General Motors Corp. and the United Auto Workers union are studying a pay plan that could change radically traditional labor-management relations in the nation's basic manufacturing industries.
The company and union are pondering the possibility of a fully salaried work force at Saturn Corp., the new GM company that is scheduled to begin making subcompact cars in the United States by 1990.
Saturn's overall objective is to revolutionize small-car production in America: to develop management and manufacturing operations that will help eliminate the $2,000-a-unit production-cost advantage that Japanese auto makers have over their U.S. counterparts.
"GM and the UAW are trying to create a very different environment for production at Saturn, and that requires a much more professional environment for all workers in the company," said David Cole, director of the Office for the Study of Transportation at the University of Michigan, Ann Arbor.
"One way to give credence to that new environment is to create a fully salaried work force," Cole said.
"Fully salaried" means that Saturn's clerical, maintenance, production and professional employes would receive annual salaries. It means an end to time clocks and hourly wages, and could mean allowing production people the same kind of overall attendance flexibility enjoyed by many clerical and professional staffers.
No other auto maker in the United States pays its production workers in the manner now under consideration by Saturn officials and the UAW. No other basic industry manufacturer gives its hourly people straight annual pay.
If GM chooses to go along with a fully salaried pay plan at Saturn, "it'll be because GM wants to shatter all traditions" in domestic auto production, and really launch Saturn as a totally different car company, said Peter J. Pestillo, vice president of employe relations at Ford Motor Co.
The Saturn pay plan under discussion "really would be significant" for the automotive and other manufacturing industries if it means allowing production workers paid absences, Pestillo said. "Nothing we have now in this industry -- nor in any other industry that I know of -- says that a production worker can be absent at will for an hour or a day with pay," he said.
GM and UAW officials were circumspect last week in commenting about the proposal to put everyone on salary at Saturn. But both sides confirmed reports that they have been reviewing the idea in informal labor talks.
Several GM sources said last week that the fully salaried plan -- or something similar -- could be announced by the end of June. At the same time, GM intends to reveal the site it has chosen to build the Saturn manufacturing and assembly complex, the GM sources said.
The GM sources were supported by a UAW official, who said "we hope to have some type of agreement by the time the Saturn plant is announced."
Ninety-nine representatives from GM and the UAW spent a year between 1983 and 1984 examining alternative labor-management relations in preparation for starting Saturn.
By the time GM announced the creation of the company last January, the GM-UAW-Saturn study group had traveled 2 million miles worldwide visiting manufacturing companies and plants, collecting information on alternative labor-management and worker compensation systems.
"They came up with a lot of human-interest kind of ideas that we think are going to make Saturn work. Having a salaried work force was something that was discussed in concept form," one GM official said.
"A salaried work force is under discussion, but we're also exploring a lot of other things in the talks," said a UAW official, who requested anonymity. "Whether or not a salaried Saturn work force will emerge from the talks is an open question. We are not hinting or saying that something like that will come about."
Still, auto industry analysts and observers believe that a fully salaried Saturn operation is in the works. They say that GM and other domestic auto makers already have begun dismantling the hourly wage system that has been a part of the U.S. auto industry since assembly lines started moving at the turn of the century.
"The fact that Saturn would go to a salaried basis would not be all that important without the work-rule changes that have occurred in domestic auto plants over recent years," said Harry C. Katz, an associate professor of management at the Massachusetts Institute of Technology.
Katz has just published a study on changing labor-management relations in the U.S. auto industry. He said the results of that study show that domestic auto management is shifting decision-making down the ranks in a number of cases, giving hourly workers more responsibility for what happens on the plant floor.
Worker teams, quality-control groups and similar bodies "are being guided by people who are listed as 'hourly,' " Katz said. "But they really are not hourly in the traditional sense. They are more like supervisors than anything else."
That perceived role change makes hourly workers more amenable to salaried compensation. It also reduces anxiety among traditional management-level employes, some of whom otherwise might object to being paid on the same basis as production workers, Katz said.
The blurring of traditional labor-management lines also occurs in several worker autonomy experiments now running in the U.S. car industry.
For example, 2,000 workers at GM's Buick Division assembly plants in Flint, Mich., don't punch clocks. Each worker, operating under an honor system, keeps his or her own time. A similar program is in effect at a plant operated by GM and Toyota Motor Corp. in Fremont, Calif., and at another GM facility in Shreveport, La. Chrysler Corp. and Ford Motor Co. also has several plants where workers have been freed from the time-clock routine.
Because of those developments, the Saturn work force proposals "really aren't new," said Stephen P. Yokich, who directs several major UAW departments, including the union's national organizing unit. "We have thousands of people already on salary and a number of plants . . . what they're really talking about at Saturn is taking all of these things and putting them into one plant. This is an attempt to gather up all of the good from everywhere else and to put it into one place," Yokich said.
He said that "It's not so much a change in the way that the union is acting or seeing things," Yokich said. "It's a change in the way that management sees the union. They finally realize that we have brains and not just backs."
None of the workers in the GM or the Ford experiments can take an extra 15 minutes for lunch, or another half hour off for personal business when he or she is supposed to be on the assembly line, GM and Ford officials said.
In that regard, the employes in the experiments are not "truly salaried," according to Pestillo and others.
"It's all a matter of semantics," said one GM official who requested anonymity. "The contract that they're working on at Saturn will be so flexible, the work rules will be so new, 'salaried' and 'unsalaried' really won't make much of a difference."
The leadership of the UAW long has sought an annual salary for its members. In 1955, for example, UAW President Walter P. Reuther asked GM for what he called a "guaranteed annual wage."
Reuther believed that an annual wage was a good way to protect his members from financial harm caused by the cyclical layoffs in the auto industry.
Car plants routinely shut down for long periods to accommodate model changeovers or to give consumer demand a chance to catch up with growing inventories. When the lines weren't running, the hourly workers weren't getting paid.
But GM rejected Reuther's proposal on grounds that it would put labor and management on the same level, undermine corporate authority and ultimately interfere with production and hold down profits.
Even many of Reuther's UAW peers opposed his thinking. Blurring jurisdictional lines would end traditional adversarial dealings between union and management, and the loss of that tension eventually could lead to a compromising of labor's goals, the UAW dissidents said.
The company and the union instead settled on a series of income-maintenance programs designed to aide production workers in down times. Perhaps the most notable of these is the supplemental unemployment benefit program, the so-called SUB, which, depending on seniority, could give a laid-off auto worker 95 percent of his or her hourly salary for up to two years.
But rising foreign competition and drastically declining domestic auto sales in the early 1980s weakened labor and management, causing billions of dollars of revenue losses and throwing hundreds of thousands of auto workers out of jobs for periods longer than a year.
Then came foreign auto makers, Japanese and Germans, who began assembling cars on American soil. By 1990, the Japanese alone will be able to make as many as 900,000 cars a year in the United States. Two Japanese companies -- Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. -- intend to continue assembling their vehicles in this country without UAW help, although Honda is the target of an intense UAM organizing campaign.
Two others, Toyota Motor Corp. and Mazda Motor Corp., will have UAW representation, but on beginning terms that will give them highly competitive production costs.
Those developments softened the ground for the work-rule changes that have taken root at the traditional Big Three U.S. car companies -- Ford, GM and Chrysler Corp. And auto industry analysts and officials believe those changes will bloom into a fully salaried, unusually egalitarian work force at Saturn.
"It doesn't matter if the union gets a toe-hold into the salaried work force through Saturn," one GM official said. "They will gain something, but so will the company. The rules of the game have changed."