Despite UAW vows, GM labor 'innovations' spread to former Saturn plant
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The groundbreaking labor deal that allowed General Motors to fire up production of the only U.S.-built subcompact at its Orion assembly plant last month was a one-off. A special case. An extraordinary agreement struck on the eve of GM's 2009 bankruptcy.
At least that's what UAW officials insisted heading into labor talks this summer. The Orion arrangement, with its broad use of low-wage entry level workers, was not a template for GM to transpose on plants elsewhere as a way to cut labor costs, UAW leaders said.
But it appears there indeed may be an "Orion 2" in the works at GM's former Saturn plant in Spring Hill, Tenn. And it may be Orion on steroids.
An "innovative operating and staffing agreement" at Spring Hill will enable workers to crank out a variety of vehicles on different platforms, GM CFO Dan Ammann told analysts on Wednesday while detailing GM's newly ratified contract with the UAW. GM plans to build two unspecified mid-sized vehicles at Spring Hill, creating 1,710 new jobs, the union says.
Exactly what innovations GM is cooking up for Spring Hill, Amman wouldn't say. But you can bet they'll include some key ingredients now in play at Orion: On-site suppliers to cut labor costs. Sub-assembly of parts by non-GM workers to cut transit costs.
And more entry-level workers. Potentially a lot more.
JP Morgan analyst Himanshu Patel said in a note on Thursday that he could see a near-100 percent entry-level work force at Spring Hill.
About 40 percent of Orion's 1,500 workers make an entry level wage. Under the new contract, they'll be paid $16 to $19 an hour, a little more than half of what traditional UAW workers make.
A 100 percent entry level work force won't happen. Several hundred former Spring Hill workers who are either still laid off or relocated to other GM plants should get first shot at the new jobs.
But it's likely that the vast majority of the 1,710 new jobs will be filled by new employees - and there's no restricton on the use of entry level wage earners.
Spokespersons for GM and the UAW declined comment on plans for Spring Hill.
The planned staffing and work rules for Spring Hill mark somewhat of a return to its roots. In 1990, GM unveiled the plant as an answer to the Japanese and their lean ways. The Saturn plant eased the web of union rules that bound other GM plants, allowed for joint decision-making between the union and management, and tied worker bonuses to vehicle quality.
It's easy to see why GM would want an all entry-level work force at Spring Hill. Tack on benefits, and those workers will cost GM about $33 an hour under the new contract. The cost of assembly line workers in Mexico -- which is where those Spring Hill jobs would have been shipped -- is about 10 bucks.
So, it seems that the UAW's resolve to contain Orion as a unique case was trumped by its top priority: More jobs.
You can reach Mike Colias at email@example.com.