Production Seems More Important than GM’s Product
DETROIT—Who lost Saturn? The recriminations have started among the politicians in the Motor State. What more could Michigan have offered General Motors to locate its new plant here instead of rural Spring Hill, Tennessee, a town of 1,000 people some 30 miles from Nashville.
The City of Flint offered General Motors a tax subsidy plus package worth about $550 million. Governor James Blanchard’s subsidy package was secret, but was known to include lavish tax exemptions, cheaper utility expenses, lower interest loans, and a legislative move to reduce workers’ compensation benefits for injured workers. Republican legislators are now demanding to see the details of Blanchard’s offer, to see if he gave GM enough.
All these post-Saturn byplays are the last stage of a disgraceful bidding war by the governors of most states who tried to outdo one another in their willingness to transfer the taxpayers’ resources to the world’s richest industrial corporation. During this seven-month Saturn bidding process, all imitations of any criticism of General Motors were suspended by governors, state legislators, and members of Congress. The Congressional delegation from Michigan wallowed in silence about GM’s car defect scandals, GM’s pressure to reduce the fuel efficiency standards in Washington, and GM’s draconian drive to reduce its property tax payments beyond avaricious dreams in Michigan towns where its factories are located.
But GM Chairman Roger Smith’s dangling Saturn circus had other designs. His lobbyists used the Saturn project, with its 5,000 jobs, as a club to push through legislation the company wanted in several states. If you don’t pass this bill, they would say to legislators in Texas, Missouri, Michigan, etc., then you may not be sympathetically considered for Saturn.
While the states, other than Tennessee, are disappointed, and in some cases bitter, with GM, Saturn’s signal to them was clear — weaken or abolish your structures of corporate responsibility to labor, to the principles of companies paying their fair share of taxes and operating their businesses without public subsidies. If other large corporations start playing the game like GM did with Saturn, this process of intimidation and kowtowing states, localities, and legislators could become institutionalized. The subsidy wars that follow would serve only to reduce the bidders to new, frantic lowest common denominator levels.
What is ironic about bidding competition is that companies, including GM, still make their location decisions on quite conventional criteria. The attractions of Tennessee for the Saturn plant were 1) proximity to major markets for small car sales, 2) a productive, compliant work force as shown at the new Nissan Truck plant near Nashville, 3) lower electric and water rates, 4) proximity to a good highway network-, 5) no state income tax, and 6) enough closeness to suppliers without being too close to Midwestern areas with a strong labor union tradition. United Auto Workers will represent the workers of Spring Hill, but under a special agreement with GM that some Michigan unionists regard with suspicion.
Missing in all the company announcements on Saturn is just what kind of car is going to be built for the buying motorist. The Detroit Free Press reported recently that GM is having “costly problems developing the car’s all-new aluminum 4-cylinder engine, and that far from being a cheap import fighter, Saturn was evolving into more of a sporty, high-performance car.”
Well, is Saturn going to have air bags, be safer, less polluting, less repair-prone, and more fuel efficient than its competition? Chances are that GM’s Roger Smith has spent far more time thinking about automating the production of Saturn than the product that is going to the dealers’ showrooms.