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NUMMI Demonstration Underlines Plant Plight

An expired UAW contract means an uncertain future of the plant that was once a model of cooperation between GM and Toyota.

by on Aug.21, 2009

The UAW is hoping to prevent the closure of the 26-year-old NUMMI venture, near San Francisco.

The UAW is hoping to prevent the closure of the 26-year-old NUMMI venture, near San Francisco.

More than 1,000 people turned out for a demonstration organized by the United Auto Workers at the New United Motor Manufacturing Inc. plant in Fremont, California yesterday, as the fight to save the state’s last automotive assembly plant continued to escalate.

Toyota Motor Corporation is considering closing down the NUMMI plant, which employs more than 5,300 people, including more than 4,500 UAW members. The UAW’s contract with NUMMI expired last week, but it has been extended indefinitely, although either party can terminate it with 5-days notice.

There has not been a decision yet on the status of what will happen to Toyota’s 50% share of NUMMI, Toyota officials have said repeatedly in recent weeks. NUMMI has been a model of US-Japan industry collaboration for as long as 25 years, but the decision by General Motors to abandon its half of NUMMI and discontinue the production of the Pontiac Vibe has prompted a set of difficult and complex decisions for Toyota.

Toyota, which lost money for the first time in 60 years during its last fiscal year and is facing another huge loss during this fiscal year, is also under pressure to cut production capacity in the US. CSM, the forecasting firm, now estimates that Toyota’s capacity utilization has now dropped to only 60%. It takes running at more than 80% of capacity to breakeven in the capital intensive auto manufacturing business as a rough rule.