Toyota May End NUMMI Without GM
Toyota May End NUMMI Without GM
Following the recent announcement that General Motors was divesting itself from the New United Motor Manufacturing, Inc (NUMMI) joint venture with Toyota Motor Corporation, many began to speculate what would become of the assembly plant in Fremont, Calif. Today, Toyota answered back by saying that it is considering ending production at the plant and expects to make a decision by the end of this month. Both companies formed the joint venture back in 1984, and the plant currently builds Toyota Corolla, Toyota Tacoma and the Pontiac Vibe, but as the Pontiac division goes, so does the Vibe and GM's need for the factory.
Initially, both companies scrambled to come up with other options for the plant including transferring the Vibe over to one of GM's surviving divisions or coming up with a new vehicle altogether to offer GM. It is also said that Toyota offered to let GM sell rebadged versions of the Prius, but with the Chevrolet Volt just a year away, GM turned that offer down as well. So as GM emerged from bankruptcy, not only will Pontiac be included among the assets of 'Old GM,' but GM's share in the NUMMI plant as well with Toyota now responsible for the plant's operations. Toyota threw around many alternatives to closing the plant such as moving production of the high-demand Prius to California to maximize production capacity, but it now looks like the plant will end up closing with Corolla and Tacoma production moving to Canada and Mexico, respectively. The Corolla is also built in Cambridge, Ontario, Canada, while the Tacoma has another production line in Tijuana, Mexico.
One aspect of NUMMI that many claim would be the reason for Toyota to shutter the plant is the fact that it is Toyota's only assembly plant in America that has workers represented by the United Auto Workers (UAW) union. In addition to the existence of the union, NUMMI is also the only large automotive assembly plant on the West Coast, which may add to its overall production costs since the costs for employee living and everyday business expenses are generally higher. In all, an estimated 4,700 workers are employed at NUMMI, but job losses could reach anywhere between 35,000 to 40,000 as 23 parts suppliers in California are directly dependent upon the production plant.
GM, on the other hand, will be losing a sporty, fuel-efficient hatchback, but although NUMMI is a 50-50 joint venture between both automakers, the Pontiac Vibe hatchback only accounted for 24 percent of NUMMI's 420,000 units produced last year. The Vibe will stand as Pontiac's sole model for the 2010 model year, which is expected to be a brief model year as the Vibe will officially end production (and spell the end of Pontiac's 84-year history) next month. Both automakers talked about moving the Vibe to Chevrolet, Buick, Cadillac or GMC, but Chevy was the only brand that such a car would have fit into and it already offers the similarly sized HHR.
In the end, the NUMMI plant helped give Toyota a stronger image, while GM benefited from learning Toyota's flexible manufacturing techniques. The 25-year joint venture will have been a success for both automakers, but it seems like it's time for the close rivals (both are ranked in the top two spots for worldwide sales) to go their separate ways. NUMMI has always been looked at as one of the most efficient automotive plants in North America, and it was the first of its kind to bridge collaboration between the U.S. and the Japanese auto market.