Toyota blames costs, not UAW, for NUMMI pullout
August 28, 2009 - 9:52 am ET
TOKYO -- Toyota Motor Corp. says it plans to shut its California
factory because of high labor and logistics costs, not because the UAW
represents workers there.
"The UAW presence does not have a direct impact on the decision,"
Executive Vice President Atsushi Niimi said in conference call today
after the automaker said it will end production at New United Motor
Manufacturing Inc. in Fremont, Calif., on March 31, 2010. The plant
builds the Toyota Corolla and Tacoma.
Niimi also said Toyota will seek to boost Corolla output in North
America. NUMMI's closure leaves Toyota with only one North American
plant, in Cambridge, Ontario, that builds the Corolla.
"California is a high-cost location," Niimi said.
He said California's higher-than-average cost of living, not the
union, dictates higher labor costs there. Expenses are driven higher
by the huge distance between the NUMMI plant and the Midwest, where
most of Toyota's suppliers have set up factories.
NUMMI is Toyota's only UAW-represented auto plant, with a union work
force of more than 4,000 people.
NUMMI's workers may apply for jobs at other Toyota plants but won't be
given special preference, Niimi said. This is the first closure of an
American plant in Toyota's history.
Wanted: More Corollas
Toyota will shift production of Tacoma pickups from NUMMI to its truck
factory in San Antonio. NUMMI's output of Corollas will be replaced by
cars from Canada and Japan to meet near-term demand.
Niimi could not say how many Corollas would be shipped from Japan
rather than sourced from Canada. But Toyota wants more Corolla
production in North America as soon as possible, he said.
The NUMMI closure lops off about 400,000 units from Toyota's total
global capacity of 10 million vehicles, Niimi said. Trimming capacity
is a top priority for Toyota, which has about 3 million units more
than it currently needs.
The NUMMI capacity figure includes GM's portion, Niimi said.
Toyota's North American production capacity will drop to 1.6 million
from 2 million.
Earlier this week, Toyota said it will shut Line 2 at its Takaoka
plant in Japan to soak up another 220,000 units of overcapacity.
UAW chides Toyota
Separately, the UAW's top leader chided Toyota for closing the plant
just after benefiting from the government's cash-for-clunkers program.
In a statement released yesterday, UAW President Ron Gettelfinger
said, "It's unfortunate the company chose to close a U.S. facility
after benefiting so greatly from the federal cash-for-clunkers
program, which is funded by U.S. taxpayers."
Toyota led all automakers in the number of vehicles sold during the
cash-for-clunker stimulus program.
Niimi, who heads global production and North American operations at
Toyota, said the future of the NUMMI factory hinges on ongoing
negotiations with General Motors Co., its partner in the venture. GM
decided to pull out of NUMMI as part of its reorganization while in
Chapter 11 bankruptcy.
Niimi said GM and Toyota are still negotiating how to absorb the costs
of shuttering NUMMI.
You can reach Hans Greimel at email@example.com.