COVER

JOINING HANDS

GM AND THE UAW LEARN TO WORK TOGETHER

ROSS LAVER April 15 1991
COVER

JOINING HANDS

GM AND THE UAW LEARN TO WORK TOGETHER

ROSS LAVER April 15 1991

JOINING HANDS

COVER

GM AND THE UAW LEARN TO WORK TOGETHER

As a 27-year veteran of the United Auto Workers union, Michael Bennett is accustomed to grappling with management. But nothing in his experience prepared him for his encounter last year with Richard LeFauve, president of General Motors’ new Saturn division. They confronted each other atop a 15-foot-high wooden platform in rural Tennessee during a workshop designed to break down the psychological barriers between labor and management. Facing each other, Bennett and LeFauve extended their arms until they could lock their hands together. Then, each using the other for support and balance, they tried to advance as far out from the platform as possible, moving gingerly along two-inch-wide steel tightropes that extended from the platform in a V-formation. “The two of us had to hold hands and hug just to keep our balance,” recalls Bennett, 47, the president of Saturn’s UAW Local 1853. “It’s an emotional experience to go through—but it reinforces the idea that you’re not going to make it unless you both do it in co-operation.” That lesson, GM officials say, is the key to Saturn’s make-or-break effort to redefine and revitalize the North American automobile industry. It is also the single most radical difference between the Saturn factory, situated 50 km south of Nashville in the small town of Spring Hill, Tenn., and virtually every other assembly plant owned by the Big Three automakers in the United States and Canada. In most traditional car plants, assembly-line workers and factory managers are locked in an adversarial relationship founded on mutual distrust. Denied the opportunity to participate in high-level decisions, workers tend to focus on short-term objectives, such as higher wages, and have few incentives outside of pride to strive for quality. By contrast, the Saturn philosophy stresses the value of consensusbuilding and teamwork. “The old system divides people into winners and losers,” says LeFauve, 56, a soft-spoken former U.S. navy pilot who dresses casually and insists that workers call him by his childhood nickname of Skip. “Here, we emphasize the need for partnership,” he added. “It sounds a little corny, but we want people to know that it’s OK to care about each other.”

Morale: So far, at least, the Saturn strategy appears to be successful. According to Bennett, morale among the company’s 4,000 unionized workers is excellent. In the five years since the plant began tooling up, the union has filed only three grievances, all involving the dismissal of UAW members. Bennett

himself withdrew two of the grievances after deciding that the company had acted within its rights; the third case is still being considered. At the same time, the UAW leader says that he finds it hard to imagine circumstances that would lead to a strike. “Those tools were part of the old world of labor relations,” he says. “We try not to rely on them.”

In fact, almost everything about the Saturn operation represents a profound shift in thinking for both GM and the UAW. But Saturn is more than simply an esoteric experiment in

New Age labor-management relations. Its roots lie in a fundamental recognition by GM that its traditional approach to automaking made it impossible to manufacture a small, fuelefficient car in North America that could compete profitably with Japanese imports. The inescapable reality of that lesson became clear in 1981, when former GM chairman Roger Smith ordered a study to find out how much it would cost to build a subcompact vehicle, codenamed the S-car, that had been scheduled to replace the Chevrolet Che vette in 1985. The result was $6,590 per car, almost twice as

much as it would cost a Japanese carmaker to build a comparable model.

Alarmed by those results, Smith immediately cancelled the S-car project and began to search for alternatives. At one point, GM officials explored the possibility of an alliance with Honda. But Honda’s owners flatly rejected GM’s overtures. Smith then joined forces with Toyota, Japan’s largest vehicle manufacturer, creating a joint venture to operate an assembly plant in Fremont, Calif., 57 km southeast of San Francisco, using Japanese-style work

methods. Known as NUMMI (New United Motor Manufacturing Inc.), the Fremont plant now produces two models: the Toyota Corolla and the Geo Prizm, a front-wheel-drive subcompact marketed in the United States through GM’s Chevrolet division.

Despite the partnership with Toyota, Smith remained convinced that GM’s future still depended on being able to design and build its own small car, without help from the Japanese. In 1982, he assembled a team of senior staff from GM’s various divisions and asked them to draw up plans for a high-quality, low-cost car

that could be manufactured in the United States but still challenge the best of the Japanese imports. Eventually, the operation involved 99 people, including UAW representatives, plant managers and engineers. According to Neil De Koker, a former GM executive who became the group’s director of business systems, the team itself decided that the project should be called Saturn, after the booster rockets used in U.S. manned space missions during the 1960s. Says De Koker,

who is now chairman of a Markham, Ont.-based marketing and consulting firm, Tier One Communications Inc.: “We chose ‘Saturn’ because we really felt that our challenge was as difficult as landing a man on the moon.”

Almost immediately, group members realized that Saturn’s approach to labor-management relations would be as important to the success of the new vehicle as its design and engineering. “The traditional view at GM was that blue-collar workers were stupid and lazy, and that if you didn’t watch them every step of the way, they would rob you blind,” says De Koker, 47, who joined GM in 1962 and left the company in 1985. “We realized that if things were going to change, management had to take the first step by altering the way we treated people.

We had to use them from the neck up, instead of from the neck down.”

Bonuses: At first, some UAW officials were suspicious of Saturn’s teamwork concept, viewing it as an attempt to undermine the union and force assembly-line employees to work harder for lower wages. One of Saturn’s most vocal critics was Canadian Auto Workers president Robert White, who at the time

was head of the UAW’s Canadian division. But gradually, the barriers that separated blueand white-collar workers began to erode. In 1985, GM and the UAW signed one of the most revolutionary labor-management agreements ever negotiated in North America. Under its terms, UAW members at Saturn are paid a salary equal to the average annual earnings of hourly paid UAW workers at other GM, Ford and Chrysler plants—currently about $34,500. Starting next year, however, up to 20 per cent of each

workers’ salary will be contingent upon meeting productivity and quality targets set jointly by the company and the union. If workers exceed those targets, they will be eligible for bonuses.

In its campaign to outperform the Japanese, Saturn also places a special emphasis on education and skills development. New recruits, including managers, receive between 300 and 700 hours of training, depending on their job requirements. A training centre beside the Saturn factory offers instruction in a wide array of technical subjects, including hydraulics and spot welding, as well as courses in decision-making, managing conflict, and creative thinking. Once hired, employees receive a minimum of 12 days of additional training a year. “Our competition is forcing us to get smarter,” says Philip Gainer, Saturn’s team leader for training and development. Gainer, who used to train workers for rival Nissan, adds that he joined Saturn because he was excited about the prospect of helping to rejuvenate the North American automotive industry. “Frankly, I don’t think anybody but GM could afford to do this,” he

says. “Rather than simply taking direction, we want people to explore their own creative thinking—to go beyond where they are normally comfortable.”

Consensus: Perhaps the most important difference between Saturn and other car plants, however, is the unique power-sharing arrangement between workers and management. The memorandum of agreement between GM and the UAW describes the union as a “full partner” in the operation of the plant and says that all decisions must be made by consensus. UAW members helped to choose Saturn’s suppliers, its dealers and even its advertising agency. Union members are also responsible for interviewing and hiring all new employees, who are selected from among UAW members at 135 other GM plants scattered throughout the United States. “The philosophy is to push decisions as far down the operational ladder as possible,” says the UAW’s Bennett. “It’s really a dimensional leap for a lot of people.” LeFauve, meanwhile, said that he does not regret surrendering some of his authority. “North Americans have been programmed to think that only one person can run the show,” he adds. “But at least this way we don’t spend a lot of time arguing about whether we did the right thing or not.”

Bennett readily acknowledges that the transition to a team-based approach has created some difficulties. Before moving to Spring Hill in 1986, he spent nine years as president of the UAW local at a huge GM parts plant in Flint, Mich. In many respects, he says, that job was less complicated than his current position. “In Flint, it was easy to stand back and blame management for our problems,” he says. “I was in an adversarial role, and that meant that I had real power to swing the hammer. Believe me, when you hand management a letter threatening to strike in five days, they listen.” By contrast, Bennett now spends much of his time trying to persuade Saturn officials to share his point of view. The process of continually trying to reach a consensus presents a constant challenge, but both he and LeFauve agree that it is well worth the extra effort. “In a global economy, workers have to be responsive, innovative and customer-focused,” Bennett says. “If we want these well-paying jobs to remain in the United States, we have to recognize that the old, confrontational approach has outlived its usefulness.” Adds LeFauve: “I’m not doing this because I’m some kind of social advocate. I do it because I believe that it produces superior results. At Saturn, we’ve got 4,000 people out there who are concerned about quality and productivity, instead of one guy at the top with a lot of ulcers.” If Saturn’s revolutionary approach yields the desired results, it could become a model for struggling manufacturers across North America.

ROSS LAVER