Forming the Future: Lessons from the Saturn Corporation
Forming the Future: Lessons from the Saturn Corporation by Jack O'Toole (Blackwell Publishers, 1996, 208 pp., $25)
A quiet but intense battle is now going on between foreign car makers and a giant American company in—of all places—the farmlands of rural Tennessee. The contest is about the ability of this company and its employees to build cars that are equal or better than foreign imports. Ironically, this race is complicated by another struggle that is simultaneously being waged within American industry, that is, between the traditionalists who believe that labour and management are by definition antagonists versus those who believe that they are partners.
Jack O'Toole, a long-time General Motors employee and a battle-hardened warrior in this two-layered struggle, writes the story of a unique and daring experiment in manufacturing automobiles and managing people. He provides a fascinating account of the origin and rise of the Saturn Corporation, General Motors' and the United Auto Workers' (UAW) answer to the declining fortunes of American companies and their employees.
The author is anything but an impartial observer. He is in fact a totally committed—some would say fanatic—believer in the need for a radical overhaul of the technical and the human relations side of automobile production. He is a crusader who is outspoken in blaming those who dwell in what he calls the "Land of the Adversaries" and in praising those who want to enter the Promised Land of a new labour-management partnership. He writes:
Saturn Corporation's roots come from the premise that we can't keep doing what we've always done and get different results—for that is called insanity. So the quest began to explore ways to do things differently in building a world-class quality, competitively priced small car. We knew we had the technology needed, but we also, finally, realized that technology wasn't enough. The union and management had to work together if we really wanted to compete successfully over a sustained period of time. (p. 3)
By the early 1980s, the American automobile producers were in serious trouble. They were directly affected by the impact of globalization, recessions, and especially by competition from foreign imports. General Motors, the largest automobile manufacturer and the biggest company on the list of Fortune 500 companies was no exception. Its losses were huge, and it was forced to lay off thousands of its employees. But it was exactly these hard times that exposed the company's internal weakness, particularly visible in the inferior quality of its products and in the widespread hostility between labour and management in its plants. Management saw that something drastic had to be done.
A similar insight was beginning to take hold within the UAW, which led to an initial alliance between Al Warren, vice-president of GM's industrial relations staff, and Donald Ephlin, UAW vice-president and director of the GM department. Both were convinced that the adversarial style of labour relations was a major cause of the problems plaguing the company. They agreed that a "clean-sheet approach" to building cars had to be worked out between the company and the union.
Out of these initial talks arose an agreement in 1983 to establish a joint study centre in which both parties served as equal partners in planning and producing an entirely new automobile. This became the start of an experiment in labour and management cooperation that must rank as one of the most ambitious, costly, and risky undertakings of its kind.
A "Committee of 99" was established in 1984, consisting of management and plant workers from 55 GM plants and 41 UAW locals. Their task was "to identify and recommend the best approaches to integrate people and technology to competitively manufacture a small car in the U.S." This large task force was given total freedom and plenty of resources to complete their assignment.
O'Toole writes that at the initial gathering of this large group, no one really understood the importance of the work they had begun, but they nevertheless became a very effective committee, thanks to some skilled facilitators and the determination on the part of all to make this work. It was an eye-opening and mind-changing experience for everyone. They divided into subcommittees to investigate every aspect of automobile production. One of the hardest things they had to learn was to shed their deeply ingrained habits of thinking in us-versus-them terms and to begin functioning as a unified entity.
The committee recommended the establishment a new division for the purpose of building an entirely new, small car and that this be done in full cooperation with the unionized workforce. In January 1985, Roger Smith, GM Chairman, announced the formation of Saturn Corporation and the company's commitment of $3.5 billion for this project.
In making the announcement about the new company, Smith said that the lesson learned at Saturn would be adopted in the rest of the company, "improving the efficiency and the competitiveness of every plant we operate and every product we build." Giving a glimpse of how much was riding on this ambitious project, he said, "Perhaps more than any other factor, we believe Saturn is the key to GM's long-term competitiveness, survival, and success as a domestic producer."
Breaking down barriers
A new memorandum of agreement between the company and the union was hammered out after a great deal of negotiations and discussions. The traditional management rights clause, which gives the company "sole responsibility" in hiring, promotion, scheduling of production, methods processes, and means of manufacturing was replaced by an entirely different and much shorter agreement. It was a partnership agreement of equals and labour was to be fully involved in decision making in the plant's operation and strategic planning.
Between the initial planning in 1982 and the start of production in 1990, a great deal of innovative problem solving in automobile production had to be worked out. The key challenge was to integrate and coordinate the various departments and functions. This required extraordinary efforts and resources in resolving conflicts and healing bruised egos. O'Toole comes across as a valiant defender of the new partnership against all comers, always on guard to protect the integrity of this project. He was especially determined to ensure that quality was never compromised.
Especially in the area of labour and management, much new ground had to be cultivated. Interviewing and hiring the plant workers only from present and laid-off GM employees—a bone of contention for the local population—was an elaborate process. Each department was responsible for its own interviewing, hiring, and training. Great care was taken that each newly hired member was well trained to fit into the new work arrangements, which required major adjustments on the part of the workers who were used to the adversarial way—the company orders, workers do as they are told, and mountains of grievances pile up.
Union representatives participate in all the major governing bodies at Saturn. They are present at nearly all planning and operational meetings in the plant. This kind of consensus and joint decision making undoubtedly makes for many lengthy meetings and discussions, but it also helps ensure that involvement and responsibility is spread across all the workers in the plant. Because much more is expected from plant workers, huge amounts of time and resources are devoted to their training.
While Saturn pays a great deal of attention to advertising and customer relations, it knows full well that these factors are meaningless without a quality product. On this score, Saturn has done very well, receiving high marks not only for the quality of its cars, but also for its innovative labour relations, production processes, and customer service.
The Saturn experiment is a many-sided success story. But it did not come easy. Nor is everyone happy about it. While a majority of the workers favour the partnership, a vocal group of local dissenters—with powerful allies at UAW headquarters—leave no doubt that there is no love lost between them and the UAW leadership at Saturn.
What riled O'Toole and Michael Bennett, the president of the Saturn UAW local who has played a major role in this partnership experiment, was the underhanded way in which a relatively small group of dissidents at Saturn was assisted by the UAW national leadership. Owen Bieber, the UAW president, backed those who wanted to wrest control of the negotiations from the local Saturn union leadership. In the end, the dissidents made progress and managed to water down the partnership agreement, much to the chagrin of O'Toole and his allies. Most of the features of the partnership, however, are still intact.
Right thing to do
O'Toole is rightfully proud of what has been accomplished despite setbacks, disappointments, and the stress of years of hard work and 16-hour days. While he remains optimistic about the good sense of American workers, and the lasting value of what has been accomplished at Saturn, he feels beleaguered and let down by the top leadership of GM and, especially, by a powerful coterie in his own union. He is convinced that the "traditionalists" refuse to face up to the simple truth that unless American workers and management learn to forego the old adversarialism and build the kind of partnership accomplished at Saturn, the American economy is doomed. While O'Toole concludes with a rather skeptical and pessimistic view of the attitude of most leaders in labour, management, academia, and government, he stills hopes that what has been accomplished at Saturn will endure and serve as a beacon for all who know that there is a better way.
The impressive accomplishment of labour and management at Saturn should be welcomed by us all. It's a major improvement on adversarialism. But it should not be overlooked that, as this book makes clear, the changes were not motivated by principle but by pragmatic cost-benefit analysis. As important as pragmatic concerns may be, the truth is that the most important reason for treating one another with respect and ensuring that work can be done with a measure of pride and a sense of accomplishment is that it is simply the right thing to do.
Something isn't right because it works, but it works because it is right. We should not be driven by calculations of self interest but by the conviction that we are called to do that which is right for its own sake. This is not to belittle the impressive accomplishment at the Saturn plant. But genuine and enduring renewal in the workplace must be based on more than mere pragmatism. We ought to treat one another with respect and seek to do a good job simply because that's the way the Creator of this marvellous world made us.