In a conversation, Dr. David E. Cole, Chairman, the Center for Automotive Research, made the point that naysayers about GM (GM) have overlooked several important issues. He view stands out as more logical and sanguine than many, and deserves a close look.
His case is relatively simple. First, the UAW has learned from the restructuring of other industries like airlines and newspapers, and, therefore, is highly engaged in the conversations about GM's future and financial health. His belief is that there is a great fear, especially among older union members, that retirement benefits could be eliminated or substantially reduced in a bankruptcy.
Dr. Cole also believes that the current, legitimate talk about Chapter 11 at GM has provided the UAW with a great incentive to change what they will settle on in the next round of negotitations with GM. In essence, his view is that this makes the crisis at least partially good news. He also sees the UAW elections in June as a mandate for a more reasonable approach toward GM's problems.
Cole clearly admires the approach that GM management is taking by working with the UAW to attempt to find a solution. His admiration of the management is a minority view, but, if the Delphi negotiations end well, perceptions may start to change. Cole clearly believes that the outcome of the Delphi three-way negotiation with the UAW and GM will end well and will also end very soon.
Cole's view of the inner workings of GM stands out as something one rarely reads about in the media or securities analyst reports about the company. He makes a strong case for the fact that GM is operationally in better shape than it has been at almost any time in its history. He points to plant productivity, die making costs, and plant flexibility as major markers of a somewhat hidden turnaround inside GM and would rank it with the Japanes and ahead of other U.S. manufacturers on these counts.
Based on this great improvement in operational efficiency, he sees the real possibility of a Nissan-style resurrection at GM, and not just a slow steady improvement, if the company and unions can come to reasonable terms.
If Cole is right, GM could end up being one of the great restructurings in U.S. business history.
Douglas A. McIntyre is former Editor-in-Chief and Publisher of Financial World Magazine. He has also been president of Switchboard.com