General Motors’ head of North American operations, Gary Cowger, yesterday said in a speech at the Jacob K. Javits Center that better marketing would help turn GM’s slumping fortunes around, but his prescription differed mightily from what independent analysts said.

In a keynote address at a press preview of the New York International Auto Show, Mr. Cowger said that GM needs to do a better job conveying to potential buyers the unique aspects of its cars and trucks.

“We want to make sure that people are aware of the things that only GM can do,” Mr. Cowger said

He cited the company’s announcement in January that it plans to put two safety features – OnStar in-vehicle communications service and electronic stability control – in all of its vehicles by the end of 2010. GM believes it would be the first automaker to make both features standard across its entire fleet.

GM also announced yesterday that it is negotiating to sell a stake in its high profile commercial mortgage unit, General Motors Acceptance Corporation. Its 50% stake could bring in as much as $1 billion, according to a report in yesterday’s Wall Street Journal. Last year, the company reported that GMAC’s mortgage book had a $249 billion mortgage portfolio.

Better marketing and a short-term cash fix via a GMAC sale are Band-Aids, said the president of research boutique CreditSights, Glenn Reynolds.

The expiration of the United Auto Worker union’s contract in mid-2007 is the key to GM’s future, and the company has to do everything possible to illustrate to the union that it is prepared to radically change its cost structure, Mr. Reynolds said.

“Within the next five years, 60% of its UAW workforce will be retirement age. They have to show the UAW that the pain has been spread throughout the company,” Mr. Reynolds said.

In his speech yesterday, Mr. Cowger said GM needs more competitive healthcare “across the board” to prevent further losses.

“We provide superb health-care coverage for our employees, and they share the costs in varying amounts,” Mr. Cowger said. `We need a competitive plan for all of our employees; an across-the-board competitive healthcare plan for salaried and hourly employees could literally save us billions.”

He said GM is in ongoing talks with the UAW about health-care costs.

But the idea that the current “talks” under way between UAW and the union regarding health-care costs will lead to concessions is “pretty much ridiculous on its face,” said Mr. Reynolds, who has analyzed the bonds of auto companies for over 20 years. The UAW contracts with Ford, Daimler Chrysler, and GM are “its crowning achievement – it’s a contract where the employer eats 100% of a liability that is growing at 10% or more annually. The union will not go to co-pays and deductibles in the middle of it.”

GM said its health-care costs this year would be $5.6 billion, up from last year’s $5.2 billion. The automaker is the largest American private provider of health care, with 1.1 million employees, retirees, and dependents covered.

Potential moves, according to Mr. Reynolds, include a massive multibillion charge designed to offer buyouts for up to 10,000 UAW workers, plant idling, white-collar layoffs, and a stock dividend reduction. The buyouts, which would be targeted at the more highly compensated senior members of the union ranks, will probably average between $30,000-$40,000 per worker. If the company takes a large charge to pay for layoffs, he said, it would be a positive for GM’s stock since the charge is taken in a year where a loss is pretty much guaranteed, but the cash payouts would be done over a period of several years.

Mr. Reynolds said the only real precedent for GM is Daimler Chrysler’s financial crisis in 2001. Faced with declining revenues and exploding costs, the company idled three plants and bought out thousands of workers. “Chrysler in the end was saved by growing revenues when it introduced a new minivan and sedan that people really responded to.” Another precedent was UAW strikes against farm-equipment maker Navistar in the mid-1990s, when factories were shut over contract issues. However, Mr. Reynolds noted that Navistar – which managed to cut its health-care costs by one-third after the strike settled – is globally dominant. “GM doesn’t command the market like that, and its share is dropping,” he said.

Egan-Jones Ratings president, Sean Egan, who was the first ratings analyst to lower GM debt to below investment grade, offered an even starker assessment. “I would venture that the company has to take a $10 billion charge, maybe more to remove excess production and fixed labor costs from the market,” he said. Mr. Egan, whose company does not accept payment from the companies it rates, said the cost structure of the world’s largest automaker was way too high. “They can’t do a thing about oil prices, steel costs, or interest rates – all of which are spiking sharply – but their labor cost is attackable.”