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.
(Source: WSJ)