Toyota Not Likely To Shutdown NUMMI

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Last Friday Toyota announced that they may have to abandon NUMMI (New United Motor Manufacturing Inc.). A car plant in Northern California, NUMMI opened in 1984 and is jointly operated by GM and Toyota…or at least it was up until last Friday.

Toyota’s decision to make this announcement on Friday the 10th coincides with the “new” GM’s emergence from bankruptcy . While it’s a little complicated, here’s why that timing is relevant:

  1. As part of GM’s bankruptcy plan, a “new” GM was formed. The new GM got all the good, profitable assets.
  2. The “old” GM retains all the unprofitable assets.
  3. All the assets of the old GM will be liquidated over the next year or two.
  4. NUMMI is part of the old GM.

In other words, now that GM has officially abandoned NUMMI, Toyota is considering the same action…and who can blame them? A case can definitely be made:

  • NUMMI isn’t located near any significant supplier base.
  • NUMMI is an older plant with some outdated technology.
  • NUMMI is a UAW plant, which – to clarify – isn’t nearly as detrimental to labor costs as it used to be, but working with the UAW isn’t something Toyota is interested in.
  • Most importantly, Toyota has excess manufacturing capacity worldwide.

There are quite a few good reasons to shut down NUMMI, but we don’t think it’s going to happen (and we’re not alone). Here’s a list of reasons that NUMMI will survive:

  • Shutting down an American plant (let alone a UAW plant) is likley to be a public relations nightmare. Toyota is hypersensitive to any potential “pro-America anti-Japan” backlash, and isn’t particularly interested in finding out how a shutdown might be popularly perceived.
  • Toyota has a “no layoff” policy they are quite proud of. While it’s not 100% true, Toyota does their very best to never lay off a permanent worker. A shutdown would be a violation of this long-standing corporate policy.
  • A shutdown emboldens the UAW. As we noted a few weeks ago, the UAW has never been in a better position to unionize one of Toyota’s North American plants. Closing NUMMI might help the UAW convince workers at other Toyota plants to unionize.
  • Where will the Tacoma and Corolla go? Toyota sold about 144k Tacomas last year, and NUMMI made most of them (about 101k of them). Toyota sold about 351k Corollas last year, and NUMMI made most of those too (about 217k). Toyota has the capacity to build the Tacoma and Corolla elsewhere, but doing so would require a healthy investment – they would have to massively shuffle production in Indiana, Canada, Kentucky, and San Antonio to make it happen…which doesn’t sound like the lowest cost solution.
  • Toyota doesn’t know how to shutdown a big plant. It sounds crazy, but Toyota hasn’t closed many plants…ever. This would be a whole new move for them, and likely something they would want to ease into.

Finally, the word “Toyota” is Japanese for “really, really cautious.” [Ok it’s not but it should be.] It’s hard to imagine Toyota making such a bold move. Most likely, this is posturing on Toyota’s part in an effort to secure some cost concessions from the UAW.

Our prediction: Closing NUMMI down in the middle of a recession right after GM and Chrysler file bankruptcy is politically dangerous. NUMMI can’t last forever, but Toyota will continue to produce vehicles at NUMMI for at least the next 3-5 years, with the clarification that production is “subject to futher review.” If Toyota can’t make NUMMI work, they’ll slowly shift production of the Tacoma and Corolla elsewhere during that time.

Filed Under: Auto News


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  1. Jeremy says:

    Does anyone else find it hard to take a plant named Nummi seriously?

  2. TXTee says:

    I sense it will shut down over a 5 year period regardless. It makes sense to do it but gradually. There is always a way to become lean and the goal is to stay competitive, not politically correct from anticipated backlash.

  3. Jeremy – LOL
    TXTee – I agree. NUMMI has a life-cycle, and it’s hard to imagine the same auto plant operating more than 25 years without a major upgrade or re-investment. It’s also hard to imagine building cars in Kooky California (they’ve got a lot of problems with laws and taxes and spending…). I think NUMMI’s days are numbered, but at the same time Toyota can’t really shift NUMMI’s production elsewhere at the drop of a hat – and not without some major investments. Maybe they decide to double-down in Texas and build Tacos and Tundras in San Antonio, and shift the Corolla to the new Mississippi plant to be built alongside the Prius. Or maybe something else completely different. No matter which way I figure it, keeping NUMMI is the cheapest option short term. I think they’re going to keep it open for a while.

  4. Todd says:

    The NUMMI location was a GM facility that started in the early 60s. NUMMI is not Toyota and never was and NUMMI is not a subsidiary of Toyota either. I look for them to pull out ASAP.

  5. mk says:

    Have the plant build more tundras. They are in short supply and if the dealers had more on their lot or at least a few to pick from which most do not, they would sell. The 2010 inventory is almost non-existent in my area with only a few dealers having a few to pick from and the dealers who do have them do not want to dealer trade one away if they think they can make some money. I understand 2010’s have just been arriving in very short supply in May, but it is already mid July. I guess if there is one thing overall I do NOT like about Toyota vs. GM/Ford/Dodge, is that Toyota does not build enough of the Tundras and the dealers (or toyota themselves) do NOT allow you to customize a build order from the plant EXACTLY the way I would want it. For example, if I wanted the power sliding rear window on the double cab, I have to also pick up other options I do not want or do not want to spend the money for since I would never use them and is a waste of my money. Toyota is basically saying take what I build with these options or else too bad. To me, that is not very customer oriented, just corporate oriented.

  6. mk – I think your comments about the Tundra are indicative of the future. As I wrote a couple of weeks ago, Toyota is trying to control Tundra inventory very closely in order to maximize profits. This means in some areas that Tundras are hard to find…not necessarily a good thing (but not necessarily bad either, at least in terms of resale value). Toyota is likely to reduce the customization options on the Tundra even further as we go forward. Part of the reason is cost – it’s cheaper to make the trucks the same way every time – and part of the reason is that Toyota doesn’t necessarily understand the American truck buyer.

  7. 1hihum says:

    Nummi stand for New United Motor Manufacturing Incorporated. It is an independent company. It is not an actual Toyota plant. As such, it is not necessarily bound by Toyotas policys, such as their no layoff tradition, or retirement, or any other commitments to it’s employees. It is the only union shop that they currently do business with, and my guess is that this may continue for the short term. Gm’s departure came just a month before the union contract is due to expire. This gave Toyoyta very little time before the contract is up, to explore it’s options, and plan an easier exit. But in my opinion, they ARE planning to exit. There is no doubt that it is expensive to do businees in “kooky California”, but I think that it will take too much money and time for Toyotat to exit immedietly.

    Rather, it makes more sense to agree to another contract with the union, and plan a safe cost effective exit over time. It takes conciderable time to ramp up a new vehicle, and a new production lines at other plants. It can be done quickly if needed…Toyota moved the Highlander in less than a year I believe. I don’t concider the Tundra move a genuine production move since it was already built in Texas. The plant was running far under its max potential, and still is for that matter. It is still only running one shift of production at the moment, even though it is designed to run two shifts. The market tightness for the Tundra is more cost effective that running a second shift, and overproducing for the current market.

    I couls easily see Toyota moving the Corolla to Mississippi as well, especially since they share the same base platform. It will be expensive to complete the plant there, but it will garner a large savings in the long term. But it may mean changing the design of the plant to accomidate the exrta vehicle. But making those changes now, whiole the plant is still only half built, makes the most sense for the long term for Toyota. As for the Tacoma, I expect to see its production split between Texas, and Mexico. Both plants will have to unergo expansions, but they are fairly close to each other (relatively), making it cost effective to find suppliers between the two. Again though, this will take time to do properly.

    All in all, I expect a short life span for Nummi (say 2-4 years), unless they deside to make the Prius there, sinse California is their largest US market…Those kooky Californians like their “green” vehicles) Not a likely scenario though. And I say this after orking at the Nummi plant since they started building the Tocoma there, 18 years ago. I hope I am wrong, I really do, but I just don’t see it going any other way. Even with Union concessions…and there will be serious concessions, it will not likely be enough for the long term viability of Nummi. But who knows, the Current President of Toyota used to be the president of Nummi, and is rumored to have strong feelings for the plant. So he may have enough interest to save it yet. We will know soon enough. Toyota has said that they will make a decision by the end of the month, not coincidently, when the Union contract is due to expire…

  8. 1hihum – Great comments – thanks very much for sharing. Please keep us posted if you hear before the press announces anything!

  9. mk says:

    Let’s face it, resale value on the trucks here in the midwest at least are not that good no matter what you buy. Dealers are always going to low ball your trade in no matter how good you take care of it. They want to make 2K clear profit on your trade in and I would like to see 1K profit. The only thing on the 1K profit is if for some odd reason your traded in tundra does not sell, but the way the new ones are NOT being built here in WI area and NO toyota dealers have any good used tundras on their lot, they should give me a fortune for a good used 2007 tundra in like new condition except for tires but they are not. They just look at auction pricing and low ball and expect that to be the price no matter if my truck looks like a new one except for tires. I got offered 23K trade in price for my 2007 tundra SR5 TRD double cab 4wd in sharp looking timberline mica green metallic with only 25K mileage. It is above, but I don’t go by or, etc. since I think they are very low trade in value for what is suppose to be a quality toyota product and suppose to hold a higher resale value, but if you look at a 1500 crew cab chevy LT1 pkg. in 5.3L very similar equipped to my tundra, the and all others are about the same trade in value within a few hundred bucks and I can get both the chevy crew cab 1/2ton and tundra double cab for about the same price – 30K. I bought a tundra to hold their re-sale value much more than a chevy crew cab 1/2 ton, but they are not fetching much more than the chevies in trade in. I suspect chevy trade ins are worse now though that GM is now government motors and finally getting out of bankruptcy.

  10. a says:

    Everyone on here has posted about moving Corolla production to the Mississippi plant, but I know for a fact that the Canadian plant just got told they have to start working overtime starting in August, for an indefinite length of time. That plant is running well under capacity and can easily handle the production capacity of NUMMI until a long term fix is implemented. Anyone know if the other plant producing Tacomas (Mexico I believe) got notice of overtime?

  11. mk – Part of the problem is that the market is down right now, so everything is lower than it should be. Also, I HIGHLY doubt that any GM owners are getting offered KBB for their trades. I’m guessing that KBB is pretty high on that one.

  12. a – Interesting – If Toyota can move all the production of the Corolla to Canada and all the production of the Tacoma to Mexico, they’re still going to miss some sales without expanding at either plant, right? My understanding is that capacity can’t be added without a big chunk of change, and overtime isn’t really cost effective for long periods…but I’m guessing you know more about that than I do. Thoughts?

  13. a says:

    I don’t think it would cost very much at all, but I may be wrong A line speed change is just a turn of a dial (so to speak), shuffle some manpower around that’s about it. I know the Canadian plant can build at least 1.75x as many cars as they are now and the adjustments could be made (from a shop floor perspective) in about 4 hours to accomodate an increase.
    As for the Tacoma’s in Mexico, not too sure.
    As far as I know the NUMMI plant was running around 64% capacity before GM discontinues production of the Vibe. After that they might be around 45% or so?? If Toyota stays there, wouldn’t that be following a path GM took years back? Everyone talks that it would give Toyota bad PR if they pull out, but wouldn’t this really be the wisest decision given the circumstances that we know? Thoughts?

  14. a says:

    You’re partially right on the overtime. Any manufacturer would rather pay straight time, but to hire more employees you must also factor in insurance, health premiums etc., for every additional employee. A lot of this wouldn’t be increased for an employee working o.t. My understanding is that it is better to run with fewer employees as long as the product can be made.

  15. a – I hear what you’re saying. While I don’t doubt the Ontario plant can build more Corollas, I wonder if they can make enough to satisfy demand – especially once the economy recovers. I think the Mexico plant can make more Tacomas, but if Toyota ever wants to sell a LOT of Tacos, they’re going to need to add a Tacoma line somewhere and/or invest in Mexico. I think the best option for Toyota right now is to a) cut staff and b) come up with an exit plan. As far as the first point, there’s no need to keep all of the NUMMI workers. I don’t believe the American consumer will react to Toyota announcing that some of the workers at the joint GM/Toyota plant lost their job as part of GM’s restructuring. As for an exit strategy, I think Toyota can start making plans to build vehicles elsewhere. That way, when it’s time to close NUMMI, it won’t be a question of “Where are we gonna build the cars?” They will already have capacity ready elsewhere, and hopefully Toyota can close the plant when the economy is warmed back up.

  16. a says:

    This probably will be the most likely scenario that you described. Would California tax breaks be worth it then if Toyota decides to leave, say in 3 years, anyways?

  17. a – From what I’ve been reading, California can’t afford to give Toyota a break and doesn’t seem too interested in helping. It’s hard for me to tell what’s going on, however, because I don’t see all the news that you might (assuming you live in CA). In any case, I would bet that the California legislature requires Toyota to stay long term as part of any incentive package they come up with.

  18. TXTee says:

    California isn’t about to give anyone a break for anything….whether times are good or bad. They thrive off ripping everyone off.

  19. TXTee says:

    Hence the reason I refuse to establish residency!

  20. a says:

    Toyota has repeatedly stated that the Prius won’t be built at NUMMI, yet the California lawmakers etc. are offering Toyota a sales tax exemption on the purchase or retooling for the NUMMI plant. Just how is this exemption going to help keep the plant open if Toyota has said they aren’t building the Prius there? Is the California legislature deaf or unable to read the reports that the Toyota spokespeople have released?

    Just one article I could find dispelling the Prius rumors. 6th paragraph.

  21. TXTee – LOL! Tell us how you really feel! 🙂

  22. a – I’ve read that too. Making the Prius in California probably sounds great to a lot of people, but a majority of Californians typically vote in favor of barriers to manufacturing. I’m thinking that this is just one of those illogical sound bites that some in the California legislature like to say for free press.

  23. a says:

    Jason – LOL at the illogical sound bites comment!! You hit the nail on the head there.

  24. a – Just read a report that says Toyota is “leaning” towards closure – hopefully that’s incorrect.

  25. a says:

    Jason – Used to be able to read articles stating that Akio Toyoda (new Toyota pres.) had worked at NUMMI for 2 years, liked it there and had a connection with the employees which may have helped save them. Now he has appointed Yoshiba Inoba to straighten out the North American problem. Trying to distance himseslf from the mess?
    Supposedly some management has stated that the Canadian plant is going back to full speed come Sept., but this may just be rumors. You know how factories are for that.

  26. a says:

    Not too much of a surprise. Man the UAW membership numbers must have taken a sh*t kickin’ lately. I bet their revenues are WAY down.

  27. BURL says:

    Mexico has no press shop, they also heavily rely on NUMMI for much of their welded sub assemblies. Tabc Inc. In Long Beach CA is THE ONLY Toyota owned plant in CA, they build the Tacoma steering columns, Stamp most parts for the cab and weld them, tailgates, catalytic converters for corolla and tacoma’s. If nummi was to get shut down, Tabc could easily ramp up their press shop and expand their weld shop to help support Baja, but Baja is no where near being self suffecient. Baja relies on Nummi and Tabc for everything, AND Baja only produces the D-Cab AKA the 4 door tacoma model. Nummi builds the B and C cab (crew,extended).

  28. BURL – Great points. It’s hard to imagine how Toyota can build the Tacoma elsewhere without making a major investment. I can’t believe that it’s cheaper to move production than it is to keep NUMMI open and work on an exit plan. If Toyota does shut down NUMMI, you have to believe it will take a year or more to happen and cost them hundreds of millions to make the change. When you add this cost to the PR hit, how does it make sense?

  29. a says:

    Jason – I believe that Toyota had been working on their exit plan and maybe forsaw GM withdrawing years ago. Do you really believe the world’s largest automaker was caught off guard by this and was forced to make a decision in a couple months? Read the comment by the Toyota worker in the following link. Seems some plants that Toyota built were set up to shift production on relatively short notice.

    In regards to the PR hit, would you rather see them turn into another GM? Also, when you really think about it, in a short time the closure of NUMMI will be old news to those not involved. The general public’s attention to stories like this is over in the blink of an eye.

  30. a says:

    BURL – Do you work at NUMMI or a Toyota plant? Was talking to a friend in a trucking company who ships stamped parts from TMMC to the NUMMI plant and he said they hadn’t shipped anything in about 4 months. Wondering if you have seen anything like this.

  31. BURL says:

    I have friends at Tabc inc. and their orders to nummi have gone through the roof! Nummi is ramping up production fast! Tabc just finalised their union contract this past Thursday, 3 year contract. Nummi is Tabc’s main customer so I can not figure out why they would lock in a 3 year deal is Nummi’s shutting down soon.. No matter how Toyota does it and who they blame Nummi’s closure on it will still make them look really bad! I assume Toyota is just using this as an excuse to get government help and major concessions from the uaw! If I was Toyota that is what I would do!

  32. a – I hope you’re right about the PR aspects of shutting down NUMMI, but I don’t think it’s going to just disappear. You’ll see more on this tomorrow, but I think this is bad for Toyota. Not only does it look like a real kick in the teeth to Toyota’s customers in California, but it’s also going to make some customers second guess Toyota’s strength in the marketplace. To your point about planning an exit strategy for NUMMI years ago, I don’t think so. Toyota would have made their move by now if that were the case. As BURL says, it’s entirely possible that this is all posturing…let’s hope that’s true for NUMMI’s sake.

  33. HEX3000 says:

    I work for the only Toyota owned plant in California.Unoin contract was finalized days ago,we ship parts both to Nummi and Baha Mexico,recently went back to two shifts and 40 hour weeks.So let the bad or good speculations begin,down here we are tired of the closing talks.No matter what we will continue making a quality product that is job#1,so if Toyota decides to close Nummi or any other plant so be it, it will become their loss.I predict they will face serious negitive attention from the American consumer if they go that rout and as far as kooky Californians manufacturing a strong product let me tell we can meet or exceed any other plant,remember we were the inventors and the first to start this in North America,we will always be the proffesors not the students.

  34. BURL says:

    hex what department and shift are in at tabc?

  35. HEX3000 says:

    I am a production operator on 1st shift, as far has what department i would rather keep that information on a need to know basis.

  36. BURL says:

    HEX3000 I understand. I am sure we know each other. I spent alot of time in Building H for BW…

  37. HEX3000 says:

    We probablly do know each other,you must of been a driver,just letting the rest of the country know California is still alive and will continue fighting.

  38. NorCal says:

    NUMMI has been upgrading the plant for 15years. New car paint plant, stamping, plastic plant, truck body weld, the only upgrades needed are for the 17yr old truck paint plant.
    It would be very bad for Toyota to walk out of NUMMI right now. Since California buys most of the cars we build and the state and local goverments are bending over backwards with tax breaks to keep it open.

  39. NorCal says:

    What people don’t realize about us “kooky Californians” (that’s right the same state that voted against same sex marrage twice and won) is that the reason California buys most of the cars made at NUMMI is because we support NUMMI. When you to the Toyota dealer here the pitch is the car is made in Fremont Ca. Also all the employee, suppliers, and thier families and friends buy the cars because they are made here. In the last 20 years I have met more than a 100 people who said that they told the dealer they wanted our car or truck not the one made in Canada or Japan. So I would hope that those making the decisions in Toyota think about this. Hopfully they’re not the same ones who came up with the stupid idea of building a truck plant in Texas or another plant in Mississippi.
    Toyota owes it’s presence in North America to NUMMI. We operate with far less help from Toyota than the other plants because of level of experience. We have excellent quality and efficiency and can build our vehicles with less man hours.

  40. NorCal – No disrespect meant by “kooky california” comment – more a reflection on the fact that the state is poorly managed and so diverse it’s difficult to categorize. In any case, we echo your sentiments about a potential backlash:

  41. Mickey says:

    Norcal maybe they went to Mississippi and Texas because of the cost of living. What it costs for your workers vice the other states. There’s a big difference in what is being paid so that makes a difference in profits. Smart move on Toyota’s part.

  42. Rachel says:

    So, it’s the last week of August and I’ve been waiting on my new Tacoma
    for 2 weeks… says it’s gonna ship from Fremont on the 28th and be here within 10 days….is this a fantasy idea? Are there any Tacomas out there? Ready to be sent to, my case, a midwest Toyota dealer? Do I continue to wait or go buy a Silverado?

  43. Rachel says:

    My dealer says a Tacoma will leave Fremont Friday the 28th and arrive
    here within 7-10 days….can I believe that statement? I’ve been
    waiting on this truck for 2 weeks. Are they building Tacoma’s in Fremont?
    Are they shipping them out? Or do I just give up and go buy a Silverado…

  44. Rachel – Toyota will be building Tacomas in Fremont until about March 2010. There’s no reason to disbelieve the dealer based on what you’ve said.

  45. Mickey says:

    Rachel I’m a little bit lost in your statement. You want a Taco which is a small truck but if it doesn’t deliver you want a Silverado a full size truck? Why nor try a Tundra?

  46. TXTee says:

    Definitely have to agree with Mickey that it was not a stupid idea to have plants in TX and MS. For a fact, San Antonio has some of the lowest COL and TX has more leniency when it comes to manufacturing than other states. Not a bad idea on Toyota’s part.

    And I don’t get the Taco to Silverado jump either. I’d wait on the Taco. I originally wanted the Taco but it just wasn’t large enough in size for my needs. But they’re cute and appear to be pretty rugged…I’d wait for it. It’s a huge investment, IMO, so why rush it?

  47. Mickey says:

    Ditto why rush greatness…..

  48. nummi says:

    I guess eveybody was wrong. It’s been a year since NUMMI closed.

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