In the sad decline of the American automotive industry, we have reached the serial restructuring stage.

Every few months Wall Street flirts with hope as Ford Motor or General Motors presents a new plan to cut workers, close plants and rejigger benefits. But the moment is fleeting, as investors revert back to pessimism.

The plant closings and job cuts are unlikely to save the companies, particularly GM, which is in more serious straits than Ford. The two Detroit mainstays could solve their problems by selling better cars, of course. But winning back customers will take years, a luxury GM doesn't have.

What's needed is a radical solution that breaks the restructuring cycle and saves GM. The United Auto Workers union says a national health-care plan would solve a big chunk of the auto industry's cost problems. But such a solution is highly unlikely in the current political climate.

So here's another idea: Transform GM's workers and retirees into owners in exchange for benefit givebacks.

Rod Lache, an analyst for Deutsche Bank, has been mulling over such a plan to save GM. Here's how it would work:

GM had a pension liability of about $90 billion at the end of 2004. Mr. Lache estimates GM has health-care liabilities of about $65 billion.

That's $155 billion in liabilities. The vast amount, but not all, is attributable to hourly, unionized workers.

Now let's look at the assets supporting those obligations. The pension plan had assets of almost $90 billion at the end of 2004. GM says that after investment gains of 13 percent last year, the plan is overfunded by $6 billion. The health-care obligations are underfunded to the tune of $50 billion. (For the purposes of this exercise, we assume simply that the pension fund is adequately funded. When GM reports 2005 year-end results Thursday, it will be easier to assign more-accurate numbers to all of these.)

Mr. Lache proposes to give the money that is socked away for pensions and health care to the auto workers. Then, he proposes that GM transfer GMAC, the financing unit, to the workers. GMAC has about $23 billion in book value. Add that to the existing $15 billion long-term health-care trust, which employees then manage. The pension plan becomes an employee-run retirement plan.

OK, that amounts to $128 billion in assets, leaving workers far short of the $155 billion in estimated liabilities. The plan needs a sweetener: Give the workers $20 billion in GM equity. But GM's market value is just $11 billion today. So, how is that possible?

After getting out from under the benefit costs, GM would be a nimbler competitor. And it would throw off plenty of cash. Indeed, Mr. Lache estimates that GM would generate a little less than $13 billion in earnings before interest, taxes, depreciation and amortization a year under his plan.

The market would give the company a multiple of five times that cash flow, Mr. Lache estimates, for an enterprise value (market capitalization plus gross debt) of about $63 billion. GM would have about $32 billion in debt remaining. There is other cash, but for this exercise, we allocate the cash and other things like the short-term health-care trust to cover restructuring costs. There would be $31 billion of equity value at the newly restructured company.

The shareholders sacrifice the potential upside from a restructuring but would avoid a bankruptcy filing. Thus, with GM's market cap growing to $31 billion from $11 billion, they can let the workers have the remaining $20 billion in additional value created by the radical restructuring.

In this plan, the workers would get about $148 billion in assets for the $155 billion that they are owed. That amounts to almost $250,000 of value, on average, for the roughly 600,000 active workers, retirees and spouses covered under the pension plan.

To be sure, workers would still come up short $7 billion and many older workers would be counting on risky shares in a difficult industry to make up for reduced benefits. But what's the alternative? It's probably more than they would get after years of deterioration led to bankruptcy. And shares would provide a chance for upside.

"There is almost a universal recognition that the union already owns the majority of this enterprise. This crystallizes it," Mr. Lache says.

The academic research suggests that employee-ownership plans work best if employees are given some say in the management. It has rarely been tried on a grand scale. United Airlines became majority owned by the employees, but failed for myriad reasons having to do with an ill-designed plan and the industry's troubles.

"Just owning a piece of the action without affecting the value has no value," says Avner Ben-Ner, a professor of industrial relations at the University of Minnesota's Carlson School of Management.

So in order to make up for the loss of benefits and the risk of stock ownership, the plan would give GM workers board seats and thereby a say in running the company.

The employee-owner solution isn't easy. Management and the union have very prickly relations, which would make negotiations tough. There would be complicated tax implications and legal hurdles requiring legions of lawyers and investment bankers, and, probably, congressional intervention. In another era, the Detroit collapse would be a matter for a presidential summit.

Saving GM is important enough to the American economy to start the conversation.