GM, Toyota sever partnership at NUMMI

June 29, 2009 6:27:29 PM PDT
After 25 years, the marriage between GM and Toyota that helped fuel the Bay Area's economy, is over. The cause is irreconcilable differences. New United Motor Manufacturing Inc. in Fremont is losing one of its parents after GM announced on Monday, it wants out.

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The fate of more than 4,000 NUMMI employees and an estimated 50,000 people who make parts in California for the NUMMI plant is up in the air. The 25-year-old joint venture appears to be dead.

NUMMI workers knew this might happen after General Motors pulled the plug on production of the Pontiac Vibe one year early.

"I'm optimistic that they'll keep the plant going, but in these economic times, I'm kind of scared right now. To be honest with you, I'm scared," said Michael Swanson, who has worked for NUMMI for 17 years.

Long-time employees hope Toyota will keep the plant going.

"I think we've got a great workforce here. It'd be silly for them not to keep us around," said Marina, who has worked at NUMMI for nearly 25 years.

GM simply said the two companies "Could not reach an agreement on a future product plan" and that "No future GM vehicles [are] planned for the joint venture."

The uncertainty prompted NUMMI worker Jonah Cameron to quit and switch to a delivery job.

NUMMI said it will take time to determine its future.

"Everyone including Toyota has excess capacity, but there are many options for NUMMI from Toyota going alone to NUMMI bringing in a new partner," said Professor Harley Shaiken, from UC Berkeley's Labor Center.

Toyota put out an ominous statement that could be a hint for the United Auto Workers as contract negotiations start next month. The statement said "The economic and business environment surrounding Toyota is also extremely severe, and so this decision by GM makes the situation even more difficult for Toyota."

"There's little question in this dismal economic climate that Toyota is very likely to have very sharp elbows at that table," said Professor Shaiken.

Hope remains that Toyota might re-think plans to build the Prius at NUMMI. Fremont Mayor Bob Wasserman puts a high premium on saving jobs.

"I think if they were to say, 'Yeah, we'll build the Prius here,' I think that between us and the state, we can find some incentives to offer," said Mayor Wasserman.

GM's half of the NUMMI joint venture will now become part of GM's bankruptcy filing. That means a bankruptcy judge will have to approve what happens to it. So far there has been no reaction from the United Auto Workers union.

Full responses:

Toyota
Toyota released a statement Monday saying, "Toyota Motor Corporation is sorry that General Motors has chosen to withdraw from the NUMMI joint venture, ending a long, successful partnership spanning 25 years. Our hope was for the 50/50 joint venture to continue. While we respect this decision by GM, the economic and business environment surrounding Toyota is also extremely severe, and so this decision by GM makes the situation even more difficult for Toyota. We will consider alternatives by taking into account various factors."

General Motors
GM North America's president Troy Clarke said, "As part of its long-term viability plan, General Motors has decided that its ownership stake in the New United Motor Manufacturing Incorporated (NUMMI) joint venture with Toyota will not be a part of the 'New GM'. After extensive analysis, GM and Toyota could not reach an agreement on a future product plan that made sense for all parties. Accordingly, NUMMI will end production of vehicles for GM in August, and there are no future GM vehicles planned for the joint venture at this time. Given that, GM believes it is in the best interest of the 'New GM' and its stakeholders that we place our ownership interest in NUMMI in 'Old GM'. We have enjoyed a very positive and beneficial partnership with Toyota for the past 25 years, and we remain open to future opportunities of mutual interest."

NUMMI
"We are sorry that GM has decided not to carry its interest in NUMMI forward to the New GM. It may take some time before the future of NUMMI is determined. In the meanwhile, we are focusing on building very high quality Corollas, Tacomas and Vibes as well as reducing our operating costs."

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