REPORTER: Aaron Lewis
The Motor City - Detroit. I've come to take the pulse of a metropolis in crisis. It's now late May and in two weeks time, on 1 June, the federal loans that are keeping General Motors alive will be cut off.
BARACK OBAMA, US PRESIDENT: I will not pretend the hard times are over. More jobs will be lost. More plants will close.
Behind the scenes, fierce negotiations are under way. GM is desperately trying to restructure to avoid being liquidated entirely.
DAVE COLE, CENTRE FOR AUTOMOTIVE RESEARCH: GM has to succeed. If that were not to happen, my judgment is that this industry will collapse and drive the economy into a depression.
RANDY SANDUSKI, UAW LOCAL 22 CHAIRMAN: Oh, my God. That would be just devastating.
KENNY JAMES, FORMER GM WORKER: If you get 10 people and line them up and ask them where they work, I guarantee that they'll say Ford, Chrysler, GM. And that's exactly why they call us Motor City - because we know nothing else but the car industry.
Kenny James worked building GM's cars for 37 years, earning enough for a comfortable life and to put his children through school.
REPORTER: Do you feel like it's your life at GM that gave you those opportunities?
KENNY JAMES: Exactly. That's who gave me the opportunity to dress the way I like to dress, drive the cars I like to drive, wear the jewellery I like to wear, without somebody calling me a dope dealer, you know? So, yeah, GM - I love them.
But things have been changing in Motown for years now. This plant in Livonia is one of the many that has slashed its workforce, as locals anxiously watched on.
KENNY JAMES: I ride past there and I only see 20 or 30 cars. So I stopped one day and asked them, "Are y'all shut down or what?" This guy says, "No. It only takes 50 people to run our plant. Everything else is closed down."
REPORTER: And how many people did it used to take to run the plant?
KENNY JAMES: 3,000 a day. And it's down to just 50 people now. So, yes, it's real scary. It's real scary. And it's like that at every plant here in Michigan.
And with that decline in the auto industry, there's been a slow and grinding decay in Detroit. The once-grand city is falling apart.
KENNY JAMES: Yes, this is Detroit Brewster Centre. This is where Joe Louis used to put on his exhibitions before he would always go out and box in New York. Diana Ross used to come here when she was in junior high school and give little free concerts before she made it big. And you can look at it now and see over the years how it's been tore up, tore down. It's kinda unsafe being in here, but we're taking a chance on walking the floors.
The Brewster Projects is typical of much of Detroit - from these dilapidated remains it's hard to imagine the Motor City's former glory.
REPORTER: This is your building, hey?
KENNY JAMES: Yeah. Lived here about three years. This was my home when I was growing up, a one-bedroom apartment.
Back then Detroit was a safer city, but nowadays it's the crime capital of America. Things are so bad that Kenny won't even be caught unarmed in his old neighbourhood. Today he's got a 357 Magnum strapped to his hip.
KENNY JAMES: When I was coming up, you could actually walk around the premises late at night and nobody would mess with you. They'd speak to you. It was real pretty, a real pretty area. But now - it's pathetic.
Even the congregation at this church service doesn't feel safe. An armed guard is posted here to give comfort to those inside.
ARMED GUARD: Churches, our buildings - anything that we would think of as sacred - isn't sacred anymore, it's just a target.
Before he started, this church had been robbed and vandalised while the cars of the people inside were broken into while they prayed.
MOTHER SMITH: This is the toughest time I've seen since I've been here.
But today, this small congregation is trying to leave its worries behind.
JIMMY PARKER, PASTOR: I don't think it's any different to anywhere else, that when times does get tough sometime you have to remind people to have faith, because nothing tries your faith more than times like these.
Jimmy Parker was an autoworker before becoming pastor and he has both past and present GM employees among his flock. With the 1 June deadline one week away, he understands why many here will be angry with GM if they throw in the towel.
JIMMY PARKER: When a company seems like they're turning their back on you, it does hurt, it does hurt, because you've put so much into it.
CURTIS REYNOLDS, G.I.F.T. MUSICIAN: We created R&B, the auto industry. We gave some of the best things to this country alone.
Under the stage name G.I.F.T., Curtis Reynolds is continuing Detroit's other great tradition - music.
CURTIS REYNOLDS: I'm ecstatic to honestly say that I'm even from Detroit. Like, to even say that name. I actually wear it on my hand because I'm so proud of this city, period. And just because we're down right now does that mean that the name gotta go away? Like, I don't think so.
G.I.F.T. grew up along the infamous Joy Road. Like many of Detroit's youth, he couldn't get a well-paying job and so he started hustling in the drug trade - a dirty business which he says that he left behind when he picked up the microphone.
CURTIS REYNOLDS: We call this the Murder Mac. This is like one of the most notorious spots along Joy Road - a lot of shoot-outs, a lot of crazy shit, so to speak, happens right here.
G.I.F.T. has brought me to the spot nearby where he and his friend Chauncey were attacked by gunmen after an argument at a nightclub.
CURTIS REYNOLDS: When the guys hopped out - you know what I'm saying? - with AKs and handguns, and they actually chased us across this parking lot. And I ran that way, and he ran this way. And when I came back to look for him he was actually laying exactly right here with his face facing that way. He actually got shot twice in the back of the head and once through the neck and once through the arm.
Detroit is now America's murder capital and G.I.F.T. believes that the crime and violence are only getting worse.
CURTIS REYNOLDS: Things have got a lot harder in the city. Whether it's because people losing their jobs It's a war every day just off of unemployment.
A major reason for the crime and violence here is the fact that unemployment is already at 12% and climbing - the highest of any city in America. As the largest car manufacturer, General Motors is key to Detroit's future because for every job on the factory floor, there can be nine others out in the community supporting the plant. Suppliers, dealers, even restaurants here are all dependent on the auto industry and if GM collapses completely the results could be devastating.
Joanne Patterson was laid off in 2001 from a paint manufacturer that supplied the big three and ever since she's been in the revolving door of industry downsizing.
JOANNE PATTERSON, FORMER AUTO WORKER: You might not be able to get back with Ford, Chrysler, General Motors, but you're working at a job shop that makes parts for Chryslers, General Motors, Fords. They start downsizing so you end up back out. Then you go back into another manufacturing kind of industry, and the same thing happens, it's a repeat because of the economy - everything is going downhill right now.
Despite eight hard years caught in the city's economic slide Joanne believes that Detroit now has the chance to reinvent itself and the spirit to do it.
JOANNE PATTERSON: Things are just going to change because you can't have everything the same way, indefinitely. Nothing lasts forever. So along the way we will have to change.
DAVE COLE: For the auto industry this is not a recession, it's an absolute depression.
Dave Cole has spent a lifetime as an engineer in the auto industry - and he's now the director of the Centre for Automotive Research.
DAVE COLE: If we had a recession, we would have 13 to 14 million units of sales - we have less than 10 million now. And so the industry has really experienced a calamitous impact from this depression-like environment that we're in and what it's doing is prompting some major restructuring.
In America, employers typically pay for their workers' healthcare and pensions. According to Cole, that means the long legacy of America's big three carmakers has now become a major problem.
DAVE COLE: When you are here for 100 years, you accumulate certain costs. For example, GM at one point was covering health care for over a million people. It was the largest independent coverer of health care in the economy because they had tens of thousands of retirees and dependents, and what the big three had then is roughly a $2,000 competitive disadvantage compared to the internationals that were building cars here because they were new - new factories with relatively new people, and basically no retirees. So it was kind of like running a race where you're running against someone who has track shoes and a track outfit on and you're wearing galoshes and carrying a bowling ball.
RANDY SANDUSKI: Has anybody in this room retired April 1st?
This is a meeting of the retirees' section of the United Auto Workers, or UAW. The current chairman, Randy Sanduski, recently retired from GM after 31 years at the company.
RANDY SANDUSKI: This meeting is going to take a long time, which I'm sure we're all fine with, because we want all the information we can get with all the things going round.
As the 1 June deadline looms, GM is trying to cut a new pensions deal with the union and today Randy is shocked to hear rumours that his monthly pension could be cut in half.
RANDY SANDUSKI: Why do we have to sit and worry about those things? I guess that's the other thing that I like to ask them. We retired under the assumption that everything was going to be OK.
Randy says that the scale of this crisis has come as a shock to everyone.
RANDY SANDUSKI: If you'd have asked me three years ago, "Randy, GM is going to go belly up," I'd have fell off the stool laughing at you. I'd say, "You outta yo' mind - that ain't gonna happen." "Not General Motors - they're gonna survive whatever you're doing to them." It certainly don't look like that now, does it? It looks bad.
Dave Cole believes the retirees have no choice but to allow GM to default on some of its major commitments.
DAVE COLE: Well, you could say that the contract was there, and there was an obligation on the part of the company to do it, but the failure to deal with this, finally - this legacy cost problem - was going to essentially wipe the companies out.
REPORTER: But that is a spectacular moral failure, as well as a business failure.
DAVE COLE: Well, it was sort of an entitlement mentality that grew in the auto industry, as if, you were an auto worker, this is one of the things that you gained - you gained lifetime security in terms of a pension and health care. With the competitive environment, it was no longer possible to do that and, realistically then, if the company goes out of business, what does the worker have?
A few days later, union members are back again to vote on the finalised deal. It's a tough compromise that protects pensions with help from the government, but makes cuts to health benefits, and this man, Curtis McClure, is voting against it.
CURTIS MCCLURE, GM FACTORY WORKER: Health care is one of the most important things that we need and they're taking this away from the retirees - they're going to take their vision and their dental, so that is one reason why I actually voted no on it.
Curtis is acutely aware of the value of GM's health care coverage. He worked at the Lavonia engine factory for most of his life when in 2001 he was hit by a drunk driver and seriously injured.
CURTIS MCCLURE: Thank God to my health care coverage. They were able to come in and provide me the best care I ever had had in my life. So I had the best of care, best of facilities they had me at, and I was off for three years.
Curtis is deeply disappointed that coverage may now be watered down.
CURTIS MCCLURE: That's going to be devastating. Health coverage is one thing that we all need.
In the end, the union votes to accept the new deal with GM, despite the cuts. But no-one seems very happy with the way things are going.
KENNY JAMES: I normally don't let things bother me, but it's starting to kick in whereas I think it's going to bother me.
It turns out the UAW deal alone will not keep GM afloat. With only three days until the deadline, GM is in negotiations with its bondholders, who will have the final say on whether the company will live or die.
RANDY SANDUSKI: This is a sad situation. But I believe the union done the best they could with the pill that we got. And I even think GM even tried to sit down and eat it up too and figure it out.
Even as the reality of GM's bankruptcy draws near, it's hard for people here to even contemplate it.
RANDY SANDUSKI: Oh, my God. That would be just devastating - terrible thing, unacceptable, heartbreaking. All the faith that I had in my lifetime in General Motors, I'd probably be willing to give it up for a nickel. For you to wait till I'm late in my life, to where I can't fight back, and then take it from me - I'm not going to like you very well. I'm not going to like you very well at all.
The night before the 1 June deadline is a long one and you can feel the tension everywhere in Detroit. In the morning, President Obama announces that the American Government has effectively bought GM. Bankruptcy court is being used to save GM's most profitable assets, and reforge them into a "new" GM.
BARACK OBAMA: I am absolutely confident that, if well managed, a new GM will emerge that can provide a new generation of Americans with a chance to live out their dreams.
This means a cost of $50 billion to the taxpayer, 21,000 jobs lost, cuts to union benefits, and more than a dozen factories closed around America.
RANDY SANDUSKI: They're already headed into a new dream, and we're done. It just doesn't sound good and the only thing that sounded good is that we didn't hear about them taking our pensions from us.
KENNY JAMES: I've just got beat up by somebody I put 38 years in so I don't have anything to say right now.
Then it's time for my last stop - General Motors' international headquarters in downtown Detroit. In stark, almost surreal, contrast to the sombre mood back at the UAW, the feeling here could be called celebratory.
TROY CLARKE, GM NORTH AMERICA PRESIDENT: It's a very interesting day. It is difficult in some respects. I mean, we worked so hard to avoid having to restructure ourselves under the protection of a bankruptcy court. But on the other hand, it's in that hard work that we've discovered, or rediscovered, the incredible future that General Motors can bring to bear.
GM's management is so optimistic largely because bankruptcy will allow it to shed some of the costly union agreements made over the last 30 years.
RANDY SANDUSKI: They're pushing us out. They don't want us to be organised or smart enough to know what's going on. And if you are, you need to shut up. That's the way they feel about us.
TROY CLARKE: It was incumbent on us to get this thing fixed so that we could manage them at their state of dependency. The fact of the matter is that under the negotiations with the UAW, pension are preserved. They're not reduced - pensions are preserved.
GM's honouring its pension plans is clearly a relief to many people I've met, but the highly valued health care will be paid out of a trust which is hugely underfunded. Shares in the new GM will make up the shortfall but if GM fails, so too will the retirees' health care. That's left many aging workers feeling that one of the most important promises ever made to them has now been broken.
TROY CLARKE: To those folks, say we regret deeply the sacrifices that we all have to participate in. The UAW, certainly our dealers, as we are trimming brands and models, certainly the communities where we're announcing today the closure of plants, which are kind of the bedrock of some of those communities, and certainly to our own employees, who will continue to make sacrifices as well.
Those sacrifices will bring more pain to the city of Detroit. Whether GM had been grossly mismanaged for decades, or whether the unions had demanded too much for too long, there's nothing people here can do now, but look to the future.
RANDY SANDUSKI: So long!
REPORTER: You believe they will recover because you've seen them recover in the past?
CURTIS MCCLURE: Absolutely. I have seen General Motors recover at least three to four times - this is not the first time.
DAVE COLE: There's no question that the auto industry has a future and I think it's going to be a very bright future. In fact, beyond this period of chaos, I think lies a period of unusual profitability for the industry.
JOANNE PATTERSON: We're going to keep struggling to try to get back. We're never going to be on the top again - that's done. But we're not going to be counted out. I would hate to see this city just go totally under.
Reporter/Camera
AARON LEWIS
Editor
DAVID POTTS
Producer
AARON THOMAS
Original Music composed by
VICKI HANSEN