North of the Border

I was badly disappointed a few years back when GM discontinued the Saturn line of cars and shut down the plant in Spring Hill, Tennessee. I’d been following the progress of the Saturn division from the beginning, and it’s probably fair to say that I wanted it to succeed as much as anyone who wasn’t a major stockholder did. Saturn was General Motors’ attempt to apply all of the advanced management techniques that the competition had been using to gain various advantages over them for years to their own production lines. If successful, Saturn would have proven that an American company could not only adapt to new conditions and new strategies, but could actually compete with newer and more technologically advanced organizations on their own terms. Unfortunately, it didn’t…

Now, I’m not going to re-open the arguments for and against closing down product lines that are not turning a profit; we’ve covered that concept in this space often enough, and the simple fact is that while closing down the Saturn line was unfortunate for the people who worked there, and for the communities where they lived and all of the businesses that either supplied the line or were supported by the employees, it isn’t reasonable to expect GM to continue operating the plant at a loss. Even with the best will in the world, the company would only be able to keep going for a limited time before they went under, taking out all of their remaining factories and bankrupting their employees as well as their investors. Even if General Motors was some kind of idealistic crusade (and it’s not; it’s a business) there would be no point in harming millions of people in order to help a few thousand – especially if those few thousand would still experience the same results in the end…

So the company shut down the Saturn division, moved as many of its people as it could to other facilities, and began cutting costs wherever it could, including some highly unpopular ideas, such as using the NAFTA provisions to shift production of some parts to Mexico. It has been a bad time for a lot of folks in that industry, and not a good one for a lot of companies and their suppliers. So I was very pleased to stumble across a story in the New York Times business section about GM planning to re-open the Spring Hill facility. Part of it is just that the company is going to re-tool the factory to produce two new midsize designs, which will keep them from having to disrupt any of their current assembly lines and save on delay costs and similar issues, and part of it is that the new union contract allows for multiple tiers of employees, making it more economical to employ Americans in Tennessee than Mexicans in Mexico…

How all of this will work out – or whether it will work out at all – remains to be seen. The past year has seen some remarkable improvement from GM, and if they use the Spring Hill facility to produce vehicles with some of the new technologies they’ve been talking about (especially clean diesel, biomass diesel, plug-in electric hybrids, or hydrogen fuel cell technology) this could be the beginning of a new revolution in the industry; the 21^st Century equivalent of the rise of the original General Motors corporation. But if they can’t learn from the events of the past two decades, I’m very much afraid that they will be destined to repeat that same history at least one more time…