Or so they thought. Their survival struggle during the previous two decades had sparked an urgency to boost quality, increase productivity, and meet the threat of foreign competition, which was becoming a little less foreign as the Japanese, German, and even Korean car companies built more factories on U.S. soil. But at the turn of the century Detroit’s success with trucks caused the impetus for ambitious efforts at self-reform to fade. On the labor front, the debate over cooperation versus confrontation continued between the UAW and the car companies, especially General Motors. The union saw its GM workforce drop from 500,000 people in 1980 to just 220,000 in 1998. GM, for its part, had almost gone bankrupt in 1992 and seemed determined not to continue business as usual.
The debates meant that GM and the union tried lots of things to change their relationship, often with initial success, but then followed through on virtually nothing. As a result, their prosperity wasn’t as sound at it seemed. Major problems lurked like rocks below the water’s surface and sometimes jutted up into public view. The issues and uncertainties were amply evident at GM’s most ambitious effort to reinvent itself, the Saturn Corporation. There the company and the UAW tried a new model for enlightened labor relations and then abandoned it, retreating into their old pattern of discord and eventual disaster.
Saturn had started modestly in 1983 at the sprawling General Motors Technical Center in suburban Detroit as a project—one of dozens—aimed at improving the company’s manufacturing efficiency and performance. But in December 1984 in Fremont, California, Roger Smith hinted that he had bigger ideas. Smith was there to help reopen a factory that had been shuttered because it was one of the very worst in the GM system, with terrible quality and nonstop warfare between management and union. For Fremont’s new incarnation as Nummi, the joint venture between General Motors and Toyota, the companies had enlisted the help of two hard-bitten union leaders (named, believe it or not, George Nanno and Gus Billy) to give the factory another chance under Toyota management methods. Before long, Nummi would be building higher-quality cars than any other GM factory.
At the “line-off” ceremony to celebrate production of the first car, Smith said GM would take the labor-management techniques from Nummi and combine them with high-tech manufacturing to leapfrog the rest of the industry—including, by implication, Toyota itself. Some listeners thought Smith’s remarks were insulting to the Toyota executives, including members of the founding Toyoda family, who were attending the ceremony. The bigger problem, however, was that Smith had a grand idea but had given little thought to “details,” such as how to make money and how to spread any innovations to the rest of GM.
The grand idea was unveiled when Smith made a “historic announcement,” as he himself put it, in Detroit on January 8, 1985. General Motors would upgrade Saturn, he said, from an anonymous project to GM’s first new brand in seventy years, to take its place alongside Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac. Unlike the others, Saturn would be established as a separate subsidiary with its own factory chock-full of the latest technology, as well as a separate workforce with its own unique labor agreement. Saturn would be empowered, Smith explained, “to develop and produce an American-made small car that will be fully competitive with the best of the imports,” meaning the Honda Civic and Toyota Corolla.
“Saturn is the key to GM’s long-term competitiveness, survival and success,” declared Smith, adding that Saturn would “affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world.” It was a national crusade, and Americans rushed to join, besieging GM with thousands of unsolicited job applications. Seven governors went on television’s Phil Donahue Show to plead publicly for the Saturn plant—with its thousands of jobs and high-tech infrastructure—to be located in their state. More than a dozen others trekked to Detroit to state their case in person. After a media circus that ran for months, the winner was Tennessee, where GM put the plant in the bucolic hamlet of Spring Hill, some forty-five miles south of Nashville. More important, it was five hundred miles from the hidebound union-versus-management mores of Detroit.
In July 1985, while the site search was still under way, negotiators for Saturn and the UAW reached a “memorandum of understanding” stating that Saturn wouldn’t be bound by the union’s master contract with General Motors. Saturn would have just five or six job classifications compared with dozens and dozens at some other GM factories, where the classifications and myriad work rules basically were feather bedding provisions. With Saturn, the union tacitly admitted that the traditional job classification structure was inefficient—though it wasn’t willing to scrap it at other GM factories, because one man’s inefficiency was another man’s job.
The memorandum further established “the principle of risk and reward” in setting workers’ pay, meaning that wages would be tied to Saturn’s success or failure. And it stated: “We believe that all people want to be involved in decisions that affect them, care about their jobs and each other … and want to share in the success of their efforts.”
It was a revolutionary, even inspiring document. The memorandum reflected the views of a blue-collar philosopher who was one of the UAW’s more remarkable leaders, Donald Ephlin, who had stood at Roger Smith’s side when Saturn was announced. Ephlin, a disheveled and overweight man, spoke with an accent that betrayed his roots in Massachusetts, where he had started building cars in the late 1940s at GM’s assembly plant in Framingham. He had risen through the UAW’s ranks to become Leonard Woodcock’s administrative assistant when Woodcock led the union in the 1970s.
As head of the UAW’s Ford department in the early 1980s, Ephlin had traveled with Ford executives to Japan to observe Japanese management methods firsthand. And with his help Ford had forged the most cooperative and productive union relationship among the Big Three. By the time Ephlin moved up to head the UAW’s GM department, he was the union’s leading intellectual, sometimes to the irritation of his colleagues.
“Don read books—and let the other guys know that he read books,” one former union official would explain. If Roger Smith wanted a laboratory for technology, Don Ephlin wanted a proving ground for a new era of labor-management relations in which GM and the union would bury their bitter, combative past.
The new Saturn contract, built on the memorandum of understanding, pledged both the company and the union to go well beyond the Japanese in joint decision-making. Each Saturn executive and many managers—about four hundred in all—would have a union counterpart. The two would share responsibility for their assigned operation, reaching consensus decisions on matters big and small. Workers would receive only 80 percent of the UAW master contract wage, with the other 20 percent tied to quality and productivity.
Instead of a traditional fixed-benefit pension, Saturn workers would get a profit-sharing plan akin to a 401(k). Seniority rights, traditionally sacred to the union, would be limited. In return, GM pledged to devote at least 5 percent of each worker’s annual working hours to skills training, and not to lay off more than 20 percent of the workforce under virtually any circumstances. Admirably, though perhaps naïvely, the contract was a template for democracy in the workplace.
To make it work in the trenches, Ephlin would need a like-minded person to lead the new UAW Local 1853 in Spring Hill, which would represent Saturn’s workers. He found his man in a most unlikely place: the union’s militant heartland of Flint, Michigan, the UAW’s equivalent of Bunker Hill, where the violent 1936 Sit-down Strike is still celebrated every year with local parades and festivities.
Mike Bennett, a mild-mannered Flint native with a flat midwestern accent, knew the playbook of labor-management confrontation very well. As president of UAW Local 326, he’d used it to considerable advantage in the past. “Our job was to prevent management from managing,” he would say in recalling his early years as a union leader, when his most potent weapon had been the grievance pad. Local union officials wo
uld write grievances—formal complaints that a manager had violated a worker’s rights—at a moment’s notice. While some were legitimate, many amounted to reverse harassment to bend managers to the union’s will. This system had worked remarkably well over the years, but in the long run cowering managers and inefficient factories weren’t in either side’s interest.
By the mid-1980s Bennett was coming to view company-union relations in a different light. Detroit’s crisis early in that decade had convinced him that “the greatest threat to our livelihoods is an unprofitable company,” as he would explain to union colleagues, adding that the UAW had to “keep the goose healthy” instead of killing the bird that laid the golden eggs of high-paying jobs. Bennett’s readiness to look for common ground with the company was just what Ephlin needed. In April 1986 Ephlin appointed him head of UAW Local 1853 at Saturn, a job that would become an elective position once the new operation got up and running.
At the outset Bennett was disappointed that Saturn gave hiring preference to workers from other GM factories, whom he believed might bring old attitudes with them. But he quickly forged a close relationship with R. G. “Skip” LeFauve, the personable executive whom GM had installed as Saturn’s president, and together the two men forged a brand-new environment, with joint union-management meetings on everything from parts procurement to work schedules.
While the factory was being built in Spring Hill, LeFauve and Bennett led their growing band of cohorts through team-building exercises at a nearby company obstacle course. Workers and managers had to scale a forty-foot wall while roped together and lie in each other’s arms while being passed through a giant net. And they took “trust falls,” flinging themselves backward off an elevated platform and into the arms of their (hopefully) supportive colleagues. Recalcitrant workers were told to take a day off to, like, come to grips with their negativity. The Age of Aquarius was meeting the automotive assembly line.
Hokey as it sometimes seemed, the new culture invigorated many workers—or “technicians,” as they were called at Saturn, evoking but not copying the term associates at Honda. One young woman had transferred in from a GM components factory in Alabama, where her job had been to shove a bootlike contraption onto a steering mechanism; she endured shoulder pain from the minute she started until her shift ended eight hours later. Years later she would recall that Saturn was “like heaven; a nice, clean new plant,” where physical work was made easier by robots and other machinery. “You felt more loyal,” she would explain, “because you were really part of it all.”
But the majority of General Motors employees weren’t part of Saturn. They were reminded of that constantly by Chairman Smith, who publicly praised Saturn as the role model for the rest of the company before it had built a single car. The result was a passive-aggressive backlash against Saturn, which many GM managers came to view as the proverbial Goody Two-shoes. One GM engineer who had joined Saturn encountered the resentment when he tried to recruit other engineers from General Motors. “People would shoot back: ‘You Saturn guys are supposed to be the experts,’” he would recall of those early years. “ ‘Why do you need our people?’ ”
And all along Chevrolet dealers resented Saturn for siphoning off product development dollars that could have been earmarked to develop new Chevrolets. Saturn was portrayed as “a special vehicle built in a special place by special people,” a Detroit Chevy dealer griped to BusinessWeek. “Where does that put the rest of what GM builds?”
In 1987 doubts about Saturn even surfaced within the executive suite. GM already was saddled with unused plant capacity, Smith’s colleagues argued, so it didn’t make sense to build two new Saturn assembly plants that could produce another half-million cars a year. They convinced the chairman to scale Saturn back to a single assembly plant at the start, with the option of adding a second plant later.
One senior executive wanted to go further and pull the plug on Saturn entirely, believing it was an expensive boondoggle. In December he even raised the issue with GM’s directors, but Smith wasn’t about to lose a battle in his own boardroom. The executive was rebuffed, and soon afterward resigned.
Meanwhile the labor-management cooperation that Saturn symbolized was spawning a backlash within the UAW as well. A rump group called New Directions began arguing that the union’s leadership had gone overboard in cooperating with management and demanded a return to the traditional confrontational approach. (Ironically, New Directions wanted the union’s old direction.) The dissidents gained public backing from the aging Victor Reuther, a younger brother of Walter, and launched personal attacks on Don Ephlin, coining the term Ephlinism as a derisive description of collaboration with management.
As the attacks continued, Ephlin became a prophet without honor in his own union. In July 1989, after forty-two years with the UAW, he would limp into retirement—a sad symbol of a new vision for the UAW that might have avoided the disaster of twenty years later. When Ephlin retired, the union praised him with more formality than conviction. “The UAW thanks Brother Ephlin,” it stated, “for giving so many years to the betterment of UAW members and retirees.” It was a bittersweet parting indeed.
A year after Ephlin’s departure Roger Smith also retired, at age sixty-five, but not before fulfilling his vow to drive the first Saturn car off the assembly line. Normally, such “line-off” ceremonies are public celebrations: journalists are not only invited but encouraged to attend. But by then Smith’s public image was so battered that Saturn’s publicists held the drive-off ceremony in private, to avoid tainting their promising new brand with the bumbling image of their boss.
Ironically, at least in concept, much was right about Saturn: the promise of a fresh start for GM, an innovative approach to labor relations, a new brand unencumbered by the blemishes of GM’s past. The trouble was, Saturn couldn’t avoid being a part of GM.
To go beyond a noble experiment, and to bring change to the entire company, Saturn needed broad support from GM’s management, the UAW’s leadership, and GM’s overall dealer body. But in each of those groups suspicion of Saturn ran high, for some reasons that were legitimate and others that weren’t. Some people felt threatened, others were just jealous, and still others believed—understandably—that GM had too many factories and brands already.
In October 1990, when its first cars went on sale, Saturn landed on the cover of Time. “Can America Still Compete?” asked the headline, a question that the article answered with a resounding yes. Saturn “scares the liver out of” the Japanese, one automotive consultant told the magazine, while another added that “General Motors is about to kick butt.” Body-part analogies were flying like welding sparks.
The Japanese indeed had been concerned about Saturn. Toyota executives believed Saturn had the opportunity to heal the wounds of GM’s labor-management strife, and Honda fretted that Saturn might surprise them with some revolutionary automotive technology. But when Honda engineers bought a Saturn and disassembled it, they found that the car was surprisingly ordinary. The SL1 and its big brother, the larger and more powerful SL2, had high-revving multi-valve engines with overhead camshafts, functional interior design, and a notable absence of chrome. The dashboards, however, had overlapping plastic panels that made them look cheap, and the engines emitted a harsh noise that stemmed from inferior motor mounts.
The cars’ one unique feature was their plastic-polymer doors, which were intended to protect the car from getting dinged in parking lots. But the gaps between the doors and the steel fenders were twice as wide as those on the Civic. As they pored over the Saturn’s parts piece by piece, the surprised engineers kept shaking their heads and exclaiming “Shinjirarenai” (“Unbelievable”) over and over again. And it wasn’t a compliment.
There was one thing, however, that the Honda engineers couldn’t see. Cars are more than just hardware. They evoke emotions, images, and feelings, and by tapping into America’s long-running love for the automobile in a brand-new way, Saturn hit a home run. The
advertising showed Saturn workers, their dogs, their kids, and the long white fence surrounding the factory. The themes were quite the opposite of 1950s tail fins and 1960s muscle cars: teamwork, down-home values, and the noble effort to prove that America could still compete.
“I never felt this way about any job, any car, or anything I ever built,” a factory technician—that is, a worker—declared in one ad. In another ad, a technician was shown kneeling beside his Irish setter and saying: “What’s happened here is something I’d like my grandchildren to know about.” And one advertising line, “It’s spring in Spring Hill,” echoed the “Morning in America” slogan that had helped Ronald Reagan win the White House a decade earlier. That was no accident: both were produced by the same San Francisco ad agency. Saturn’s tag line was “A Different Kind of Company. A Different Kind of Car.”
Maybe the car wasn’t all that different, but the company really was—and the message often was driven home by real employees. Saturn’s management asked one man, whose burly frame and huge hands made him the central casting version of an autoworker, to speak to a dealer group in California. Though nervous and awkward, he talked about teamwork, innovation, and the Saturn cause—and the dealers rose in a standing ovation. Saturn began sending him to make promotional appearances at Disney World and professional baseball games.
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