General Motors Corp. today will make what its top officials say is an announcement of major importance to the U.S. auto market, amid speculation it will set up a separate company that will revolutionize auto production here and abroad.
GM officials yesterday refused to give any specifics on the development. But auto industry analysts and other observers speculated that GM will announce the creation of a completely new company to produce its planned high-technology Saturn passenger car.
The secrecy-shrouded presentation will be made by Roger B. Smith, GM chairman and chief executive officer, at a 1 p.m. news conference at the GM Technical Center in Warren, Mich.
Smith for the past six months has been promising to come out with a "lulu" -- his term for a stunning new corporate strategy and/or product that would indisputably establish GM's leadership in the domestic auto industry and beyond.
The Saturn production project -- talked and written about for many months -- reportedly was approved in detail yesterday at a regularly scheduled GM board meeting in New York. "The board members figured that this thing would have such an effect on the market that they didn't want it to come out in leaks. They're going to do it all at once today ," one GM official said.
According to yesterday's guesswork by analysts and industry officials:
* GM will announce that it will build a completely computerized, fully automated "factory complex of the future" -- one surpassing the company's current new facilities at sites such as Orion Township, Mich. The Saturn complex will involve about five buildings and a total investment of $1 billion, sources speculated.
* The Saturn car, planned as a front-wheel-drive subcompact, will use production and labor-management systems now being developed at New United Motor Manufacturing Inc., a GM-Toyota Motor Corp. joint-venture company that recently began production of subcompact cars in Fremont, Calif. But the production technology as well as the vehicle technology will be more advanced than those being tried at Fremont, sources believe.
* The United Auto Workers union, which has been working closely with GM's Saturn task force, will accept radically different work rules in an effort to lower production costs by reducing the number of man-hours needed to produce one car. GM is shooting for 70 to 75 man-hours per unit, versus the current 130 man-hours.
* Saturn will be produced under a new corporate structure largely designed by Electronic Data Systems Corp., a Dallas-based computer systems company acquired by GM last year for $2.55 billion. (Smith, in an interview last August with The Washington Post, said that he wanted EDS to take the lead in developing factory automation systems having applications within and outside of the auto industry.)
* The Saturn will be "reversed designed" -- that is, designed to best take advantage of the efficiencies built into the new factory. The current method of auto development emphasizes building and retooling the factory to meet the engineering specifications of the car.
There also was some speculation yesterday that GM would use EDS's strength in the automated administration of health care systems to establish a new health insurance and provider company that would rival Blue Cross-Blue Shield. But most sources, including some within GM, discounted that rumor.
"The Saturn program seems to be the most logical bet," said David Healy, an analyst with New York-based Drexel Burnham Lambert Inc. "I believe that when GM sharpened its pencils and examined the figures, it found that, even with all of its new plants and modular assembly technology, they still wouldn't be able to produce a new car in the United States at much below its current $23-an-hour labor rate."
That labor cost is a major contributor to the imbalance in production costs between domestic auto makers and their Japanese competitors, who now produce quality small cars at a unit cost $1,500 to $2,000 lower than their American counterparts, according to Healy and other analysts.