Slipping Saturn Sales Could Mark End of Auto Experiment

When leviathan General Motors established Saturn Corp. here among the emerald Tennessee hills in 1985, it set out to see if a clean-slate American company could build small cars that would rival Japanese quality and value.

By most accounts, the "plastic" car, made by team-oriented factory workers and sold at its haggle-free dealership, was a roaring success.

But one of the most daring experiments in the history of American automotive manufacturing may be nearing an end - or at least a fork in the road.

For the first time in its 13-year history, Saturn sales have dropped, forcing a 14-percent reduction in production. No one has been laid off - the labor contract doesn't permit it - but the responses by management and workers to the sales slump may threaten the essence of what has made Saturn unique.

Recent management decisions about new models and a dramatic cut in bonus pay for workers are prompting a vote by Local 1853 here today and tomorrow on whether to keep its innovative labor pact or adopt a contract similar to the one governing other GM workers.

The Spring Hill factory labor-management partnership has long been considered the cornerstone to producing a quality product and making Saturn "a different kind of company."

Tearing a page from the manual of Japanese carmakers, Saturn has eschewed the traditional adversarial relationship between workers and auto management. Workers and managers make decisions together, in teams, instead of running through the union or management hierarchy. Workers rotate through positions in the factory and are "empowered" to make decisions about the production process to improve quality and control costs.

But that unique culture is straining under this year's cutbacks. To keep workers on the job, the factory has cut out overtime and stepped up training. Bonus pay, based on sales and profits, has dropped from $10,000 in 1995 to $2,200 last year. And workers are keeping the factory spotless. But "When people ask what to do next, there's only so many times you can say 'Make sure the floor's clean,' " says Curt Gibbs, head of vehicle assembly operations at Spring Hill.

Missing the overtime pay and beginning to doubt GM's support of the Saturn concept, the workers, almost all of whom have worked at other GM factories in the past, are considering a return to the old-style GM/UAW contracts. Under such a contract, workers could face layoffs but are guaranteed close to full pay while idle.

Another source of friction, and an indication that the Saturn experiment may be drawing to a close, is that GM plans to introduce a new model but will build it neither at the Tennessee factory nor under its UAW contract. To many observers, those are the key factors responsible for Saturn's No. 1 rating among American cars in J.D. Powers's annual survey of initial quality.

GM wants Saturn to start sharing car platforms and factories with the very GM divisions it was designed to best.

Barbecue for 44,000 families

For Saturn, the challenge is to build on a brand loyalty that is the envy of the industry. Some describe Saturn customers as fanatic. When the company announced a "homecoming" for customers in 1994, 44,000 families drove their Saturns to Spring Hill, for a barbecue and factory tour.

But many of its entry-level buyers are looking to move up and need more room for their families. To meet that demand, GM plans a new mid-size sedan next year, called the Saturn LS. It will compete with the bestselling Toyota Camry and Honda Accord. But it may be too little, too late for many Saturn customers - and workers - who suggest that Saturn produce a sport-utility vehicle or a minivan.

Mid-size sedan gambit

Indeed, the mid-size sedan market is the largest, most competitive segment of the US auto industry. So the LS needs to be a big hit.

It will have two of the advantages of all Saturns: a plastic body skin and the company's customer-friendly dealer network. But it will be built in a 50-year-old General Motors factory in Wilmington, Del.

The Delaware factory was slated for closure, and rather than add expensive capacity in Tennessee, GM chose to extend Wilmington's life. But the Delaware plant comes with its own labor force and its traditional UAW contract.

It's the first test of whether Saturn techniques can be integrated into other GM factories. The Wilmington labor contract includes "sufficient vagueness of language to allow them to behave like us," says Joe Rypkowski, president of UAW Local 1853 in Tennessee.

But unlike Saturn's current cars, the LS series is based on an existing GM platform, one currently used by the German Opel Vectra.

An old factory and a shared platform may raise doubts about whether the Saturn culture and quality can be transferred - and still produce, as the ads trumpet, "a different kind of car."