Courtesy of GM
Launching a Rocket: The first Saturn rolls off the assembly line in 1990
BUSINESS: THE AUTO INDUSTRY

Saturn was Supposed To Save GM

Instead, GM crushed Saturn. Here's how.

 

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It's hard to remember a time when the top man at GM was the most celebrated industrialist in America, maybe even the world. But that was the case on Jan. 8, 1985, when Roger B. Smith convened a press conference in Detroit to make what he billed a "historic announcement."

Smith was a man given to grand gestures. The pink-cheeked, squeaky-voiced executive, once branded the "cherubic chairman" by BusinessWeek, who had taken the helm in 1981, had already ordered a sweeping reorganization of GM's unwieldy structure. He'd also made bold investments in robotics, space satellites and data processing—buying whole companies, like Ross Perot's Electronic Data Systems, and Hughes Aircraft Co., instead of merely contracting for their services.

But on this wintry day in Detroit, Smith would make his biggest gamble yet: unveiling the Saturn, GM's first new brand in 70 years. More than just a car, it would be a stand-alone subsidiary—using innovative technology by workers and managers engaged in unprecedented joint decision making. "Saturn is the key to GM's long-term competitiveness, survival and success," Smith said. Its mission: "to develop and produce an American-made small car that will be fully competitive with the best of the imports … [and] affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."

Smith was making Saturn not just a car but a crusade, and the country rushed to join. GM was inundated with thousands of unsolicited job applications. Seven governors went on "The Phil Donahue Show" to plead publicly for the Saturn plant to be located

in their state. More than a dozen others trekked to Detroit to state their case in person. Smith eventually decided to put the plant in the bucolic Tennessee hamlet of Spring Hill—some 45 miles south of Nashville, and nearly 500 miles from the ossified traditions of Detroit that the chairman wanted to shake to their very core.

Twenty-four years later, Smith has passed away, and his dream is in shambles. GM is fighting for its life; its CEO, Rick Wagoner, was ousted by the federal government as part of a bailout effort that may yet involve bankruptcy and billions more in taxpayer dollars. The Obama administration is contemplating splitting GM in two, dividing the "good" from the "bad"—a plan that, if adopted, would essentially treat Saturn as a toxic asset to be sold off like so much subprime mortgage debt. GM has 60 days to submit a new plan to the White House, but its first one called for Saturn to be phased out by 2011, unless a "Hail Mary" play by its dealers to buy the brand succeeds, or a better alternative can be found. (A GM spokesman said: "We're selling the cars we have and waiting to see what the franchise-operations team can come up with.") The plant in Spring Hill, once a place where giddy owners traveled from all over to meet the folks who made their beloved cars, no longer produces Saturns, cranking out Chevys instead on the days when it is on line at all.

Saturn was hardly a panacea. But its fall to earth, more than $5 billion in GM money later, is about far more than the flameout of one brand. In the eyes of some automotive analysts, Saturn represents a major missed opportunity for Detroit to place a sustained bet on fuel-efficient cars that would compete with the Japanese—and to recalibrate the bitter business-labor relationship in ways that could have had far-reaching implications for the entire industry. Saturn was never able to surpass the Japanese in technology, as Smith had hoped. But the competitive knives Saturn faced within GM did far more damage than any threat from overseas: execs who felt the auto giant already had too many brands and factories; dealers resentful of Saturn's product-development dollars; and a labor union whose leadership came to regard the brand's workplace innovations as collaborations with the enemy. It did not help matters that from the mid-1990s until just recently, Americans turned away from small cars in favor of trucks and SUVs.

Smith wanted to remake GM in Saturn's mold, but the opposite happened. "This is a real tragedy," says Prof. Saul Rubinstein of the School of Management and Labor Relations at Rutgers University, who coauthored a book on Saturn. The lesson for GM and its American rivals now struggling to stay in business, he says, is that when they launch daring innovations, they need the will and a way to ensure that those ideas don't get drowned by the corporate mainstream.

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Member Comments

  • Posted By: reswob10 @ 04/27/2009 12:20:35 PM

    I just want to say, since I graduated college in 1993, I've had only Saturns. I've gotten a total of 400,000 miles from both, 190,000 from the first (1993 SL) and 210,000 from the second (1996 SL) and only spent about $10,000 total in maintenance. I'm still driving the second 150 miles a day and getting 35 - 40 MPG. Great car as long as it's not a 2000 or higher...

    Saturn was, at one time a great car and a great company... division of GM. I'm sorry to see the slide.

  • Posted By: rabagley @ 04/26/2009 1:28:34 PM

    It's fairly easy to explain why Saturn failed: low energy taxes. Why do (did) American consumers favor huge vehicles with horrible mileage? Why do europeans have so many fuel-efficient choices in their car market? Why do Americans continue to own homes 30-80 miles away from where they work? Why do European cities look so different? Why is public transit in Europe clean, convenient, and usable? Why are 90% of American cities so hostile to pedestrian, bicycle, and scooter/motorcycle traffic? Why are our current plans to increase CAFE mileage doomed to fail? Why are Americans in serious trouble once fuel prices head back up?

    One reason: a history of corrupt energy policy stretching back 30 to 50 years. Want to fix it? Call your congresscritters and ask for a 50% gas tax to be phased in 5%/year over the next ten years, with the proceeds going to public transit infrastructure. You think this year is bad, if we do nothing, just wait.

  • Posted By: tech010101x @ 04/26/2009 11:58:08 AM

    The concept of "Buy American" is ironically anti-American at its core. If, as an American, you hold dear the idea of limited government role for healthy private industry for a strong and healthy USA, then the idea of having artificial constraints like trade barriers and "Buy American" are the antithesis to those fundamental American core values. The only way "American made" would enter the consumer's decision making is because the product is somehow inferior - either price, quality, features, or something that makes it less than a competitor. Therefore, if a "buy American" factor kicks in, it is to prop up a non-competitive product (at least for that particular consumer). If enough consumers do this, then as a group, they are subsidizing the non-competitiveness of that American made product. Kick in enough of that... between government subsidies, tax breaks, and consumer forgiveness, this American made product and the company behind it is getting inducement to do less... not more - overall unhealthy for both the company and ultimately America.

    Americans bought way too many GM's, Ford, and Chrysler cars over the years - giving these companies a very wrong picture over exactly how well their products really competed in the marketplace. Look at the overseas marketshare's of GM, Ford and Chrysler (yes there are protectionist trade policy issues, but still...) Now take away the fact that "buy American" isn't really true anyways anymore... that Chrysler is probably Canadian and the rest are made in some combination of U.S., Canada, Mexico, and many other places. So now, not only are the products inferior, they're not even American, or no more so than many Honda's, Toyota's, BMW's, or Mercedes. The companies themselves are stock corporations with ownership that is completely spread throughout the world. The companies themselves are complacent... after all, Americans have been buying all sorts of truly awful cars coming from the Detroit automakers for years, why do they have to work that hard? So now they are "too big to fail" and we toss in billions in the hope that they will survive. But ultimately, if you believe in limited government and private enterprise, the weak must re-invent or perish. At this point, the Detroit automakers don't know how to get better. Leave Ford to be the last one standing... it will easily soak up the remaining market for mediocre products made by the historically "American" car company and focus on a new crop of innovative companies like Tesla. Focus on reducing the barriers to making a car company, like limited factory runs on out-sourced manufacturing plants so that Saturn dealers can have a contracted run made to their spec, rather than GM bosses dictating it. Let companies fail - build a system where failure doesn't mean the failure of the U.S. industry. This, in many ways, is the failure of big business - too big to fail means it isn't healthy for th

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