GM Former Board Member Jerry York Says GM, Chrysler Will Survive

Former General Motors Corp. (GMGMQ) board member Jerry York said he expects GM and Chrysler LLC to survive in the future after their reorganization in the bankruptcy process.

"They are finally doing some things that need to be done," York said following a speech at Oakland University. "These guys are focused."

York's comments come after he tried to warn GM that it needed to embrace change. He spent nine months on the board in 2006 where he represented billionaire investor Kirk Kerkorian who was the auto maker's largest shareholder. York quickly became one of the leading advocates for GM to consider joining the Renault-Nissan alliance. GM scuttled the merger idea and York left the board. York said he wouldn't return to the board of directors even if asked.

GM filed for bankruptcy protection June 1 and is now relying on aid from the federal government as it attempts to restructure itself. Former board Chairman and Chief Executive Officer Rick Wagoner left the company at the end of March. Frtiz Henderson replaced Wagoner as CEO. York said he understood the government's decision to force Wagoner out.

"The government is sitting there and they are doling out $20 billion and from the reports in the press, Rick was not buying that bankruptcy was the right solution, so he had to go," York said

He declined to comment on the appointment of Edward Whitacre Jr. as GM's new chairman. Whitacre was the former CEO and chairman of telecommunications giant AT&T Inc. (T). Whitacre takes over the chairman post after GM emerges from bankruptcy protection.

York said it was a smart move to bring in an automotive outsider pointing to the work done by former Boeing Co. (BA) CEO Alan Mulally who is now the CEO of Ford Motor Co. (F)

"They need some new blood," York said. "The auto industry is inbred."

York, who also worked as Chrysler and served as its chief financial officer in the early 1990s, said Fiat SpA (FIATY) should do a better job running Chrysler than its former partner Daimler AG (DAI). Chrysler is awaiting word for the Supreme Court on whether it can merge its assets with Fiat.

"Daimler did a god awful job," York said. "Daimler should be shot for what it did. Look at this thing. They left this company in a mess. The styling is bad and the quality is terrible."

Earlier, John Casesa, managing partner at Casea Shapiro Group, said he believes that GM and Chrysler will be salvaged through the bankruptcy process although Chrysler will continue to shrink in size and GM will have to deal with the potential loss of some of its foreign subsidiaries. The auto maker is currently working to sell off its Opel division.

Casesa, who was a longtime automotive analyst, also said GM and Chrysler had no other choice but to turn to the federal government for aid and President Barack Obama's administration has moved quickly and effectively to help restructure these companies.

Governments, both in the U.S. and around the world, will be bigger players in the automotive industry in the future as well as consumer perception of the car companies, Casesa said. There will be smaller cars in the future and suppliers will be "vastly" more important when it comes to adding value to vehicles through products and innovation.

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542; [e-mail];