Once billed as “a different kind of company” making “a different kind of car,” Saturn, is losing its distinct identity and becoming just another General Motors division, an Associated Press (AP) report said.
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Analysts have told AP that GM is forcing Saturn to adopt common practices for design, production and labour, a change that had to happen to cut costs and make Saturn competitive.
AP said Saturn officials are playing down the changes – “We simply negotiated a new (labour) agreement,” Saturn spokeswoman Sue Holmgren told the news agency – but the analysts see it as the end of Saturn as an separate entity.
Associated Press noted that the Saturn Corporation was an experiment launched in 1990 to compete with low-cost imports made by Toyota, Honda and Nissan with all cars made in the small town of Spring Hill, about 30 miles south of Nashville, and more importantly, about 500 miles away from Detroit.
The company had its own managers who reported to the Saturn executive board rather than to GM, and the United Auto Workers signed a separate contract with GM to create a cooperative environment between labour and management, AP added.
Associated Press said Saturn’s cars – there was initially only one model – were offered at a fixed price, with no haggling and the company developed a reputation for customer loyalty that rivalled higher-priced brands.
But SCM Worldwide analyst Mike Wall told AP that, after a promising start, Saturn let the car’s look and technology get stale.
“Saturn’s coupe and sedan stayed on the market a lot longer than they should have,” Wall reportedly said, adding: “Automakers get bursts of activity by tweaking the design, but that didn’t happen with the Saturn S series.”
New models were finally introduced to mixed results, and the company has plans for more, including a minivan, a sport utility vehicle and possibly a sporty coupe or roadster, AP added.
Production of the new Relay minivan will begin next fall, but not in Spring Hill – instead, it will be assembled at GM’s plant in Doraville, Ga., using a standard GM frame, the report said.
“Flexibility is king,” Wall reportedly said. “You’ve got to have flexibility of production in the current market. This isn’t a bad sign for Spring Hill … GM isn’t turning away from the Saturn brand – it’s injecting more flexibility.”
AP said Saturn’s new contract with the UAW, which was approved last month, is another sign of change.
The contract reportedly calls for workers to receive a $3,000 bonus now and a 3% performance bonus to be paid next year, in addition to a 2% raise in 2005 and a 3% raise in 2006.
Associated Press said the union also agreed to a transition to the national labour agreement with GM that would allow the company to lay off employees for the first time in its history – workers approved the contract 2,953 to 317.
Analyst Wall told AP that GM wants to create a global network of flexible manufacturing plants based on common practices to let the carmaker shift production of different lines and models to various factories as needed to match the competitors, especially the Japanese companies.
To survive, Saturn had to become part of this strategy. And for the union, it was adapt or die – last year, Saturn represented only about 6% of the GM vehicles sold in the United States, and it has made money in only one of the last 13 years, the AP report added.
