George S. May Business Blog

General Motors is shutting down another factory and bringing Toyota with them

After failing to come to an agreement with Toyota in regards to which cars should be built there, General Motors Corp. has decided to end its rapport with New United Motor Manufacturing Inc.

NUMMI, Freemont based, has housed a GM / Toyota joint venture for nearly 25 years. Toyota used the NUMMI to produce the Corolla compact sedan and the Tacoma pickup, GM used it for the Pontiac Vibe hatchback.

The combination of GM’s refusal, with Toyota already having two other North American plants producing the Corolla and Tacoma (both which are running below capacity), and with the fact hat NUMMI is running far under capacity, undoubtedly sets the table for the future of NUMMI to be in serious jeopardy. What’s more, NUMMI has 5,400 employees, the great majority of whom are United Auto Workers members. This makes NUMMI the only unionized facility among all of Toyota’s North American plants and, more importantly, the most expensive plant to operate in North America.

Comments are yet to be heard from the UAW.
A spokesman for NUMMI could not be reached for immediate comment however the plant did issue a statements that included the following comments:

“We are sorry that GM has decided not to carry its interest in NUMMI forward. It may take some time before the future of NUMMI is determined.”

A note about the history of the plant: Originally the plant was solely a GM plant. It was also a failure, plagued with inefficiencies and production difficulty. Then along came Toyota. Suddenly, its performance drastically improved and NUMMI became the most efficient GM plant in the region.

Last week, GM said it would close its plant in Shreveport, La., where small pickups and the Hummer H3 are built. It employs just under 1,100 people and will cease operations by 2012.

In total, GM plans to close 14 existing manufacturing facilities as part of its restructuring process.

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