretary of State Hillary Clinton was among the top officials here in Prague briefing the president very early this morning to stay on top of the situation.

Secretary Clinton has also been on the phone consulting with key allies, reaching out to her counterparts from China, South Korea, Japan, as well as Russia, trying to build some momentum before the United Nations.

And what's interesting is top White House aides are saying that the fact that this rocket did not reach orbit doesn't really matter because they're saying that the real problem here that warrants U.N. action, is what the president called the provocation, was firing the rocket in the first place.


OBAMA: North Korea broke the rules once again by testing a rocket that could be used for long range missiles. Its provocation underscores the need for action, not just this afternoon at the U.N. Security Council, but in our determination to prevent the spread of these weapons.


HENRY: Now, in terms of that spread, the president went ahead with a long planned speech on trying to diminish the nuclear threat around the world. He was saying North Korea was just one of many threats around the world.

It was almost like a campaign-style speech for the 20,000 people here in Prague, the president at one point even borrowing a line from the campaign saying that while a lot of critics may say it will be hard to pass a complete, comprehensive ban on all nuclear testing around the world, he said to those critics, yes, we can -- John.

KING: Ed, an interesting trip. The policy challenge in London was he economy. The policy challenge in Prague was Afghanistan, the NATO alliance, and the speech you just mentioned. The president wraps up in Turkey. A very interesting mission there, sitting down with young Muslims. Tell us about that.

HENRY: Absolutely, because, as White House aides have been saying in private, even they didn't expect this early they'd be going to Turkey. But the fact it has a large Muslim population was part of the calculation. The president making that promise in the campaign that he wants to reach out to the Muslim world. Clearly he wants to send a signal by going there very early. I think another thing to watch over the couple of days, this president has been looking very tired in recent days.

This is now this E.U. summit here in Prague, his third summit in just a few days, a lot of one-on-one meetings on the sidelines as well. Two more days now coming up in Turkey. He has been battling a cold as well, now dealing with his first international crisis.

He's obviously going to be looking forward to eventually getting back home -- John.

KING: Learning those international trips, a lot of work, and sometimes can run you down. Ed Henry staying on his feet for us. Ed Henry in Prague, enjoy the rest of the trip. Thank you, Ed.

And coming up, we'll sort through this morning news out of North Korea and President Obama's European trip with the best political team on television. Stay right there.



OBAMA: When I was born, the world was divided and our nations were faced with very different circumstances. Few people would have predicted that someone like me would one day become the president of the United States.



KING: Talk about that, the president's trip overseas and North Korea's dramatic missile launch, today, with our three members of the best political team on television, CNN's senior political analyst David Gergen joins us from Boston; in New York, the Republican strategist Ed Rollins; and with me here in Washington, senior political analyst Gloria Borger.

I want to get to the moment, the president's first overseas trip in a minute. But let's start on North Korea.

David and Ed, you've both been with presidents on overseas trips, and it often happens; there's a surprise somewhere else in the world when you're trying to focus on one thing.

Let me start with you, David Gergen. The options, when it comes to North Korea -- they're not very good? GERGEN: They're not very good. But it was, in some ways, a good coincidence that the president was planning to give this major address today on nuclear proliferation. It's one of the toughest issues he faces as president. It's not well understood by the public.

But the experts all think that, if nuclear weapons continue to spread as they have in the last few years, it will be extraordinarily dangerous.

Once again, we have this highly ambitious president taking on this huge issue. And I think, because of the dexterity he's shown in his trip, I think he will have a better chance of uniting the other nations and isolating North Korea.

KING: Just another challenge, Ed, or a challenge big enough that it, maybe, will distract him from something else? ROLLINS: Well, he's got many distractions on his plate. Obviously, the fiscal thing is what we're all most concerned about. You know, North Korea's a very -- I mean, the people in North Korea have been eating bark for many years. They don't have food. They don't have a whole variety of things.

And we've always, kind of, had this carrot-and-stick relationship. They've now waved their stick. They've basically said, we have the capacity to fire a rocket a great distance (inaudible) and we're obviously in a nuclear world and we're building, as fast as we can, a nuclear capacity to put on the end of that rocket.

We can't allow that, because they are terrorists and they basically have sold their rockets and weaponry to all sorts of terrorist organizations around the world.

I don't know whether rhetoric stops them or not, though. And I think the key thing here is to make sure that, whatever we need to do to basically put the squeeze on them, is very important.

The only concern I have about the nuclear proliferation, when the Russians start calling you "comrade" on your first meeting...


... and, obviously, you know what they want, and the president's offering to surrender everything and have a nuclear-free world, it's just not realistic. And I think, to a certain extent, as important as his trip was, the strength is still not measured yet. And that's going to be an important test to him.

KING: I want to come back to that point in a minute, the bigger issue.

But, Gloria, on the issue of North Korea, the previous administration didn't think much of the United Nations. This administration will go to the Security Council this afternoon. Any reason to think that anything except tough words will come out of the United Nations? BORGER: No, probably -- probably not. But on your show this morning, Wendy Sherman said there -- there's still going to be the six-party talks. The important thing is getting back to the table.

And there was a lot of disagreement within the Republican Party when George Bush changed his policy on North Korea, even with his own vice president.

And now you see a united Democratic Party standing behind this president, as he decides to continue to the six-party talks because he believes that's important.

And, by the way, John, he did get that 3 a.m. phone call, didn't he?

(LAUGHTER) KING: 4:30 a.m.

BORGER: Four-thirty.

KING: The campaign...


KING: Let's go to the bigger picture. You just heard the president coming in, standing there in Prague saying, you know, when he was born, the was divided; it was just -- when your guy, Ronald Reagan, was president, Ed, you know, Prague was behind the Iron Curtain.

He says you'd never expect an African-American to be president of the United States. Let's grade the trip in the big picture.

David, to you first: First time overseas, two important summits, the G-20 and NATO -- what do we learn about our president?

GERGEN: Well, politically, John, this was a first-class trip for the president. I think he's done more in a single trip to transform U.S.-European, U.S. international relations than I've seen any president do in a long, long time.

He was -- he reached out in a conciliatory way. He was humble. He listened instead of lecturing. As Strobe Talbott said, he showed that one could be a leader without being the boss, which has been so aggravating.

Substantively. I do think that he came up with less than the administration hoped over the last few weeks, whether it was in terms of a stimulus plan or getting more troops into Afghanistan.

And you know, Ed Rollins has made the point that he's going to have some controversy here at home about his nuclear plans.

Substantively, I do not think it was a spectacular trip. But politically, both for President Obama and, importantly, for his wife, he has done a great deal to lift American prestige in the world. And I think it's going to give him a lot of personal self-confidence back at home.

I think we're going to see a somewhat -- I think we'll see a stronger president back home because of what he accomplished overseas.

KING: And, Ed, jump in on that point. From the perspective of somebody who was at Ronald Reagan's side when he took his first trip overseas and everyone said, yes, who is this former movie actor guy; is he capable of leading the United States?

ROLLINS: Well, I think he had an incredible public relations trip. Obviously, other world leaders have to respect his ability to charm and his ability to move an agenda forward.

I don't think he accomplished much in the sense of what they set out to, but those goals are pretty high.

I think the key thing, here, it's the beginning of a long, long task here. He has two major summits that he's lined up, here, with China and Russia. There's a lot of work ahead. I keep coming back to, is he taking on too much when we still have very strong economic things?

The ticket cost is $100 billion that we had to kick into the IMF. We didn't get any more troops. I don't think we need any more countries to hold our coats when our troops are on the ground in a place like Afghanistan, when this really was the a U.N.'s -- or the NATO's efforts over the last several years, and they certainly couldn't hole the line.

So I'm concerned from that perspective.

KING: to Ed's point on the troops, he got a modest installment, mostly around the elections, not a -- no one else is buying into this policy.


KING: This is President Obama's Afghanistan policy. When he comes home, does that increase the risk, the ownership, if you will?

BORGER: Oh, it does. And, I mean, he's already got the ownership and it increases the ownership. And in terms of this trip, you know, what was important for Barack Obama was that he stood toe to toe with other leaders and that he emerged as a leader among leaders.

I mean, here's a guy trying to talk about a deal on tax havens, for example, between -- with China and France. They were disagreeing about the issue of tax havens. Who cut the deal? Barack Obama cut the deal. That was very important for him.

From a political point of view, on the stimulus and on Afghanistan, the political team managed the expectations pretty well on this. Going over there, we were all told he doesn't expect to get everything. And guess what?

KING: He didn't. (LAUGHTER)

BORGER: He didn't.

KING: All right, three of my favor people when it comes to kicking around politics. So let's have a more political moment, here, at ending.

I was talking to David Axelrod, the president's senior adviser, and at the end of the interview, after most of the substance, I gave him a chance to respond to Vice President Cheney, who was here a few weeks ago and who said he believed the policies of the Obama administration had made the American people less safe.

Let's listen to David Axelrod.


AXELROD: I think it was an unfortunate statement. And let me say, in contrast, how much we appreciate the way President Bush has behaved.

He was incredibly cooperative during the transition. And when he left, he said, "I wish you guys the best. I'm rooting for you." I believe that to be the case.

And he's behaved like a statesman. And as I have said before, here and elsewhere, I just don't think the memo got passed down to the vice president.


KING: Ed, did the memo not get to the vice president or did he simply choose not to read it?

ROLLINS: He definitely hasn't read many memos, I think, of late, other than the ones he's written himself.


I think, historically, presidents, when they leave office, take a six-month or a year period; they don't criticize their successors. The rules should be for vice presidents, too. But I think Cheney had so much invested in this administration, particularly in the war efforts, that he's out being a loud voice to a lot conservatives. I don't think it's necessarily beneficial to the country.

KING: Is this one over, David, or will there be more salvos back and forth?

GERGEN: There will be more salvos back and forth because Dick Cheney will disagree with some of the substance of the foreign policy on this trip, starting with the nuclear weapons issue.

But I think David Axelrod did a very shrewd thing. He's driving a wedge between George W. Bush and Dick Cheney. That's a smart thing to do. He has good politics.

BORGER: This isn't the last we've heard from Dick Cheney. He's writing a book. This is Dick Cheney, unbound. He needs, he believes, to set the record straight on just what he did and did not recommend to this president, including on North Korea. You're going to hear a lot more from him.

KING: And George W. Bush is writing a book as well.

And Gloria Borger, David Gergen, Ed Rollins all could write books, maybe collaborate on a great book.


Thanks for joining us on this Sunday, here.

And the White House showed some tough love, this past week, by muscling out the top boss at General Motors.

KING: Did the president go too far? We'll ask the new man in charge of GM. He's right here.


KING: I'm John King and this is STATE OF THE UNION. Here are stories breaking this Sunday morning. United Nations Security Council is holding an emergency session this afternoon. At issue, North Korea's launching a long-range rocket. President Obama called the launch provocative and called on the international community to quickly condemn it. Afghan President Hamid Karzai bowing to pressure from the West says he'll review a new law that critics say makes it legal for men to rape their wives. President Obama called the law abhorrent. The law is intended to regulate family life inside the Afghan/Shiite community.

And when the nets are cut down tomorrow night, the recession slammed Motor City hopes it will be the big winner. North Carolina and Michigan State play at Detroit's Ford Field for the NCAA basketball championship. Detroit hopes for $30 million to $50 million boost to its economy. That and more ahead on STATE OF THE UNION.

A shot of the cherry blossoms there in Washington, D.C., a spectacular April morning here. If you can get to the nation's capitol, always a beautiful sight.

You know, it was just one week ago today that the White House forced out the CEO of General Motors, Rick Wagoner. The new CEO is charged with coming up with a new restructuring plan so that he can get more money from Washington. We think of GM as Detroit, as an American company, but it's worth noting, GM has more than 118 facilities in 33 countries around the world. As you look here in Europe, as you look all the way around in Asia, it is a diversified company.

So we went out to Detroit this week to sit face to face with the new CEO, Fritz Henderson. And we asked him, what do you do to satisfy the president? How many more workers will lose their jobs?


KING: You have a very difficult job. The company had submitted a plan to the task force and the administration said it wasn't good enough. And you, yourself, have said you have to go faster and move more deeper into the company. In February, GM had about 92,000 employees here in the United States and your submission said you'd get to 71,000 by year end. How much deeper in terms of employees here in the United States?

FRITZ HENDERSON, CEO, GM: I don't have the answer to that question today but I think it's going to certainly require us to be even leaner -- certainly require us be leaner than we had foreseen in February.

KING: But if leaner than 71,000, does that mean 50? Does it mean 60?

HENDERSON: Again, I don't have that finalized. We would certainly have that finalized as part of the revised plan. But it's certainly going to be, you know a significant additional change for the company because we just got to go further.

KING: In addition to the numbers that you have to deal with, how many employees will you have around the world and how many here in the United States? There's also the wages they're paid and we've been in the last 10 weeks to Lansing, one of your plants, Indianapolis, to see autoworkers who work for GM and just this week, in Spring Hill, Tennessee. And in every one of those stops, the workers say you know, we've given a lot. How much more are they going to have to give?

HENDERSON: We need to go further. I think at this point, it would be inappropriate for me to try to guess what that would be. I just know this. If the conclusion is you've got to go deeper, you've got to go faster, you can't really afford to take anything off the table.

KING: When you have a Democratic president of the United States, a man elected with the help of those very unions, saying things like it will require unions and workers who have already made extraordinary painful concessions to do more -- when the president is telling the unions sorry, go back to the table, does that help?

HENDERSON: I would say yes, but I would also say our own people understand the situation of the company. And I think like I said, our people have sacrificed. There's been no shortage of willingness to say we need to do the right thing. So but I think what he was saying, what President Obama was saying and certainly what the task force said, is what you've outlined is you haven't gone far enough. You haven't gone fast enough, it's not deep enough, you've got to go further because the environment's tougher. There are a lot of things that are tough and you can't really rule anything out. It was very clear, we understand the message and so we're going to sit down with our people and get the job done. KING: And what about facilities? Forty-seven assembly plants, staffing facilities in the United States. I assume if you have to cut workers, you'll have to cut more facilities.

HENDERSON: We'll have to improve our level of capacity utilization, which means consolidation. We've already done quite a bit in terms of plant closures, getting our capacity utilization higher. More will be necessary.

KING: You can't say which plant but can you help people understand the standard you will use when you look at a plant? Does it matter? We were just in Spring Hill, Tennessee, for example. Used to make the Saturn. That facility doesn't make Saturns anymore. Now it makes the Chevy Traverse. They say the company put about $1 billion into it to make it a more modern, leaner facility.

So they think from a technology and efficiency and a product standpoint, they should be OK. They also worry they're in a state where the senators have said you know what? Let the auto industry go into bankruptcy. The government shouldn't be involved at all. How do you make your decisions? Does politics play a role? Does the age of the facility play a role?

HENDERSON: I would say it's much more age of the facility, the technical capabilities, the quality of the workforce, the flexibility of the plant. A lot of it depends on what the product that is built in the plant as well. We have a lot of great plants. Take for example our Jamesville, Wisconsin plant. Fantastic work force, but the facility was building full-size SUVs. We just didn't have demand for full sized SUVS.

KING: One of the most interesting things in your first week in office is that you sound so much more open to bankruptcy than your predecessor. I was out here two years ago to see Mr. Wagoner. Even back then this was an issue on the table. And he said flatly, no. And then in the early consultations with the administration, he said he didn't want to go that way to the point in which Mr. Wagoner said he didn't think it would work. You need in the end a long period of bankruptcy which I believe would result in liquidation of the company. You disagree?

HENDERSON: You can't rule options off the table. So you basically say we will spend time to try to get it outside of bankruptcy. But if we can't, we're not going to compromise our goals. We're going to get it done inside our bankruptcy. Our preferred approach is still to do it outside, but you can't rule out going in. And candidly what happened, if I think about it this week on Monday, unprecedented, there was one, a finding or at least the conclusion of the task force was General Motors can be viable, will be part of the future.

Second, guaranteeing and standing behind customer warranties so that you can feel confident that you can buy a GM car or truck, even if we go to that path.

Third, financing for the companies during this period. So, enormous, strong, tough messages, stinging messages in some ways but powerful messages for consumers.

KING: You mentioned strong signals. Don't you have a pretty strong signal from the president that he thinks bankruptcy is a cleaner option?

HENDERSON: What the task force indicated as did the president is it may very well be the best solution for the company to achieve these goals which is why when you look at the situation, we say OK, we'll spend the time to say complete the work, more aggressive work outside of the court process. But if it's required, that's what we'll do.

KING: And if it is required, do you have any doubt that GM would look very different, perhaps the court would tell you to spin off, take a few and make it a separate company or somehow change your product so that you have essentially you have a good GM and maybe in the real estate world, now they use the word toxic assets, a bad GM?

HENDERSON: I think what the task force has talked about is there are mechanisms that can be used within the bankruptcy code to allow companies to move faster. Typically you do require financing while in bankruptcy and what the government has said is OK, we understand what's required there.

Our principal concern has been about consumers. We think we now have both the product as well as the offering so the consumers can feel that if that's required, you can still feel confident. You can buy a GM car or truck and we'll be there for you in the future.

So will GM look different if we have to go through a bankruptcy process? We would actually. I'm quite certain, because I think whether we do it outside of a bankruptcy process or inside, we will change. We will be fundamentally different going forward. And the company's going be reinvented.

KING: What's your sense of where we are in the strange environment where you have the government, in many ways, calling the shots? It was the Obama administration, the White House that said, Rick Wagoner had to go and that said you should take over this company. It was an interesting this week in Spring Hill, we met a guy named Michael O'Rourke, he's the president of the local down there, represents the union autoworkers, guy who supported the administration but he was angry at the idea the president of the United States is calling the shots in his company. And this is what he told us --


MICHAEL O'ROURKE, SPRING HILL: How many automobile makers are in Washington, you know? They're not doing a real good job with the banks either so I'm a little skeptical.


KING: Do you share Michael O'Rourke's skepticism about government involvement at the highest level in what you do?

HENDERSON: I certainly understand the emotion of our people, because our people have been historically -- I mean, very loyal to Rick. He's a fantastic guy. I need to look forward. We need to pick up the pieces. We need to look forward and we don't have a lot of time to be asking second or third questions. We have a short period of time to get the job done and we need to have 100 percent of our attention focused there. KING: What about fairness argument? When you talk to the workers, it comes up quite a bit and again, most of these are people who supported this president and supported the Democrats who run Congress. But what they see is this double standard. They say they are told that they have to go back to the table and renegotiate their contracts and then they hear from the same administration, well we can't go after bonuses of the AIG guys because that's contractually negotiated money. Is there a double standard when it comes to your people?

HENDERSON: Our people really have done a fantastic job. We're going to focus on General Motors. We have our hands full at General Motors. I don't work for AIG. I don't work for a bank. I think that the way the administration's handled General Motors has been in a very professional way. You know, human nature being what it is of course there's got to be some part of that. But I think our people really understand, what it will take to make General Motors competitive? How do we actually move to the next century and not necessarily dwell on how we compare with some other industry.


KING: It is President Obama who put Fritz Henderson at the helm of GM. Does the new CEO trust the president? Did he vote for Mr. Obama? We'll ask him, next. (COMMERCIAL BREAK)

KING: Let's get back to our discussion with the new CEO of General Motors, Fritz Henderson.


KING: There was a question if you went back to the campaign as to whether this president was a friend of your industry. He came to this city, gave a big speech at the Detroit Economic Club talking about somebody needs to give some tough love to the car companies and tell you look, in this world, you need to have more fuel efficiency, higher standards. Do you trust him?

HENDERSON: I'm a citizen. This is the president of our country. And moreover, I'm an executive with responsibility to General Motors. So in the end, you know, I trust that we're going to get this job done. I have to understand that the taxpayer, you know, the president's job and the task force's job is to look after the tax payer. We need to respect that. The day we took a dollar from the taxpayer because we ran out of money last December was the day that we brought on additional responsibilities on all of us. And so we need to do our part to first take care of customers so that ultimately we can win because the customers pay the bills.

And then second, with respect to the taxpayer, we need to develop a plan that is satisfactory to the country and will allow us to be successful and competitive so we're not careening from problem to problem. KING: The president in some of the more stern remarks said it's been a failure of leadership here in Detroit and in Washington he said. You've been at company for 25 years, where have you failed?

HENDERSON: Well and I've been with the company 25 years. I know I've made a lot of mistakes. I had a professor in business school once who said the finest executives make the right decisions about 55 percent of the time. And about 45 percent of the time, they make mistakes and they recognize them and they adjust. So I think we all make mistakes.

KING: How long are you partners with the government, to use that term?

HENDERSON: One of the saddest days in my career was when we needed to borrow money from the U.S. taxpayer. And I'm quite convinced that one of the happiest days of my career is when we repay it.

KING: I want to talk a little bit about you in closing. If you read the industry press, and I'm no expert on the auto industry, but they say you're very different from Rick Wagoner. Let's start from the financial standpoint. He agreed to work for a dollar a year at one point. You have decided not to do that. I assume because you think that sends a bad signal, why?

HENDERSON: Well, a couple of things. I took a 30 percent pay cut, a salary cut and as part of the loan agreement, we agreed to work without any form of incentives. I don't have a contract. We don't have golden parachutes. I am 25 years with the company. I don't have a pension. I don't have any of those things. In fact, when I took the 30 percent pay cut as the president and chief operating officer, it put me at a level which was well below I think in terms of my peers than the president. In truth, I think it's a fair level of compensation. Ultimately, that's what the board felt. And that's where I am today.

KING: Are you a car nut?

HENDERSON: I love them.

KING: Since when? Take me back. What was your first car?

HENDERSON: 1969 Buck Skylark.

KING: Buick Skylark. And why do you love it?

HENDERSON: Well first, I loved it because my dad bought it for me. It was used. I loved it. It had a 352 barrel and I thought it was just fantastic.

KING: And what do you drive now?

HENDERSON: I drive...

KING: They let you drive? HENDERSON: Oh, absolutely. I have my 2005 Corvette which I got in the first year, the current generation. I love that vehicle. My wife's got a Saab 93 convertible which she let me drive once in a while on the weekends and I drive an Escalade as well.

KING: Most people think of CEOs as Republicans. I looked through the records and you've given money to Democrats and Republicans. When it comes to presidential races, you gave money to Bush and Cheney in 2000 and again in 2003. You seemed to have skipped the last election in 2008. It's Fritz Henderson a Republican?

HENDERSON: Yes, I am. But I am -- I always vote for who I think is the best person. And so, you know, I try as much as possible to get myself up to myself up to speed and I vote for who I think the best candidate is.

KING: You put that on the table. Then who did you vote for last time?

HENDERSON: I'm not going to get into that.

KING: If you look through your resume, you're head of operations in Latin America, you're head of operations in Asia. You have had some experience in Europe as well. With all that global experience, now you're here, the CEO of the company that acknowledges most of its problems when it comes to profitability are here in North America.

KING: What is wrong with the North American model of making cars that you need to change to be successful?

HENDERSON: Well, I think if you look at our plan, John, it's about getting focused around core brands. Because only here in the U.S. do we have, I'll call it, the proliferation of brands that we don't really have those in the rest of the globe. So it's about getting focused around core brands.

KING: In business school and in your early days at GM, could you ever imagine it coming to this? This is Detroit. It's Motor City. It's home of the big three. I'm not sure people equate the big three in the way they used to before. But this was capitalism at its finest, companies going out there making new cars, hiring people. And now you're dependent on the government. Did you ever see this happening?

HENDERSON: No, I didn't.

KING: Is it American? It's sort out of our way of doing things, isn't it?

HENDERSON: It is out of our way of doing things. But I think, you know, what is also American is when you need a hand, when you need help, that is American.

KING: And so to those out there, whether they're every day Americans or members of the United States Senate who say, you know what, this government is not supposed to be doing this, up or down in the marketplace, tough love, go to bankruptcy court if you have to but this is not the government's job, you would say what?

HENDERSON: I would say that we can and will play a role in the future of the auto industry. Clearly, the weaknesses and the fragilities of our business were exposed in the current economic environment. It's our job to take care of customers and then take care of the taxpayer, pay it back and justify the -- you know, what has been done to try to help us.

KING: Thank you very much.

HENDERSON: Thank you.


KING: The CEO's perspective there. Well, you might be surprised at what union GM workers think about the president stepping into their business. Up next, we head to Tennessee, a state with a lot to lose if the auto industry fails. Why watching a car company try to remake itself there is nothing new.


KING: As you know, our goal is to get out of Washington every week to meet everyday Americans. And with the future of the auto industry at stake, we decided this week to go down to the state of Tennessee. If you look here, the unemployment rate in Tennessee is 9.1 percent. There are three auto plants in the state and approximately 11,000 Tennesseans employed in the auto industry.

Where did we go, we went to Spring Hill, right up here. There is a population of 23,462. It's the 14th fastest-growing city in the nation, the site of a Civil War battle back in 1864, also the site of a General Motors plant. About 3,000 people work there now.

It's a conservative county, but those workers -- those union workers, blue collar, Democrats, most supported President Obama in the last election, however, when we visited, you might be surprised at what they think of the president of the United States meddling in their business.


KING (voice-over): Brenda Carter in the kitchen, enjoying her first day of retirement.

BRENDA CARTER, RETIRED GM EMPLOYEE: Well, it's wonderful. I woke up this morning at 3:30 and I let the clock go off and I hit it and went back to sleep.

KING: Happy with a chance to sleep in. Not happy, though, with the White House that forced out the boss who signed the certificate marking her 30 years at General Motors.

CARTER: I don't believe that the government should actually run the businesses. You know, we need help from them. But to say that the president tells a company's CEO that he has to leave, I just don't believe it should happen.

KING: Make no mistake, Brenda Carter says she loves President Obama. But her concerns are proof of the risk Mr. Obama faces as he faces an aggressive role in the restructuring of GM and Chrysler.

Already anxious about their job security, many blue collar autoworkers who backed Mr. Obama in last year's election are nervous about the administration's heavy hands-on role now.

MIKE O'ROURKE, PRES., UAW LOCAL 1853: How many automobile-makers are in Washington, you know? They're not doing a real good job at the banks either. So I'm a little skeptical.

KING: Michael O'Rourke is president of the United Auto Workers local in Spring Hill, Tennessee. Bring up the big AIG bonuses and O'Rourke gets visibly annoyed at the Democratic White House.

O'ROURKE: They say we can't break those contracts. But by God, we can break the UAW contract. And we're going to give them a hair cut. And, you know, fundamentally, are we really on the right path here in this country? I wonder every day.

KING: The union chairman, Mike Herron, is more diplomatic about the White House role.

MIKE HERRON, UNION CHAIRMAN: I'm always concerned when you get that high degree of involvement. But we have got a great agree of trust. And so they have thrown the life line out there. They have helped us through some very difficult times.

KING: Herron says the blue collar doubts about Mr. Obama are borne of a bigger gnawing uncertainty, as GM seeks more wage concessions and more plant closings.

HERRON: You have got to earn your way every day. And then you have got to hope and pray that you're not one of the plants that ends up on the closure list.

KING: The Spring Hill plant is tucked amid gorgeous rolling hills and farmland. It is a reminder that GM has tried to remake itself before.

CARTER: I was there at the beginning, what an experience. I love Saturn with all of my heart.

KING: Brenda Carter remembers the launch of the Saturn brand and the sleepless nights before Spring Hill built its last Saturn in early 2007.

CARTER: It bothered me so much, I just woke up, and I just wrote a poem, you know, about the Saturn.

KING (on camera): What did you say in the poem?

CARTER: Good-bye to the coupe (ph). And I talked about how we -- the -- how we... KING (voice-over): Emotional in an upbeat way about the Saturn in the garage, 216,719 miles and counting.

CARTER: I helped build this.

KING (on camera): Yes?

CARTER: Mm-hmm.

KING: So it's your baby?

CARTER: It's my baby.

KING (voice-over): Brenda Carter thinks GM is wrong to give up on the Saturn brand, worries now the president she loves might make some wrong calls in his oversight of GM. But she isn't ready to give up on Mr. Obama or on the company she gave 30 years.

CARTER: The president is not going to be right all the time. You know? So I'm not going to judge him on just one thing that I think that should happen. I have every confidence that it will survive. And we will do everything we can to help it survive.