End of a 20 Year Experiment - Why Saturn and the United Autoworkers Agreement Failed

End of a 20 year experiment:

Why Saturn and the United Autoworkers Agreement Failed

The General (GM) Motor Saturn-United Auto Workers (UAW) agreement evolved from GMs desire to build a small, affordable, and efficient vehicle. The purpose of this paper is to explore the opposition to the agreement and the circumstances of events that will explain why the Saturn-UAW agreement failed.

The unique labor relations agreement was basically the result of two chief negotiators, Don Ephlin from the UAW and Reid Rundell from GM who takes the initial concept conceived in 1982 and makes it a reality. By 1983, GM and the UAW enter into a joint venture to develop the principles and ideas for the foundation of Saturn. A team of 99 individuals, Group 99, visit numerous plants and facility all over the world and come up with the following proposal: "ownership by all employees, the assumption of responsibility by all, equality and trust among employees, the elimination of banners to do a good job, give staff the authority to do their job, and existence of common goals (Saturn Corporation)." In layman's term, the group recommended the use of labor-management cooperation, employee empowerment, self directed teams, and the ability to resolve conflict management at the lowest level through consensus.

GM and the UAW approve a labor agreement for Saturn in 1985. The agreement in itself is unique because it is not consistent with current auto manufacturing principles. The agreement focuses on a team-based production and labor-management decision making. It takes the standard six hundred plus page UAW contract and condenses it to thirty plus pages. It reduces job classification, allows job flexibility and eliminates standard work rules. All employees receive salary and twenty percent less than the standard General Motor contract. Saturn employees can recoup the difference through job performance and achieving common goals. However, if employees do not achieve their common goals then they can lose up to twenty percent of their pay.

Supporters hail the Saturn-UAW agreement as an innovative approach to labor relations even though it offers lower wages, fewer benefits, and an incentive pay for work performance program. Opponents to the agreement view it as a sell out. Their argument is that unions that get involved with business decision making no longer looks out for the employees' best interest. Victor Reuther, one of the most notable outspoken opponents of the agreement considers the team concept a ploy by management to undermine the worker and take advantage of their creativity and intellect. He, also, views it as union failure for giving up on earned concessions. Victor Reuther states, "this so called-historic breakthrough was negotiated in secret and ... much more damage than a 20 percent wage cut, and the change in job classification. And all that results is the destruction of the internal organization of the union (Multinational Monitor)."

The eventual demise of the Saturn-UAW agreement goes back to the to the company's first union contract in 1991. Saturn-UAW agree to utilizing a Letter of Understanding the first year while is they negotiate a contract which takes longer than anyone had anticipated due in part to the cooperative labor/management arrangement. Key issues are retirement, health care, wages and bonuses.

Saturn's production line is still limited by 1995, with no large vehicle line, and their engine is noisy despite attempts to correct it. There is growing pressure from the International UAW top members, to include President Stephen P. Yokich, who have been opposed to the agreement from it conception, on Saturn-UAW Local Union 1853 to disband the agreement. Some Saturn employees start to view the contract as a sell out and express a desire to convert to the standard GM union contract. I should note, Saturn employees receive the highest bonuses in 1995 and 1996 $10,000 versus the $2,600 in 1992, $3,000 in 1993 and $6,000 in 1994 (Kochan and Rubinsten).

Saturn sales decline 20.2 percent and production reduces in 1998 (Bradsher). During the same timeframe, General Motors is experiencing a nationwide shutdown because of a 9,200 worker strike at two of its plants and the layoff of 186,000 employees throughout the United States, Mexico and Canada (Editorial Board). Saturn-UAW Local Union 1853, unhappy with