NUMMI to close as Toyota reins in expectations

Posted by: David Welch on August 28, 2009

Toyota Motor Corp. said that it will shutter its New United Motor Manufacturing Inc. plant in Fremont, Calif, in 2010. The move came almost two months after General Motors decided to pull out of the 25-year-old joint venture. It should come as no surprise.

NUMMI already had everything going against it when GM decided to kill Pontiac and pull out of the venture in July. Its United Auto Workers contract guarantees workers $28 an hour compared with $24 an hour in other Toyota plants. Higher electric rates in California made it undesirable. Throw in shipping costs to get parts from the Midwest and to send finished Toyota Tacoma pickups and Corolla compacts across the U.S., and it was one of the Japanese giant’s most expensive factories, if not the most expensive. Without the Pontiac Vibe, keeping the plant running full tilt would have been an even bigger challenge for a Toyota that already has too much production.

Toyota will move Tacoma production to its underused Tundra pickup plant in San Antonio and the Corolla will go to Cambridge, Ontario. Both make strategic sense since the assembly lines can be quickly retooled to make the vehicles. But they also have cost advantages over a place like NUMMI. San Antonio has lower wages. It’s a newer plant, so not all of the workers are up to top wage scale. There are lower healthcare costs in Canada and both are near the I-75 corridor where the parts making infrastructure lies. Cambridge isn’t on I-75, but it’s just a jaunt down Canada’s 401 into Detroit to get on the highway.

There’s one bigger point to be made. Toyota doesn’t close plants. The company hasn’t had to in recent times despite rapidly falling sales. Toyota has kept the dust flying with new plants going up and even has a shell of a new factory in Mississippi that is waiting for something to build. Shuttering NUMMI is an acknowledgement that Toyota overbuilt during the good times and even an economic recovery won’t justify all of its factories. Now, Toyota has to hang tight like everyone else. Its big growth days appear to be in the rearview mirror.

Reader Comments

Rob B

August 28, 2009 11:30 AM

Well, looks like the UAW helped screw the little guy again. When will they ever learn? The way out was to close the UAW plant and ship the jobs to the south (I don't know if UAW is in the San Antonio plant... my guess is no) and north to Canada. Seems the jobs go to anywhere but Union Country.

Karl

August 28, 2009 12:19 PM

Isn't that the same plant where Toyota & GM were named in a lawsuit back in 2007? I believe you can still 'Google' this- TOYOTA AND GENERAL MOTORS HAVE BEEN NAMED IN A LAWSUIT THAT, and read about the "Whistleblower Lawsuit" regarding "defect reports" that were allegedly being "altered", & how a "cover up" was taking place that resulted in "defective cars". Thank you.

Karl

August 28, 2009 12:51 PM

I just 'Googled' this- TOYOTA AND GENERAL MOTORS HAVE BEEN NAMED IN A LAWSUIT THAT, and that article from 2007 is still there, if anybody wants to read it. Thank you.

econguy

August 28, 2009 12:57 PM

This is another example of the new normal. Those companies were acting irresponsibly at NUMMI to begin with in a form of investment bubble since it hardly ever made any money. What kind of money and time wasting leadership is that? Since it does not make any since, there must be one or more political types hidden in this picture somewhere. Waxman, Feinstein, and Nancy step forward!

Mark

August 28, 2009 1:00 PM

The reason the plant closed is GM pulled out. If GM was at full tilt on the Vibe, this plant would still be open. Don't blame this on Toyota, blame it on GM. If blame is to be placed on Toyota, it would be for the decision to partner with GM in the first place.

bkm

August 28, 2009 1:39 PM

Maybe they'll turn it into another mall like the Ford plant they turned into the "Great Mall" in Milpitas. After all, we know that to revive the economy you don't need to do any work or make anything, you just need to go shopping and spend on stuff, preferrably stuff made in China so that our economy is not devastated by the impact of making it and all the low wage jobs that come with manufacturing.

madsale1

August 28, 2009 2:28 PM

Toyota has yet to close a Toyota plant. That mess in California is all GM / UAW. Toyota is ending the partnership. The building belongs to GM. UAW is a thing of the past. Time to move on.

JP

August 28, 2009 3:10 PM

This would be a good site for Tesla to build their cars.

leal

August 28, 2009 3:37 PM

It's so easy for outsiders to make comments, but what about the people who worked there 5, 10, 20 oplus years in a hard manual labor job. What about them? Toyota benefited greatly off these peoples commitment to hard work amd quality.

John Davis

August 28, 2009 4:08 PM

I'm sorry to see Toyota close the plant in
Fremont,but it is'nt much of a surprise as I purchased a used 1997 Toyota Carolla that was built at the the NUMMI plant,the car was the best car I ever owned,now I drive a 2005 Chevy Colbalt that mechanically is fine,but GM's keyless remote system is a BIG JOKE,and the GM dealer it was purchased from Wm L.Morris is BIGGER JOKE. There is a GM
district office just around the corner from my house,that I have tried to get help from them and nobody in the fancy building know's who I can contact
to discuss the dealers poor service department. GM could learn a lot about
quality built in a car or truck from Toyota. Look's like the new GM wants to keep alot from the old GM around.During the time I had my Carolla,I put 105000
miles on it in 3 years,I bought it used with just over 48000 miles,and it never
had any major work other that regular maintnance as required. I got my 2005 Colbalt with 47000 on it,and it now 77000 miles,but has cost over $1000.00
in unnecessary repair's as the alarm that GM put in this car keyless remote
system alway's has malfuctioned. I finally removed the fuse so this alarm
wouldnt randomly go off. I final point,
Toyota beleives in quality,GM does not.

DB

August 28, 2009 4:18 PM

Toyota may be trying to get rid of the Union and then reopen as a non-union plant and lower all wages. And I quote "Its United Auto Workers contract guarantees workers $28 an hour compared with $24 an hour in other Toyota plants". Now you see the cost of living is more expensive here so 4 dollars is not that much of a difference. Now did GM really have to stop producing the Vibe or could they have just gave it a Chevy name? Toyota should buy the land get rid of the Union and bring in some other hard working people. I work for a supplier to NUMMI and were talking about another 40 or 50 suppliers. So you only see the 5000 workers from NUMMI on the news. What about The other 50,000 people who make parts for NUMMI. We need are jobs. So some of you need to look at the big picture.

jambo

August 28, 2009 4:25 PM

UAW lived in the past. As the world changed and went global, UAW thought they could sustain the old world mindset. GM/Chrysler fell in the same trap.

Little by little, the old ways give in to the new, and those who don't adjust will simply fade away.

Jason

August 28, 2009 4:38 PM

When it was G.M. it closed down...Now its Toyotas turn....Who`s next there?

James the numbhead

August 28, 2009 4:41 PM

Its a brilliant move. The wages at the plant were very high. The UAW is a pain in the rear. California employees sue and bitch at the slightest bump in the road. In San Antonio the factory is near the main MExico to Detroit rail lines. As more and more parts are made in MExico they can easily be shipped to Texas. Its a no brainer. California as a manufacturing hub is dead. Put a fork in it.

Sum

August 28, 2009 6:23 PM

Why would tesla or anyone else for that matter want to do business in CA. Get out while you still can.

RL

August 28, 2009 6:51 PM

With this economic times it doesn't make any sense to produce in California. For one, UAW wages are extremely high for what they actually do and like the article said logistically, it costs to much to move their inventory around North America. This being the only Unionized Toyota plant in North America, there's no way Toyota would try to limp it along when they have stronger un-unionized plants that are actually making money else where in the States and Canada.

Louis

August 28, 2009 7:05 PM

I'm sadden for all those friends and family members that i know, with this news coming out, we need to help one another. We all will get thru this!

Jenny

August 28, 2009 8:03 PM

You are all absolutely ridiculous!! You think this is funny??!! It doesn't matter whose "fault" it is. No matter how you look at it this is an absolute tragedy. You say that NUMMI was destined to close and blah, blah, blah? Well tell that to the 50,000 jobs across the state that will be affected by this closure. Tell that to 50,000 families and then try to sleep at night you arrogant jerks!!!

Jeremy

August 28, 2009 8:35 PM

If you guys look closely at your comments, you're all right. All of this is definitely the cause of high costs of a manufacturing factory in California, UAW's inability to realize what damage it's doing and how GM's collapse made it impossible for Toyota to foot the rest of the bill. Slum times call for slimmer measures and UAW is making that difficult. Great intentions; wrong time.

For those who give Toyota a hard time, you have to think very closely how Toyota is very tied into our "american" society. They even built numerous "smart" factories throughout the US, making them more "American" than most "American" cars. So to have some of the Toyota cars being built elsewhere other than the US spells bad deals for our economy.

ItsOvr

August 28, 2009 8:54 PM

GM pulled the plug on this; don’t blame the UAW or NUMMI management of Toyota for that fact. I have a good friend whom is in senior management here and was part of the negotiating team. These are the things people should know about what happened here. Toyota wanted to bring the Prius here, they even offered to let GM badge a knock off and sell it as their own. But no, GM wanted to sever ties with Toyota and the NUMMI plant. Toyota had no choice to dissolve the partnership at the end of the fiscal year. If not they would have to assume GMs 50% share of all debts and liabilities So if people want to be pissed off at someone place the blame on GM and not Toyota. I have read other places where people are saying to boycott Toyota for closing the plant. If that’s your logic then you should be boycotting all GM products. As for the Union yes they are a pain to deal with and create lots of headache for any company dealing with any of them not just the UAW, but the UAW did not cause this plant to close.
The management and the T/Ms here have did everything to bring costs down .We had one of, if not the best Tema Quality audits in North America this past March scoring a .01 DPV. So I will lose my job at the end of March like thousands of others. Like so many others I will have lost my only source of income, have had my house devalued by 400k, much of my industry (manufacturing) has now left the state as so will I.

Snoz

August 28, 2009 10:20 PM

NUMMI closure is another deadly body blow at California, home of socialism, corrupt politicians, real estate fraud and illegal immigration. The high cost of doing business in California is one additional reason behind NUMMI's closure. The corrupt politicians of California have passed ever higher taxes to fund entitlement programs for their illegal immigrant constituents. Take note: Sales tax in LA City, home of the largest number of illegal immigrants in southern California, is 10.25%, LA County is 9.25%. In addition to Federal minimum wages, California has it own oppressive minimum wage law that drive up the cost of doing business in California . Couple all of the above cost with the bureaucratic nightmare of starting a business in California, it is understandable why Toyota closed NUMMI. During the several decades, the unbridled illegal immigration into California has contributed heavily to its over crowded jails. Constructing a jail is more expensive than building a five-star hotel and incarcerating even a petty criminal cost more than a year tuition at Harvard. As the real estate fraud finally imploded the California banks (WaMu, Wachovia, Downey, IndyMac, Countrywide) and devastated the real estate industry, socialist California almost went bankrupt but for its selling IOUs in a revolving door fashion and nickel-and-diming its middle class citizens. Even more oppressive is California's Unitary tax law which taxes any corporation doing business in California its world-wide income rather than only the income derived in California. Why would Toyota stay in California subjecting itself to such draconian taxation? Recent and past crisis has pummeled the State's economy. California is one of the leading foreclosure state of the nation; only Michigan’s unemployment rate exceeds California’s 15%; suffers from numerous bank failures; collapse of housing prices; public education is ranked at the lowest level, nationally; record number of crime/incarceration has overwhelm the criminal justice system; illegal immigrants have over run the entitlement programs; an insolvent public health care system caused by Californa laws requiring medical treatment of all patients regardless of illegal resident status; government bureaucracy, regulations and tax laws that are anti-business. After taking too many blows to head and body, socialist California is not just down on its knees but has slipped into a fatal coma as NUMMI, its only auto manufacturing industry joins other departed manufacturing factory, the steel plants, and chemical industry.

jimhenry

August 29, 2009 5:36 AM

Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)

Jimhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

JB

August 29, 2009 6:27 AM

When you lose a partner it is hard to move forward. Maybe labor cost DO MATTER in the production of products. Looks like Texas, with lower labor cost won on this one. Lower living cost also.

RJL

August 29, 2009 7:48 AM

From a business perspective, it is an astute move by Toyota. The hostile busines climate in CA coupled with the unionized workforce is not a recipe for success. It is interesting to observe how the media spins this into making Toyota the "bad" guy. This plant was on the fast track to closure in the early 80's until Toyota stepped in. Thank GM and our good friends at the UAW for this.

RJL

August 29, 2009 7:48 AM

From a business perspective, it is an astute move by Toyota. The hostile busines climate in CA coupled with the unionized workforce is not a recipe for success. It is interesting to observe how the media spins this into making Toyota the "bad" guy. This plant was on the fast track to closure in the early 80's until Toyota stepped in. Thank GM and our good friends at the UAW for this.

Anscluss

August 29, 2009 10:56 AM

Amazing how people are quick to blame Toyota. Afterall, GM abandoned the marriage. Toyota is simply selling the house.

Darren

August 29, 2009 11:37 AM

Hey Mark, don't blame this on GM. The mighty Toyota still has the Matrix they could be building there. With the Vibe gone, you'd think that market would be taken up with increased Matrix sales and the plant should still be making the same number of vehicles. Oh, wait, the Matrix doesn't sell in decent volume...neither does the Tacoma. Yeah, and that's probably GM's fault also.

Hondo

August 29, 2009 2:26 PM

After working for GMAD Fremont (NUMMI now) from 1967-1982 (plant closing) I can tell you this much. The workers there are in for a rude shock. The economy is much worse now than at any time since the mfg facility was built in 1964. I say knock the building down and move on. Good luck to all those workers as you most probably built a better quality vehicle than the GM days of when I worked there. So much for 'team member'crap however...that is all it is. Too much capacity and lack of sales and the cost structure of CA led the way...again...

resourceguy

August 29, 2009 5:03 PM

This is great news for a state that is still in need of some hard lessons in reality training. If the nation is moving back to a new normal after a decade of unsustainable personal consumption and financing, CA has been doing it in spades for a generation, especially in its political leaders at the state and local level and congressional delegation.

john

August 29, 2009 5:41 PM

Yes... GM's pullout certainly lead to the closure of this plant. As big a factor is the California general business climate, no one with an ounce of brains would run a big manufacturing operation there...taxes, labor laws that only Nancy Pelosi would love and the UAW to boot... so it's off to Texas !! Eventually that state will consist solely of the unproductive and a handful of the overtaxed supporting them... oh yeah, it already is..

jr

August 29, 2009 5:53 PM

i think governator is now under pressure for the future unemployment increase after d closure. i was told from a friend that if toyota wants to take the plant. Uaw/nummi would have to layoff everyone so that toyota corp can hire all or some orig people who can reoperate the plant under the new drection of toyota. If this were to happen. The former uaw emps would be out of a job for at least eight months to eleven and could be mpre depending o how things go. This what i heard from a friend at nummi. I think my friend said that toyota emps at non union. in regards to tesla. Santa clara county helped tesla for the next twenty or so years for funding the new plant on a formerlandfill ? Im not sure if tesla can break contract with santa clara of they decide to eye or move to nummi. Its sad that all the work done around nummi like the newly built overpass with sixeighty and eighteighty would make the facility look like a ghost town. i dont think fremont wants another headache to make it a mall. Look at the project they were doing in grantroad in elkgrove area.

jambo

August 29, 2009 11:27 PM

There was a UAW protest in the bay area today. One UAW protestor stated that, they took care of Toyota, and Toyota should take care of them. Others say they have family to feed and mortgages to pay, etc, etc.

These protesters seem to think they are entitled to lifetime employment and with good wages and benefits. They don't want to live in our world, where any of us can lose our jobs at ant time. Well, I have family to feed, and I took care of the company I worked for, does this guarantee that I will work there forever, or until I decide to retire?

These UAW workers had something really good. Earn good wages with limited education, and now they think they are entitled to it. Well, it's 2010, and not 1955. The world has changed, and sadly, UAW over reached and now the whole union is slowly disappearing, a piece at a time. Time to face reality and live in the real world like the rest of us.

jambo

August 29, 2009 11:27 PM

There was a UAW protest in the bay area today. One UAW protestor stated that, they took care of Toyota, and Toyota should take care of them. Others say they have family to feed and mortgages to pay, etc, etc.

These protesters seem to think they are entitled to lifetime employment and with good wages and benefits. They don't want to live in our world, where any of us can lose our jobs at ant time. Well, I have family to feed, and I took care of the company I worked for, does this guarantee that I will work there forever, or until I decide to retire?

These UAW workers had something really good. Earn good wages with limited education, and now they think they are entitled to it. Well, it's 2010, and not 1955. The world has changed, and sadly, UAW over reached and now the whole union is slowly disappearing, a piece at a time. Time to face reality and live in the real world like the rest of us.

jambo

August 29, 2009 11:27 PM

There was a UAW protest in the bay area today. One UAW protestor stated that, they took care of Toyota, and Toyota should take care of them. Others say they have family to feed and mortgages to pay, etc, etc.

These protesters seem to think they are entitled to lifetime employment and with good wages and benefits. They don't want to live in our world, where any of us can lose our jobs at ant time. Well, I have family to feed, and I took care of the company I worked for, does this guarantee that I will work there forever, or until I decide to retire?

These UAW workers had something really good. Earn good wages with limited education, and now they think they are entitled to it. Well, it's 2010, and not 1955. The world has changed, and sadly, UAW over reached and now the whole union is slowly disappearing, a piece at a time. Time to face reality and live in the real worlkd like the rest of us.

Ivan

August 31, 2009 9:55 PM

For all you people out there that blame us "overpaid UAW workers, Do you even know how much us "overpaid nutrunners" account per vehicle cost............? 10% or LESS per vehicle assembly, and yet we're the ones that ALWAYS absorb most of the blame when an automaker struggles. And another thing, I'll have you know we do WAY more than screw some nuts and bolts, as a matter of fact I'd love to see ANY of you come in to one of our plants and try to do one of our jobs, and then you can tell me if we're overpaid or not

ps

September 1, 2009 8:04 AM

This is tragic for the workers that bust their butts and make fine products. Of course all of our armchair Patriots sitting on their made in China furniture purchased at WalMart will bash Toyota for pulling out but GM pulled the plug. The other part is that Toyota was subsidizing a losing proposition. Even though the cars are great and the wages were absolutely not outrageous, the California business climate is absolutely horrible. How many taxes and state mandates were laid on this enterprise. They can build anywhere else in the nation for less than California. It's not the wages, it's taxes and ridiculous regulations that doom big heavy industry out along the golden coast.

ps

September 1, 2009 8:04 AM

This is tragic for the workers that bust their butts and make fine products. Of course all of our armchair Patriots sitting on their made in China furniture purchased at WalMart will bash Toyota for pulling out but GM pulled the plug. The other part is that Toyota was subsidizing a losing proposition. Even though the cars are great and the wages were absolutely not outrageous, the California business climate is absolutely horrible. How many taxes and state mandates were laid on this enterprise. They can build anywhere else in the nation for less than California. It's not the wages, it's taxes and ridiculous regulations that doom big heavy industry out along the golden coast.

mike

September 1, 2009 9:12 AM

people say that 50,000 jobs will be lost, not lost, relocated......ToyotaCanada has most suppliers from the U.S. They will be building most of the lost corrola's

Pockets7

September 1, 2009 6:36 PM

Leal, you are correct. Anyone who has never worked in an automotive assembly plant does not know what hard work is. I bet there isn't one critic of the UAW who would allow their sons and daughters to work for what the new wage model now in place at all UAW plants. Y'all need to wise up.

justtrying

September 2, 2009 12:36 PM

I loved reading all these posts. Everyone has such different views. Here's mine: NUMMI always made 2/3 Toyota vehicles & 1/4 GM. Toyota did NOT offer it's employees the possibility of reduced pay and/or employee covered benefits. They are not offering any type of severence pay. No pensions. Couple that with the fact that Toyota was the #1 recipient of Cash for Clunker $'s and that the Corolla was the #1 selling car and California was the #1 customer for the program...why should we think that they are the "victim's" and should, of course, be dropping NUMMI and California?? GM is another joke. A current report indicates that they are working on a light truck with China. Really? When they had a line in California already dedicated to Toyota's top selling light truck? Who is overseeing these bancruptcy arrangements that involve OUR taxes?? GM continues to make ignorant decicions and Toyota keeps on USING them to deflect from the fact that they are benefiting from all our tax incentives while screwing over thousands of Californian's that pay those same taxes?? I am an Obama supporter, but I am seeing the same non active oversight that I have seen the last 8 years...I am waiting for this change we were promised..where is it????

bubbadg

September 29, 2009 11:50 PM

the only reason toyota is closing nummi is because california's state govt pushed them out,ab-32 is california's cap and trade,the full bill goes in affect on 1/1/10,it raises costs on companys by a huge amount,and in 2008 toyota asked california to expand the plant to build hybrids,california turned them down,5,000 jobs would have been added,yes i said added,now the company is closing nummi,the only people to blame is the poeple in the sacramento capital,you have the power to vote them out.....

ps

October 2, 2009 8:12 AM

Bubbadg, you are absolutely right. Calfornia's lunatic fringe is now running things, courtesy of the voters.

MisterC

October 5, 2009 5:05 PM

California is a bad place to run a business, special thanks goes out to the lawyers and the unions, honarable mention to the sloppy lazy people as well

bto

October 5, 2009 7:29 PM

you're right guys

CA law is getting tighter for big companies and make it
difficult to keep operating in this State that's the reason why
most of them move to anoher state and the jobs somewhere else....

rich ,g

October 18, 2009 6:26 PM

The union is to blame the company approached the union months ago and asked THE UNION for some help the response as usual from the union was a negative NO,the union should of seen the writing on the wall as numerious other companies were making concessions to keep their business open and competitive,also the nummi workers had the right to vote against the unions proposal but did they?NO MAYBE IF THEY WOULD OF WENT TO 22.00an hrthey would of stayed open???

rich ,g

October 18, 2009 6:26 PM

The union is to blame the company approached the union months ago and asked THE UNION for some help the response as usual from the union was a negative NO,the union should of seen the writing on the wall as numerious other companies were making concessions to keep their business open and competitive,also the nummi workers had the right to vote against the unions proposal but did they?NO MAYBE IF THEY WOULD OF WENT TO 22.00an hrthey would of stayed open???

RICKEY GRAHAM

March 4, 2010 1:04 PM

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Cell: (510) 938-5856, Email: rgbusinessconsultant@gmail.com.

GD

April 1, 2010 3:12 AM

I am sorry for family and friends I have @ Nummi, but for the past 10 years the whole union was a joke!, now it has bitten them in the ass!!! A ripple effect, GM LEFT!!!! NOT TOYOTA!!!!!

ps

April 1, 2010 8:53 PM

It really is a shame this experiment had to end. And of course, it was springboard for one company to expand in the states while the other continued business as usual and became a ward of the state. But the bottom line is also you have to look at the state of California's anti business environment. I dont blame the unions in this case, they tried. And Toyota didnt pull out first, Detroit Central did. Too bad, it would have been a great place to build the Cruze instead of Sabotage City, I mean Maryville, Ohio. Remember what they did to Vegas during a job action?

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