Thu, 5 Mar 1998 23:26:38 -0800 (PST) Thu, 5 Mar 1998 23:19:35 -0800 (PST) Date: Thu, 5 Mar 1998 23:19:35 -0800 (PST) To: (Recipient list suppressed) From: Michael Eisenscher Subject: Dirty Rings Around Saturn's Model Contract? March 6, 1998 Many at Saturn Factory Find Less to Smile About By ROBYN MEREDITH SPRING HILL, Tenn. -- Every week, hundreds of curious tourists make pilgrimages to this small town to take a tour of the Saturn factory. They watch yellow and orange conveyors flow through it like veins and arteries carrying essential car parts to the heart of the assembly line. Many come to see where their beloved Saturns were built. They wave at workers, who smile and wave back. Indeed, the scene resembles the touchy-feely image created by Saturn's advertising campaigns -- one of cheerful, dedicated Americans working in teams to build quality cars. But all is not well on the factory floor. Some workers are embarrassed by the television ads that continue to portray them as a contented work force. "We want to sell cars and build an image, but I want to feel like I'm living the truth," said Daniel Lawrence, 45, who installs batteries at the factory. The market for small cars is collapsing, and even Saturn's well-liked no-haggle pricing policy and reputation for good customer service could not keep Saturn's sales from plunging. The cheerful workers in Saturn's advertisements have been complaining about what they see as bungling by Saturn's parent, General Motors Corp. They have watched their annual bonuses dwindle and have begun to fear for the first time that Saturn may be approaching the kind of catastrophe that would trigger layoffs. Next Tuesday and Wednesday, Saturn's 7,200 unionized workers will vote on whether to ask GM to jettison the innovative labor contract forged here by Saturn and the United Automobile Workers union in favor of the traditional contract that governs the Big Three's 400,000 other unionized workers. If dissident workers prevail, the UAW and GM will presumably begin discussing what to do next. There are no formal provisions in the current contract on how to overturn it. At the very least, though, a negative vote would be a staggering blow to corporate America's most ambitious ongoing experiment in labor-management relations. The vote, which is expected to be close, "represents a confrontation between the new and the old, the future and the past," said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan. GM executives, fearful of tipping the union vote against the Saturn contract, have refused to comment since workers decided in late February to vote on changing the contract, which has no expiration date. The UAW national office also refused to comment. In the meantime, the company is quietly fighting back. Last week, it agreed to make it easier for Saturn workers to earn bonuses, by allowing them to win up to $1,860 this year if quality goals are met. In addition, if the factory produces 280,000 cars a year, 30,000 cars fewer than before -- but still 30,000 more than the factory churned out last year, they could earn a few thousand more. Many workers are skeptical about reaching the quota anytime soon. The 75-page Saturn labor contract is a bare-bones document compared with the 1,470-page tome that covers workers at other GM factories. The Saturn contract requires managers and hourly workers to cooperate in teams. On the other hand, the traditional contract divides responsibilities with hierarchical precision. Managers are required to go through union officials to make many requests of workers. Workers get higher base pay but forego the chance to earn the big bonuses Saturn workers have received in past years. GM assembly-line workers, on average, earn $40,622 a year, plus a bonus tied to corporate performance that has amounted to $2,439 over the last six years. Saturn workers, by contrast, on average earn between $36,774 and $41,787 a year, depending on whether the factory meets its quality, health and safety, and training goals. They have earned additional bonuses amounting to $32,829 over six years for reaching production targets. The crucial difference in the contracts, from the standpoint of Saturn workers, is that they are protected against layoffs except during "unforeseen or catastrophic events or severe economic conditions." Saturn is in deep enough trouble, many workers say, that layoffs are increasingly likely. The traditional UAW contract allows layoffs but requires GM to continue paying idled workers 95 percent to 100 percent of their base pay until they are offered another job or retire. The Saturn contract offers no explicit protections. Thomas Hopp, 39, said his two decades of experience working at GM factories have taught him a simple truth. "If we're not making cars, your job is in jeopardy," said Hopp, who helped organize Concerned Brothers & Sisters of Local 1853, which forced the contract vote. "I get scared when that line isn't running." Slow sales are the root of the problem, and Saturn is suffering along with the entire market. Small-car sales peaked in the 1980s but have fallen 20 percent in the last four years. Until 1996, Saturn was able to shelter itself from the downturn by increasing its market share, mainly by building a nearly cultlike following with its folksy advertisements featuring workers. But for the last two years, Saturn has been stuck with a dwindling share of a withering market. Small-car sales have faltered for a number of unrelated reasons. With a gallon of gasoline priced at less than bottled water, few people want to buy small, fuel-efficient cars. The Asian currency crisis has helped foreign small-car makers drop prices to woo Saturn buyers. And the proliferation of sport utility vehicles and other light trucks is hurting sales of small cars, whose drivers find the bigger vehicles blocking their view of the road. Saturn has fared better than some competitors, but its sales still dropped 9.9 percent last year. In October, Saturn lowered prices on its 1998 models. In January, with unsold Saturns piling up at dealerships, the company stopped building cars on Mondays. Workers use the time to maintain equipment or take additional courses on creative thinking, conflict resolution and other Saturn standbys. Last month, Saturn lowered lease prices: Its cheapest car can be had for $129 a month. Precisely because Saturn workers are used to taking pride and responsibility in the cars -- and the company -- they have built, they are doubly frustrated by what they view as mistakes by management. The disputes are fueling an extraordinary debate between labor and management over how the company should be run. Many workers and local union officials believe General Motors has missed several opportunities to expand on Saturn's success as a popular small-car maker. GM should have developed Saturn into a company selling cars and trucks of all sizes and shapes, they contend. "If Saturn is to take its place as initially stated to be an import fighter, well, the imports are fighting us on a lot of fronts," said Joseph Rypkowski, president of Saturn's Local 1853. With more than 70 percent of Saturns sold to non-GM customers, he sees lots of potential. "If we can do that in the small-car market, we can do that in midsized and there's no reason we can't do it in trucks." But until next spring, nearly a decade after the first Saturns rolled off the assembly line, dealers will have nothing to show loyal customers who had children and outgrew the small cars. Only then will dealers begin selling the Saturn LS, the first midsized sedan. Similarly, GM did not act on workers' suggestions two years ago that Saturn begin selling a small sport utility vehicle, and workers have watched Honda's CR-V and Toyota's RAV4 sell like hot cakes instead. Saturn now is considering selling a small sport utility vehicle, but not until 2002. And instead of sending Saturn the Catera, a small, sporty near-luxury sedan, GM doomed it to slower sales by christening it a Cadillac and hoping it would attract buyers without gray hair to GM's luxury brand. Executives at General Motors said they had little choice but to starve Saturn. The parent corporation nearly ran out of money in the early 1990s and had to cut back in the development of new cars and trucks at all its divisions. Wagoner said last month that it was easy to second-guess GM now, but acknowledged that Saturn would be better off if it were already selling a midsized car. "Clearly we would like to have it," he said. Last summer, Michael Bennett, chairman of Saturn's Local 1853, took the unusual step of proposing that GM spin off Saturn as a separate company. That request has so far been ignored. Indeed, instead of increasing Saturn's autonomy, GM is increasingly integrating it into the corporate parent. That's part of GM's strategy to capitalize on worldwide efficiencies by using common parts and processes for many of its different cars, and by having workers around the world jointly develop new models. The upcoming Saturn LS was developed in Europe as the Opel Astra and will be built at a spare factory GM owns in Wilmington, Delaware. That has alarmed workers. "They think that General Motors is swallowing us back up, which in fact it is," Bennett said. "The problem with that is that Saturn was set up to be a different kind of car company and a different kind of car, and the two strategies aren't fitting very well." All of these issues add up to matters of pocketbooks and pride. The GM decisions have hurt Saturn sales and profits, which have caused workers' bonuses to fall to $2,200 last year from $10,000 in 1995 and again in 1996. Some workers argue that the Saturn contract, and the style of factory life it makes possible, should not be abandoned. "If this was a normal GM plant under a national agreement, we'd already have a layoff," said Dennis Adams, who assembles about 500 front doors per shift, and plans to vote to keep the current labor agreement. "We have a better system here," said Adams, who worked at other GM factories for 16 years before coming to Saturn in 1993. Local union leaders, who favor retaining the contract, said Saturn had not faced such a challenge before, because times had been good. "We're really for the first time getting a test," Rypkowski, the union president, said. Many workers who want to return to the traditional UAW agreement said they were embarrassed, not proud, of Saturn's image because of all the changes in the last couple of years. Boyd Burton, 38, who has worked at Saturn for nine years, recently had some friends at his house when a Saturn commercial was shown on television. "They asked if that's really the way it was there," Burton said. He told them, "That's not reality -- it isn't working like that." Copyright 1998 The New York Times Company