Saturn Will Retain Contract


Union workers at Saturn Corp. on Wednesday decisively reaffirmed their support for the innovative contract that has made the small-car company a model of labor-management cooperation.

But the vote unmasked widespread dissatisfaction among Saturn workers with General Motors Corp.'s support of its main import-fighting car model, and underscored deep divisions in the ranks of the United Auto Workers.

Members of UAW Local 1853 voted nearly 2 to 1 to retain the current 13-year agreement featuring a labor-management partnership, rather than switch to the more traditional adversarial national agreement covering workers in all other GM plants.

"This is a vote of confidence in the Saturn approach," said Jerome Rosow, president of the Work in America Institute, a labor research group based in White Plains, N.Y.

The Saturn agreement has been copied in wide segments of industrial America, and its rejection by the work force that helped spawn it would have been a blow to advocates of labor and management partnerships.

But the vote is unlikely to quiet the growing disenchantment with the Saturn experiment by union leaders and workers who charged that GM has reneged on promises of autonomy for the Tennessee-based car company.

"The partnership is alive and well in Spring Hill, Tenn., and the Saturn Corp.," said Michael Bennett, bargaining chairman for Local 1853. "The question is whether or not it's alive and appreciated in Detroit."

Bennett charged that Saturn no longer enjoys independence to make key decisions on products and design or in choosing suppliers. Nor does the union any longer have a voice on key strategic decisions, he said.

Don Hudler, chairman and president of Saturn, denied the allegations. "Detroit is committed to Saturn," he said, responding to reporters' questions.

The union referendum came at a critical crossroads for Saturn, whose folksy ads market it as a "different kind of company," with a unique approach to labor relations and customer service.

Saturn has accomplished many of its initial goals. Its cars are attracting import buyers. They have top-notch quality. Its dealer network is the envy of the business. It has achieved operating profits for three years, though it may be decades before it pays back GM's $5-billion development commitment.

But the company, which only makes a subcompact sedan, coupe and station wagon, is facing its first significant market slump since it began production in 1990, as small- car sales have fallen industrywide. Saturn sales were down 10% last year, and have tumbled another 20% in the first two months of this year, part of a nationwide sales shift toward bigger vehicles blamed partly on cheap gasoline.

More important, Saturn is facing an identity crisis, as GM has been slow to give it more models and is taking steps to integrate the company more closely with GM's other divisions. This has prompted union members and others to worry about the loss of Saturn's uniqueness.

"There is a feeling that GM is throwing away the only brand equity it has created in the past 25 years," said Sean McAlinden, a labor economist at the University of Michigan.

The Saturn experiment was hatched in the mid-1980s when GM and the UAW were regarded as backward organizations incapable of competing with the more efficient Japanese.

To prove otherwise, they launched an ambitious plan to make workers and managers partners. The union accepted a lower base wage rate, elimination of seniority rights and narrow work rules in exchange for a no-layoff pledge, bonus potential and a voice in decision-making.

The current labor unrest at Saturn has been brewing for several years as an increasing number of workers were transferred to its sprawling plant here from other closed GM factories. These later arrivals are less comfortable with the Saturn approach and have lobbied for changes.

In addition, the leadership of the UAW in Detroit has long been ambivalent toward Saturn. UAW President Stephen Yokich does not oppose Saturn's teamwork approach, but he believes the separate contract diminishes the union's overall clout. He also has long been at loggerheads with Bennett.

Saturn has responded to the drop in sales by lowering prices, increasing leasing and cutting production. The cost-cutting has hurt workers, who have seen overtime and bonuses trimmed.

This has created growing anxiety among workers who are afraid that a prolonged fall in small-car sales will not only hurt their paychecks but also result in layoffs, despite a no-layoff policy.

They note that the national contract provides for 95% of base pay for idled workers, whereas the Saturn contract has no explicit protections.

"They can do whatever they want," said Paul Wilsey, an assembly-line worker who has only two years at the plant. "If things get worse, Saturn will lay people off."

Another issue is bonuses. Saturn workers earn 88% of the base pay of other GM workers, but also have a chance to earn substantial bonuses pegged to quality, production and other goals.

In 1995 and 1996, Saturn workers earned bonuses of $10,000 apiece, putting their average total compensation about $4,000 above other GM workers. But last year the bonus was just $2,000.

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