GM’s Revolution
General Motors Corp. is about to spend $5 billion to build a new auto plant and, quite possibly, launch a revolution. GM’s Saturn project is an attempt to produce an all-new car using technological and organizational approaches that differ dramatically from what up to now have been the norms in the U.S. auto industry. Included in these approaches will be a labor contract that is novel both in what it gives and in what it gains. The Saturn experiment is being watched closely throughout the American auto industry. If it works, something that is not likely to be known for five years or more, the traditional and often antagonistic relationship between workers and management may be permanently changed.
Saturn is GM’s answer to the challenge of Japanese auto imports. Small Japanese cars, besides having a reputation for high quality and high mileage, enjoy a production cost advantage of up to $2,000 over their American counterparts. Saturn will represent an all-out effort to erase that advantage. To achieve competitive cost reductions Saturn will be built at a highly integrated plant where many of its parts will be produced on-site.It will be built using the most advanced labor-saving equipment. And it will be built by union labor under a contract that provides for greatly expanded worker participation in decision-making and extremely flexible work rules.
If all this comes together, GM expects that a Saturn model can be produced in about 60 work hours--about half what it takes today to build an American subcompact car. That should lead to the kind of cost savings that, GM hopes, will allow it to begin profitably selling Saturns beginning in 1989 for around $10,000. GM is initially aiming at selling 500,000 such cars a year.
The contract negotiated by the United Auto Workers union and GM relies heavily on the concept of worker self-management. Work units of 6 to 15 people will decide among themselves how to divide up and rotate assigned assembly-line jobs. Old job titles are to be abolished, along with a lot of rigid and productivity-limiting work rules. Blue-collar workers will be paid salaries rather than hourly wages. Pay will be about 20% below what other auto workers make, but bonuses tied to productivity could raise the pay of Saturn employees above the industry standard.
The UAW and GM have worked together since 1983 on plans to build cars in better ways. Auto industry practices in West Germany, Sweden and Japan have been studied closely. Saturn represents an agreement between GM and the union that greater efficiency in making cars is not only possible but also imperative. The Saturn approach is worth watching. More to the point, it is worth doing.
