Following General Motors’ decision to abandon its joint-venture New United Motor Manufacturing Inc. production plant, Toyota says it may be forced to close the Fremont, California factory. GM and Toyota set up the joint-venture plant in 1984.
Despite its 25 year run as a Toyota plant, the Japanese automaker may have to shutter the NUMMI plant as a result of GM’s departure. “We are carefully evaluating our options with respect to the NUMMI joint venture as a result of General Motors’ actions,” Toyota said in a statement. “Under the current business circumstances, Toyota regrettably must also consider taking necessary steps to dissolve the joint venture.”
Toyota is also considering adding more model lines to the plant to keep it running, but says it needs to consider if it’s “economically feasible to contract with NUMMI without GM.”
One major strike against the NUMMI plant is its high cost of labor. As Toyota’s only UAW-represented plant, it typically pays workers $8 to $13 more per hour than it does at its other U.S. plants, according to Automotive News. NUMMI recognizes that pay discrepancy and says it is working to make the plant more in line with Toyota’s other production facilities.
“Neither NUMMI’s labor costs nor business conditions are competitive, so we are working hard to improve them and make NUMMI more attractive to Toyota,” NUMMI said in a statement.
However, Toyota’s decision to close the NUMMI plant could be a matter of costs and over capacity. Toyota recently completed a brand new factory in Tupelo, Mississippi, but has yet to equip the plant with any tooling or machinery. With that kind of extra capacity just laying around, it could spell the end for Toyota’s 25 year run at the NUMMI plant.
