Implementation of the New Brand of Management GM and the Project Saturn - Case Study Example

GM & Saturn + G20 & the Dollar I. SUMMARY OF FACTS This is an article about a series of events culminating in the present financial crisis. It's about GM and the project Saturn. Saturn was conceived during the 1980s by GM's front man, Roger Smith. The title itself conceives of many meanings - "supposed to save GM". Why should GM be saved when it was still one of the leading US automakers in the 1980s' But for one, GM had just survived the recession at that time, and was threatened by US and Japanese competitors, like Ford, Honda and Toyota which were making a mark and doing really good in the US auto industry. Saturn was to be a plant to produce a brand new car; GM had not been introducing a brand new car for some time. The name Saturn bears the name of the rocket ship the astronauts used to go to the moon. Saturn was to combine innovative technique in labor relations and innovative manufacturing technique. Roger Smith said that Saturn was the key to GM's long-term competitiveness, survival and success, and its mission was "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." (Ingrassia) After careful planning, with intervention from governors of different states to have the plant built in their jurisdictions, Smith proceeded with the project in Spring Hill, Tennessee. More than two decades later, a new brand of recession hits the world. GM has a pending application for a bailout by the White House. And Saturn is about to be sold out to whoever wants it. What happened to the GM savior after all these years' II. Issues Issue No. 1: What was the philosophy behind the Saturn concept' Issue No. 2: How effective was the new brand of management that Smith and the UAW worked on for GM' Issue No. 3: Did the Saturn bring GM financial successes, and otherwise' III. Discussion Issue No. 1: What was the philosophy behind the Saturn concept' It was Smith's dream - the savior concept of Saturn to put GM back on track. In the 1980s, GM was still struggling or was just recovering from the harsh realities of the recession. Yet, it was threatened by other auto giants of the time, like Ford, and the Japanese automakers Honda and Toyota. These companies had their own brand competitive cars and a distinct but effective management. Issue No. 2: How effective was the new brand of management and new technology on Saturn to bring GM to its desired leadership in the industry' The innovative technique in labor relations indeed materialize, but not the technology that Smith envisioned. Smith and the UAW agreed on a Memorandum of Agreement to implement plans for innovative technique in labor relations. Smith and UAW head Donald Ephlin signed the MOU which stated this principle: "We believe that all people want to be involved in decisions that affect them, care about their jobs and each other ' and want to share in the success of their efforts." This kind of effort proved effective and beneficial for the plant employees. They were now part of the management of the plant and even in hiring new employees. They felt they were part-owners of Saturn. But this produced resentment inside GM. Other GM brands viewed Saturn as unfair to them. The first Saturn cars went on sale in the fall of 1990 to great fanfare. When the Japanese auto makers bought one Saturn car and opened it up, they all laughed to what they discovered: "the dashboard had overlapping plastic panels that made it look cheap, and a harsh-sounding engine that stemmed from inferior motor mounts." (Ingrassia) Issue No. 3 - Did Saturn bring GM financial successes, and otherwise' Saturn was behind arch-rival Ford in earnings, quality and every other measure. GM's financial performance was lagging. The quality or different kind of car that Saturn was to build as envisioned by Smith did not materialize. Smith had bought whole companies, like Ross Perot's Electronic Data Systems, and Hughes Aircraft Co., just for Saturn. He could have contracted these companies for their services. However, even if the technology was not that perfect, "the public-relations campaign was firing on all cylinders". The ads showed that Saturn was really building "a different kind of car". The dealers took the bait. Everyone thought the car was selling or it was a good product. When a customer would complain of a defect in the car, Saturn would replace the entire car. It was a good promotional campaign which earned customer enthusiasm. There was high cost spending and too much manufacturing capacity. Saturn lost a then-record $4.45 billion. When Smith stepped down, his successor soon followed. Besides, there were no new innovations or added attractions committed on Saturn cars; no new versions were developed. GM top management was not committed on putting more money on Saturn. There was also a problem with suppliers; they were giving in inferior quality supplies. IV. Opinion Ingrassia's article connotes an interconnection of events leading to the present financial crisis - from Saturn to the present financial crisis in the United States' financial world. We will talk about the United States in particular because it is there where the global financial crisis first originated. President Obama just commented after his attendance with the G20 Summit that his administration was giving GM 60 days to submit a new plan and also thought of splitting GM into two, or selling off Saturn. CEO Rick Wagoner was ousted upon recommendation by the federal government as part of the bailout effort that may yet involve bankruptcy and billions more in taxpayer dollars. News is in the air that Saturn would have to go. With the big wound it had inflected on GM, and eventually on the US economy, Saturn might be disposed of for good. Saturn dealers have plans to buy it. Saturn can be one of those trigger mechanisms because it is a part of the economy. As said here, when the project started, billions of dollars were lost that were never recovered. Until recently, GM continues to bleed, so that when the government plans a bailout on the auto industry, it wants to make sure; thus the 60-day deadline on GM by the present administration. This is not intervention on the business sector by the Obama Administration; rather, an offshoot of the preventive measures discussed and agreed upon by the G20 Summit in London on 2 April 2009. These are preventive measures to make sure that the present global economic crises will not happen again. G20 is the summit of leaders of 20 major advanced and emerging economies. The European Union, led by the French, and some other members of the G20 want a new global financial order, as much as an entire remake of the 1944 Bretton Woods accord that set the basis for the world's financial system after World War II. The G20 acted together "to fulfill pledges to bring the world economy out of recession and prevent a crisis like this from recurring in the future." (The London Summit 2009) This Summit is one of those we needed to prevent a financial catastrophe. It may not be too late because this was a gathering of the world's financial experts. Everyone should cooperate in order to help the world's poorest nations which are affected very much by the crises. Works Cited Ingrassia, Paul. Saturn Was Supposed to Save GM: Instead GM Crushed Saturn. 4 April 2009. Newsweek. 11 April 2009. . The London Summit 2009. Global Plan for Recovery and Reform: The Communique from the London Summit. 4 April 2009. Read More