WSJ Opinion:UAW & GM Killed Saturn - Ford Inside News Community
 
LinkBack Thread Tools
post #1 of 7 (permalink) Old 10-03-2009, 04:38 PM Thread Starter
Ford Falcon
 
ndwariga's Avatar
 
Join Date: Feb 2007
Posts: 2,900
WSJ Opinion:UAW & GM Killed Saturn

WSJ Opinion:UAW & GM Killed Saturn

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.

On Wednesday, what appears to be Saturn's death knell sounded when Roger Penske, the legendary automotive entrepreneur, abandoned his plan to buy Saturn from GM and run it as an independent car company. Mr. Penske's plan was a long shot anyway. He had intended to make Saturn a distributor and retailer only, procuring the vehicles from auto makers—initially GM and then France's Renault—on a contract basis.

One inherent problem was that the companies making cars for Saturn also would be its competitors, if only indirectly in Renault's case. (Renault controls Nissan, which competes head-to-head with Saturn in the U.S.) So it was little surprise when Mr. Penske couldn't reach acceptable terms with Renault and pulled out of the deal. Barring a miracle, GM now will "move quickly to wind down Saturn," as GM Treasurer Walter Borst said Thursday at an analysts' conference in Scottsdale, Ariz., and many dealers likely will shut their doors soon.

But make no mistake: 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.

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.

Saturn's chief UAW apostle was Donald Ephlin, the visionary head of the union's GM department who passed away in 2000. Ephlin strongly believed that Detroit's auto makers and the UAW had to change from confrontation to collaboration.
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.

The latter provision was overly idealistic, but certainly an improvement over constant and costly combat. Nonetheless, Saturn's labor innovations were attacked by UAW traditionalists, who coined the term "Ephlinism" to describe Saturn's heresies. Ephlin retired, on the defensive, in 1989. Mr. Smith retired a year later, his reputation besmirched by GM's chronic underperformance, just before Saturn built its first cars.

The cars were pretty ordinary, causing Honda engineers to scoff when they disassembled one. But the engineers couldn't see Saturn's emotional appeal, reinforced with advertising about labor-management cooperation amid the down-home values of Spring Hill. One ad featured a technician kneeling next to his Irish setter and saying: "What's happened here is something I'd like my grandchildren to know about."

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.

In June 1993, Vice President Al Gore visited Spring Hill and said he wanted to "Saturnize" the federal government, whatever that meant. The Age of Aquarius was meeting the automotive assembly line. Saturn sales peaked at 286,000 cars in 1995.
But that year 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.

Yokich convinced GM to assign a new Saturn model to a factory in Delaware instead of Spring Hill. He worked to unseat Mike Bennett, an Ephlin protégé, as president of UAW Local 1853 at Saturn. Mr. Bennett was defeated for re-election in 1999.
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. The decision was understandable but unfortunate. By the time new models finally arrived, Saturn's sales had fallen dramatically and Saturn didn't seem so special any more.
In 2003 the Spring Hill technicians—now workers again—voted to scrap Saturn's special agreement and return to the UAW's standard contract with GM. Spring Hill became a regular GM factory after the last Saturn was built there two years ago. Ironically, the town of Spring Hill still has a street called Stephen P. Yokich Parkway.

GM is cagey about whether Saturn ever was profitable; the answer likely depends on accounting allocations for corporate overhead and the like. But in recent years Saturn, like the rest of GM, clearly was losing money. Without a special labor contract or any unique vehicles, Saturn was a clear candidate for closure when President Barack Obama's automotive team forced GM to downsize in the government bailout.

Mr. Penske then attempted to save Saturn by buying the brand and creating an automotive Costco that would procure cars from various manufacturers. Saturn always had portrayed itself as "a different kind of company," but this was too different to succeed.
Last week I went to Tennessee to speak to the Republican Women's Club of Williamson County, home of the former Saturn factory. 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."

Mr. Ingrassia is a Pulitzer Prize-winning former Detroit bureau chief of this newspaper. His book "Crash Course: the American Automobile Industry's Road from Glory to Disaster," will be published by Random House in January.

WSJ Link

Got Exclusive News or Exclusive car pictures?
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
or post them here with Title "Fomoconews Exclusive: .....

To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
ndwariga is offline  
Sponsored Links
Advertisement
 
post #2 of 7 (permalink) Old 10-03-2009, 06:43 PM
2b2
Mercury C557
 
2b2's Avatar
 
Join Date: Mar 2007
Location: N NW of Atlantis (Reno)
Posts: 22,734
Blog Entries: 6
Re: WSJ Opinion:UAW & GM Killed Saturn

otoh - from mgescuro @ GMI
Quote:
Originally Posted by mgescuro View Post
Confirmed: Renault-Nissan killed Saturn

http://www.sfgate.com/cgi-bin/blogs/...id=48735&tsp=1

As reported in today's Bottom Line column in the Chronicle, it was Renault-Nissan, and particularly Nissan Motor Co., who stuck the knife in.

The joint company's COO, Patricia Pelata told Bloomberg today that talks with Roger Penske's Penske Automotive Group broke down at the last minute.

"We negotiated with them but we were unable to reach agreement at the end,"Pelata said.

Renault-Nissan's CEO Carlos Ghosn didn't recommend approval of an agreement with Penske to the board, which met yesterday, Pelata told Bloomberg.

"The deal probably made a lot of sense to Renault at first glance," Mike Tyndall, a London-based European autos specialist with Nomura Securities, said in a telephone interview. It may have drawn objections from Nissan Motor Co., Renault's 44 percent-owned Japanese affiliate, he said.

"When they looked into the details they probably realized it would do the Renault-Nissan alliance more harm than good," Tyndall said. "They'd be using potentially cheaper versions of alliance products to compete with Nissan in its most important market."

Bloomberg story here.

Read more: http://www.sfgate.com/cgi-bin/blogs/...#ixzz0SiTKNxQm

.
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
2b2 is offline  
post #3 of 7 (permalink) Old 10-05-2009, 12:02 AM Thread Starter
Ford Falcon
 
ndwariga's Avatar
 
Join Date: Feb 2007
Posts: 2,900
Re: WSJ Opinion:UAW & GM Killed Saturn

This is why GM and Ford need to sideswap Japan inc, in a way they will not know what hit em.
GM has Korea Daewoo going for it, from a cost stand point. What I have never fathomed is why Detroit has never taken the Japanese Market seriously. They need to attack that market aggressively.
Buy a local company, outright, (Mazda for Ford/Suzuki for GM) and use it as a trojan horse to get a foot hold.

Got Exclusive News or Exclusive car pictures?
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
or post them here with Title "Fomoconews Exclusive: .....

To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
ndwariga is offline  
 
post #4 of 7 (permalink) Old 10-05-2009, 12:18 AM
2b2
Mercury C557
 
2b2's Avatar
 
Join Date: Mar 2007
Location: N NW of Atlantis (Reno)
Posts: 22,734
Blog Entries: 6
Re: WSJ Opinion:UAW & GM Killed Saturn

Quote:
Originally Posted by ndwariga View Post
...Buy a local company, outright, (Mazda for Ford/Suzuki for GM) and use it as a trojan horse to get a foot hold.
that ^ is an interesting idea

I was going to say without political support it wouldn't work but your idea might
imho Japan really Really needs an "attitude" adjustment

.
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
2b2 is offline  
post #5 of 7 (permalink) Old 10-05-2009, 08:44 AM
Ford Flex
 
Join Date: Sep 2007
Posts: 2,239
Re: WSJ Opinion:UAW & GM Killed Saturn

The three reasons I believe Saturn failed were decisions made from the start.

They were origianaly set to compete with the Accord and Camry, but by the time they were on sale, Accord & Camry had grown to a size larger.
Strike One.

With the new space age body design utilizing plastic panels which needed to allow for expansion and contraction, they could never get the body panels attain that "small gap" look that people were obsessed with at the time. Strike Two

The main reason for using the plastic body panels was to allow for frequent changes in styling. It stood to reason that they could make updates to body panels, and the updates would cost less, and be more dramatic than what the metal panels everyone else had. It might have helped, but for some odd reason, Saturn seemd to change less than the competition, and grew stale.
Strike Three
Logans Run is offline  
post #6 of 7 (permalink) Old 10-05-2009, 10:44 AM Thread Starter
Ford Falcon
 
ndwariga's Avatar
 
Join Date: Feb 2007
Posts: 2,900
Re: WSJ Opinion:UAW & GM Killed Saturn

it can be summed up as lack of money.

Got Exclusive News or Exclusive car pictures?
To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
or post them here with Title "Fomoconews Exclusive: .....

To view links or images in signatures your post count must be 0 or greater. You currently have 0 posts.
ndwariga is offline  
post #7 of 7 (permalink) Old 10-05-2009, 02:38 PM
Ford Flex
 
Join Date: Sep 2007
Posts: 2,239
Re: WSJ Opinion:UAW & GM Killed Saturn

Initial investment was huge.
New plant, new platform, new dealer network.

There wasn't a lack of money back then, as much as it was a lack of commitment a few years after the launch. To justify the benefits of the plastic body panels, major styling changes should have happened every two years. But even that wouldn't have helped for long. The platform itself was just too small to compete by the time it was released.
Logans Run is offline  
Sponsored Links
Advertisement
 
Reply

Tags
killed, opinionuaw, saturn, wsj

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the Ford Inside News Community forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in










Thread Tools
Show Printable Version Show Printable Version
Email this Page Email this Page



Posting Rules  
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On

 
For the best viewing experience please update your browser to Google Chrome