General Motors Corp., which isn't known for acting impulsively, last added a new car division in 1918. Its car was called the Chevrolet.
This week, GM created a new division called the Saturn Corp. to produce a line of subcompacts by 1988 or 1990 that are meant to be unlike anything GM has made before.
The technology will be new, the labor contracts and union-management chemistry will be different, and even the culture of the venture will be far removed from what now exists inside General Motors, predicted GM Chairman Roger B. Smith.
To ensure its success, GM is pushing this vital new venture as far outside the corporate fold as it can, away from the operation manuals, labor agreements, supplier covenants and all the time-honored rules, guidelines and doctrines that have governed the company for generations. The Saturn Corp. will be a separate subsidiary, given a "clean sheet" on which to design, produce and sell the subcompacts. That, said Smith, is the only way he can see GM producing a subcompact with good enough quality and low enough costs to compete with foreign imports.
It will be years before the success or failure of the Saturn project is obvious, but in breaking so sharply with its own culture, GM has thrown its bulk behind a new strategy that has been adopted by some of the country's largest corporations.
GM, International Business Machines Corp., General Electric Co. and Control Data Corp. have deliberately sent important new ventures out on their own, away from the company bureaucracies, concluding that this is the best way to ensure the survival of the ventures in an increasingly hostile economic environment.
When IBM decided to build its personal computer, it left the project development group free to violate some hallowed gray-flanneled IBM traditions. P. D. Estridge's PC group went to competing suppliers for key computer components. Turning its back on IBM's sales army, it signed Sears, Roebuck & Co. and new chains like Computerland USA to market the PC. Most importantly, it invited the software industry outside IBM to design programs for the PC -- a move that helped assure the PC's success.
Control Data Corp., in a struggle with American and Japanese competitors to develop a new supercomputer, sent more than 100 of its best scientists and technicians off on their own, in a separate company called ETA. Control Data is the majority owner, but ETA's employes own stock, too, and will benefit from its successes. "We're looking for risk takers -- people who can't sleep at night when they're under deadlines to solve very, very difficult problems," Control Data Chairman William Norris said two years ago when ETA was launched. "I've learned by experience that big computers are most efficiently built by small groups with the fewest possible constraints," he said. ETA is on schedule, the company says.
The philosophy that GE Chairman John F. Welch Jr. is trying to implant in that vast bureaucracy is the attitude of the Silicon Valley start-up. "We've got to get people who feel it's worth taking the swing, because the safe person in the big company is sometimes one who keeps his head down . . . "
The managers and employes in new GE ventures must feel they "own" the business, he said in an interview last year.
The same mandate has been given to Joseph Sanchez, general manager of GM's Oldsmobile division, who was appointed president of the new Saturn Corp.
"Saturn Corp. will operate as an essentially self-contained business," said Smith. "Saturn will build and operate its own, new, highly integrated manufacturing and assembly complex. It will also develop its own business and management systems tailored to its precise needs. . .
"This program is different than anything we've ever done before," Smith told reporters. Saturn has been set apart to make sure that the unique ideas aren't buried in GM precedent "and we don't revert to what we used to do," Smith said.
If Saturn works as Smith intends, Sanchez can use his "clean sheet" to write wholly new relationships with GM's dealers, suppliers and the United Auto Workers, GM officials said.
The effect of the Saturn venture on the UAW, in particular, will be closely watched by unions and management alike: Saturn may be a forerunner of labor relations throughout the industrial sector as the pace of automation and the intensity of foreign competition accelerate.
"We've been trying to do everything that we could to help the Saturn project, because we believe that it is critical to the future of the U.S. auto industry," UAW Vice President Donald Ephlin said Tuesday.
The UAW's best hope of preserving high-paying union jobs lies in helping the shift toward new technology and automation, union leaders have concluded. The introduction of more automation in the Saturn project means fewer UAW jobs per car, but the value of each autoworker's labor will be higher, union officials said. "At this moment with Saturn, we are still in the process of talking about everything," said Ephlin, one of the UAW officials who worked with GM on Saturn. Ephlin said they are considering a system of compensation based on "gain sharing" -- a concept in which workers receive bonuses based on quality improvements in cars coming off the assembly lines, or for proposals that lower costs.
Separating Saturn from the rest of GM serves the union's interests as well as the company's, a UAW official said. "If there are controversial labor agreements, it allows us to treat [the project] like it's quarantined," he said. If the relationship works, Saturn becomes a model for the rest of the union, he added.