RIP Saturn – You Could Have Saved GM

05 October 2009

RIP Saturn – You Could Have Saved GM

 

GM could have been a very different company today.  Unfortunately it missed, if not completely screwed up, the best opportunity almost any company could ask for.  How often does a company get the chance to partner and learn from the world’s most successful company in its industry, to learn the inside secrets, and presumably to take that knowledge back to its other facilities?

 

General Motors and the United Auto Workers union have waged war against each other—sometimes hot, sometimes cold—for most of the past 80 years. One of the few things on which they collaborated, sadly, was undermining Saturn, which began as the boldest effort to reform the dysfunctional dynamics of their relationship.

 

The failure here isn’t Mr. Penske’s. Saturn was killed by its creators, GM and the UAW. The company starved Saturn for new products, and the union waged war against Saturn’s labor reforms to keep them from spreading to other GM factories.

It started off on a good, forward-looking foot.

The story began on Jan. 8, 1985, when GM announced Saturn at a press conference in Detroit. It would be GM’s first new brand in 70 years and operate as a separate subsidiary, with its own labor contract, to develop a small car fully competitive with the imports. Chairman Roger B. Smith assigned Saturn a historic mission: to "affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."

Those stirring words were echoed seven months later in a Memorandum of Understanding between GM and the UAW: "We believe that all people want to be involved in decisions that affect them, care about their jobs . . . and want to share in the success of their efforts." Saturn became not just a company but a cause. Its factory would be in Spring Hill, Tenn., a bucolic town 45 miles south of Nashville and hundreds of miles from the hidebound headquarters of GM and the UAW in Detroit. 

Thus the Saturn contract, built on the Memorandum of Understanding, eliminated most of the work rules that strictly limit the tasks UAW members can perform. Workers would be called "technicians" and get just 80% of standard UAW wages but would share in Saturn’s profits, allowing them to earn more if Saturn succeeded. Most Saturn executives and managers would be assigned a UAW counterpart, and the two would share in key decisions.

GM’s Smith recognized that GM management had created many of the company’s problems and a new paradigm was needed.  The UAW recognized that inflexible work rules stymied efficiency and creativity and a new paradigm was needed.  The customer even became a focus for the first time… and last… at GM.

Saturn dealers were awarded broad area franchises, freeing them to focus on customers instead of competing with dealers down the block. Customers loved the no-haggle pricing and being cheered by employees when they drove their new car off the lot. More than 40,000 Saturn owners attended the June 1994 Saturn Homecoming in Spring Hill, where they were treated to factory tours, country-music concerts, and picnics with the workers who built their cars.

And some other notable people even recognized how the concept could be applied outside of auto manufacturing.

In June 1993, Vice President Al Gore visited Spring Hill and said he wanted to "Saturnize" the federal government, whatever that meant.

At least he didn’t claim to invent lean manufacturing as well as the internet.  The seeds of opportunity were planted… but it didn’t last long.

Saturn’s labor innovations were attacked by UAW traditionalists, who coined the term "Ephlinism" to describe Saturn’s heresies.  That year [1993] saw another, more menacing development. The UAW elected as its new president Stephen P. Yokich, a militant firebrand with an explosive temper who hated Saturn. Before his death in 2002, he opposed profit-sharing, the elimination of work rules, and the flexible factory shifts that improved Saturn’s efficiency.

So the UAW begin to starve the opportunity.  Management soon joined in the destruction.

Meanwhile, Saturn wasn’t faring much better at the hands of management. After GM almost went bankrupt in 1992, the cash-strapped company didn’t give Saturn money to update its cars.

An opportunity lost.

Some of the attendees were former Saturn workers, good people who really tried to create something different at Spring Hill but were let down by their company and their union. Perhaps the new GM and the UAW will forge a different relationship in the future. Meanwhile, the Saturn workers’ sense of loss is expressed poignantly by Mike Bennett, their former union leader, who says, "I wake up at night sick, thinking about all the things that might have been."

As do many of us, taxpayers who are now investing in and giving yet another chance to a company smart enough to kill an incredible opportunity.

Last Wednesday Roger Penske decided to abandon the deal to take over Saturn and GM immediately decided to shut down the division.  Thus ended an era and an opportunity.

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