Is this the end of Saturn?

The most ironic casualty of General Motors Corp.'s push toward modular assembly and global platforms will be Saturn Corp.

The different kind of car company, with the open labor agreement, factory-floor flexibility and cooperation GM could only dream about elsewhere, clearly is caught in the crossfire.

In the modular assembly vision, a sprawling complex where 7,200 workers produce everything from engines to body panels to door modules to instrument panels is just not competitive anymore.

GM wants to reinvent itself as a quasi-virtual manufacturer. Sure, engines, transmissions and most stampings will stay in-house. Those are the core competencies. But in the next five years, almost half of what Saturn now makes itself will be turned over to Tier 1 suppliers. That explains much of what led to Saturn's first strike authorization vote in late July.

Already, outside suppliers will build key components for the Delta platform, from which the 2002 replacements for Saturn's traditional small cars will come. These include cockpit, door modules and other injection molding now done in-house by about 570 Saturn workers, according to Michael Bennett, bargaining chairman for UAW Local 1853.

Will those jobs disappear? Will suppliers agree to absorb them? Will they have to take a cut in pay? These are thorny questions.

The same modular approach is being applied to a Delta-based sport/utility vehicle that Saturn's Spring Hill workers want to build. But given its smaller size and the government-subsidized health care of Canada, GM's CAMI Automotive Inc. plant in Ingersoll, Ontario, a joint venture with Suzuki, may beat out Saturn for the small SUV.

"The whole concept of Saturn as a different way of doing things is essentially dead, due to GM's globalization and standardization of platforms, " says University of Michigan labor economist Sean McAlinden. "Spring Hill will be forced to compete with Lordstown, Lansing, Ramos Arizpe, (Mexico) and CAMI for all future small-car programs. The parts will come in ever bigger modules, and some of the key components will come from Mexico, South America and Europe."

Tom Dennig, Saturn vice president of manufacturing, says GM still wants to capture many of Saturn's manufacturing and marketing processes and spread them throughout the company.

"We are hopeful we'll be able to bring the Wilmington team (where the new midsize Saturn LS sedan goes into production next year) around to appreciate the Saturn way," Mr. Dennig says.

But the Wilmington workers will be governed by a more traditional labor agreement. So far, there has been only limited contact between workers in Spring Hill and those in Wilmington.

In the current small car sales slump - Saturn sales are down 11% through the first seven months of 1998 - the company will be unprofitable after taxes and interest for the second consecutive year. So instead of Saturnizing GM, Saturn will have to fit into the common global platform paradigm.

"It's kind of like putting a square peg into a round hole," says Diane Swonk, deputy chief economist for First Chicago/NBD. "But at this point GM doesn't have a choice."

Mr. Bennett, with the support of top UAW leadership, will continue pressing his case that Saturn can adapt without surrendering its cultural identity.

"We're not against modular assembly, but there are so many versions of how you can do this," Mr. Bennett says. "The only one I know that works is right here in Spring Hill."

- Jeff Green contributed to this article