In yet another ominous sign from the auto industry, Toyota is considering closing its California vehicle assembly plant which it jointly operates with General Motors Co. GM has now decided to pull out of the deal and Toyota isn't sure it wants to go it alone.
The joint venture is called New United Motor Manufacturing Inc. or Nummi for short.
Nummi has mostly been a money-losing operation since GM and Toyota established the partnership in 1984. GM announced last month that it was going to pull out of the plant, where the auto maker produces the Pontiac Vibe. Toyota said GM's decision to end its involvement has "prompted a set of difficult and complex decisions for Toyota."
*****
The decision on what to do with Nummi involves weighing the political sensitivity surrounding the plant's future against the economic realities of the global auto industry. Because of its location in the San Francisco Bay area, the 4,600-worker Nummi facility is a high-cost plant for the Japanese auto maker.
*****
Nummi makes the Pontiac Vibe car for GM and the Corolla compact car and Tacoma pickup truck for Toyota. One of the plant's purposes was to have GM and American workers learn Toyota's production methods. For Toyota, Nummi served as a beachhead for it to push deeper into the U.S. market and a learning lab to figure out how to effectively use American labor within the Japanese company's "lean manufacturing" system. Toyota has since built more than a dozen manufacturing facilities in North America, including seven plants that assemble most of the company's U.S.-sold vehicles.
Toyota's chief executive, Akio Toyoda, had earlier pledged not to close any U.S. plants. But the GM bankruptcy has thrown a real monkey wrench into Toyota's plans. In Chapter 11 bankruptcy, the debtor goes through all the contracts and either assumes or rejects each one: one of the upsides of bankruptcy is the ability to get out of burdensome contracts. Based on Toyota's statement, it seems likely that the plant will close unless another joint venture partner can be found.
