Union leaders hated the flexible work rules and eventually got rid of them.
General Motors and the United Auto Workers union have waged war against each other—sometimes hot, sometimes cold—for most of the past 80 years. One of the few things on which they collaborated, sadly, was undermining Saturn, which began as the boldest effort to reform the dysfunctional dynamics of their relationship.
On Wednesday, what appears to be Saturn's death knell sounded when Roger Penske, the legendary automotive entrepreneur, abandoned his plan to buy Saturn from GM and run it as an independent car company. Mr. Penske's plan was a long shot anyway. He had intended to make Saturn a distributor and retailer only, procuring the vehicles from auto makers—initially GM and then France's Renault—on a contract basis.
One inherent problem was that the companies making cars for Saturn also would be its competitors, if only indirectly in Renault's case. (Renault controls Nissan, which competes head-to-head with Saturn in the U.S.) So it was little surprise when Mr. Penske couldn't reach acceptable terms with Renault and pulled out of the deal. Barring a miracle, GM now will "move quickly to wind down Saturn," as GM Treasurer Walter Borst said Thursday at an analysts' conference in Scottsdale, Ariz., and many dealers likely will shut their doors soon.
But make no mistake: The failure here isn't Mr. Penske's. Saturn was killed by its creators, GM and the UAW. The company starved Saturn for new products, and the union waged war against Saturn's labor reforms to keep them from spreading to other GM factories.
The story began on Jan. 8, 1985, when GM announced Saturn at a press conference in Detroit. It would be GM's first new brand in 70 years and operate as a separate subsidiary, with its own labor contract, to develop a small car fully competitive with the imports. Chairman Roger B. Smith assigned Saturn a historic mission: to "affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."
Those stirring words were echoed seven months later in a Memorandum of Understanding between GM and the UAW: "We believe that all people want to be involved in decisions that affect them, care about their jobs . . . and want to share in the success of their efforts." Saturn became not just a company but a cause. Its factory would be in Spring Hill, Tenn., a bucolic town 45 miles south of Nashville and hundreds of miles from the hidebound headquarters of GM and the UAW in Detroit.
Saturn's chief UAW apostle was Donald Ephlin, the visionary head of the union's GM department who passed away in 2000. Ephlin strongly believed that Detroit's auto makers and the UAW had to change from confrontation to collaboration.
Thus the Saturn contract, built on the Memorandum of Understanding, eliminated most of the work rules that strictly limit the tasks UAW members can perform. Workers would be called "technicians" and get just 80% of standard UAW wages but would share in Saturn's profits, allowing them to earn more if Saturn succeeded. Most Saturn executives and managers would be assigned a UAW counterpart, and the two would share in key decisions.
The latter provision was overly idealistic, but certainly an improvement over constant and costly combat. Nonetheless, Saturn's labor innovations were attacked by UAW traditionalists, who coined the term "Ephlinism" to describe Saturn's heresies. Ephlin retired, on the defensive, in 1989. Mr. Smith retired a year later, his reputation besmirched by GM's chronic underperformance, just before Saturn built its first cars.
The cars were pretty ordinary, causing Honda engineers to scoff when they disassembled one. But the engineers couldn't see Saturn's emotional appeal, reinforced with advertising about labor-management cooperation amid the down-home values of Spring Hill. One ad featured a technician kneeling next to his Irish setter and saying: "What's happened here is something I'd like my grandchildren to know about."
Saturn dealers were awarded broad area franchises, freeing them to focus on customers instead of competing with dealers down the block. Customers loved the no-haggle pricing and being cheered by employees when they drove their new car off the lot. More than 40,000 Saturn owners attended the June 1994 Saturn Homecoming in Spring Hill, where they were treated to factory tours, country-music concerts, and picnics with the workers who built their cars.
In June 1993, Vice President Al Gore visited Spring Hill and said he wanted to "Saturnize" the federal government, whatever that meant. The Age of Aquarius was meeting the automotive assembly line. Saturn sales peaked at 286,000 cars in 1995.
But that year saw another, more menacing development. The UAW elected as its new president Stephen P. Yokich, a militant firebrand with an explosive temper who hated Saturn. Before his death in 2002, he opposed profit-sharing, the elimination of work rules, and the flexible factory shifts that improved Saturn's efficiency.
Yokich convinced GM to assign a new Saturn model to a factory in Delaware instead of Spring Hill. He worked to unseat Mike Bennett, an Ephlin protégé, as president of UAW Local 1853 at Saturn. Mr. Bennett was defeated for re-election in 1999.
Meanwhile, Saturn wasn't faring much better at the hands of management. After GM almost went bankrupt in 1992, the cash-strapped company didn't give Saturn money to update its cars. The decision was understandable but unfortunate. By the time new models finally arrived, Saturn's sales had fallen dramatically and Saturn didn't seem so special any more.
In 2003 the Spring Hill technicians—now workers again—voted to scrap Saturn's special agreement and return to the UAW's standard contract with GM. Spring Hill became a regular GM factory after the last Saturn was built there two years ago. Ironically, the town of Spring Hill still has a street called Stephen P. Yokich Parkway.
GM is cagey about whether Saturn ever was profitable; the answer likely depends on accounting allocations for corporate overhead and the like. But in recent years Saturn, like the rest of GM, clearly was losing money. Without a special labor contract or any unique vehicles, Saturn was a clear candidate for closure when President Barack Obama's automotive team forced GM to downsize in the government bailout.
Mr. Penske then attempted to save Saturn by buying the brand and creating an automotive Costco that would procure cars from various manufacturers. Saturn always had portrayed itself as "a different kind of company," but this was too different to succeed.
Last week I went to Tennessee to speak to the Republican Women's Club of Williamson County, home of the former Saturn factory. Some of the attendees were former Saturn workers, good people who really tried to create something different at Spring Hill but were let down by their company and their union. Perhaps the new GM and the UAW will forge a different relationship in the future. Meanwhile, the Saturn workers' sense of loss is expressed poignantly by Mike Bennett, their former union leader, who says, "I wake up at night sick, thinking about all the things that might have been."