NCPA - National Center for Policy Analysis

A Labor Contract Worth Emulating

May 1, 1998

While union contracts at most General Motors plants leave much to be desired, according to labor specialists, the contract at GM's Saturn plant in Spring Hill, Tenn., allows flexibility and is the most unconventional in the industry. Moreover, it is highly popular among the plant's 7,200 workers.

  • At Spring Hill, there are only a handful of job descriptions -- compared to the 100 or more job categories at other GM plants.
  • Observers say that the greater the number of designated functions, the more limits there are as what certain workers can and cannot do -- leading to lack of cooperation and a waste of time.
  • At the Saturn plant, workers have the flexibility to cross over and do other things, such as a welder sweeping his own area at the end of a work day -- activities that would demand two separate workers in other plants.
  • Although the base-pay scale at the Saturn plant is thousands of dollars less than at other GM plants, a production-based bonus program allows Saturn workers to add as much as $10,000 a year to their wages.

It was widely reported that last year -- due to a downturn in Saturn sales -- bonuses nearly dried up, leading workers to demand a more traditional contract. But GM lowered the production targets for bonuses and workers approved a new contract in March 1998.

Observers say the unique contract has promoted labor-management cooperation -- a "buddy" system, in effect -- and has resulted in an environment of overall trust. Factory workers even swap places with dealership employees, providing them with feedback on product quality and market realities.

Source: Paul Eisenstein, "The Labor Contract of Future?" Investor's Business Daily, May 1, 1998.


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