The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the day's news we will look in detail at the announcement of a major scaling back at General Motors. We'll hear from the GM chairman, several employees, and four analysts. Then comes conversation No. 3 about the Bill of Rights with San Diego editorial writer Joseph Perkins, and we close with a Roger Rosenblatt essay about beauty. NEWS SUMMARY

MR. MacNeil: General Motors today announced a major restructuring that will close 21 plants and cut its North American work force by nearly 19 percent in the next four years. GM Chairman Robert Stempel told employees that the company will cut the white collar work force by more than 9,000 next year. Fifteen thousand blue collar jobs will also be eliminated. GM, the world's largest automaker, is expected to lose between 5 and 6 billion dollars in their North American operations this year. Stempel spoke to reporters in Detroit.

ROBERT STEMPEL, Chairman, GM: 1991 has been a difficult year for General Motors and the entire U.S. automotive industry. And while we anticipate problems in the Middle East due to the war and the resulting economic downturn, a dramatic loss of consumer confidence and reduced industry automotive sales have been more persistent than expected. Despite the many steps we've taken throughout the year to improve our competitive situation, business conditions are not improving and we don't see significant change in the near future.

MR. MacNeil: General Motors is our lead story after the News Summary. Federal Reserve Board Chairman Alan Greenspan today warned Congress against quick fix plans to spur the economy. He said any plan that increases the federal deficit could do long-term damage. Greenspan also said the Federal Reserve was prepared to lower interest rates yet again if the economy remains weak. He spoke before the House Ways & Means Committee.

ALAN GREENSPAN: The upturn in business activity that began earlier this year clearly has faltered. It is apparent that the economy is struggling and that there have been some strong forces working against moderate cyclical revival. These events do not necessarily mean that a prolonged period of economic weakness is inevitable. But they do mean that policy makers must consider these unusual forces when shaping their response in the current situation.

MR. MacNeil: There was some brighter news for the economy. In a survey released today by the Commerce Department it said U.S. businesses intend to increase spending on plants and equipment by 5.4 percent next year. That compares with a decline of 4.5 percent this year. Jim.

MR. LEHRER: President Bush signed the 1992 transportation bill today. He did it at a highway construction site near the Dallas- Fort Worth airport. The legislation spends $151 billion for highways and mass transit. Mr. Bush had this to say about it.

PRES. BUSH: Now, this bill will launch the post interstate era of America's surface transportation system. It'll enable us to build and repair roads, fix bridges, and improve mass transit, keep America on the move, and help the economy in the process, but really it is summed up by three words: jobs, jobs, jobs. And that's the priority and yes, these are tough times. And yes, there are layoffs. And many families are having a rough go of it and the American people want action and action is what they'll get, and I want every American to know that getting the economy back on track is my No. 1 priority and I expect I speak for the members of Congress here from both sides of the aisle. It is their No. 1 priority as well.

MR. LEHRER: Barbara Bush placed her husband's name on the New Hampshire primary ballot today. She flew to Concord to deliver a $1,000 filing fee to the Sec. of State's office. She told reporters no one hurts more than her husband when others are suffering because of economic problems. The New Hampshire primary on February 18th is the first in the nation. Perennial Republican Presidential candidate Harold Stassen announced today he was running for President for the 10th time. The 84-year-old former Minnesota governor also went to New Hampshire to have his name put on the primary ballot.

MR. MacNeil: Mikhail Gorbachev has called on the Soviet legislature to transfer power to the new commonwealth of independent states. Tass News Agency said he asked the legislature to hold one final session to do so. Boris Yeltsin, who forged the new commonwealth, said today there would be no job in it for Gorbachev. Yeltsin, himself, came under attack today from his own Vice President. Alexander Rutzkoy said in an interview that Yeltsin's leadership had brought anarchy and economic chaos to the Russian republic. Meanwhile, Sec. of State Baker held talks in Kiev with Ukrainian republic leaders. He was seeking assurances on the security of Soviet nuclear weapons, among other things. Baker also held talks in Byelorussia. It's leaders said that republic wanted to become a nuclear free zone. South Korean President Roh Tay Woo today announced that his country was now free of nuclear arms. He used the occasion to urge North Korea to end its nuclear weapons program. Roh's statement was a signal that all U.S. nuclear weapons had been removed from South Korea. Roh said there was now no reason for the North to continue its nuclear program which the U.S. has called the No. 1 security threat in the region.

MR. LEHRER: The Israeli-Palestinian peace talks broke up today in Washington with agreement on mostly nothing, except to meet again. They met for six days but could not overcome differences over procedures and never really engaged in talks about substance. They agreed to try again in January, possibly in Washington. Israel's talks with Syria and with Lebanon also ended the day. The negotiators said they would also meet again, but did not say where or when.

MR. MacNeil: The fate of Haitian refugees today remained in limbo. More than 7,000 have been picked up at sea by the U.S. Coast Guard since a September coup in Haiti. Yesterday an appeals court ruled the U.S. could forcibly return them. But several hours later, a federal judge in Miami barred any deportations pending a Friday hearing. Most of the Haitians are being held at the U.S. Naval base in Guantanamo Bay, Cuba.

MR. LEHRER: And that's it for the News Summary tonight. Now it's on to the reshaping of General Motors, a conversations about the Bill of Rights, and a Roger Rosenblatt essay. FOCUS - BREAK-DOWN

MR. MacNeil: First tonight, General Motors' fight to staunch its financial hemorrhage. 1991 was its worst year ever. Today the chairman of this country's largest automaker revealed dramatic cuts in its North American work force and operations. Robert Stempel told reporters that GM will close 21 plants, most not yet named, in the next four years, cut 15,000 blue collar workers next year, cut 9,000 white collar workers next year, and another 11,000 by the mid nineties. These jobs would be lost through early retirement plans and attrition. In addition, Mr. Stempel estimated that another 39,000 blue collar jobs would be lost before 1995. The automaker also intends to cut $1 billion from its budget for manufacturing and design. Chairman Stempel talked about the economic climate when he announced the cuts to reporters today in Detroit.

ROBERT STEMPEL, Chairman, GM: As we have told the administration since March of this year, the economy is starting to slide. And I was told that no other figures were turning it around, don't worry, it's going to be okay in the summer. Back in the summer we said it slid a little further and I've lost a few more dealers and a few more suppliers. It's okay, you're too pessimistic. Well, I think we've waited as long as we can. We, obviously, are very disturbed any time we shrink the business. All of you read papers and media have been reporting. We are all fixing our bottom line by shutting down, closing down, cutting back. This country enjoyed growth through the eighties. we've got to get back in a growth position here in the nineties. This is not a country toshrink and we've got to turn it around. So I'd love to be a part of the growth. I don't see that on a near-term horizon. It's obvious we've got to take care of the health of the corporation for the long- term, hence the consolidation.

REPORTER: By explicitly not naming plants, you're creating a situation where plants are going to throw themselves over each other offering concessions. It's the equivalent of a political hand grenade in the middle of the UAW. Are you going to ask the UAW to reopen the contract and aren't you really trying to play class off against one another?

MR. STEMPEL: No, we are not, because I think we're beyond that when you think about the things we've done in our quality network and where we built our organizations, we obviously, when you take those two plants or any couple of plants, you have to look at their geography, transportation costs, total impact on the state, total jobs in the state, and it goes far beyond just UAW considerations. So far as the elements with the union, are you going to is not quite the right question. We have been asking that question all through the year. We'll continue to work with Owen Bieber and Steve Yokich and see what opportunities present themselves.

REPORTER: For those of you who have been watching consolidations in the industry for the last couple of years, we've seen the blue collar angst very heavily affected by this. We've seen the white collar angst very heavily affected by this, but there really hasn't been at least any outward effect on top management. Speaking from the perspective of the tens of thousands of people who are going to be affected by these consolidations, is it fair and will it continue in that vein, that there is no outward effect, at least from our perspective, on top management?

MR. STEMPEL: Well, I appreciate your subtle and diplomatic question. I would have to tell you and only point out to you that the executive ranks at General Motors have been steadily declining and if you look, in fact, over the last five years since we began our -- more than that -- since we began our reorganization in North America and worldwide, the executive ranks in General Motors have shrunk significantly, as a matter of fact, more than 1/3 since 1986.

REPORTER: The pay, is that being lowered too?

MR. STEMPEL: Yes. The pay has been significantly lowered the last two years for executives.

REPORTER: If there is a double dip recession, could this scenario get even worse? Could your cuts have to go deeper than you're announcing today? And second of all, is what you're doing today enough to satisfy Wall Street and those who set your credit ratings?

MR. STEMPEL: I'll look with interest and see what they say. And I think we have a very good, comprehensive plan. I think it's very clear what we're doing. I think anybody who wants to get a size of General Motors in the very near future got that picture today based on where employment will be in North America. We think it's very sound. It certainly has tremendous up side potential with great earnings significance there. On the down side, we think we're well positioned to weather the storm.

REPORTER: Do you consider this the largest down sizing announcement in GM's history?

MR. STEMPEL: I guess I haven't gone back in history and looked at all of that. There have been some beauts along the way, but this has been a very difficult one. We think it's balanced, it's for us, in my career, it's certainly one of the largest, and I can tell you that I'd much rather be building plants and growing the business, and we hope to do that very soon.

MR. LEHRER: The coming of the General Motors announcement was known for a week. This gave GM employees a week to brace themselves. Elizabeth Brackett reports.

MS. BRACKETT: General Motors, long the premier U.S. automaker. In the 1980s, GM and the economy were on a roll. GM still controlled almost half the U.S. auto market. No longer. This year GM has lost close to $6 billion in their North American operation. That's a loss of $15 million a day. Unlike other bad times in the auto industry, white collar office workers will also be hard hit. It has been a tense week at GM headquarters in Detroit as employees waited for today's announcement. Many employees we talked to earlier this week said they agreed the company must trim its white collar staff of 95,000 to cut the company's crippling losses. Thirty-year-old Jim Peyton has worked for GM for two and a half years.

JIM PEYTON, Export Sales: Well, I think a lot of people realize that if we don't take these measures that we can be a lot less confident in the long run and that these are things that need to be done to make General Motors a more competitive and more efficient operation, and so that in the future we will have a chance to compete with Japanese and other competitors.

MS. BRACKETT: You say that people have always felt General Motors has been loyal to their employees. Has that been shaken at all over the last week over the concern about what might happen?

MR. PEYTON: I don't think people are blaming the company. They just understand that the times are tough, that we have lost market share and we have to get our capacity in line with our current market share and that will give us a chance to build a foundation that we can get that market share hopefully back.

MS. BRACKETT: But a leaner GM does mean a different kind of company than the one Beverly McGurk has worked for for 28 years.

MS. BRACKETT: Have you always felt secure with General Motors?

BEVERLY McGURK, Sales Promotion: Yes, I definitely have.

MS. BRACKETT: And how do you feel now? Has that changed any?

BEVERLY McGURK: I still have this little secure pillow feeling, but, of course, there's a concern about benefits and about things that might be taken away from us that I hope doesn't have to happen but if it does, I guess we have no options, I mean, especially in my case. After all these years, I'm not going to make a change.

MS. BRACKETT: Sow how are things different now when people go to work for a major corporation like GM? Formerly people felt very protected. What's happened to that feeling?

MS. McGURK: I think there isn't that feeling. You did a job at the company and you'd stay there for 99 years, and that's not the case anymore. People move on much more frequently. They have cutbacks. They have so many more things than we ever expected would be happening to us. You know, you got a job and you were going to be there till retirement, and that's not the case these days.

MS. WOODRUFF: When GM makes major cutbacks, it's not just GM employees who lose their feeling of security. Ernie Colangelo manages the bar and restaurant across the street from GM headquarters. Nervous GM employees were worried about their future as they made their way through lunch this week.

ERNIE COLANGELO, Restaurant Manager: I'll have to wait till they come back to work and see how many people they do let go. If they do, I'll have to make cuts over here accordingly, which means people will be laid off or lose their jobs if we have to.

MS. BRACKETT: So are your employees nervous also?

MR. COLANGELO: I don't think they realize the impact of what will happen across the street like I do because I've been through it before and I'm worried that this is my livelihood and if it gets slow, I have to make cuts just to survive.

MS. BRACKETT: Today's announcement is not GM's first shot at getting costs under control. The company has been closing plants and laying off blue collar workers since the early eighties. In the Detroit area, 30,000 blue collar jobs have been lost in the last five years. But the union has protected its workers well from the ups and downs of the industry. For GM's blue collar workers, the years of effort by their union, the United Auto Workers, have paid off in this time of recession and GM cutbacks. A UAW member with 10 years of seniority gets almost full pay even if the plant closes and the job disappears. But union leaders like Dick Long, president of Local 653 in Pontiac, Michigan, say that it's not the union that has made the mistakes at General Motors.

DICK LONG, President, UAW Local: I think for so many years GM enjoyed being so big that they didn't think anybody would ever come after 'em and that they were safe, they were basically immune. Ford's gone through their growing pains. They're down to a current work force of between seventy and eighty thousand. Chrysler almost went completely out of business. Fortunately, the government come to their aid, plus the Chrysler workers made some significant concessions to keep their plants open.

MS. BRACKETT: With the kinds of contracts you've won for your workers, you can be out of a job for over two years and still have almost full pay. Hasn't that hurt the company too?

MR. LONG: I would say it probably has hurt the company but if you owned the company and had that type of a situation existing, why would you continue to put work outside? And I mean outside, I mean down into Mexico. I think the protection's put in the agreement because General Motors, the joint programs we see today were not always there. The only thing they understand was force. We had to put 'em in a situation where they had to react to some kind of pressure and the pressure was you will pay these people if they're not producing. You've talked to our people today. They don't want to be at home. They want to be working. The benefits of being off, not having a job, they would much rather be working than they would be sitting home, drawing benefits. That's just the way the people are. There's a lot of pride in the auto workers that people don't see.

MS. BRACKETT: It took tool and diemaker Dick Fuller two and a half years to get back to work at a GM plant after the Fiero plant closed down. But he got 95 percent of his pay during the layoff and he says he can't imagine working for anyone but General Motors.

DICK FULLER, Toolmaker: Oh, Lord, it's been just about everything to me. It's put my children through college. It's bought me homes. It's bought me cars. It's gave me a high standard of living. It's been my whole life.

MS. BRACKETT: Do you think it will give a next generation of workers the same kind of life?

MR. FULLER: I doubt that very much.

MS. BRACKETT: Todd Houtman is the next generation. He is working as an intern at GM. Despite the company's troubles, his dream is to join his two roommates as a full-time GM employee.

TODD HOUTMAN, Intern: It's a challenge and it's an opportunity to, you know, show yourself and show some new leadership in a company that perhaps needs some new leadership.

MS. BRACKETT: How much would you like to get a letter saying that you're in?

MR. HOUTMAN: Oh, it would be the greatest day. I'd call my dad like that and say, dad, I got a job. I would be really excited and it would be the goal that I'd always wanted come true.

DICK LONG: The auto industry's been good to people around here and if it wasn't for General Motors, Ford, Chrysler, most of us wouldn't have the livelihood. The contracts negotiated by UAW have made that possible, but now we're fighting for our survival. And both sides have to fight together. We can't go at odds on this. Yeah, we have to protect our members for our agreements but there's a lot of things we can do within the agreement to get us where we got to go.

MR. MacNeil: Now for analysis of GM's announced cuts, how much good it will do for the troubled automaker, we get four views. James Womack is research associate at the MIT Japan Program and the lead author of a book about the global auto industry, the machine that changed the world. Maryann Keller is an auto analyst at Furman Selz, a New York investment banking and brokerage firm. She's the author of "Rude Awakening," a book about General Motors. Dan Luria is an economist at the Industrial Technology Institute, a non- profit think thank in Ann Arbor. Luria previously worked as an economist for the United Auto Workers. He joins us from Ann Arbor, Michigan. And Michael Flynn is a research scientist and associate director of the Office for the Study of Automotive Transportation at the University of Michigan. He's also in Ann Arbor. Maryann Keller, what do you see as the real reasons behind this huge cut announced today?

MS. KELLER: Well, the most obvious reason is that General Motors had to respond to the fact that it's market share had fallen so low that it had to cut and become a smaller company. The reason, however, that the program was announced today and why the company had to make this announcement I think rather quickly was in response to actions by the credit rating agencies in early November which put General Motors' debt, senior debt and commercial paper on a credit watch list with a negative downgrade. In order to prevent that from happening, General Motors must over the next two months meet with these representatives and convince them that they have a plan in place that would result in them removing this possibility.

MR. MacNeil: Why would the credit rating on their commercial paper be significant to an automobile company?

MS. KELLER: For General Motors it is the most significant thing that could happen to the company because General Motors, GMAC, relies on commercial paper to conduct its normal daily business, providing funds to dealers so that they can floor plan cars, in other words, carry their inventory, so that money is provided to you and I so that we can buy automobiles. General Motors accesses the money market to do that. If it were curtailed by an A-2 rating from that, General Motors would simply be cut of the commercial paper, would effectively be cut out of the commercial paper market in the amounts that it needs. And it would have to rely on longer- term debt. It would force the company to reduce the level of business that it does. It would cost it sales, plus it would raise its interest expense. By my calculations, it would probably cost the company hundreds of millions of dollars a year in the combination of lost business and higher interest.

MR. MacNeil: Michael Flynn in Ann Arbor, what do you see as the reasons behind today's announcement?

MR. FLYNN: Well, as Maryann said, GM's market share has been falling steadily, precipitously during the middle eighties. And their capacity reductions have not kept pace with that. And I think it's pretty clear that as GM learns to become more flexible and make better use of reduced capacity, it was time for them to reduce capacity in the next few years. The commercial paper problem I think clearly accelerated what was going to be happening over the next five or six years in any case.

MR. MacNeil: James Womack, how do you explain what happened today?

MR. WOMACK: Well, I think in a fundamental way GM didn't keep up with what was happening out in the world. At one time, thirty or forty years ago, GM was the world's leading company. It was a new way of doing things, the mass production system that we invented, and we conquered the world with it. And we should be proud of that. But we got stuck, a lot of reasons, and we haven't been able to find an effective way to counter, in particular the Japanese, organized in a totally different way, all the way across the system from the top to the bottom.

MR. MacNeil: And yet, GM has been famous in the last 10 years or so for importing a lot of the very latest Japanese technology, going very heavily into robotics and so on.

MR. WOMACK: Well, it's not, for the most part technology in the hardware sense issue but rather fundamental organizational questions. The best of the Japanese techniques are easy to read about, they're easy to understand as a conceptual thing, but they're very hard to do. It's easy to get the words, it's very hard to carry the tune. We haven't really been able to carry the tune yet.

MR. MacNeil: And Dan Luria, what do you see as the reasons behind today's announcement?

MR. LURIA: Well, I think that GM did the best job of any of the U.S. Big Three in the early part of the 1980s in trying to grow the business and where Ford and Chrysler both shrank precipitously between 1980 and 1983, GM has really undergone its shrinkage after 1987. I think that the real problem, to the extent GM is to blame for its problems, its failure to ally with the United Auto Workers, with Chrysler and with Ford, and to go for a managed trade policy means that there's going to be a permanently higher Japanese share and hence, more problems for GM than there otherwise might have been and, in fact, today's announcement, as both Ms. Keller and Dr. Flynn have made clear, really in some sense shows us what a bad situation we've arrived at where 30 year old MBAs on Wall Street can tell the largest American corporation that it has to consolidate its operation, it has to shrink, which, of course, means more room for the Japanese to gain share in the market.

MR. MacNeil: Is he right about that? Do you agree that 30 year old MBAs on Wall Street are really running the biggest motor company in the world?

MS. KELLER: All the people in the credit -- first of all, I doubt that there are too many who are 30, but what they do is simply look at the creditworthiness of the company. They are looking at whether or not this company has a plan that is reasonable, that will guarantee its ability to repay its debt. The credit rating simply reflects that.

MR. MacNeil: And is this such a plan?

MS. KELLER: I don't know. It's up to them to decide whether or not it is, but that is absolutely what precipitated it. I would agree with Dan in part when he said that this country, that the trade policy of this country has contributed to the problems of the auto industry.

MR. MacNeil: Can we come back to that question a little bit later and just look at, starting with you, Mr. Womack, has what Robert Stempel, has the medicine he swallowed today, is it enough, is it going to do what's necessary to put them back in a competitive stance?

MR. WOMACK: The most interesting thing about today's announcement is what it doesn't tell us. It doesn't tell us whether they're going to reorganize their product development process. It's not worked very well. It doesn't tell us how they're going to fix their supply chain that doesn't work very well. It doesn't tell us how they're going to run their global strategy, and they've really been very weak, particularly in their Asian strategy. So it tells us they're going to retreat. It doesn't tell us whether this is the last retreat, or whether this is simply the prelude to the next retreat.

MR. MacNeil: So when we used the word "restructuring" at the beginning of this program, you're not sure that this is a real, enough of a restructuring, is that it?

MR. WOMACK: Well, I would call it a cutback.

MR. MacNeil: A cutback.

MR. WOMACK: Retreat is the term that comes to mind.

MR. MacNeil: When you said that their development of new product, you raised that question, whether they were going to improve it, what's wrong with their development of new product? They've got lots of apparently quite popular new cars out there.

MR. WOMACK: Well, I think the American industry has had a very hard time managing its professionals. There is the sense, I think, out in the country that what's wrong with America is that people in factories aren't managed right or they don't work hard enough or whatever. I don't think that's quite right either, but we've really got a problem in getting our professionals to work together in a way that gets real world class products. GM has struggled. They're showing some positive signs. Now, just in the last year --

MR. MacNeil: Make that concrete for us so we can understand it. What are they not doing that say the Japanese are doing in designing new cars?

MR. WOMACK: In simplest terms, they aren't able to produce product that people are willing to pay what I'll call top of the segment prices for. The striking thing, when you look at the car market, in a given class of car, is that when the Japanese are in there, I'm not talking about the best of the Japanese, they just get a lot more money for their car than the Americans can. Some of that Iacocca says we've all been brainwashed, there may be some perceptual lag that American cars are better than we were, but there also is this persistent situation where we don't seem to be able to get the kind of money for our products that they get for theirs. Now that means you've got to get your cost even lower and we're in a situation where our costs are very high because of some long-term commitments to people in the system, so it's a very difficult problem. If you're not going to get top dollar for your product and your production costs are higher than the other fellows, you've got a double problem.

MR. MacNeil: Michael Flynn, is what Mr. Stempel announced today going to do it for General Motors?

MR. FLYNN: Not in and of itself. I agree with Dr. Womack that what we heard today was an announcement of reductions. And I think it was an announcement that was very much targeted to Wall Street. I think I would probably disagree a bit with Dr. Womack on what else GM is doing. If you look historically, during the 1980s, as Dr. Luria suggested, Ford and Chrysler shrank precipitously. But they did something else too. They did pursue a competitive strategy aimed at the Japanese that did not rely on massive new plant investments, that did not rely on technology, the old American reliable for beating the competition. GM is now in that phase and while certainly Dr. Womack's observations on the product development process holds some weight, they've improved tremendously in some areas. And I think one of the problems GM faces is that it's so large and so complex that if you pick and choose among different GM units, you can assemble a small world class car company. The problem is that GM, more than other automakers, be they Japanese or American, seems to have trouble in spreading those lessons, seems to have trouble learning internally. But very clearly through the eighties, Ford and Chrysler improved their productivity at a much more rapid rate than General Motors did.

MR. MacNeil: Maryann Keller, how much less competitive is GM, or how does GM stack up competitively with the other two automakers that have gone through this drastic down sizing?

MS. KELLER: In terms of capacity utilization, in a good year Ford and Chrysler can operate at 100 percent of capacity utilization and General Motors clearly is significantly below that. With the actions today they ought to when the car market returns operate much closer to full utilization of their plants. The other issue which is the one Jim was raising is the issue of their efficiency. And that was not really addressed in today's program. It takes the Ford Motor Company in round numbers about half as many man hours to produce an automobile. That has to do with the way the car is designed, how many parts are in it, how difficult --

MR. MacNeil: Half as many man hours --

MS. KELLER: Yes.

MR. MacNeil: -- as General Motors?

MS. KELLER: Yes.

MR. MacNeil: And how does that -- give us the numbers. How many man hours for a Japanese car on average, how many man hours --

MS. KELLER: It varies from company to company. In the case of Ford, it's probably in the area of 22 or so man hours and it's probably somewhat closer to 40 man hours for General Motors. And as I said, it has to do with the way cars are designed, how difficult they are to put together, how many parts they have. The Ford Taurus is a world class automobile. Ford assembles that automobile in roughly 18 man hours, which is as good as Japanese production efficiency. The most recent mid-size cars which General Motors introduced in 1989, four years after the Taurus, require about forty-four, forty-five man hours to bring out. The consumer doesn't see the difference. The difference had to do with the way GM designed that car.

MR. MacNeil: And do these cuts today address that kind of inefficiency?

MS. KELLER: These cuts don't address them. We have to re-await the redesign of these automobiles so that they will be able to be produced in fewer man hours.

MR. MacNeil: Dan Luria, what's your comment on how adequate today's cuts will be to put GM back in a competitive stance?

MR. LURIA: Well, I think where I disagree with several of the most recent statements by other members of tonight's panel is I don't think the problem is fundamentally GM's competitiveness. First, if you correct for differences in capacity use, the gap between GM and Ford assembly time is more like eight or ten hours. And moreover, assembly is really only about 15 or 20 percent of the labor that goes into a car. So I think when that's all said and done, the difference between the best and the worst companies in production costs are perhaps 300 to 600 dollars per vehicle. I think the larger problem that General Motors faces is the fact that it has to figure out a way to sell all those new products. I think that in 1991 and 1992, GM had more good new products than any other automaker in the world. The problem is it couldn't sell them into what looks like a full blown depression. And as a result, everybody is saying, oh, it's GM's competitiveness problem. In fact, if the recovery had come in the middle of 1991, as Bob Stempel kept saying he was told it might, I think GM would have made money hand over fist and gained three to five points of market share. And I would also point out that while --

MR. MacNeil: So you're saying it's just a recession problem?

MR. LURIA: No, I'm not saying it's just a recession, but I'm saying, for example, Ford is the most efficient of the three domestic automakers and yet, Ford has lost the most market share in the past six quarters and I think will continue to lose market share in the year ahead. I don't think you grow based entirely on your cost. Product matters as long as people are buying it.

MR. MacNeil: How do you sell more cars?

MR. LURIA: Well, GM can reduce the cost of making cars, but as Jim Womack points out, they're certainly not going to reduce that cost and, therefore, cut the price of cars. The real issue is positioning so that you, in fact, get top dollar in each segment in which you are participating. The way you sell more cars is you have an upturn in the economy and you have a trade policy and investment policy that allows the domestic auto industry to get some of the benefits of the recovery when it does come.

MR. MacNeil: What is a trade policy? Do you mean imposing further restrictions on Japanese imports, or Japanese setting up plants here to make their own cars in this country?

MR. LURIA: I think what you have to do is recognize that dozens and dozens of communities around the United States and Canada are dependent on having GM, Ford and Chrysler plants thrive and flourish. And you cannot allow the next cyclical recovery, whenever it comes, to simply be something that sucks in more and more imports and more and more transplant vehicles assembled by the Japanese in the U.S. but using largely imported parts. You have to allow the next recovery to benefit America's premier corporations or that recovery is not going to reach most industrial communities in the United States.

MR. MacNeil: Do you agree with this, that, in effect, the trade policy of the United States would have to be changed drastically in the case of automobiles if the American industry is going to survive?

MS. KELLER: I agree that the American industry has suffered from lack of a rational trade policy during the 1980s. When we imposed the VRA, the Voluntary Restraint Agreement, in 1981, actually the Japanese agreed to do it for us, we created a system that enriched them beyond anything they could have imagined. We created shortages, they made more money on cars, they moved up market into luxury cars. We, in fact, provided the cash so that they could invest in this country. So we have really had a very lop-sided trade policy for many years which I absolutely agree has contributed in part to the problems of the industry. I think we also have to fundamentally realize something about the American industry. This is an old industry. American companies have one retiree per active worker. American companies, every worker in an American factory is carrying the burden of that large retirement. Japanese transplants in the United States have received heavy subsidies. They have very young work forces. They don't have this retiree burden. And so natural -- and they do rely on imported components and so this is a burden that the American-owned auto industry somehow has to overcome.

MR. MacNeil: And what's your solution to overcome it?

MS. KELLER: I'm afraid that I don't have too many solutions, but I don't think that --

MR. MacNeil: In trade policy, I mean.

MS. KELLER: In trade policy, what we have right now is just frankly going to continue I think to pressure the domestic manufacturers. It's certainly contributing to an enormous trade deficit.

MR. MacNeil: Do you think, Mr. Womack, that some radical revision of the free trade policy is going to be necessary to keep an American auto industry in business?

MR. WOMACK: Well, I think the situation's pretty bad. We've been talking as if GM were the company in trouble. Well, GM is in trouble, but Chrysler and Ford are really, Chrysler's case in even worse shape, so it is a very, very serious situation. When you look at the next six or eight years, it's just not good, stagnant market, our producers are high cost for the reasons Maryann has been talking about. They may reach a point where they just can't make it. And a reality of the political situation is these companies are too big to fail.

MR. MacNeil: When the chairman of Ford, Harold Poling, told reporters the other day we have a hang up in this country called free trade, he's talking about really turning over, I mean, that's heresy for someone in as big an industry as that to say that, is it not?

MR. WOMACK: It's not heresy for Detroit for a while now. But at one time, 25 years ago --

MR. MacNeil: It would be regarded as heresy by the Bush administration in Washington.

MR. WOMACK: That certainly is not the Bush administration's view. And look, they have a very legitimate question. If we help these people, how do we know they don't start backsliding? That's always the problem you have with some sort of protective regime, that it gives you the opportunity to relax. I don't think anybody thinks we should let Detroit relax. The question is: Can you help in a way that is truly constructive?

MR. MacNeil: What do you think about this, Mr. Flynn? Do you think a protective policy is going to be necessary?

MR. FLYNN: I think some kind of policy --

MR. MacNeil: Protectionist policy I really mean.

MR. FLYNN: I wouldn't call it protectionist necessarily. I think some kind of a responsive policy to Japanese trade policy is certainly required. I don't think there's any way around it. You know, I think GM is certainly going to survive. GM is going to do fine. Ten years from now people may look back on this as an important step in the salvation of GM. I agree with Jim Womack that Chrysler is perhaps a more immediate worry. I would point out one thing, and that is that we are the largest automotive market in the world. We have a significant share going to direct imports, 20 percent plus in passenger cars, a significant percentage, about 18, in light trucks. Japan is the second biggest auto market in the world. Fewer than 3 percent of the passenger cars in Japan are sold by their non-traditional, non-Japanese makers. That is a situation, and it's similar by the way in automotive parts, that cries out for some kind of assertive response on the part of the U.S. government. Whether that's protectionist, market opening, or a whole range of options, I'm not prepared to say.

MR. MacNeil: All right, thank you, Mr. Flynn, Mr. Luria in Ann Arbor, Maryann Keller, Dr. Womack in New York. Jim.

MR. LEHRER: Still to come on the NewsHour tonight, the Bill of Rights and a Roger Rosenblatt essay. SERIES - FIRST FREEDOMS

MR. LEHRER: Now our third conversation marking the 200th anniversary of the Bill of Rights. Tonight we talk to a newspaper editorial writer who has written extensively about them. He is Joseph Perkins of the San Diego Union. He formerly worked for the Wall Street Journal and as a deputy assistant for domestic policy on the staff of Vice President Quayle. Mr. Perkins, welcome.

MR. PERKINS: Thank you.

MR. LEHRER: Do you believe we would be a different nation if it were not for the Bill of Rights?

MR. PERKINS: Oh, indeed I do, very much so.

MR. LEHRER: Why?

MR. PERKINS: I don't think freedoms that we take for granted today would exist. I believe that were it not for the protections that are afforded Americans by the Bill of Rights that central government, Washington, would, certainly would have been more powerful, would have exercised more control over the lives of individuals, et cetera.

MR. LEHRER: Just because that's human nature?

MR. PERKINS: I think that that is generally the course that governments take. For one reason or another, the larger they become, the more intrusive they tend to become in the lives of individuals, the lives of businesses, et cetera, and without those safeguards, I think that that would have happened in this country.

MR. LEHRER: Looking back on when these things were written by James Madison a couple of hundred years ago, what was it that caused them, the James Madisons of the world then, this country then, to realize they had to be written down, these inherent rights, if they weren't written down that they weren't going to exist?

MR. PERKINS: Well, I'm not so sure that James Madison feared that those rights would not exist. I believe that they believed, well, as was said in the Declaration of Independence that there were inalienable rights, but there was some discomfort on the parts of various of the states that were these rights not codified and made part of the Constitution and that government perhaps might tend to usurp these rights, these unwritten rights, and I think as a condition of ratification of the Constitution that it was at least a gentleman's agreement that there would be a Bill of Rights included.

MR. LEHRER: Tony Lewis was here talking about this last night and I asked him about some recent surveys that show that many Americans, the majority of Americans, are not that aware of the specifics of the Bill of Rights, but he said that you'll find very few Americans that are not aware of what their rights are. Do you agree with that?

MR. PERKINS: I agree with that. I think that if, for instance, a person gets pulled over to the side of the road by a policeman and they're driving, they would be very much aware of what their rights are under such a situation, and if a person received a knock on the door and there was a policeman standing there they would be quite aware that they had, that the policeman must bear a warrant, et cetera. So when those rights are challenged or when they are brought to bear that I think people are very much cognizant of what they have. And if they aren't immediately aware, they soon find out.

MR. LEHRER: There are 10, of course, 10 of these Amendments in the Bill of Rights. Which, from your point of view, is the most important? Or is it possible to say?

MR. PERKINS: Well, as a journalist, I think I'm somewhat prejudicial and I believe that the First Amendment is probably the most important. And I would say that the Fifth follows very closely behind.

MR. LEHRER: Why is that?

MR. PERKINS: Well, there is a principle that is articulated in the Fifth Amendment, and that is due process, that before government can deprive you of life, liberty, or property there must be due process of the law, and there is also a protection of one's property rights that says that if government does take your property, seize your property, that you have a right to just compensation. And so I believe that the Fifth Amendment is almost as important as the First Amendment.

MR. LEHRER: And most people understand that, do they? That's your point, right, that the average American, he or she's got the right to protect themselves from people, from the government coming in and wanting to encroach on their rights?

MR. PERKINS: Indeed they do.

MR. LEHRER: Do you believe in the absolute right of free expression in the First Amendment?

MR. PERKINS: I don't. I think that there should be responsible amendments to the exercise of any freedom. I think that that's a principle that most people agree with, for instance, the right to free expression. Well, that right does not, one does not have that right with respect to say shouting fire in a crowded theater. As a journalist, I don't have the right to print information about troop movements in a time of war. So under certain circumstances that right is secondary to a higher principle.

MR. LEHRER: How do you come down on this current controversy that exists on some college campuses about racial slurs and that kind of thing, anti-semitic statements, et cetera?

MR. PERKINS: That's a very problematic area in my mind. I know that there is a Supreme Court case pending now about Minnesota hate law, hate crime law, which proscribes that kind of thing. But I believe that such expressions are protected under the First Amendment. I think that they should be actionable under other laws, like vandalism.

MR. LEHRER: In other words, if somebody writes a racial slur on the side of a building, that's not, they shouldn't be prosecuted for saying it, they should be prosecuted for --

MR. PERKINS: For defacing the property.

MR. LEHRER: What's the difference?

MR. PERKINS: Well, because I think that that expression is protected. You have the right to say something that I might find completely profane to me or obscene or objectionable. But you have that right but if you were to scrawl that on my house, well, then that should be actionable under the law and it is. And I think that's an infinitely better way than to prosecute some, to abrogate someone's First Amendment right to free expression.

MR. LEHRER: Some people have suggested recently, particularly in this climate of the anniversary of the Bill of Rights that Americans are aware of what their rights are, in fact, they're almost obsessed with what their rights are, but they have forgotten that with those rights go responsibilities. How do you feel about that?

MR. PERKINS: I agree with that. I think that we are bombarded now with this talk of, I mean, just the plethora of rights, and there is not that critical linkage between rights and responsibility. For instance, I believe that a sacrosanct principle is the right of free expression, but I also believe that there is a responsibility and there is free press, that that's something that most Americans agree with wholeheartedly, but I think that the press has got an obligation to be responsible in use of that right.

MR. LEHRER: You mean, the press has the right to be irresponsible, but they can also be responsible if they want to be, in other words, they have an obligation to be responsible.

MR. PERKINS: I believe that the press has an ethical obligation to be responsible. Most recently we saw this is the case of Will Kennedy Smith. I believe that Current Affair had the right to pay the young lady $40,000.

MR. LEHRER: That's a syndicated TV show.

MR. PERKINS: But I think it was irresponsible. It was reckless and I don't think that it was consistent with the spirit of free press in my mind. Now many might disagree.

MR. LEHRER: Yeah. The Supreme Court through the years, of course, I talked to Tony Lewis about this last night as well, the Supreme Court, obviously, its job is to interpret the Constitution, and that includes the Bill of Rights. How good a job do you think they've done through the years?

MR. PERKINS: I think by and large the Supreme Court has done a good job, but I think that because of the way the Bill of Rights is written, especially certain amendments that are somewhat nebulous or they have become somewhat anachronistic, that becomes increasingly difficult.

MR. LEHRER: Like what?

MR. PERKINS: Well, the Ninth Amendment. In the past 1/4 century it has been interpreted as guaranteeing privacy. I think that's something of a stretch because if it guarantees privacy, then it can guarantee all sorts of rights. It just says that those rights that are not enumerated specifically in the Bill of Rights are retained by the citizen. But I find it somewhat problematic. The Second Amendment, which says that we have a right to keep and bear arms, I think it is probably the most misinterpreted, as Chief Justice Burger mentioned on Monday. And if the --

MR. LEHRER: You agree with Chief Justice Burger that it does not, that Amendment doesn't say that the American citizen has the right to have a machine gun in his or her house?

MR. PERKINS: No uzies or weapons meant to kill other citizens, and I think it has been grossly misinterpreted. What I would like to see and this may be far fetched at this point, I would like to see us consider some other amendments to settle, resolve some of these constitutional battles once and for all, because rather than saying that abortion is countenance under the Constitution by virtue of the Ninth Amendment, which I consider something of a stretch but which was the basis on which Roe V. Wade was decided, why don't we introduce an Amendment that says that women have reproductive rights?

MR. LEHRER: But what if --

MR. PERKINS: If it's not ratified, then that would settle the question, would it not? With respect to the death penalty, once and for all, I'd like the court to decide whether or not it is cruel and unusual punishment.

MR. LEHRER: But what would you say to somebody who would say, hey, wait a minute, Mr. Perkins, the beauty of the Bill of Rights is its beautiful ambiguity, that it is ambiguous enough to be stretched and whatever to accommodate the times?

MR. PERKINS: Well, then I would say to them, gee, this is a nation where we have more than 20,000 murders every year which owe in large part to the fact that we have just easy access to guns, to weapons of mass destruction, and were it not for this misinterpretation of the Second Amendment, perhaps we wouldn't have that kind of murder rate. I mean, I know there are other factors and perhaps I'm making a broad leap, but that would be the argument that I would make.

MR. LEHRER: Does the Bill of Rights as far as you're concerned work on a daily basis? Is it something that as we look ahead, we've had it now for 200 years, as we look ahead for the next 200 years, with the exceptions and changes, additions you would like to make, is it a document that still is and has meaning?

MR. PERKINS: Oh, I think so. I think it will be just as vital two centuries fromnow as it is today as it was 200 years ago, and I think it provides the underpinnings for our civilized society and without it we would be lost.

MR. LEHRER: Flesh that out. What do you mean we would be lost? What kind of country would you and I be sitting here, talking in if we hadn't had the Bill of Rights?

MR. PERKINS: Well, we would live, in my mind, in a country somewhat akin to the Soviet Union prior to revolution, one where there was no free and unfettered press, one in which government controlled the lives of individuals and which dictated to in terms of where one worked what actions one might take.

MR. LEHRER: And because all of the rights and the power were put in the hands of the state and not in the few hands of the --

MR. PERKINS: I believe in the primacy of the individual and I think that's a principle that has been bedrock since the beginning of our republic and it's that principle, the primacy of the individual over the state, that permits us to have the freedoms that we take for granted today. And I think that's why we are the most prosperous and the freest society in the world.

MR. LEHRER: Joseph Perkins, thank you very much.

MR. PERKINS: Thank you. ESSAY - BEAUTY

MR. MacNeil: We close tonight with an essay. Roger Rosenblatt, editor at large at Life Magazine, has been looking at the best seller list.

MR. ROSENBLATT: Since Katharine Hepburn has written a new autobiography, one sees a lot of photographs of the great star shown at different stages of her life. The photos make you wonder how can Miss Hepburn be beautiful in her early twenties and also beautiful in her eighties. She certainly is that, beautiful and the line free face staring out and up at the world with decades left to conquer it, and undeniably beautiful in older age, with the same high spirit glowing through the skin, and a different sort of sexy dignity. How can one Katharine Hepburn be beautiful and the other Katharine Hepburn be beautiful too? The question really isn't about Miss Hepburn but about us, the way we determine beauty. The question really isn't troubling in the sense of annoying but it is mysterious. The following things have been called beautiful. How can they all be beautiful? A house is called beautiful, not just one house, several. A castle is beautiful. But so is a townhouse and so is a country cottage. A road vehicle is called beautiful, which means that a sports car is a beauty, but so is a 1930 Rolls Royce, and an army jeep and a bus. A bus is very beautiful. One hat is Bill of Rights and so is another that looks nothing like it. A field in summertime is beautiful and the same field is beautiful under snow. A work of art may be beautiful and a work of engineering. A solution to a math problem can qualify. There, you got it right, beautiful. If all these disparate things can be assigned the term, what then connects them? A great many minds, beautiful minds, have dwelt on this problem and I apologize for simplifying their conclusions here. One answer is symmetry, when objects are in balance, they are beautiful. So renaissance painting and a Japanese sushi arrangement are beautiful. Another answer connects symmetry to divinity. This theory holds that the world is most beautiful and balanced because God has balanced His creation. See the petals of a flower. But then some people say that beauty is imbalance, imperfection, that being a sign of humble mortality, and others that beauty is a sign of virtue, that something cannot be beautiful without being good. Maybe that's so. When the swastika was a primitive religious symbol, it looked fine. When Hitler got ahold of it, that was something else. Whatever the reasons, it seems clear that what we call beautiful has to do with something inside the object and not with life on the surface. Many faces are called beautiful because they have the right parts in the right proportions in the right places. Yet, look at a fashion model's face compared with say that of Einstein, or that of Lincoln. One could stare into Lincoln's face for hours equipped with the knowledge of what the man accomplished or perhaps entirely ignorant of his works and yet, know intuitively that the face is beautiful because the soul had shaped it. Look at Gandhi, look at Billy Holiday, takes your breath away. This is how the poor are often beautiful, because suffering has made them so. And the decaying tenement house can be more beautiful than a mansion because life has struggled there. Different things can all be beautiful, but some beauties are greater than others and those seem to be the ones we trace to something honorable, brave, essentially human. In a way, the observer creates the qualities of the thing observed. One mind greets another in an act of mutual congratulations as if to say I think you're beautiful because you think I'm beautiful. Of course, Katharine Hepburn was beautiful at both ends of the candle, which is why the mere sight of her makes people glad, whether she stares into the morning like sunshine, or walks in beauty like the night. I'm Roger Rosenblatt. RECAP

MR. LEHRER: Again, the major stories of this beautiful Wednesday, General Motors announced a major restructuring which will close 21 plants in the next four years, Federal Reserve Chairman Alan Greenspan said the economic recovery has faltered, and Soviet President Gorbachev called a final session to the Soviet legislature to transfer power to the new commonwealth of independent states. Russian President Boris Yeltsin said there would be no place for Gorbachev in the new commonwealth. Good night, Robin.

MR. MacNeil: Good night, Jim. That's the NewsHour for tonight. We'll be back tomorrow night with another in our series of conversations on the 200th anniversary of the Bill of Rights. I'm Robert MacNeil. Good night.