Toyota Closes NUMMI - Public Backlash Likely

Toyota has all but confirmed the closure of NUMMI, a Fremont California auto plant that was once a joint venture between GM and Toyota. When GM abandoned NUMMI during their recent bankruptcy, Toyota was left with a difficult choice: Either continue to build vehicles at NUMMI (where production costs are $500 to $1000 higher per vehicle than elsewhere) or close the plant.

Now that Toyota has decided to close NUMMI, it's likely that Toyota will experience a significant public relations hit. Here's why:

1) Toyota has long publicized their "no layoffs" policy, yet closing NUMMI (which is technically a joint venture and therefore not specifically Toyota employees) seems to be a clear step away from that guarantee.

2) Closing NUMMI is going to hit California hard. California is in the midst of a major economic crisis - this is a bad time to put 5,000 out of work at NUMMI while also impacting (indirectly) more than 300,000 workers in the local area. Considering that California is a major market for Toyota, this could impact Toyota's sales significantly.

3) Closing NUMMI makes Toyota look just as dysfunctional as GM. While some will say that since NUMMI is a joint venture, Toyota's role in NUMMI's closure will be minimized. While that may be true, the fact is that Toyota has been making the lion's share of the vehicles at NUMMI for many years. It's more Toyota's plant than GM's. When consumers here "Toyota closing California auto plant," many are likely to assume that Toyota is in the same kind of trouble that GM is in.

4) Closing NUMMI is another action that makes Toyota look weak. In the last 6 months: Toyota has fired their CEO and half their top executives. Toyota has cut all exec bonuses. Toyota has suspended production worldwide. Toyota has suffered the largest one-quarter loss in history (about $8 billion). Toyota has taken a loan from the Japanese government. Toyota has closed NUMMI.

Granted, Toyota isn't anywhere near as dysfunctional as the old GM was...but consumers, who aren't necessarily industry savvy, might not see the difference.

What do you think - is closing NUMMI going to hurt Toyota's image?
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fatandsassy - 7/27/2009 11:44:53 AM

+4 Boost

TIMBER>>>>>>>>>

kpaxx - 7/27/2009 11:48:24 AM

-2 Boost

Things are looking scary for Toyota!

lexworld - 7/27/2009 11:59:26 AM

+2 Boost

"Look..this is buisness and to allow un-profitable exspenses to drain from current revenues is not wise. The point of that plant operation was the joint-venture partnership so, logically if either parnter would become financially bankrupt, which GM did, the venture would cease to exist. Why would Toyota continue to operate this useless operation? There will be no public backlash...Who are you anyways TUNDRAHQ? A behind the scenes pessimist?

tundrahq - 7/27/2009 2:00:31 PM

+2 Boost

I love it! We publish posts that say Toyota is great and we're labeled as "biased fan boys." We publish posts that say Toyota is going to get an earful from the public and we're "pessimists." I guess that's the problem with having an opinion that people don't like. To answer your question more directly, we're fans of Toyota that aren't afraid to call them like we see them.

dumpsty - 7/27/2009 12:28:01 PM

+4 Boost

First, GM decided to back out of NUMMI and sell its stake to Toyota. And everybody took a sigh of relief thinking all would be better when Toyota officially gained total control of the once joint facility.

But, Toyota, facing its own financial reality, broke with its own industry stereotype; and decided that it costs too much to run NUMMI at their current UAW labor costs. Even Toyota has a hard time surviving using UAW wages.

I think everybody feels duped by Toyota, but they basically assumed Toyota was going to "save the day" as GM packed up shipped out. The old days of free-flowing funding from Detroit and Japan are over at NUMMI.

NItePhire - 7/27/2009 12:49:52 PM

-2 Boost

This will not hurt them at all. People (the general public) are sheep and they will continue to do what the sheepherder (Toyota) wants. Noone that I have spoken too really even remembers or knew about yota's giant recall a few years back they just kept buying even after some had to gointo the dealers and get new cars. The dealers (some of them) got over on a few of the customers. They refused to service the cars if they didnt have all of the documentation about every oil change they have ever had. Others (dealers) said they would fixed the engines but would allow the consumers a 1000 dollars break on their cars. So no it wont bother them at all.You and I are not going to buy their cars but we wont be missed.

NItePhire - 7/27/2009 9:17:02 PM

0 Boost

I am afraid you seemed to have missed the whole point. The average customer I am talking about is not you nor I. And yah everyone has recalls but when I talk to what I consider an average person they dont know or care about Toyota's recalls at all. My point being is that they dont care about certain carmakers recalls. I have already had several people ask me about the Camaro issues and they arent even thinking about buying one.

XYZZ - 7/28/2009 5:34:47 AM

+2 Boost

yah, you think ONE recall will torpedo and SINK a giant corporation like toyota, which STILL has a reputation world wide of building the MOST RELIABLE vehicles on the planet?

you wish.

i usta own a 2000 ford focus, arguably THE recall king of all models. yet those glitches did not detract from my enjoyment of the car's sporty handling and fresh styling.

ChevyFan100 - 7/27/2009 1:31:49 PM

+2 Boost

So since the Vibe is dead, is the Matrix dead?

tundrahq - 7/27/2009 2:02:34 PM

+5 Boost

The Matrix is still alive - it will probably get built in Canada alongside most of the Corollas that would have been built at NUMMI.

XYZZ - 7/28/2009 5:38:19 AM

+4 Boost

the Vibe (and previously, Prizm) was also the MOST WELL BUILT and RELIABLE vehicle ever to come out of GM showrooms. yet another dumb decision by GM.

Joe_Limon - 7/29/2009 10:47:16 PM

+1 Boost

LOL HyundaiSmoke isn't Canadian, we don't want him. He's all american lol.