Saturn Passes Its Test of Faith The ball is in GM's court

The Saturn dream limps along, repelling another attempt by the pharisees to dismantle the temple of cooperation and impose the good old-fashioned labor-management combat that defines how General Motors Corp. builds its vehicles everywhere else in the U.S.

Despite last month's convincing 2-to-1 vote of confidence in Saturn's innovative labor pact, the barbarians will storm the gates of Spring Hill again, especially if GM's global development strategy continues to make Saturn stand in line for new models that will look increasingly like their corporate cousins from Chevrolet, Pontiac, Olds and Opel.

Maybe the new midsize LS will save the day when it debuts next year, but don't bet on it. Setting aside the thorny politics of the United Auto Workers union, the real problem is that small cars are selling in America's cheap gas paradise about as well as chastity belts in a brothel.

Of course, Saturn needs a broader product lineup, but the joie de vivre, the missionary fervor that gives this bold "partnership" its essential credibility is slowly dying.

"Decisions that once belonged to Saturn are being shifted back to the corporation," says Michael Bennett, bargaining chairman of UAW 1853. "That's one of the reasons we are being caught flat-footed on sport/utility vehicles."

I have walked along the assembly line in Spring Hill and seen Saturn workers wave to me without prompting. I have talked to earnest Saturn sales people with a commitment to their customers that borders on zealotry. I have even climbed walls and jumped from the top of a telephone pole with the support of Saturn Outside Services trainers, who believe that with teamwork all things are possible.

GM was finally on to something here.

Sure, this ambitious prodigy spent freely, running up more than $3 billion on the corporate parents' credit cards. But at least it spent wisely.

Workers were carefully screened so they were psychologically geared to work in teams. Dealers had to meet lofty customer satisfaction targets. Engineers gambled on lost-foam casting of engine blocks and composite body panels and turned them into core elements of the cars' brand identity.

When a bracket on a seat back did not function properly on a few cars in Saturn's early days, management, workers and retailers turned a potential PR disaster into a celebration of customer service by offering to replace every car sold to that point. Then dealers threw barbecues in their stores as customers brought their cars in for the recall.

There's nothing wrong with requiring Saturn to present plausible business cases for future products, just as every other vehicle in the GM portfolio must do.

But in an industry where the buzz-phrase "best practices" is inserted into every other sentence, why haven't the soldiers of Spring Hill been actively enlisted to train people in Wilmington, DE, who will build the midsize model this enterprise so desperately needs? If GM wants to call itself a learning organization, why hasn't it fought harder to transfer lessons of Spring Hill to Lordstown, OH; Orion, MI, and Oklahoma City?

Ultimately, last month's referendum was about retaining the risk-reward compensation system, in which workers set aside up to 12% of their base pay in a double-or-nothing bet that pays off if they achieve specific production, quality, safety and training goals. When they fall short, they make less than other GM UAW workers.

This is the heart of the Saturn partnership. Until last year's slump in small car sales, the system worked for everyone. In 1995 and 1996 it generated rewards of about $10,000, catapulting the average annual paycheck of the 7,200 hourly workers well above that of UAW workers at other GM plants.

Add a heavy dose of overtime, and no one questioned that the gain was worth the pain.

But production tumbled 13% last year. Overtime has been eliminated. Planned output for the first half of 1998 has been trimmed by 14% from the same period last year.

One result: between 200 and 300 skilled tradespeople who had grossed more than $100,000 in '96, have seen pay nearly halved. Many have sought financial counseling.

Call it the revolution of rising expectations.

In late February, the Saturn board of directors, which includes GM North American Operations President G. Richard Wagoner, Donald Hackworth, group executive in charge of all North American passenger car programs, and Ronald Zarrella, group executive for NAO sales, service and marketing, agreed to a revised risk-reward proposal. It gives Saturn folks a fighting chance of earning their payouts, even when small car sales slump.

For example, the company must build about 280,000 cars a year to trigger the bonuses, down from 310,000 under the old plan. But Saturn built only 272,000 cars last year, It will be hard-pressed to exceed that this year.

Quality targets have been raised, as defined by an internal GM auditing group, to no more than 9 defects per 25 cars over the coming year. Last year the risk-reward threshold was 9.5 defects. And rather than requiring everyone to undergo 92 hours of training each year, workers and team leaders are expected to develop individual training goals more specifically tailored to each person's job.

Mr. Hackworth and others have raised legitimate questions about a risk-reward system that pays off even if the company fails to profit. Saturn did not make a profit for 1997.

Yet, when other GM divisions have fallen on hard times, top management committed the resources to deliver desperately needed future products. Saturn deserves nothing less.

"This local union is committed to the Saturn way," says Mr. Bennett. "This vote revalidates and sanctions what we've been doing here. I don't think GM can take that for granted if they really want to build a partnership with the UAW."