General Motors Corp.'s
decision to drop out of a California joint venture has created a difficult decision for partner Toyota Motor Corp.
Bankrupt GM said Monday that its 50% stake in the New United Motor Manufacturing Inc., or Nummi, facility in Freemont would not be part of the revitalized company that comes out of Chapter 11. GM and Toyota have worked together at Nummi since 1984, when Toyota first invested in the plant.
With GM's decision a plant that was heralded 25 years ago as the future of domestic automaking now could become part of the industry's past. Toyota says no decision has been made about what to do with the plant, but an official with the automaker said Nummi is losing money and could be shut down by the automaker.
Toyota might relish the chance to bring down its costs, having lost more than $4 billion in its fiscal year that ended in March and predicting an even wider loss in the current year. But the official said standing in the way of shutting down the facility is a promise president Akio Toyoda, grandson of the founder, made last month not to close any of Toyota's plants.
Speculation has centered on Toyota expanding production of its hybrid Prius at the site, but the automaker could determine, like GM, that the expense of retooling to build a new vehicle at a high-cost location can not be justified. Industry rumors have Toyota's North American leadership leaning toward shuttering Nummi as a way to slash excess capacity, but Japanese management is hesitant.
The plant's fate could be tied to the willingness of United Auto Workers Local 2244 to accept concessions. A four-year contract covering most of Nummi's 4,500 workers (independent from the UAW's contracts with the Detroit Three) expires in August, and at least some of Toyota's indecisiveness could be viewed as an attempt by the company to lower costs in a new deal.
Whatever becomes of Nummi, history seems likely to judge the joint venture at least a partial success. Toyota used it as a springboard to grow its manufacturing base in North America, where the company now operates seven plants and a number of engine facilities. GM meanwhile used the operation to learn Japanese manufacturing techniques, and in years past has boasted that the partnership has helped it to streamline vehicle production globally. --
Lou Whiteman
Lou Whiteman is a senior writer covering the automotive, transportation and industrial sectors. Follow him on Twitter @louwhiteman
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