August 2002, Vol. 125, No. 8
Lessons in co-management
Book reviews from past issues
Lessons in co-management
. By Saul A. Rubinstein and Thomas A. Kochan. Ithaca, NY, Cornell University Press, 2001. 156 pp. $25.
Learning from Saturn: Possibilities for Corporate Governance and Employee Relations
In the early 1950s, United Auto Workers revered president Walter Reuther suggested to the big three domestic auto manufacturers that the union might entertain some contract changes if the industry considered manufacturing a small car to compete with some of the imports beginning to trickle into the U.S. marketplace. Increased production, Reuther believed, would create more jobs for his membership and was not really a concession but a positive gain. General Motors, in particular, bluntly informed Reuther that his job was to negotiate benefits for the workers and that production strategies were management prerogatives. Not until the late 1970s did American auto manufacturers see the benefits of Reuther’s suggestion after small Japanese, Korean, and German car makers began to carve out large chunks of the U.S. auto market. Like the powerful Saturn rockets that propelled astronauts into outer space, a stellar experiment in this process was GM’s subsidiary in Spring Hill, Tennessee.
Saturn was by no means the only business entity to produce a low-cost experiment using a philosophy of labor-management cooperation in the 1980s and early 90s, but it was the benchmark by which other similar experiments were measured. As the authors clearly illustrate, "From 1992 to 1998, Saturn produced and marketed cars that achieved world-class quality and customer satisfaction unsurpassed by any other vehicle manufactured in the United States....only the Infiniti and the Lexus, two high-priced luxury cars selling for three to five times as much as the Saturn, received higher customer satisfaction ratings." Many publications, including several produced by the U.S. Department of Labor’s Office of the American Workplace, echoed similar feelings about the Saturn process. One of the most highly touted monographs analyzing labor relations in the 1990s and beyond, Negotiating for the Future by father-and-son team Irving and Barry Bluestone, devoted an entire chapter to Saturn and anointed the organizational structure at the facility as the model for the future. Co-author Rubinstein focused on Saturn for his Ph.D. dissertation, and probably spent as much time in Spring Hill as the employees at the facility’s modules.
Saturn was a nontraditional manufacturing system where co-management, involved in the organizational Manufacturing Action Councils and Strategic Action Councils at Saturn, pervaded all aspects of the company, from design and engineering to sales and marketing. As the 1990s drew to a close, the U.S. economy had rebounded from its moribund state in the 1970s and 80s. Long lines of automobiles waiting at gasoline stations became recent but fading memories, and consumer tastes began to sway back toward larger gasoline consumptive vehicles. Unions that made concessions to management during the previous economic slump now wanted a share of the new prosperity. Some of the experiments in labor-management cooperation, most visibly at Eastern Airlines where a strike—despite the existence of employee stock ownership and union representation on the board of directors—drove the self-acclaimed "Wings of Man" into liquidation.
Saturn, again as the authors note, was never fully accepted by many officials at both General Motors and the United Auto Workers. In 1999, the members of UAW Local 1853 deposed long-time president Mike Bennett and replaced him with Ron Hankins, who supported partnership but was not as wedded to the cooperative process as his successor. When GM closed its Wilmington, Delaware, production facility and reopened it as a Saturn plant, UAW President Steve Yokich insisted that the workers have a traditional UAW-GM contract. As early as at the 1986 UAW Constitutional Convention, one of the union’s pioneers—Victor Reuther, brother of the late Walter—vowed not to allow "Saturnization of the auto industry."
Rubenstein and Kochan succinctly note that despite pressure and obstacles in Saturn’s procedural way, "The net effect of the governance and co-management structure at Saturn is that union members and leaders serve in a wider variety of roles than their counterparts in other locals." At Spring Hill, more than 400 jointly selected union members have partnership roles in the unique organizational structure at the site. The contrast, they add, between Local 1853 and other UAW local is important for three reasons: first, the multitude of opportunities local leaders have to represent member interests in management decisions; second, the distinct differences in resource allocations between Saturn and other plants; and third, union leaders take on more active co-management responsibilities. Combined, this gave the auto manufacturer the presence of quality, cost-effectiveness, and consumer satisfaction.
Therefore, despite the gloom and doom of many industry analysts, the authors remain ardent fans of Saturn and its promise for the future. They highlight the opinion of former Saturn-GM President Skip LeFauve that the bottom line is that Saturn involves the people in the factory, at the dealership level and with suppliers. While many older "brownsite" GM facilities are downsizing or closing, Saturn has increased employment, providing 8,300 jobs in Spring Hill and the administrative and research operation in Troy, Michigan. An additional 6,000 jobs in related or influenced operations can be added to that total. In conclusion, both the distinguished MIT professor, Kochan, and Rutgers faculty member Rubenstein are optimistic about Saturn’s future. Saturn, however, is at a consumer crossroad. They have expanded production for new models, including a sport utility vehicle line, the most popular sales item in the auto consumer marketplace. If one can draw an analogy with the car’s namesake, the Saturn rocket faced many obstacles and had less than a total success rate before depositing Neil Armstrong and crew on the moon.
Learning From Saturn is a very nice and concise account of the Saturn process. In about 150 pages, the story of Saturn, for both professional analysis and personal interest, is nicely packaged. Much of the early sections of the book have been analyzed in great detail prior to this publication. As noted, a great deal of it was culled from Rubenstein’s Ph.D. dissertation. Kochan has done considerable research into the breakdown of the "social contract" in labor-management relations, and it is encouraging to read both authors’ optimism that the opposite is the case with Saturn. Labor relations policymakers, both in the private and public sectors, should read this book. Partnership experiments may have waned in the late 1990s, but they are far from dead. Saturn, as the authors note, continues to run rings around the competition.
—Henry P. Guzda
U.S. Department of Labor
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