Toyota has never closed a plant anywhere.
As Toyota Motor Corporation ponders the fate of New United Motors Manufacturing Inc. in Fremont, California in the San Francisco Bay Area, the United Auto Workers is fighting to protect is last foothold in manufacturing on the West Coast.
UAW officials have confirmed that the union has been holding talks with Toyota about NUMMI, after Toyota said the plant is no longer competitive because of its location and labor costs. With the cessation of production of the Pontiac Vibe, and General Motors Company’s announcement that it is abandoning its share of NUMMI, the future of the huge plant, already working at partial capacity, is tenuous at best. Toyota owns 50% of the plant.
The NUMMI plant, which has more than 5,400 employees, including 4,500 union members, has the capacity to build more than 420,000 cars and trucks annually.
NUMMI is also the only automotive assembly plant operating in California where the unemployment rate now hovers at more than 11%. The San Francisco congressional delegation includes House Speaker Nancy Pelosi and Democrat George Miller, the chairman of the House Committee on Labor and Education.
No Costs!
“We need to determine whether it can be economically feasible to contract with NUMMI without GM. Under the current business circumstances, Toyota regrettably must also consider taking necessary steps to dissolve the joint venture,” the Japanese automaker said in a statement.
Toyota has never closed a plant anywhere in the world.
Toyota, however, has lost $7.4 billion during its last fiscal year and has predicted another loss during the current fiscal year. Part of the loss due to the difficulties Toyota has faced during a sharp decline in sales in the North American market.
“Toyota has a lot of trouble right now,” said Erich Merkle, president of Autoconomy, a forecasting firm based in Grand Rapids. “They have several issues they’re trying to sort out right now,” including its future product portfolio in North America and production capacity.
However, Alan Baum, an analyst with The Planning Edge, a forecasting and analysis firm based in Birmingham, Michigan notes that the NUMMI plant builds about 420,000 units per years, making it one of Toyota’s largest production centers in the United States. Only Toyota’s plant in Georgetown, Ky. is larger.
“Frankly, I would be surprised if they closed (NUMMI) because they need the capacity,” Baum said.
The Fremont plant operated by NUMMI is the only source of the Tacoma pickup truck, which remains popular, and is the major source of the Toyota Corolla, one of Toyota’s best sellers.
“They could always import a fewer Corollas to make up for the lost production of the Pontiac Vibe,” he said. “It never seemed to bother anyone that the Corolla mostly came from California. But I supposed they could retool some other plants.
NUMMI also has its own unique contract with the UAW since the inception of the joint venture in 1983 when the joint venture took over the GM plant in Fremont. GM and Ford Motor Co. had already closed three other assembly plants in California before the joint venture got under way.
GM considered the Fremont plant surplus. However, the well-entrenched local union surprised many observers by agreeing to accept Japanese management and the Toyota production system more than two decades ago.
The UAW’s current contract with the NUMMI is considered one of the most expensive in the North American industry, including wages of more than $30 per hour, expires August 9. The hour wage is higher than at GM, Ford or Chrysler.
A UAW spokesman, who asked not to be identified because he was not authorized to comment publicly, confirmed that the union has been discussing the future of the NUMMI plant with officials from Toyota.
“The parties have a 25-year history of working together in an atmosphere of mutual trust and respect. Members of UAW Local 2244, local union leadership and the International Union, UAW are making every effort to continue a positive relationship,” the union said in statement released in response to specific inquiries about the situation at NUMMI.