Evolving Excellence

Still Blind - The GM Taxpayer Fleecing Continues

By Kevin Meyer

Nearly a year ago Bill told you how GM's plan to reduce its dealer network was just a fraction of what needed to be done.  At the time GM had 6,300 dealers selling an average of 468 vehicles each, compared to Toyota which had 1,800 dealers selling an average of 1,250 vehicles each.  GM proposed closing 2,600 dealers which take the average to a still underperforming 797 vehicles each, obviously assuming constant sales.

Well that 2,600 reduction was soon whittled down to 2,000 and now it has been reduced even further.

General Motors Co. is reinstating at least 660 of the more than 2,000 showrooms it had planned to drop, a partial reversal of a consolidation plan that caused pain and fear in cities and towns across the country when first disclosed last year.

Toyota now has 1,452 dealerships in the U.S., each of which last year sold an average of 1,219 vehicles. GM has about 5,500 dealerships and sold 2.1 million vehicles last year, an average of about 376 a store.

Of course we can understand why this happened since GM is now effectively controlled by the government.

Lawmakers had pressured GM on behalf of local businesses, forcing it to first offer arbitration to dismissed dealers. The company last year was bailed out by the U.S. government, which now owns 60%.

Policy trumping good business.  No surprise.  So why is the number of vehicles sold a big deal? The Wall Street Journal describes part of the problem:

In many markets, GM, Chrysler and Ford dealers compete as much or more against other dealers of those companies, and undercut each other on price. After years of losing money, many have been left with old and outmoded facilities, while dealers for companies like Toyota Motor Corp. and Honda Motor Co. have been able to update and expand their showrooms and amenities.

And Bill describes how those dealers then react in order to bring in more money to survive.

I was surprised to learn that the average dealer loses money on a new car sale, but makes a great deal of money selling parts and service.  Maybe you already knew that.  I am sure that this is true for GM dealers much more than for Honda and Toyota dealers simply because the smaller dealer base in the Japanese supply chains sells so many more cars per dealer - so much less fixed cost per car sold. By deploying such an obese dealer network, GM has put the dealers in the service business - with the unintended consequence of making defects the dealer's best friend.

Reducing inventory and reducing cost is good business, which increases the value to the customer.  GM, or GM's nanny, has decided to go in the opposite direction - at a time when customer demand is down no less. 

What's really scary is that the old discontinuity between "sales" and "demand" continues to exist, and wasn't even confronted by the author of the WSJ article.

Reinstating dealers and taking orders to restock their lots could help GM improve its market share as Mr. Whitacre desires, and help the company regain the lead in U.S. vehicle sales.

Restocking lots is simply increasing inventory, not a sale - unless you have screwy accounting like GM which records a sale when a vehicle moves out of the factory, not when a final consumer decides they want to buy it.  It has no impact on market share.  Customer demand is customer demand, regardless of how many vehicles sit waiting for an owner.

Increasing inventory in the face of decreasing demand obviously makes no sense, but remember this is being driven by GM's puppeteers, the same group of jokers that came up with "cash for clunkers"... and we know how financially irresponsible that was:

More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars. So, the government paid $3 billion of our tax dollars to save $350 million.

We spent $8.57 for every dollar we saved.

I'm pretty sure they will do a great job with our health care, though.

Yeah, right.

Andons and Problems at NUMMI

By Kevin Meyer

Interesting article by John Shook in the latest MIT Sloan Review on the culture at NUMMI.  The GM-Toyota joint venture let Toyota experiment with applying TPS in the U.S. while GM could learn about TPS.  Toyota learned, GM ignored, and the rest is pretty much history.

Two sections of the article are particularly interesting and contrast Japanese (or at least Toyota) culture with that of the U.S. and GM.  First, the concept of andon.

The best example of how the culture was changed at NUMMI is the famous stop-the-line — or andonandon — system on the assembly line. All of the GM and NUMMI people who underwent training in Japan experienced learning and working with the stop-the-line system (or some variation of it). One of the decisions to be made in establishing production at the joint venture was whether to install the stop-the-line system. For Toyota, of course, that was no decision at all — it was a given. The system epitomizes Toyota’s belief in, and commitment to, developing the means to enable employees to work in a way that “builds in” quality.

A key Toyota tenet is “Respect for People,” the conviction that all employees have the right to be successful every time they do their job. Part of doing their job is finding problems and making improvements. If we as management want people to be successful, to find problems and to make improvements, we have the obligation to provide the means to do so.

Of course that level of employee power scared the crap out of GM.

When NUMMI was being formed, though, some of our GM colleagues questioned the wisdom of trying to install andon there. “You intend to give these workers the right to stop the line?” they asked. Toyota’s answer: “No, we intend to give them the obligation to stop it — whenever they find a problem.”

A perfect demonstration of how Toyota respects people.

In Toyota’s system, each worker on the assembly line knows precisely what his job is. He is given the knowledge and skills to know when he has encountered a problem (an abnormality that prevents him from successfully completing his task), what to do when he’s found such a problem, and exactly what will happen when he notifies his leader about the problem. His team leader will come to provide assistance within his job cycle, or the time available to complete his assigned responsibilities. (Note: The line doesn’t actually stop right away. It halts only after it reaches a certain point — called a “fixed position” — and only after the team leader has made the decision to let it stop.)

That translates into a promise from management to the work force: “Whenever you have a problem completing your standardized work, your team leader will come to your aid within your job cycle.” That’s quite a promise to a work force of a couple thousand whose job cycle is in the neighborhood of one minute. But Toyota learned that that is what it takes to enable workers to build in quality and to be engaged in problem solving and making improvements.

This of course leads to how the different companies, and cultures, approach problems.  First, learn the value of problems themselves.

Every person in a supervisory capacity, including hourly team leaders, visited Toyota City for two or more weeks of training at the Takaoka plant. The training included long hours of lectures but, most importantly, practical on-the-job training in which they worked alongside their counterparts to learn what was to be their job back in California. At the end of each training tour, we asked the trainees what they would most want to take back with them to Fremont of all they had seen at Toyota. Their answer was invariably the same: “The ability to focus on solving problems without pointing fingers and looking to place the blame on someone. Here it’s ‘five whys’ [which means simply asking “why?” until reaching the root cause of any problem]. Back home, we’re used to the ‘five whos.’” Call attention to the problem to solve it, or to the behavior to change it, but not to the individual for being “wrong.” 

Then deal with the problem.

“Problems” were indeed viewed completely differently. Americans like to respond “no problem” when asked how things are going. One phrase known and used with gusto by every early member of NUMMI was the Japanese word for “no problem,” which, when spoken with a typical American accent, sounded pretty much like “Monday night.” So when Japanese trainers tried to ask how certain problems were being handled, American NUMMI employees could be heard all over the plant cheerily shouting, “Monday night!” The response to this by the Japanese was, “No problem is problem.” There are always problems, or issues that require some kind of “countermeasure” or better way to accomplish a given task. And seeing those problems is the crux of the job of the manager.

No problem is a problem.  Problems are good.  Thanking employees for finding problems, even if they are their own.  What a concept.  What respect for people.

Of course the interesting epilogue is that Toyota executives have forgotten their own shop floor lesson.

Toyota's Shop Floor Still Remembers

By Kevin Meyer

While Toyota executives are scurrying around having lost their way, the employees at their factories are doing what Toyota does best: improving.

For the past week, Toyota's leaders have wrestled with the fallout from an unprecedented recall of 4.5 million vehicles that will likely cost the automaker $2 billion in repairs and lost sales. Here at the company's largest North American plant, the workers who assemble two of those recalled models are thinking more than ever about quality.

Those employees still understand that the power of the Toyota system revolves around people, especially the brains of those people.

Workers affected by the idling had the option of taking paid vacation or unpaid leave, but the vast majority came to work, with many taking training sessions, cleaning assembly line stations or applying new coats of paint. But it's also been a time for the plant's more than 200 "quality circles" to meet and find ways to solve assembly problems, searching for sometimes elusive answers to Toyota's quest for better efficiency and lower costs.

Each circle, a program done globally at Toyota plants, consists of seven to eight employees across the plant who volunteer to focus on a particular issue. When the assembly lines are running, the circles meet after work or during break times.

So what types of problems and issues are tackled?

"Sometimes it's tough to work on the processes while the line is up, so this is an opportune time this week to go to the process and make some modifications while the line is down," said Nancy Corey, quality circle administrator in Georgetown.

On Friday, among the teams meeting were one examining how to make faster and less expensive repairs to tools and another looking to recycle a supplier's velcro ties.

"Some things seem very small but they have a big impact," Corey said.

Small things... small improvements.  Toyota is known for many suggestions per employee per year and the art and science of kaizen.  The cumulative effect is massive in terms of productivity and quality.

Toyota is also known for the andon - celebrating the discovery of problems as a chance to improve, and the stopping of the line to ensure those discovered problems never see the light of day.  Contain the problem, fix the problem, then prevent the problem from ever reoccurring.  I saw it myself when I visited the Lexus factory in Kyushu.

Toyota's executives, perhaps in their haste to grow and conquer new markets, forgot that last part.  They still have a chance to survive the increasing maelstrom if they leverage what their employees still remember.

Toyota Pulls the Big Andon Cord, Finally

By Kevin Meyer

Toyota just announced that it was suspending sales of eight of its most popular models while it investigates the accelerator pedal sticking problem.  Good for them... finally.

There are supposedly two distinct problems, one where the floor mats create the sticking and some new manifestation of a similar issue.  A few months ago Bill took Toyota to task for going about tackling the problem in a distinctly non-Toyota fashion. 

Many of us in the lean community - all of us long admirers of Toyota and ardent proponents of the business and manufacturing model they spawned - have had to make excuses for Toyota and rationalize some of their failings recently.  The latest one, however, demonstrates just how far they have slipped from the principles that propelled them to greatness.

Appropriate containment of the problem was not put in place to protect the customer when it was first noticed and appropriate problem solving was not implemented.  Very disappointing, and Toyota's reputation suffered.

But with that in the past, let's take a look at today's news.  Not only are they suspending sales to contain the problem, they pulled one of the biggest andons ever by stopping all of the related production lines.  What has not been reported widely is that in the Toyota supplier system this immediately cascades all the way across first, second, and third tier suppliers.  Across the country production lines are stopping, inside and outside Toyota.  Inventory will not build up.

I have to give Toyota kudos for the guts to do that.  How much you want to bet that they will also keep the employees on the job to help with problem-solving and to perform additional training?

What do you think a traditional manufacturer would do?  Would they even stop sales?  Even if they did, would they stop the final assembly plants?  And even if by some miraculous spark of brilliance they stopped a final assembly plant, would they cascade the stop throughout the supply chain?  Highly doubtful.  Most likely they'd keep production running then try to bring them back if and when a solution was found.  And would they continue to pay the employees in order to provide additional training?  Yeah, right.

For that matter how many of you, even the lean cognoscenti among us, would allow employees, or perhaps even leads and supervisors, to shut down an individual production line?  Let alone encourage and celebrate it knowing that finding a problem is a good thing?

Time will tell if Toyota has really found its lost mojo, but this is a good sign.

The Cascading Cost of Rehiring

By Kevin Meyer

A couple of recent stories on the same topic but from different angles really helps point out the cost of laying off.  First Richard McCormack at Manufacturing News discusses the impact of GM shuttering a plant.

The economic impact caused by a single, large manufacturing plant closing in America is massive, according to research conducted by the Institute for Research on Labor, Employment and the Economy (IRLEE) at the University of Michigan.

In a case study on the closure of the General Motors Moraine Assembly Plant in Montgomery County, Ohio, IRLEE director Marian Krzyzowski and associate director Lawrence Molnar found that for every hourly job lost 15 jobs in the economy disappeared with it.

As one example:

GM closed its 4.1 million-square-foot Moraine Assembly operation in late 2008, laying off 2,170 hourly workers. The event led to the loss of another 10,850 indirect jobs (for a total of 13,020 jobs lost) in the immediate vicinity of the plant.

But job losses cascaded through GM's supply chain, with the elimination of another 3,334 jobs: DMAX laid off 645 workers; Jamestown Industries laid off 80 workers; Johnson Controls laid off 130 workers; PMG Ohio laid off 70 workers; Plastech laid off 88 workers; four Delphi plants that supplied Moraine laid off 2,120 workers; Tenneco laid off 118 workers; and EFTEC laid off 83 workers.

As a result, the total number of indirect jobs lost due to the Moraine plant shutdown was 27,520.

In all 33,024 workers were impacted by closing one large factory.

Now for the other side of the story.  Perhaps good news, with GM now rehiring or recalling some folks.

General Motors may reopen shuttered factories because it can’t produce four of its vehicles fast enough to meet demand, and Chrysler is preparing to hire more engineers and product development workers.

I won't dive into that so-called demands, since as we know GM records a sale when a car goes to a dealership, not when it is truly sold to a final customer.  That creates all kinds of distortions which aren't the point of this post.  So for grins let's simply consider this to be good news.  A factory is rehiring!

But think about that rehiring in the context of the Manufacturing News article.  Uh oh.

Yep, the same cascading effect, but in reverse.  Hiring back a couple thousand people then requires second and third tier suppliers to also begin rehiring.  A good thing for the workers, but think about the time lag, the training investment, and other startup costs.

It's not as easy as simply calling a couple thousand people at one factory and telling them to come back to work.

Perhaps something to consider before telling them to go home.

A Rube Goldberg Creation of Rare Perversity

By Kevin Meyer

Obviously with that kind of title I can only mean the insanity created, again, when the free market force of nature meets skewed politically-induced regulations.  Many thought that the taxpayers investing in failed auto companies was somehow a good idea.  Months later with independent Ford surging forward while our unintended investments, now managed by naive overseers, languish, we are shown yet another reason to bang our heads against the wall.

What a shocker that GM reportedly plans to invest $1 billion to launch new versions of its big, fuel-guzzling pickups and SUVs. Does this mean the whims of the Obama administration can't be expected to trump economic reality after all, which would be a terrible precedent for health care?  GM's surprise, of course, is no surprise, unless you live on some faraway world where the visions of the Sierra Club prevail.

Nothing really new there - if you want to make a buck, you need to make something the customer desires.  But wait!  What about CAFE standards and such?

GM says it has new ideas on how to build its large trucks while still meeting Washington's tough new fuel-economy standards, but don't let the spin kid you: Its main way of meeting those rules will be simply to push small and electric cars into the market at a loss in order to create the "fleet average" freedom to sell larger vehicles.

This is exactly the Faustian compromise that kept the industry together for 25 years, albeit with one big difference today: Now GM will be counting on direct taxpayer subsidies added to the mix. 

[Long ago] Detroit and Washington worked together to exploit the chicken tax to create a protected niche for the Big Three to make large passenger cars, call them "light trucks," and thereby shield them from foreign competition as well as the stricter fuel economy rules that apply to cars that are called "cars."

But the chicken loophole is no longer sufficient, so taxpayers will have to pitch in too. They will do so with a $7,500 tax credit for buyers of electric cars like the forthcoming Chevy Volt, plus some $25 billion in direct loans to carmakers to retool plants dedicated to "green" cars.

Oh great... now my hard-earned tax dollars are going to subsidize a loss.  If the government nanny owns the "company" and also controls the standard, wouldn't it be just a tad more efficient to modify the standard so less good money goes after bad?  That's obviously assuming the overseers consider making a profit on trucks to be a worthy objective in the first place.  Sometimes you have to wonder.

Our buddy Mr. Ghosn of Nissan fame has already figured out how to play this game to suck up my tax dollars for his private enterprise.

Nissan sought and received a $1.6 billion U.S. Energy Department loan to convert its Smyrna, Tenn., plant to churn out an all-new electric car, the Leaf, which it plans to introduce late this year at a price comparable to a small gasoline-powered sedan (i.e., far below cost).

Mr. Ghosn, once dismissive of hybrids that couldn't legitimately earn their way with consumers, has become a feverish believer in electric cars to solve all the world's problems—as long as governments are willing to assure their profitability. "We have to make money. If we don't, the technology is doomed," he recently said. "And that's one of the reasons we are negotiating with the U.S. government—to make sure we have a reasonable return on our investments and continue to develop the technology."

Oh brother.  So the free market is distorted by regulation, creating an absurd (and costly) opportunity for the free market.  Got a headache yet?

When Mr. Obama arrived in Washington, America's auto-cum-energy policies were already a Rube Goldberg creation of rare perversity and, let us admit, idiocy. But he can fairly claim: Taxpayers, you ain't seen nothing yet.

No kidding.

Speaking of Value...

Sometimes you really have to wonder...

How quickly dreams can become nightmares.

Just a few days after the engineering team behind the Chevrolet Volt triumphantly rolled out the production version of its much-anticipated car for journalists to test, the folks in marketing followed it up with folk music, break dancing, and what looks like a few rejects from a 1986 high school production of the "Pirates of Penzance".

Although it looks more like a "Saturday Night Live" skit, the dance routine that was performed on the Volt display at the Los Angeles Auto Show is all too real. Captured by a visitor who uploaded the video to YouTube, three females wearing puffy shirts and the aforementioned break dancer, who also plays air guitar, shake just about everything on their bodies for the duration of the song. Often out of sync. Reportedly, the cringe-inducing interpretation of an electric-powered future took place every hour during the ten days of the show.

And so, with fear and trepidation, and still asking the question Bill posed last week about "value"... here's the video.  GM's video.  Paid for with our tax dollars...

GM's Dangerously Naive Overseers

By Kevin Meyer

I've been keeping a pretty close eye on GM since I recently became an unexpected investor in the company thanks to the government bailout.  Some good signs, some bad, but the news yesterday was more than a little troubling.

Starting Jan. 4, General Motors Co. plans to do something unprecedented in the U.S. car industry: It will run its assembly line here [Kansas City] around the clock on a permanent basis.

It's not just unprecedented in the U.S., but in many such industries worldwide.

While common in other industries, not even car-efficiency benchmark Toyota Motor Corp. operates its plants routinely with more than two shifts. Car-assembly lines need too much scheduled maintenance and restocking for such intensive production to make sense, many industry experts say.

For a company long bloated with unused capacity, GM's third-shift strategy is a radical—and risky—departure. Unlike other cost-cutting moves made during its trip through bankruptcy court last summer, such as halving its brands to four, the third-shift plan could make GM a model of car-industry efficiency—or end up a failure like its 1980s drive to let robots run its factories.

So why would they do it?

The Obama administration auto task force that oversaw GM's reorganization last spring was startled to learn that the industry standard for plants to be considered at 100% capacity was two shifts working about 250 days a year. In recommending that the government invest about $50 billion in GM, the task force urged the company to strive toward operating at 120% capacity by traditional standards.

But industry manufacturing experts are skeptical, noting that the federal task force had limited automotive experience. "Do those guys understand the business?" asked Ron Harbour, whose Harbour Report is a widely followed analysis of auto-plant efficiency.

The article points out one good reason for not running three shifts.

A few idle hours between shifts also enables a plant to perform cleaning and restocking. A plant's paint shop alone generally requires about four hours of cleaning a day, said Mr. Harbour, adding that the efficiencies of a third shift can disappear quickly amid slowdowns for such maintenance.

"If running three shifts means you're moving [the line] at only 60% of capacity, then you haven't gained anything," he said. In all industries, moreover, midnight-shift workers are prone to above-average rates of on-the-job errors, absenteeism and illness.

I've personally run 24/7 operations a few times in the past and can vouch for how tricky they are.  Maintenance becomes a serious issue, and without a laser focus and commitment from the very top, quality will suffer.  If a mold goes down a few cavities, the almost overwhelming desire is to keep the press running, even if the mold is unbalanced.  If I knew GM had that total commitment to quality I might buy into this.  I don't.  At least not yet.

But as I implied, the article mentions one good reason for not doing three shifts.  There's another, one we've talked about before, and that's the distortion of reality caused by traditional accounting.

Traditional accounting creates the desire to fill unused capacity in order to absorb overhead, depreciation, and other indirect costs.  Usually regardless of whether demand actually exists for that capacity.  Last time I checked GM still had a much larger inventory than other auto companies, spread out through a still too large dealer network.  Improving, but a long ways to go.  They are also going to pay $30k per employee to relocate, plus retraining and retooling, and tons of time trying to figure out how to manage a third shift.  With traditional accounting those dollars and costs aren't in the same bucket (let alone the bizarre concept of a "sale" being when the vehicle has left the factory, not when money transfers from a real customer).  In reality, bucks are bucks.

It may look like a bold, risky move but is it?  How risky?  How bold?  Appropriately risky?  Interesting how GM's move that effectively risks the company's viability is portrayed as a good thing by the Obama overseers, but Wall Street's risk-taking is a bad thing.  Go figure.

In reality there are several other bolder moves that could, and should, be taken.  Ones without the risk of destroying my unintended investment.  Here's a very simple one: have all the managers and execs go stand in an Ohno circle on the factory floor, a few times a week.  Of course you'd have to educate a lot of them to just recognize a factory floor... or perhaps even their own cars for that matter.  But I bet they'd have a lot of "a ha!" moments and realize how the could vastly improve efficiency and reduce waste.

Without putting the entire company, my investment, at risk.

So Long, Fritz

By Kevin Meyer

I had planned on penning this post about GM's CEO Fritz Henderson a couple days ago when I first read his interview in the Detroit Free Press.  Then of course today he had to suddenly up and resign.  Although we had taken him to task a while back, I was going to pay him and even GM some compliments... well, perhaps not quite.

Let's start with some quotes from the article.

He says he’s focused on instilling a new corporate culture built around customers and vehicles; accountability; speed; and risk-taking.  Success is crucially important, experts say, because GM’s culture must foster innovation and quickness in order to compete.

Yes, although that's been said before.  Does it include incentives and rebates?

He added: "Having our daily time spent around products and customers is the foundation of the culture change. It's about having everybody involved."Underscoring how important cultural change is to the new GM, GM's board of directors now receives a monthly update on progress in that area, Oster said.

Great... another report.  A good director might have gone to the gemba to see for herself.

GM executives and employees point to evidence of a changing culture: fewer meetings, quicker decision-making and greater emphasis on taking responsibility for fixing problems.There's also a new, more liberal dress code as well as a new employee performance evaluation system that aims to line up employee goals with developing GM's new culture.

Good... we all like fewer meetings and I personally like wearing sneakers to work.  For whatever it's worth.

GM has identified workers throughout the company, whom it is calling "Pride Builders," to brainstorm new ideas and encourage others to embrace change.

Ok now we're getting into the hokey stuff.  I wonder if those Pride Builders get picked on by the other schoolkids?

Some raise concerns that Henderson, a 25-year employee of GM himself, is surrounded by other longtime GM executives, which makes cultural change even more difficult.

Well Fritz just solved that problem, in an obtuse kind of way.  Boy all those bailed out companies sure are having trouble keeping executives.  I'm sure it's not the salary caps.  Bite my tongue!

But here's my real issue... among all the glorious comments in the primary and secondary articles, not once did he mention employee and knowledge development.  Training, kaizen, even the oft-ubiquitous people are our primary asset stuff.  Sure they get to dress down and a chosen few become Pride Builders, but what about tapping the brainpower of the many?  All those years of experience, bottled up creativity presumably stifled in the past and now raring to come out?  The impact if that experience and creativity was augmented by training on lean concepts?

Guys in jeans are one thing.  Guys in jeans leveraging their knowledge are a competitive gamechanger - the one GM needs now if it's going to save my investment.

RIP Saturn - You Could Have Saved GM

By Kevin Meyer

GM could have been a very different company today.  Unfortunately it missed, if not completely screwed up, the best opportunity almost any company could ask for.  How often does a company get the chance to partner and learn from the world's most successful company in its industry, to learn the inside secrets, and presumably to take that knowledge back to its other facilities?

Last Wednesday Roger Penske decided to abandon the deal to take over Saturn and GM immediately decided to shut down the division.  Thus ended an era and an opportunity.

General Motors and the United Auto Workers union have waged war against each other—sometimes hot, sometimes cold—for most of the past 80 years. One of the few things on which they collaborated, sadly, was undermining Saturn, which began as the boldest effort to reform the dysfunctional dynamics of their relationship.

The failure here isn't Mr. Penske's. Saturn was killed by its creators, GM and the UAW. The company starved Saturn for new products, and the union waged war against Saturn's labor reforms to keep them from spreading to other GM factories.

It started off on a good, forward-looking foot.

The story began on Jan. 8, 1985, when GM announced Saturn at a press conference in Detroit. It would be GM's first new brand in 70 years and operate as a separate subsidiary, with its own labor contract, to develop a small car fully competitive with the imports. Chairman Roger B. Smith assigned Saturn a historic mission: to "affirm that American ingenuity, American technology and American productivity can once again be the model and the inspiration for the rest of the world."

Those stirring words were echoed seven months later in a Memorandum of Understanding between GM and the UAW: "We believe that all people want to be involved in decisions that affect them, care about their jobs . . . and want to share in the success of their efforts." Saturn became not just a company but a cause. Its factory would be in Spring Hill, Tenn., a bucolic town 45 miles south of Nashville and hundreds of miles from the hidebound headquarters of GM and the UAW in Detroit. 

Thus the Saturn contract, built on the Memorandum of Understanding, eliminated most of the work rules that strictly limit the tasks UAW members can perform. Workers would be called "technicians" and get just 80% of standard UAW wages but would share in Saturn's profits, allowing them to earn more if Saturn succeeded. Most Saturn executives and managers would be assigned a UAW counterpart, and the two would share in key decisions.

GM's Smith recognized that GM management had created many of the company's problems and a new paradigm was needed.  The UAW recognized that inflexible work rules stymied efficiency and creativity and a new paradigm was needed.  The customer even became a focus for the first time... and last... at GM.

Saturn dealers were awarded broad area franchises, freeing them to focus on customers instead of competing with dealers down the block. Customers loved the no-haggle pricing and being cheered by employees when they drove their new car off the lot. More than 40,000 Saturn owners attended the June 1994 Saturn Homecoming in Spring Hill, where they were treated to factory tours, country-music concerts, and picnics with the workers who built their cars.

And some other notable people even recognized how the concept could be applied outside of auto manufacturing.

In June 1993, Vice President Al Gore visited Spring Hill and said he wanted to "Saturnize" the federal government, whatever that meant.

At least he didn't claim to invent lean manufacturing as well as the internet.  The seeds of opportunity were planted... but it didn't last long.

Saturn's labor innovations were attacked by UAW traditionalists, who coined the term "Ephlinism" to describe Saturn's heresies.  That year [1993] saw another, more menacing development. The UAW elected as its new president Stephen P. Yokich, a militant firebrand with an explosive temper who hated Saturn. Before his death in 2002, he opposed profit-sharing, the elimination of work rules, and the flexible factory shifts that improved Saturn's efficiency.

So the UAW begin to starve the opportunity.  Management soon joined in the destruction.

Meanwhile, Saturn wasn't faring much better at the hands of management. After GM almost went bankrupt in 1992, the cash-strapped company didn't give Saturn money to update its cars.

An opportunity lost.

Some of the attendees were former Saturn workers, good people who really tried to create something different at Spring Hill but were let down by their company and their union. Perhaps the new GM and the UAW will forge a different relationship in the future. Meanwhile, the Saturn workers' sense of loss is expressed poignantly by Mike Bennett, their former union leader, who says, "I wake up at night sick, thinking about all the things that might have been."

As do many of us, taxpayers who are now investing in and giving yet another chance to a company smart enough to kill an incredible opportunity.