SATURN Amid falling sales, workers OK contract

The new labor contract provides for major investment in GM's Saturn plant.
NASHVILLE, Tenn. (AP) -- Workers at the Saturn automotive plant in Tennessee had little choice but to approve a contract with General Motors that ends labor's unique partnership with management but almost ensures the production of new vehicles, analysts say.
"Saturn has been losing billions of dollars over the years," said David Healy of Burnham Securities, who thinks employees at the Spring Hill factory, about 30 miles south of Nashville, were being pragmatic.
"I think the workers are probably cognizant that there's a lot of risk to production and jobs there unless they cooperate with GM's efforts to bring costs under control," he said.
Saturn's sales have fallen steadily in recent years.
Last year, overall volume was down 3.2 percent. During the first five months of this year, about 96,000 Saturns were sold, down from 121,000 during the same period of 2003, said Healy.
Over three days of balloting last week, Saturn workers voted 3-1 to approve details of the new contract, which will take effect Jan. 1 if approved as expected by the GM board.
End of unique setup
The new deal formally ends a 19-year-old relationship between the union and the automaker that allowed workers to have a say in plant operations. The contract also allows layoffs for the first time in its history but will require a multimillion-dollar GM investment at the plant.
Art Spinella, president of CNW Marketing Research, said that if Tennessee workers had not approved the new contract, the plant likely would have been shut down over the next several years.
In addition to allowing GM to cut costs, the new contract is a good deal for the company because it will keep a reliable and efficient work force, Spinella said.
He also suggested that GM will begin building Chevrolet or Pontiac vehicles at the Spring Hill plant over the next few years so that if Saturn sales continue to fall, the brand can slowly disappear.
"General Motors is not wedded to Saturn the way it once was, but it is wedded to the plant, because of the quality of work done there," he said.
GM spokeswoman Sue Holmgren said an upgraded plant could build future generations of Saturns or other GM vehicles, but no plans have been announced and there is no deadline to do so.
Experiment
When the first Saturn rolled off the assembly line in 1986, hopes were high for the "different kind of car company." Set up as a separate business far from the GM hierarchy in Detroit, Saturn gave workers a say in management and created a no-haggle purchasing experience for customers. It also had a no-layoff policy for workers, who in exchange received smaller salaries but the opportunity for large bonuses.
Spinella said the experiment failed largely because GM failed to provide new Saturn models for several years, leading loyal customers to seek step-up vehicles elsewhere.
"That was a management issue and they basically booted the ball," he said. "That really was the beginning of the end of the agreement."
Also, when Japanese automakers stopped using an employment-for-life model, that took away some of the UAW's leverage for keeping the no-layoff policy in Spring Hill.