ClimateOne

 

Greg Dalton:  Welcome to Climate One, the conversation about America’s energy, economy and the environment.  I’m Greg Dalton.

 

Today, we’re talking about the US economy and auto industry with General Motors Chairman and CEO Dan Akerson.

 

Three years after the Obama administration bailed out the humbled giant, a leaner General Motors is firing on all cylinders and recently posted is most profitable year ever.  The new GM has paid back about half of the $50 billion it received from US taxpayers, but the government’s remaining 30% stake in the company could be seen as a financial and political liability.

 

Over the next hour, we’ll discuss this American comeback story as well as gas prices, fuel economy and the move toward electric cars, such as the Chevy Volt.  Along the way, we’ll include questions for Dan Akerson from our live audience here at the Commonwealth Club in San Francisco.

 

Before taking the reins at GM in 2010, Mr. Akerson was head of global buyout at the Carlisle Group, a private equity firm in Washington, D.C.  He previously was CEO of General Instrument, where he succeeded Donald Rumsfeld, and prior to that, he served as CEO with NEXTEL.  Please join me in welcoming GM’s Dan Akerson to Climate One.

 

[Applause]

 

Greg Dalton:  Dan, welcome.  Thank you for coming.

 

Dan Akerson:  Thank you.

 

Greg Dalton:  So GM has just had a good year.  Where is it now and where are you trying to take the company in the years ahead?

 

Dan Akerson:  Well actually, we had the best year we have ever had in a hundred three-year history, we posted record profits.

 

[Applause]

 

Dan Akerson:  I hope that’s not the last applause I get.

 

[Laughter]

 

Greg Dalton:  And so on the profits next year.

 

Dan Akerson:  You know, you’re only as good as last quarter.  Where are we today?  You know, I’ve been CEO a couple of companies as you mentioned, and being in private equity actually helped coming in to this industry.  First, I was criticized for not being a car guy, and that’s okay, there are three non-car guys in Detroit today and it’s I think it’s the first time in 20 odd years since all three of us -- all three of the major American manufacturers are profitable.

 

[Laughter]

 

Dan Akerson:  We had to go through some difficult times, and there has been a lot of political dialogue on that to and fro, anti and pro.  But where we are, we are -- after two-year hiatus, General Motors is again the largest auto manufacturer in the world.  As I said, we had our most profitable year.  Between ’10 and ’11 alone, we grew our revenue $15 billion.  That alone will put us in the Fortune 250.  So, our revenue today is about $150 billion which would be larger than the gross national product of a hundred countries in the world.  So it is a huge, I think -- it’s an American company, it’s a global country -- company in the sense that we compete in 117 odd countries.  We export around the globe.  We’re very successful in most of the high-growth markets.  We have the largest market share of any manufacturer in the world, auto manufacturer.

 

I think the lessons learned is we can’t be as internally-focused as we were before and I mean by that, we had internal metrics, are we better than the last model we made or are we looking at the aspiration of competition and saying where do we think they’ll be in three to five years?  As Wayne Gretzky said, he doesn’t skate to where the puck goes, he says, he skates to where it’s going to be.  We would often say, well we have a car and it’s going to be XYZ.  And the obvious question is, yeah, but the high time we get to market, are they going to still be static -- and they won’t be.

 

So we’re much more external.  We benchmark against the best in the industry and we’re producing great cars.  You see, it’s when I think about what are the things that keep me awake at night, first of all, we can’t rest on our laurels.  It would be very easy to say a great year.  The first thing we did and we announced as we’ve really got to attack our cost structure and make sure that we’re viable and we’re producing cash and we’re going to be competitive.  Our margins are not what our primary competition is.  And over time, you say well, you just still make a lot of money, while if the other is more efficient than you are over long time -- companies don’t fail on a year or two.  It takes 10 years, 20 years, 30 years for the deterioration and the rot to really impact the viability of the company.  So we can’t be sitting here and in 2030, 2035 and saying what happened.  The decisions that were made in 2012 are these positives of the future of the company.

 

So, we’re in pretty good shape but we have a lot of work to do and we still have many issues that need to be addressed and resolved.

 

Greg Dalton:  We’ll get to fuels and energy and climate change and some of other things in a little bit.  But first, the bailout has become quite a national political issue in this election season.  You came from a private equity firm.  What do you think about the -- was there a private capital available that could have bailed out the company instead of taxpayers’?  Did the deal give the UAW a deal over bondholders?  Were you given any critiques of the bailout package?

 

Dan Akerson:  Well, I don’t want to be defensive because having come from private equity, we experienced we’re part of many restructurings, and there are multiple options, multiple avenues to a successful restructuring.  And I know we have become somewhat of a punching bag in this political season.  I don’t want to get into the political arena, but I’ll say this much -- if you are in private equity and we had a hundred billion dollar portfolio around the globe, front row seat, it was coming off the wheels.  And as American, we are very proud, our government stood up regardless of party affiliation and just like blood is critical to the body, liquidity is critical to the economy.  And yes, we liquidate -- net liquidate and we provided liquidity into the markets, and I was -- I’m also the senior director of the American Express which is one of the larger financial institutions.  Questions were, were they going to be viable?  And it was a different set of circumstances in the financial arena than it was in the manufacturing, specifically in the automotive.  But at the end of the day, regardless -- I don’t want to debate it.  I wouldn’t have joined the board, I wouldn’t have joined the company if I didn’t agree with it, because I think pragmatism has to enter into the economic dialogue.

 

I went to graduate school, to London School of Economics.  Everybody knows that, but it’s actually the London School of Economics and Political Science, because you can’t separate politics and economics on a macroeconomic scale.  This company, in my opinion, and George Bush -- and by the way, these two presidents of divergent political perspectives put money into this company.  It wasn’t just one of them.  And they weren’t running for office at the time.  They were in the arena.  They had to face the hard facts.  And in my opinion, they made the pragmatic decision to save this company, because it’s now been estimated a million jobs were at risk.  That’s a million households, and on a personal level, this is a wealthy state and a wealthy community and we all look very prosperous and wealthy to me.  But when you go to Detroit, and you go to Ohio, and you go to Pennsylvania and Indiana and Illinois where a good share of the automotive industry resides, whole communities have been negatively impacted just by the downturn.  It would have been significantly worse.  And President Bush said, “A million jobs and $150 billion tax revenue would have been be foregone by the federal and state governments had it been allowed to fail.”  So -- and then, there’s the infrastructure, the industrial infrastructure of this great nation would’ve been severely damaged.

 

So I don’t care how we got there.  The question is, “Did it work?”  Well, price was alive, we’re alive.  We’re not just alive, we’re prospering around the globe, in this country.  And since bankruptcy, we’ve hired almost 17,000 employees in the United States alone and we have invested almost $10 billion, and I know against $1 trillion deficit sounds like peanuts -- it’s not.  And the ability to build new cars, so what do we -- we’re focused on, you know, what is the evolution of the industry?  We want -- we can’t afford to focus on the near term.  What’s it going to be like in 2030?  Why are we spending so much money on alternate forms of propulsion?  Whether it’d be electric, hybrids, ultimately hydrogen fuel cells, which we are a leader on a global basis in hydrogen fuel cells.  If I mention names of companies that you all would say, wow, they’re -- that German company is looking at your technology.  It’s because this company is a repository of a huge amount of intellectual property that’s associated with alternative fuels as it evolves.  And this country now has an industry that’s been totally revitalized.  They can make the necessary investments to transition our economy to a higher tech and more efficient, cleaner industry.

 

Greg Dalton:  One way to separate politics from economics would be to pay back the remaining money that’s lent by the US Treasury.  Do you have a timeframe for when that 30% stake -- the stock is still below the IPO price.  Do you an idea when the Treasury would be paid back the other half?

 

Dan Akerson:  Well, at the parse words but you say lent.

 

Greg Dalton:  Well, okay.

 

Dan Akerson:  Okay, they lent us money, and we paid all of that back.  They provided preferred interest of -- preferred stock with a 9% coupon.  We played all that back plus dividends and interests and we held the largest IPO in the history of the world, and most of that went to the federal government.  They own 27% on a fully-diluted basis, and they’re just like every other shareholder, they can sell it when they want.  And it is perverse but I know -- I have some understanding of capital markets and although we produce record profits, lie is in the stock at record levels.  Well, part of it is because we have a big shareholder and we don’t know when they’re going to leave.  Because as part of the bankruptcy, we -- you’ve heard the structure in the financial world, it was let’s take the good assets of the bank called good bank and bad bank.

 

Well we have liquidation motors.  And liquidation motors was we left all the “toxic assets” behind if you will, and there were a hundreds of millions of shares at -- there was a complicated -- I won’t draw any conclusions or make judgments about who got a good deal and who didn’t.  It had to be done quickly.  And again, there are many paths to the solution that’d work.  But we had to give those several hundreds of millions of shares to the liquidation motor shareholders, and some of those largely were bondholders.  Well, and the stock really swooned late last year is because we dropped a couple of hundred million shares on them and they flushed them to the market.  So a lot of our big shareholders look at a big holder like the federal government saying, “when are they going to exit?”  And the answer is candidly, I don’t know.

 

Greg Dalton:  And you can understand the theme their crying in Congress though if the US government sold shares to their 30% below the IPO price, the scream would be, “Ah, the tax holders are getting fleeced.  They sold at a loss, bad move.”

 

Dan Akerson:  Well again, I asked -- I don’t know who I asked the question, is the federal government a private equity firm or were they acting on behalf of we, the people?  We are the government.  So did our -- was our economy, was our citizenship properly served?  What if we didn’t collect that $150 billion in taxes?  By the way, if we had failed, we had $23-24 billion pension shortfall which I -- we’ve now worked down to around 12 or 13 billion.  That would’ve gone to the PBGC.  The government would have to take up that $20 billion liability.  It’s much more complicated than you get in a 20 second blurb on the evening news or a quick thing in an article.  It’s -- this is a complicated bankruptcy on a scale that I think the average citizen in this country doesn’t have the interest quite frankly.  So I would say--.

 

Greg Dalton:  How would you like them to sell?

 

Dan Akerson:  How would I like them to sell?  Well, recognizing this may show up in Washington--

 

[Laughter]

 

Dan Akerson:  I think it ought to be a very controlled -- I mean I think a good way -- come on say, we own 500 million shares themselves, 50 million shares every quarter for the next 10 quarters.  Or something were--

 

Greg Dalton:  Dollar-cost averaging.

 

Dan Akerson:  I would just say, they’re not there to get the last dollar.  By the way, there’s only -- we say oh, there’s only one automobile company that owns -- owes the government any money -- that’s Ford.  Ford -- we were offered 12 billion, we were -- Michigan delegation was working on our behalf, when I came in, we could apply and we would -- I’m sure we would’ve been granted $10 to $12 billion of low interest Department of Energy loans for clean and high-tech, and I said we’re done with that.  We nixed it.  So did Chrysler.  Ford has taken -- and I add no fault when you say the perverseness of it all is their -- governments help their companies to kind of shape and mold without too much of a heavy hand, shape and mold direction of technology and how the company, how the economy evolves.  I don’t see anything -- it’s not a religious issue.  It’s something that’s pragmatic and companies are -- that stand for companies around the globe all the time.

 

Greg Dalton:  Another pragmatic issue for a lot of Americans is high gasoline prices and you said last year, you told CNN that gasoline at about 4.50 would affect people going into the showrooms.  So how are high gasoline prices affecting car sales and the kinds of cars that Americans are buying?

 

Dan Akerson:  Well, just in my 10 years, we’ve shifted -- if you looked at the type of trucks, crossover SUVs, sedans, we’ve seen a shift of almost 12% of our production to small to medium-sized sedans away from large trucks.  And that’s a function of energy cost and us producing better cars in this low end of the market, and I don’t mean low end price but low and smaller cars, more fuel efficient cars.  For example, I remember President Obama when I was in private equity and I think in an unguarded statement of exasperation with the whole industry I guess and at the depths of the recession said, “Why can’t they build a car like the Corolla?”  Well, we did.  The best selling compact car in the America today is the Cruze, the Chevy Cruze.  We’ve -- it’s not just the Corolla, all of them, in one year, and it makes about 40 miles per gallon.

 

Greg Dalton:  Do you make money on the Cruze?

 

Dan Akerson:  Yes, we do.

 

Greg Dalton:  So you can make money because the general prevailing wisdom is bigger cars, bigger margin.  Well you can’t make money on the small or medium-size cars.

 

Dan Akerson:  Yeah, it’s -- you put your -- you make a lot more Cruzes than you do some other ones.  So we don’t want -- we’re not, you know, we don’t make money on the Volt on incremental, one-off basis.  But the Volt -- so we sold as many Volts in the first year as Toyota sold Priuses in their first year.  I mean sometimes you have to be a pioneer to do the right thing and kind of shape and mold our own future, and so we’ll make investments where we think the long-term future is in our interest.

 

Greg Dalton:  Last year you said that a dollar a gallon gasoline tax would be preferable to the efficiency standards that were being talked about at that time and subsequently became law in California and United States, do you still think that increasing the $0.18 a gallon gasoline tax is a good idea?

 

Dan Akerson:  I think there are a number of approaches to how you want to impact consumption.  In a -- there are so many -- there are laws, economic laws just like there are physical laws.  And one of them is you don’t tax reduction, you tax consumption if you want to change behavior.  And so there are a number of ways to get to that.  That was an example of one of several.  But I do think you can affect consumer behavior by a number of different ways.

 

Greg Dalton:  So maybe a gasoline tax increase?

 

Dan Akerson:  I think it ought to be some -- it’s on a list of potential alternatives, yes.

 

Greg Dalton:  We put this program on -- announced this on Facebook and I immediately got a bunch of questions about a particular issue.  I’d like to read you one of the questions we got from the Facebook today.  “Please ask Mr. Akerson why GM funds the Heartland Institute, a group that has tried to push misinformation about climate change into our public schools.  Is this funding consistent with their company’s message in marketing of the Chevy Volt?”

 

Dan Akerson:  Well, I actually am glad you asked me that.  I wasn’t aware of this until the last day or so.  A couple of things in terms of good governance, I cannot sit on the foundation’s board or steer anything because--

 

Greg Dalton:  Are you saying it was the General Motors’ foundation that gave the money to this institute?

 

Dan Akerson:  Yeah.  Yeah, not the company.  Let me say another fact.  The first time I was interviewed by the press, I was stunned with the following reaction, some guy says, “Do you believe in global warming?”  And I said, “Well yeah, I do.”  Several GM executives says, “You don’t say that in public.”  Well--

 

[Laughter]

 

Dan Akerson:  This may surprise you, my underwear doesn’t have GM stamped on it and I am an individual and I do have my own convictions and it may sometimes they -- they agree and sometimes they don’t.  I think it’s actually healthy you have different points of view and perspectives around the table.  Let’s talk about -- I always say actions matter more than words.  So just last week, the EPA named us their star energy provider because of consistent reduction of emissions controls.  Sixty percent of our plant -- we are 60% more efficient in the use of fuel than we were just five years ago.  Landfill usage coming off of our plants is essentially zero.  You can put it in a coffee can.  That’s how we’re trying to improve.  We have--

 

[Applause]

 

Dan Akerson:  We have plant -- most of our plants, we have some plants that are completely run off on landfill methane.  They are -- they’re zero emissions upon our -- and we have, we have plants that are the size of small farms, 200, 300 acres under one roof.  We put $40 million behind the Chevy program with the Cruze and said we would reduce 8 million metric tons of CO2 in this country in one year and we’ve done it, we’ve bought, we’ve paid for force to be at the size of the state of Connecticut.  This is $15,000 that was committed to before I came in.  I also think the Heartland Institute untold is -- does other things and I find this interesting, I won’t go any further but I’m going to take another look at it when I get back to Detroit.  I leave it at that.

 

[Laughter]

 

Greg Dalton:  We had a lot of conversations here, a lot of companies are thinking about will there be a price on carbon some day?  A lot of markets around the world and Europe, you’re a global company, General Motors -- Europe has a price on carbon very low, Australia recently put on a carbon tax, China is moving in that direction, when do you think there’ll be a price on carbon and how that will affect your planning for General Motors selling cars around the world?

 

Dan Akerson:  I always thought, you know, I’m -- when I was a midshipman and they look at me, we were told, yes sir, no sir, I’ll find out sir, and --

 

[Laughter]

 

Dan Akerson:  So, I don’t know.  I actually didn’t get -- I don’t know when that tax--

 

Greg Dalton:  No one -- because lots of people have metrics and scenarios.

 

Dan Akerson:  Yeah.  All I got to say is I try to be very pragmatic and we have to allow for all possibilities.  And we have -- we were an active participant and willing participant in CAFE standards this year.  We’re going to do our level best to be a corporate, a responsible corporate citizen.  And if the wisdom of our political leadership is to put in a carbon tax, we’re going to react to it and we’ll react to it as best we can in the interest of our shareholders.

 

Greg Dalton:  In the past, California is also putting a price on carbon pollution through AB 32, a law that Governor Schwarzenegger passed, signed and other legislators wrote.  In the past, General Motors spent a lot of time litigating against those sort of things, in lawyering and rather than getting the engineers out there to say, “Hey, how do we -- how do we meet these goals?”  So, with the auto industry signed up for the current round to increase mileage standards to 55 miles a gallon--

 

Dan Akerson:  No, no, no.  We didn’t sign up.  We actually were party to it.  And we could have -- and believe me, there were factions in the company that I -- this is--

 

Greg Dalton:  The lawyers wanted to go at it?

 

Dan Akerson:  This is today’s -- this is the new GM, and rather than sit in the corner and be exoteric, we’re going to be -- we want to be part of the solution.  We do not want to be part of the problem.  We live in this country.  I have grandchildren and children and I want them to inherit a better earth than we did, and I think quite frankly our generation, it was 1970, the EPA was put in the -- the water and the air in this country is cleaner than it was when I was growing up in the ‘50s and ’60s and I think it ought to be cleaner next year than it is today.  We’re not going to get there for free.

 

[Applause]

 

Dan Akerson:  And I don’t think of huge manufacturers such as General Motors or any other company can not be a part of the solution and that’s what our goal is to be.  And so we are active participants.  We weren’t dragged to it.  And--

 

Greg Dalton:  Not because the government owns 27% of the GM--

 

Dan Akerson:  No.

 

Greg Dalton:  --and not that you couldn’t sue your boss so you have to go along?

 

[Laughter]

 

Dan Akerson:  What did he say?

 

[Laughter]

 

Greg Dalton:  So CAFE, the mileage standards were basically flat for 25 years in the United States.  And from 2010 to 2025, they will go up -- they will double from about 28 miles a gallon to 55 miles a gallon.  Here in California, there’s a law to decrease the carbon intensity of liquid transportation fuels 10%.  And oil companies, particularly independent refineries, are fighting that tooth and nail in court.  And I‘m just being considerate, like your comment on that juxtaposition, auto companies increase efficiency 100% and they’re at the table voluntarily.  The energy companies, the oil companies are fighting 10%.  Your response?

 

Dan Akerson:  I’m in a car company.  I’m not on an -- and I respect they’ve got to serve their owners as their owners want them to behave in the marketplace.  You know, what I’m proud of is in our company, if you look back 25, 30 years, we’ve taken almost 99% of out of the emission of a car.  It’s still a lot.  I know that’s a lot of too much but it’s we want to be better.  So what are we doing?  We’re producing cars like the Volt, we’re producing cars like the BEV which was better electric vehicle, the Spark, which will we hear next year.  This week -- this week, we came out with a new engine that will burn liquid gasoline as you see it at Exxon or Chevron or anybody else today, and it’s also the same engine -- not two engines, the same engine will also burn -- compressed natural gas.  We have to spend a little bit more on lifters, sealants and piston and whatnot and it will cost us -- I’m not going to give you a number but it’s not prohibitive, but it allows us to migrate a way to a cleaner form of energy over time.

 

So we’re not sitting still.  We want to be a part of the solution, and that comes in many different levels.  When we look at CAFE for example, you probably didn’t know this, but if your Mercedes, as long as you produce 24,999 of a particular model, you weren’t subjected to the gas customer tax, otherwise you’ve stayed below 25,000.  Well I don’t get that break in Germany, so why in the hell did someone agree to that back in the old days and so, you know, I just said at last.  We’re at the table and we’re ready to talk turkey and I say but why give an advantage to a foreign competitor?  We’re not getting it in Germany.  And by the way, guess who didn’t show up at the announcement of the new CAFE standards?”  Which I thought was a mistake.  I think I would have done that.

 

Greg Dalton:  And some of those European companies when they exceed the rules, they pay a slap on the wrist fine and they go about their merry business, right.  That the penalties for non-compliance have been--

 

 Dan Akerson:  We’re -- we are pushing everything on cleaner energy, more fuel efficient, we have many cars now that are EPA rated at 40 and above 42.  The new Eco Cruze is at 42.  We’re coming out with a clean diesel next year for the Cruze.  The collateral impact, positive impact of all of our work on Volt.  We’re putting in what we call eAssist on trucks.  We’re putting them on midsize sedans and small cars.  For example, the new next generation, if you really want a good car that will give good mileage is the new Malibu that’s coming out.  I mean this car has just gotten rave reviews and we put a battery string in the back in a congested city like San Francisco or like any big city in America, we estimate that one in every five minutes, you’re sitting still or in traffic or stop light.  Well, you go to -- you got your chargeable battery to run your radio and everything else but we go to a string of lithium ion batteries in your trunk, and your mileage will drop anywhere from 35 to 33%.  It’s again, and it’s cleaner, and you are in the city when you’re on that mode, so you’re seeing the evolution here and you can see where it’s going over time.  And the more creative we are and the greater energy density that we can get into a cell battery, the better off we’re going to be.  So we’re already -- we’re investing, I mean this is the GM, we put $100 million in the GM ventures.  Sounds like a priority of every firm, doesn’t it?  But we decided, look, we don’t have -- we don’t have all the answers.  And you have these entrepreneurs, these wonderful entrepreneurs that their life and their soul and their grandmothers’ inheritance, they invest everything and they live and die with that.  Well, I like that intensity and we had the opportunity to kind of walk around the technology and see if it has as an automotive application.  So here in California, the Envia Corporation, I think it was probably picked up in your papers here.

 

Greg Dalton:  It was.

 

Dan Akerson:  They -- that’s a very promising technology.  We don’t know if it’s industrialized yet.  We have -- but we have see the--

 

Greg Dalton:  We should clarify, he said a company that claims to have made a breakthrough in energy density and car batteries.

 

Dan Akerson:  Yes, lithium ion.  So we’re excited about that because our battery in the Volt is a 400-pound battery.  That’s a lot of weight.  It gives 16-kilowatt hours of energy.  Well, what happens if it’s so dense, it’s four times as dense?  Well, it was to be at 64 kilowatts.  Well what does do?  That means a battery can run a lot further.  Instead of 40 miles, it will run maybe 140 miles.  And so I believe in my lifetime, in technology, there’s this ever-escalating improvement.  You got to be optimistic about it that battery technology will improve over the next 5, 10, 15, 20 years.

 

Greg Dalton:  And you hearing all that, it sounds like away from petroleum to natural gas, batteries or mixed of fuels because the one--

 

Dan Akerson:  Yes, yeah and I think the crowning -- you know the holy grail if you will would be the hydrogen fuel cells.  By the way, we have a fleet of hydrogen -- this technology works.  It’s just very, very expensive.  The chemistry is extraordinarily complicated, and quite frankly we’re spending -- it takes about -- it first it took about two ounces of platinum, if you look at platinum prices lately.  Now, we’ve got it down to a half to a quarter ounce of platinum.  But that -- when I was with General Instrument, you mentioned, we are the company that literally invented digital high-definition television.  The first copy cost us $350,000-$400,000.  Well, you’re buying them now at whatever you’re buying your televisions for, couple hundred dollars.  It took a while.  But you’re going to see cost of hydrogen fuel cells come -- today, we’ve got -- we have to put three million miles on hydrogen fuel cell cars today.  But the cars cost 3, 400, $500,000.  Now we’re down about 3, 350.  And hopefully in the next 10 years we’ll get it down in maybe 35 or 40.

 

 Greg Dalton:  Dan Akerson is chairman and CEO of General Motors.  He’s our guest today at Climate One.  I’m Greg Dalton.

 

The Chevy Volt is the centerpiece of a lot of GM’s strategy right now.  It brought something of a halo effect to the company and yet recently, the company announced it was suspending production.  You sold less than you wanted to last year. Are you a little bit disappointed with the Volt or is this natural for something that’s new and new technology in the marketplace?

 

Dan Akerson:  Well, I hope the audience understands what I’m about to say as -- you never have perfect knowledge of what the market is going to do and how well it’ll receive your product.  So this Cruze I mentioned, the best selling compact car in America, we closed the plant for two weeks last November.  You didn’t know that, because there was so much intensity around the Volt because although it was designed probably when President Obama was in the Senate, it’s now his car.

 

Greg Dalton:  He said he’s going to buy one.

 

Dan Akerson:  Well, you know, I’m happy to hear that.  I wish he’d buy one this year.

 

[Laughter]

 

Dan Akerson:  But he’s not and -- not this year I don’t think, but it’s become somewhat politicized.  In fact, the Volt always -- it’s always in the background.  And so we are going to match production to inventory.  And that’s what -- if you were owners of this business, if it was your company, that’s exactly what you would do, whether it’s the Cruze, whether it’s a truck.  I mean, we over-inventoried trucks this year.  Why?  Because we got to shut our truck lines down for 26 weeks this year because we’re doing a whole new remake of our truck line.  Well, you know, the average guy in Wall Street says, “We’re going to build an inventory.”  “Well, we’re going to shut the plant -- the plants down for 26 weeks this year.”  So you had to accept that there is some intelligence behind our decisions.  And the Volt we shut down because we saw inventory building and we want to get into line with production and demand in the marketplace.

 

Greg Dalton:  We want to show a brief clip about 15-second ad that is running about the Chevy Volt and I want to ask you about it.  And so if we could queue that up.  This is an ad that’s Chevy Volt ad that’s been running.  You can see it but we’d certainly -- we can certainly hear it.

 

Advertisement:  For our town.  For our country.  For our future.  This isn’t just a car we wanted to build.  It’s the car America had to build.  The extended range electric Chevy Volt.  From the heart of Detroit to the health of the country.  Chevy runs deep.

 

Greg Dalton:  From the heart of Detroit, to the health of the country.  Why is -- why is this good for America?  What’s the -- what are you trying -- what’s GM is saying--

 

Dan Akerson:  Well, the great thing about the Volt is it represents American innovation, American ingenuity, clean technology, and I think it’s a statement about what this company represents, the very best that America can produce.  It’s clean and it reduces our dependence on oil, and especially foreign oil.

 

Greg Dalton:  Okay.  Dan Akerson is chairman and CEO of General Motors, our guest here today at Climate One.

 

Last year, Toyota downscales -- reduced downward its profit expectations for the year because of supply chain disruptions in Thailand.  Intel did the same thing.

 

Dan Akerson:  Yeah, we’ve done it too.

 

Greg Dalton:  You, you have something it related to Japan--

 

Dan Akerson:  We have in Thailand but--

 

Greg Dalton:  In Thailand.  So the floods that that struck Thailand are precisely the kind of extreme weather events -- droughts, floods, fires, the climate scientists who as like I heard you earlier, you said you accept their science, say it will happen with increased intensity and frequency.  So my questions is, you ever run a global business, how do you plan for these kinds of unexpected supply chain disruptions that then, you know, hit you from the other side of the world?

 

Dan Akerson:  You know, we have operational risk management function within the company.  And so when I came and I said, well, give me the 25 biggest things that could happen to you.  And if you want to lay awake at night worrying about all of the -- I did that for a while not agreeing with -- what the hell I’ve did and all that, but I mean if someone would have told me, I mean it’s so tragic what happened in Japan, an earthquake, a tsunami and a nuclear disaster.  What it tells you is you have to diversify your supply chain, and we are actively doing that and, you know, to be honest with you, depending on how your -- how far your supply chain went around the globe, some manufacturers were impacted much more through what happened in Thailand than what happened in Japan.  So we have taken a hard look at that as I’m sure all of our competitors have.  It’s been a lesson learned, and I will tell you, we were very concerned in both instances but we marshaled our resources as best we could.  We shut our Shreveport plant down for I think four or five days to ensure we had supply to a different set of issues we had.  And we were lucky that’s all impact we had for those two natural disasters.

 

Greg Dalton:  So climate risk -- climate driven weather can be a business risk?

 

Dan Akerson:  Yeah, yeah.  And in the case of -- the climate wasn’t the issue in Japan, it was just --

 

Greg Dalton:  More in Thailand.  Yeah, right.

 

Dan Akerson:  Thailand was probably more likely.  I’d like to think it was more likely than what happened in Japan.

 

Greg Dalton:  You mentioned GM Ventures.  GM Ventures invested in car sharing, I believe with RelayRide?

 

Dan Akerson:  Right.

 

Greg Dalton:  I’d like to talk about, you know, the future of car sharing and automobiles as a service mobility as a service, not something that people buy, you know.

 

Dan Akerson:  Yeah, we’re in a mobility business at the end the day, I mean, when you look back at it.  And you don’t know what shape or form that mobility will take place.  We’re looking at autonomous cars too, you all know what I mean by autonomous cars?  I mean, we’re trying to look at everything now.  We can’t afford to run around with blinders saying we’re going to build just trucks.  We’re going to build every segment of the market and we’re going to try to be the best and most efficient we can in every segment of the market.  Well, if it evolves to a zip car-type or a peer-to-peer type application that relay cars represent, we want to be a part of it.  And we have a unique technology and on star where we can enable at.  So that if you want a car and you want to make it available and you can rent it to me for 2.50 a day, I think it is the running number, they want to take this to all 50 states.  So we wanted to be an enabler -- and of course, nothing you do in this world satisfies everybody.  I mean, I was criticized for being stupid on that one.  And it was well, but what if this takes off?  What if urban mobility takes that vent?  Well, we don’t want to be late to the game so we decided to be proactive rather than reactive and I think, you know, if it works out, we’re going to be -- as always if you’re right, you’re a genius and if you’re wrong, well, of course we knew you were stupid.

 

[Laughter]

 

Greg Dalton:  But there must be some people inside GM who will say, “Wait a minute, that means we’ll sell fewer cars.  We’re in the business of selling cars, if people rent a car, then that’s bad for our production etcetera.

 

Dan Akerson:  Yeah.  There are people like that.

 

[Laughter]

 

Dan Akerson:  Yeah, I’m sure, I like to sit around saying that guys like Dan that got us into this thing, but, you know.

 

Greg Dalton:  Bill Ford was here recently and said, “Hey, it’s going to happen whether we like it or not, we might as well part of it.”  We also talked about some young consumers these days, companies are always interested in young consumers, they might pick their iPhone over their car as a social tool for connecting.  So you got to think about that.

 

Dan Akerson:  Yeah.

 

Greg Dalton:  So bringing the Cloud into the car--

 

Dan Akerson:  Yes, we’re very interested in that.

 

Greg Dalton:  These days, I’ve seen advertisements that are more about the entertainment and the console than the car itself.  It’s more about the entertainment experience in the car than the car itself.  It seems like a real interesting approach for a car company that sell the entertainment value of the car.

 

Dan Akerson:  Well, I don’t know exactly what you’re referring to but we put it under broadband or infotainment.

 

Greg Dalton:  Right.

 

Dan Akerson:  And, but we don’t want to jeopardize the safety on the road because I would tell you, I’ve been going down the road and I see people come over and they say it’s a distract -- it provides as much distraction and risk to oncoming traffic as a drunk driver would.  And I have to admit, I’m much more alert to oncoming traffic that I might have been a couple of years ago.  When I was CEO of NEXTEL, we talked about short message service when nobody had the full keyboard that you get like on the iPhones and whatnot today.  But that being said, we want to have a hand-free, eyes-free application in our cars.  That’s the thrust we are trying to make.  So if someone text you, the first phase will be a couple of voice recognitions that you answer “Yes, no, I can’t talk right now, I’ll call you back.”  And so let’s say, your wife or your husband calls you and says, “Well, while you’re in downtown, can you pick up the dry cleaning.”  Yes, no, I’ll call you back or whatever.  But eventually, we’re interested in some of the work that Apple is doing with Siri because you get voice recognition technology which is going to continually improve.  Again, let’s get in on the ground floor, we have hired more people from Netspace and it’ll probably surprise you the people we’re hiring out of Bell Labs, Lucent, VISCA-type industries so we can be up on that.  The new Q system Cadillac user experience has millions of lines of code written into that infotainment system that will facilitate the introduction into this, but the guiding principle is hands-free eyes-free.  So -- and I know it’s distractive even the talk but my wife talks to me all the time when she’s driving and we were married 40 years and we’re still here.

 

Greg Dalton:  No crash, good.  We are going to put our audience microphone out here and invite your participation, invite you to come with one, one part brief questions for Mr. Akerson.  And the line will form back there with our producer Jane Ann.  If you’re on this side of the room, we please ask can you go through that door over there rather than crossing these cameras -- yes, so please -- please go through that room and the line will form over there.  And while we get that going, our guest today at Climate One is Dan Akerson, Chairman and CEO of General Motors.  I’m Greg Dalton.

 

We haven’t talked about China yet.  China is a big part of the auto industry.  In fact, there’s Shanghai Auto Company that owns one percent I believe, of General Motors.  Let’s talk a little bit about the future of China, how big a part it’s going to be for General Motors and will that share -- one percent share, could that be increased so there’s more cross ownership with China?

 

Dan Akerson:  Well, they bought -- to be clear, they bought $500 million, so I’m not sure that equates to one percent.

 

Greg Dalton:  Okay.

 

Dan Akerson:  We own -- we’re on a joint venture with Shanghai Auto in what is now the largest automotive market in the world, and we’re proud of that and we’ve been gaining market share and--

 

Greg Dalton:  And record sales in China.

 

Dan Akerson:  Yup.  Just like here.  So -- but everything is not great at General Motors.  We have our issues.  Europe is a problem for us, South America.  We’re kind of doubling down in terms of our capital expenditures and what not.  I mean, this is -- it’s a complicated business.  But yes, in Asia, generally in China and specifically we’re doing well.  We have the largest market share and but we’re putting the same press on there and their government is hand and glove with their manufacturers just like here trying to get us to be cleaner, more efficient and we’re working diligently to do it in China as well as we are here.

 

Greg Dalton:  Let’s have our friends’ first audience questions.  Yes.

 

Betsy Rosenberg:  Hi.  Great conversation.  As a founder of gas news organization called “Don’t Be Fueled” and host and producer of an environmental radio show, I get a lot of questions about earlier the hybrid car, and now the electric car, and from a lot of intelligent people and as you might imagined, I’m a big advocate for cleaner vehicles.  What I’m getting more questions about and not sure how to answer is, what about the safety and environmental hazards of these batteries?  There’s two concerns, EMS and also disposal of these batteries.  That’s my first question and second--

 

Greg Dalton:  Oh, just one question.  We got a big line.  Thank you.  So the safety of the batteries we recycle--

 

Dan Akerson:  Yeah, one of the reasons we like -- we chose the path we went down with batteries and we give an eight-year guarantee.  And because we cool it with liquid, it’s called DEX-COOL but it’s not dissimilar to what you see in an ordinary car, combustion engine car.  But we do that and we never allow charging to go above 85% or decline below 15%.  In that way, we can guarantee this battery for eight years.  An air-cooled battery, based on our testing to date, is going to last only two or three years.  So A, we’re going to get longer, so it’s going to be in -- we think it’ll actually go long but that’s what we’re willing to warranty it or guarantee it for.  We’ve opened -- we have an open dialogue with some utilities in terms of storing for various applications.  Coming from the cell phone industry, I can tell you, you need to have batteries on all the cell towers because you will lose commercial power at times.  So this is a work in progress.  I don’t have a clear-cut, no questions asked, but we are in dialogue with a number of people on how we’re going to use these things.

 

Greg Dalton:  And I think the other part of the questions was EMS, so that’s electromagnetic -- there some concerns around electromagnetic -- the aspects of the batteries?

 

Dan Akerson:  I -- I’ll be honest with you--

 

Greg Dalton:  Recycling of the batteries after their useful life?

 

Dan Akerson:  Well, like I say, we’re going to try and use them in some sort of application for the storage of electrical energy and we just haven’t sorted that all out yet.

 

Greg Dalton:  Okay.  Let’s have our next audience question for Dan Akerson from General Motors.

 

Don Sifkus:  Hi, Mr. Akerson.  Don Sifkus from San Leandro, California.  Many consumers would like to be able to buy E100 flex-fuel vehicles, not E85, but E100 vehicles whose mileage is optimized for ethanol, not gasoline.  What would we have to do to get General Motors to offer these vehicles in the United States?

 

Dan Akerson:  Well, we will build cars or trucks -- people say I am building these big cars, because that’s what the market wants.  And we’re going to meet the market.  And that’s what you would expect is to deliver on a profit-oriented organization.  Ethanol isn’t in high demand now.  And if there was a demand for not 10,000 or 20,000 but 100,000 all of a sudden we’ll get more interested in it.  And we don’t see that demand in the marketplace today.  So if the market is there, we’ll be there.  If the market is not there, we’re not going to be there.

 

Don Sifkus:  Thanks.

 

Greg Dalton:  Let’s have our next audience question for Dan Akerson.

 

Female Audience:  Hi.  I was intrigued by your statement that fuel cell cars are sort of ultimately where you want to be.  I’m curious why you think that’s the final goal for technology development?

 

Dan Akerson:  Well, let me say there is a practical application that we need the infrastructure.  We need the distribution system for not only natural gas but for hydrogen.  But why am I intrigued with it?  Because literally, you can take a two-month-old baby and put a baby underneath that exhaust, just as long as the dripping water doesn’t impact on the child’s ability to breathe, you’re in as good as shape sitting where you are as that child is, and I think at the turn of the century, there were 6 billion people on this planet.  By mid century, there’s going to be 9 billion people.  And we’re going to have to really have to be good stewards of our environment, and I think ultimately you want zero emissions.

 

Greg Dalton:  One of the challenges for hydrogen is where does the hydrogen come from, how much energy does it take to create that hydrogen?

 

Dan Akerson:  Yeah.  You know where most hydrogen’s produced today?  Refineries.

 

Greg Dalton:  And I’m sure that the oil companies would be very happy to get some revenue for that but there’s transportation and infrastructures use--

 

Dan Akerson:  Yeah, they -- they don’t use it -- largely don’t use it today.  So -- it’s in a pipeline somewhere.

 

Greg Dalton:  Yes.

 

Dan Akerson:  Well, you know, they can -- that’s their business.  We’re not going to get into that business.  We’re not that smart.  That’s a tough business.

 

Greg Dalton:  But Governor Schwarzenegger has tried a lot of -- pushed hard on hydrogen, hasn’t really taken off in California?

 

Dan Akerson:  Yeah, I -- you know, leadership is a tough thing.  Sometimes you got to make tough decisions and sometimes you’re going to be wrong.  And of course everybody remembers when you’re wrong and not when you’re right.  But at some point in time, this is I think the future, and it may not materialize, the market may not be there.  If it’s not, that’s why Volt and, you know, the first -- this is this first chapter written on a book called Alternative Forms of Propulsion or Alternative Propulsion, and it will evolve over time.  The chapters are yet to be written.  And maybe I’m wrong.  You know, I always have to allot for that possibility.  As my wife tells me, I have been wrong.  And if it isn’t hydrogen, well then, we better figure out a way to push a lot of electricity.  Let’s face it, electricity produced at a coal-fired plant doesn’t have -- pure emissions either.

 

And there are strong points of view around all that whether it be natural gas or nuclear or coal.  But at the end of the day, modern societies, competitive societies have to figure out how to get the cleanest, most efficient form of energy to the marketplace, and I think as the world evolves and energy evolves, you’ll see -- you may see this evolve in the hydrogen fuel cells.

 

Greg Dalton:  Let’s have our next set of question for Dan Akerson at Climate One.

 

John Thomas:  Dan, my name is John Thomas.  I’m from the Mad Hedge Fund Trader.  I have a personal question for you.  When you were offered the post of running GM, what initially came to your mind?  Are you crazy?  Are you out of your mind?  What was it in this job that lured you to accept that offer and who specifically made that offer?

 

Dan Akerson:  Well, I think GM is the most -- one of most complex, most interesting and most challenging business opportunities of my generation of management.  And where I was in private equity and thought, well I will just finish my career there, it was -- it was generally intriguing.  And I thought I could make a difference.  I’ve been overseas for two weeks, came to the board meeting, and--

 

Greg Dalton:  We should clarify.  You are on the GM board first and then you became CEO.

 

Dan Akerson:  Yeah.  I was at the board meeting, I was part of the new board that we brought on post bankruptcy, and then CEO said well he was leaving, he was 68, going to be 69 and he stepped -- he was a temp, interim, because we had lost our CEO from the old GM, the prior management.  And candidly, I went on -- I had had this vacation and my daughter was pregnant, so she couldn’t go anywhere, so we took her and my elder granddaughter, and I almost turned the job down because when we -- my wife and I kind of wanted a couple of days to think about and when I told my granddaughter I wasn’t going to be around so much, you know, she started crying.  But I had already accepted by then and I figured I -- man is as good as his words, so I -- but I’m glad I did it and it’s, it’s -- I mean there are some personal aspects of it that aren’t all that attractive.  But you know, I’ll be back in the home range with granddaughter in some period here in the future, and that will settle that concern.

 

Male Audience:  Hi Dan.  You touched very briefly on business editions in Europe that you are seeing right now.

 

Dan Akerson:  Yes.

 

Male Audience:  That it gives way too much capacity over there--

 

Dan Akerson:  Yes.

 

Male Audience:  And I wonder what we’re doing to address that?  Are you going to be closing some plants there?  And why are -- could you clarify how much money we’re actually losing in Europe at the moment?

 

Dan Akerson:  Well, what’s going on in Europe is not dissimilar to what happened in the United States prior to the great recession.  And to give you an idea, we shut 14 plants in this country because the average plant utilization in the United States prior to the recession was at about 70%.  So we overproduced to cover our fixed cost.  And then we tried -- and this is the unnatural act that was being perpetrated -- we tried to bend the supply-demand curve.  So we overproduced to cover this fixed cost because it weren’t efficient, and thereby, these too many -- we supply too much versus demand and we would dump those cars into rental fleets either corporate or rental.  And what did that do?  It diminished the resale price because we had to sell those cars at a lower price.  So the residual and the cost of ownership over three to five years, we destroyed and channeled distribution called leasing.  And it was -- people were overproducing to hold share and so prices were coming down generally and it was just kind of a -- like a whirlpool.  That’s -- and so we shut down 14 plants -- 14 plants.  The disruption and dislocation was pretty significant.

 

In Europe today, we shut a plant down when we restructured post parent bankruptcy and we were profitable when we are on the -- we were in a road trip, we’re losing about a billion dollars including restructuring costs and I made a bull statement, I thought we get it back to profitability.  We were actually profitable by about $300 million in the first half of ’11, and then we lost about that much in the third quarter because when we were going through our crisis last year, when we got downgraded as our national debt -- rating was downgraded and there was a lot of controversy in Washington were we’re going to lift the debt ceiling or was the country going to default, well think about we finally got that sorted out.  But in Europe, they’re hearing about potential sovereign debt defaults twice a day, every morning when I get up and before I go to bed.  And it would hurt their customer -- their consumer confidence, people stopped buying, we can see it, I can tell you I see it everyday in our sales reports.

 

And so same thing is happening, everybody is -- they’re idle, they’re doing what we call short weeks where they send them home and there are certain benefit packages.  So we still have those plants open.  And so it’s estimated there may as many as seven to ten plants excess across the entire industry.  We take it from Volkswagen, Mercedes, BMW, Peugeot, FIAT, Renault, Opel -- all of them.  And we have to kind of right-size our operations in order to gain -- achieve profitability again.

 

This last year, last year including a right down on Goodwill which is a non-cash charge and restructuring for another 200 million, we lost about 700 million, a little over $700 million in Europe.  It is a very troubling situation.  We’ve already taken action to address that, but I think it’ll be a good maybe a year or two before we can achieve profitability in Europe again.  We’re not giving up on it and we’re in dialogue, discussions with our various constituencies, our dealers, our unions, our management, to affect a solution that’s satisfactory and optimizes the outcome for us.

 

Greg Dalton:  We’re discussing the auto industry with Dan Akerson, Chairman and CEO of General Motors.  I’m Greg Dalton.  We have a few minutes left for a few questions, so yes, sir.

 

Male Audience:  Hi.  I work at SolarCity.  We’re the nation’s largest residential installer and seller.  At about 20 months ago, we launched our electric vehicle charging division and it’s been growing quickly.  And we see a lot of customers think about their -- the energy powering their home is tied to the energy that powers their vehicle in a way that didn’t really exist before.  The Volt ties you to your customers’ homes in a way that you really weren’t before.  So how does this affect your company’s strategy and what challenges and opportunities as it present to be so much more tied to your customer’s home?

 

Dan Akerson:  Well, we actually invented -- no, we invested in a company that they build a little kind of, I’ll say lean to, it is not really, but you drive in and it’s all got solar panels above and you drive in there and you just plug the car in and you’re home free.  Could that happen?

 

Greg Dalton:  Car port.  Yeah.

 

Dan Akerson:  Yeah car port, I’m sorry.  That’s a good technical term.  I like that

 

[Laughter]

 

Dan Akerson:  And so -- I mean, is that a solution?  We do a lot of inductive, you know, you like with your cell phone, you can put it on a pad.  We invented -- we invested in a company like that.  You’ll see that in our models coming out where you take your cell phone, you throw it in there and you’re don’t have to plug it in and worry about the jack and all those other stuff -- convenience.  You’ll see that in our cars in the upcoming years.  Well then someone’s said well, why do we just get one the size of put on your garage floor and you just drive on that of course, then you think of old Fido walking across there and [Laughter] I mean, you got to worry about all the stuff.

 

So yeah, we’re thinking about everything because -- and for example, if natural gas is a solution and you -- I have natural gas into my home, why not just fuel your car at home?  Well, I can tell you, that wouldn’t go down well with Exxon and the boys because all of the sudden, they got another form of distribution.  But we’re thinking like that because I -- you know, what’s one company solution is another’s bad news.  But there may be alternate plans for distribution in the coming decades.  I don’t know, but I can tell you you would have to get the depressurized natural gas from residential feed into a car.  You’d have to pick the pressure up to get it in there.  And so there are a lot of practical problems that needed to be solved or addressed.

 

But we’re looking at everything and everything is on the table, whether it’s relay cars, we’ll look at anything that people say, “Well, why would GM do that?”  Well, I think Bill Ford is right.  It’s going to happen whether, you know -- we can’t control the universe.  We’re a company, we have to be -- we have to react to reality, we want to predict the future so we can be proactive.  So I don’t know if it’s going to be electric and infused into the architecture of a home or if it’s going to be natural gas.  I don’t think anybody is going to be putting nuclear reactors on cars anytime soon.  But I mean if they did, we’d start thinking about it.

 

[Laughter]

 

Greg Dalton:  Do you have a charging -- Volt charging station in your garage?

 

Dan Akerson:  Yes I do.  And I love it.  And I’ll tell you, I have now driven probably -- I had one of the first Volts and what we call it captured test fleet.  I drove it over for 2500 miles, I’ve put 8/10 of a gallon of gas into it.  We talked to 40-plus Volt dealer -- owners today and there was one fellow who had driven -- he’s had it 12 months, driven it 13,000 miles and he still has the initial gas that he got when he bought the car.  So -- and on your Volt, it tells you how much you’ve gotten, I mean with the Volt I bought about a month ago, I’ve now used a tenth of a gallon of gas.  And so, you know you were averaging 190 to 100 miles equivalent on these cars and I think that’s -- that’s good news and if we can get this battery density up instead of going 40 miles, you know, maybe we’ll go 240 miles and that -- but I think what’s great about the electric range vehicle, I mean, this is such a huge step forward in innovation and creativity and ingenuity, but also, you can drive that car from here to Florida and back.  It is not an urban car.  It’s a car with all those wonderful additives and a high degree of utility.  You don’t have to restrict your thinking.  You don’t have to have range anxiety.

 

Greg Dalton:  Let’s have our last audience question.

 

Dan Akerson:  You drop a purple pill in that thing and it’ll work really well.

 

[Laughter]

 

Male Audience:  Mr. Akerson, I’m a Vietnam Air veteran and I understand you were a Naval officer that served off the coast of Vietnam.  I was wondering if you could say a few words for the Naval sailors that are serving off the coast of Iran and what would happen if they engage in military conflict there and gasoline prices rising, how can GM rally this nation to adjust to those much higher gasoline prices?

 

Dan Akerson:  Well, thank you for your service.  I was in the Navy for five years.  I did not serve in Vietnam.  I was in the 6^th Fleet which is in Europe.  We faced off against then the Soviet Union.  You know, I think that’s beyond my pay grade.  I have -- I have -- unlike a lot of people in this country today, I believe in our political leadership that they’ll come to the right decision.  And I actually think it’s a benefit to have served in the military, because I do think those are the folks are the last who want to go to war.  And I would -- I would think seriously as deeply in heart about committing our young men and women to combat and whether it’s Iran or Vietnam or Iraq.  And that’s a citizen in me.  I don’t want to speak as a -- I want to restrict my commentary to my role as a CEO of General Motors and -- but I -- I hold these young men and women in the highest regard.  It breaks your heart when you hear that -- well, they give so much to us.  And we’re a big sponsor of everything to do with veterans.  We have 3,000 veterans and we made a choice if someone goes, like when I -- back in the day as they say, and I say to my children, while we -- when one of our employees goes away, we still pay him at the same.  They get paid -- they were getting paid $3,000 a month and they go I think a number of thousand, we’ll make up the 2,000.  The benefits continue.  We want them to feel like their families are protected--

 

[Applause]

 

Dan Akerson:  --and we -- we in conjunction with the UAW, we give the Wounded Warriors.  I personally am very involved with Veterans Affairs.  We have a Veterans’ affinity group within the company that’s very active.  They do food baskets and send stuff.  We’re very active in cell phones for soldiers everywhere in the country and we support the wounded -- in fact, if you saw the Army-Navy game, in the Army-Navy game, we go to it which I happen to go too all the time.  It’s very important that we meet with these wounded veterans.  So I share your concern and pray for peace.

 

Greg Dalton:  We’ll have to end it there. Thanks for Dan--

 

[Applause]

 

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