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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