Although Toyota was a 50% stakeholder in the NUMMI facility in Freemont, California, it may end up carrying 100% of the closure costs. The LA Times reports that Liquidation Motors, the company which took over GM’s assets won’t fund any of the severance pay or other expenses to the closure of NUMMI. “Motors Liquidation is not contributing at all” (to the closure costs), said Tim Yost, a spokesman for Detroit-based Motors Liquidation Corp., “We don’t believe there will be a requirement for us to do so.” Paul Nolasco, a Toyota spokesperson in Tokyo said that “Although we cannot provide any figures at this time, it is something for which we plan to make allowance in our earnings report.” Toyota was planning for a smaller-than-expected loss for this financial year, and the addition of these extra costs (should they happen) will affect the company and its stock price. On the other hand, it also puts Toyota in the exact same boat as the American taxpayers.
Keep in mind, Toyota entered the NUMMI partnership to learn something about american business practices.
Ironic, isn’t it?
From the NUMMI website, which is still up and running today at nummi.com:
“For Toyota, the joint venture was an opportunity to test its ability to use its production methods in an American setting. For GM, it provided a way to learn how to build cars more efficiently using Toyota’s lean production system. Since GM also wanted to manufacture a small, high-quality car, Toyota seemed like the perfect partner.”
This mentions nothing about American business practices. But they soon found out. GM couldn’t recognize a quality-based lean production system if it bit them on the nose, so Toyota quit worrying because their production system worked just fine, and GM yawned. Hard work just wasn’t sexy enough for the boys from Detroit. Back to career-climbing for them.
Then Toyota got stuffed by GM earlier this year, just like they’ve done to everyone else. Liquidation Motors, I’d forgotten the name. How apt. Responsible for nothing except destruction in their wake.
If it wasn’t for bad luck, Toyota wouldn’t have any luck at all.
Well, it’s the price you pay for licking some political a$$es.
If Toyota is willing to learn a lesson here, it will be “do the right things.” Which include building better cars and providing better sevices. Which do not include working with a failing competitor just to pretend a political good will.
Toyota should not be stuck with this Plant, after all it was the New GM that decided to end the partnership wasn’ t it? GM appears to have lots of Money to expand certain plants like the CAMI plant here in Ontario as they state the vehicles they produce there are flying off the walls of dealers, I am not sure where they are doing that, certainly not in the unemployed ranks we have in both of our Countries! Also in Oshawa the Plant that makes the Camaro, they are calling for overtime to produce this nitch vehicle, its a crazy life isn’t it?
Don’t expect Toyota to make the same mistake twice. In the future any plant built here will not include the UAW nor a US partner. As to their liability for severance I think GM should foot the bill. They pulled out first and cause the riff.
GM could take some German taxpayer money and pay off these people. After all, don’t cost nothin’.
If GM can’t beat Toyota with product, they can sink Toyota with plant closing costs.
@RogerB34: +1 GM finally pulled a rabbit out of the hat.
Interesting. Things are looking pretty bad in this country.
When GM went into bankruptcy, the contracts went to the Liquidation Motors. New GM has nothing to do with NUMMI. NUMMI built the Corolla, Tacoma, Matrix, and Vibe. There will be no more Vibes, which was 40% of the production. The other 60% was the Toyota products, which Toyota is moving else.
The Tacoma is going to the San Antonio plant, which has plenty of extra capacity because the Tundra is selling well under what Toyota wanted.
The Corolla and Matrix are moving to a plant in Canada which already makes the vehicles.
Closing the plant is a good move for Toyota. Getting the other plants at higher capacity will be more efficient.
I don’t know what recourse Toyota has here. They can sue a company that is selling off everything, or do nothing. I don’t know if in bankruptcy if the contract was voided or not, but yes, Toyota is taking a hit here. But, it is a move that is going to help them as well.
There’s pain everywhere you look in manufacturing at the moment; Toyota can afford it, unlike the other delinquent partner.
Toyota believes in, you know, honouring their obligations. Old fashioned I know.
The comment in the Bloomberg article was priceless:
Regardless of the bankruptcy filing, it’s “improbable from a common-sense point of view” that Motors Liquidation Corp. would pay nothing, said Koji Endo, managing director of Advanced Research Japan, a Tokyo-based equity research company. “It was a 50-50 joint venture for 25 years.”
Endo-san, you’re looking for common sense in all the wrong places my friend.
the buffet will be closing in just a short while, please make your final trip to the food line as we will be closing shortly…
Which prior “partner” hasn’t been totally screwed over by, then tossed aside like so much trash, by GM? Warning to all businesses worldwide; if you work with GM, you should be aware of what’s likely to happen. They’ll wine and dine you then rape you then steal from you then kill you if they can. If it were a human being, they’d be in a penitentiary for multiple life terms, since they are a repeat offender, as well.
Here’s a reminder of a few from the last 35 years or so.
Isuzu.
Suzuki.
NUMMI (Toyota).
Daewoo’s creditors (when they bought it for pennies on the dollar).
GMVAZ (yes GM had partnered with the manufacturers of Lada for awhile).*
Subaru (ironically, now safe in the arms of Toyota).
Saab.
US Taxpayers.
GM stock and bondholders.
Magna/Sperbank/German taxpayers.
*GM met its match with the Russians, however, and I believe they were the screwees as well as the screwers in GMVAZ. Something Renault is now finding out about with VAZ, to their cost.
Which prior “partner” hasn’t been totally screwed over by, then tossed aside like so much trash, by GM?
Fiat.
This also begs the question: why would any non-evil minded individual wish to perpetuate this company by purchasing anything from them?
Looking at it from a completely practical point of view, if an automobile or truck is the second largest purchase that most families ever make (and the largest, for folks who rent instead of having a mortgage), why would one consider purchasing a car from a company which has already proven to be run so poorly that it went from #1 in the world to bankruptcy and taxpayer rescue? Surely the likelihood is that when the political winds change, “paybacks will be severe” and GM will be left to die on the vine.
Then, try to find genu-ine GM parts and try to get your warrantee honored. Good luck with that. (And yes, I do know the Prez “promised” to honor GM and Chrysler warranties – to which I would respond – and you’re naive enough to believe a politician about protecting YOUR interests and pocketbook?!)
The Russians and Italians obviously have GM’s number, Mirko.
You’re right. GM was the screwee with the Fiat deal.
Can’t wait to see how SAIC-GM plays out….