GM, UAW Take Steps Toward ‘Saturnization’ : Autos: Tapping the unit’s successes could revive the ailing firm and save union jobs.
As General Motors Corp.’s new management team attacks its downsizing mandate with renewed urgency, and the United Auto Workers union braces for another round of plant closings, the two sides are hoping to reach a meeting of the minds centered on one bright spot in GM’s troubled U.S. automotive business: the Saturn Corp.
Created eight years ago as an independent company free of the entrenched bureaucracy haunting its amorphous parent, Saturn has escaped the pitfalls that led to GM’s dramatic market-share slide and the job-slashing plans that have strained the company’s relationship with its union.
Newly appointed Chief Executive John F. Smith Jr. is expected this month to identify the remaining seven of the 21 plants GM plans to close by 1995. But high demand for the hot-selling Saturn models means that the auto maker could soften the blow for the UAW by using an existing plant to expand Saturn production from its base in Spring Hill, Tenn., keeping several thousand UAW workers employed.
And as part of the bargain under discussion, the UAW might agree to adopt Saturn’s innovative labor agreement--which ties 20% of employee pay to quality and production targets--in an assembly plant that supplies one of GM’s other divisions (Cadillac, Buick, Oldsmobile, Pontiac, Chevrolet or GMC Truck).
Such a deal might just be “the salvation” of a plant scheduled for closure, says a GM source who requested anonymity. “It’s a distinct possibility and a good strategy.”
Sources close to GM say Smith is discussing such a scenario with Stephen P. Yokich, the top union negotiator for GM. But neither GM nor the UAW will confirm it. It would involve complex compromises on both sides, and some industry observers wonder whether either one is ready to make those concessions.
But at a time when the union is still bitter at ousted GM Chairman Robert C. Stempel’s handling of the initial round of plant closings earlier this year, the idea marks a fresh approach to resolving the differences of the traditional adversaries. And it may provide groundwork for cooperation at a time when the company and union must depend on each other to weather their crisis.
This approach also reflects an attempt to accomplish in labor relations what GM’s new management team is setting out to do in other areas of the company: Use the youthful Saturn subsidiary’s success to transform the failures of its doddering 76-year-old parent.
The chance to expand the Saturn labor contract to a non-Saturn plant would be an important step in GM’s bid to reinvent itself, says David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. “A plant like that could become a model for propagating the Saturn philosophy within the mainstream of General Motors.”
But that might not be so easy to swallow for the UAW’s Yokich. The current UAW leadership has adamantly opposed implementing the Saturn contract elsewhere at GM, insisting that the pact concedes too much to the company.
Because the pact ties pay to quality, union members working under its terms could end up earning less than other UAW members. The contract also allows the company to bypass the union’s seniority system and select workers of its own choice.
The idea has its drawbacks for GM too. With its North American automotive operations losing more than $2 million a day, the company is loathe to spend more on Saturn until it starts making money on its $3.5-billion initial investment.
That may happen as soon as next year, when the Spring Hill plant is scheduled to switch to round-the-clock production, boosting its output by nearly one-third. But even then, some within GM would rather spend precious product-development dollars on larger vehicles with fatter profit margins.
Others worry that requiring Saturn to build cars in an existing plant will spell disaster. The company’s winning strategy has been to start from scratch: Saturn built its own plant, chose its own suppliers and selected its own work force from among UAW ranks--luxuries that may not be possible in the deal Smith and Yokich are said to be working on.
Although GM and the UAW would not confirm discussing an agreement centered on Saturn, recent signs point to the beginning of a more cooperative relationship.
These signs include agreement on an early retirement program for GM’s UAW employees, the details of which Yokich may unveil this week at a gathering of local union officials from GM plants in Las Vegas.
GM also has plans to shift production of Chevrolet Cavalier and Pontiac Sunbird models from a plant in Mexico to an underused complex in Lansing, Mich., pending an agreement on a flexible labor contract to maximize production efficiency.
In his first statement as chief executive, Smith last week allayed fears that he would try to reopen the union’s three-year contract before it expires in September, and he emphasized the need to build trust. The union responded with optimism in an exchange that marked a striking departure from the tone of the Stempel era.
Stempel inflamed the union’s hostility by playing the local unions at plants in Ypsilanti, Mich., and Arlington, Tex., against each other in a bid to extract concessions. When he announced in February that the Willow Run plant in Ypsilanti would close, the decision was widely seen as having been based on Arlington’s willingness to adopt the more flexible labor contract.
Now, there is speculation that Willow Run may be saved in the possible Saturn expansion. But while labor experts agree that Smith has made headway with the union, they are skeptical that the “Saturnization” of GM’s labor relations will happen overnight.
“You’re not going to be closing plants and opening Saturns,” says Harley Shaiken, a professor of work and technology at UC Berkeley. “For Saturn-type initiatives to spread, there has to be a foundation of trust and a broader understanding on issues such as job security.”
Still, any resistance within the union to Saturn’s labor agreement may be overcome more easily in the face of the impending layoffs of 54,000 workers.
“Anything we could do to save our plant, I’m for it,” says Jack Cordell, president of Local 435, whose members build Chevy Corsicas and Berettas at the Wilmington, Del., assembly plant reportedly on the list for closure. “People are getting more and more concerned as it gets closer to the end of the year. There just aren’t any other jobs around here.”
Quality That Pays
In a radical departure from other GM divisions, the Saturn-UAW contract links 20% of all employees’ pay to quality, productivity and profitability. This is cited as a key reason that Saturn ranked as the highest-quality American-made brand of cars in an annual consumer survey in 1992. Only two other GM divisions--Oldsmobile and Buick--were listed as performing above the industry average of 125 consumer complaints per 100 cars in the first 90 days of ownership. Problems per 100 cars Infiniti: 70 Lexus: 73 Toyota: 85 Honda: 105 Nissan: 108 Saturn: 109 Lincoln: 114 Acura: 115 Oldsmobile: 121 Subaru: 122 Audi: 124 Buick: 124 Industry average: 125
Makes that ranked below average: BMW, Cadillac, Chevrolet, Chrysler, Daihatsu (small sample), Dodge, Eagle, Ford, Geo, Hyundai, Jaguar, Mazda, Mercedes-Benz, Mercury, Mitsubishi, Plymouth, Pontiac, Saab, Suzuki, Volkswagen, Volvo. Source: J.D. Power & Associates
