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Was Saturn a failed “Experiment”?

Posted in auto industry, Saturn by Patrick McNally | May 7th, 2009 | Leave a Reply |

The “Saturn Experiment” began in 1985 as a brainchild of General Motors, to create a separate entity from the parent company to compete with Japanese auto makers. It came undone in 2004 as a result of a contract change between management and workers, and could be on its way to becoming a thing of the past. GM announced in April that the Saturn, along with the Pontiac brand, will be discontinued due to economic necessity. The two brands join Oldsmobile, which was dissolved in 2004. This week, the Wall Street Journal reported that the Renault Motor Company is one of many that are interested in supplying cars to be sold through Saturn dealerships. But nobody as yet has made a move to continue a car division that once billed itself as “A Different Kind of Car Company.”

Saturn first tried to lead the way by agreeing to an innovative contract with the United Auto Workers (UAW). In the agreement, workers would be paid an annual, not hourly, salary. Also, raises in salary would partly be contingent on the company’s success in the marketplace. This feeling of ownership between management and workers helped to foster Saturn’s focus on “people.”

Saturn was initially successful in producing an automotive line outside of the GM mold at their dedicated Spring Hills, TN plant. The 1991 models were embraced by consumers who were tired of the cookie-cutter designs of Detroit’s “Big Three,” but wanted to continue to purchase American-made cars. With a distinctive body style and engineering, along with innovations such as dent-resistant bodies, Saturn stood out from the crowd.

The automotive world also began to take notice. In 1991, Popular Mechanics Magazine gave the company a “Design and Engineering” award for “an engineering process that results in exceptionally high quality for an all-new vehicle.” Motor Week Magazine followed with its “Driver’s Choice” award for best small car of the year.

Saturn also continued to distinguish itself with its business model and hiring practices. In 1992, The U.S. Secretary of Labor gave Saturn the EVE (Exemplary Voluntary Efforts) Award, for promoting the hiring of women and minorities. Chief Engineer David Whitaker was also given the Black Engineers Award, for his design of body systems and components. It was no wonder that many in the industry considered the Saturn experiment to be a ray of home in the future of General Motors, competing on equal terms with Japanese brands.

The awards continued, with Motor Trend Magazine naming Saturn as Best Small Car of the Year and one of the Ten Best Domestic Buys. It also became the top selling car of 1992, the first time in 15 years that a domestic brand topped the list.

But while the company continued to introduce innovations such as the traction control system, an electric vehicle in 1996, new air bag technology in 2000, and the ECOTEC engine in 2002 and hybrid technology in 2005, sales continued to decline. At one point, the company had to stop production of the Saturn Ion for three weeks, so dealer inventory could decrease.

In 2004, the unique contract between Saturn and the UAW was dissolved by a 2 to 1 vote by union members. “Some workers are concerned that Saturn will lose its identity if the original labor contract is abandoned,” said the Detroit News in a story earlier this week. But without workers’ approval to dismantle the original contract, GM said it could not guarantee the plant would remain in operation after the current generation Ion and Vue complete their production cycles in 2008-09 (saturnfans.com).

Part of the labor agreement stipulated that the Spring Hill plant would remain intact for another ten years. But Saturns ceased to be produced at that plant in 2007, making way for a new Chevrolet line. The Saturn line was transferred to GM’s Wilmington, DE plant, which also produced some Pontiac products. It is not know if this plant will close due to the demise of these products.

Would the Saturn Experiment been able to continue if the labor agreement had not changed? It’s hard to tell, with today’s economic climate. But when GM decided to push the UAW to repeal the contract and fall in line with the standard contract which was in place in Detroit, it signaled the end of the “different kind of Car Company.”

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