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Why There's Still Hope for Detroit

Stocks in this article: GM F

OKLAHOMA CITY -- As chairman of the Center for Automotive Research, David E. Cole could fill books with his knowledge of the U.S. automobile industry.

While others have written off General Motors (GM) and the other Detroit automakers, Cole still holds out hope for a happy ending to the story. Cole even looks for some crowd-pleasing plot twists, such as universal health care and battery-powered vehicles, to enhance the tale along the way.

"Because of the crisis atmosphere, you can do big things," Cole explains. "People are willing to do things that they would never do before. Right now, the sense of urgency is very, very high."

Cole remembers the last time the domestic automakers came under serious pressure. In mid-2007, they faced crucial labor negotiations that could ultimately determine their ability to survive. Once the United Auto Workers recognized the gravity of the situation, the union agreed to start covering retiree health benefits, carrying an estimated price tag of $100 billion, a few years down the road.

That groundbreaking deal, set to take effect next January, slashed wages and benefits for incoming workers, as well. It even scaled back benefits for existing employees who had always expected top-notch coverage in the past.

To hear Cole tell it, the Big Three automakers uncovered buried treasure with that legendary deal.

"If you say, 'Here's your choice: You can have the gold or the silver health care plan,' people will take the gold health plan every time," Cole says. "But the axis of choice shifted, and it was no longer gold or silver, but instead silver or lead.

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