California NUMMI Commission Offers Toyota No Carrots and No Sticks

Here’s the thing about that NUMMI plant in Fremont that’s closing down at the end of the month – Toyota thought about making Prius hybrid electric cars there after the departure of General Motors, but then rejected that idea. So, Corolla production will  be taken care of by an existing plant in Ontario, Canada and pickup trucks, too, will be made somewhere else if necessary. This all got worked out last summer.  

(Here’s Toyota’s current take on the situation from NUMMI spinmeister Lance Tomasu for the record. Enjoy.)

Anyway right now, California’s Toyota NUMMI Commission is coming back from Japan after trying to nag Toyota brass into keeping the Fremont factory going. Take a look at their report. The Question of the Day is why Toyota should remain the only car manufacturer in the entire western United States.

So you’d think that California would offer some carrots and/or wave some sticks around at Toyota but the Commission’s not really equipped to do that all that much.

It’s not like they can’t find some carrots or sticks in their quiver, it’s that their quiver is pretty much empty.

According to the commission, the chance for Toyota to build hybrid electric Corollas in Fremont is somehow some big benefit to Toyota that Toyota is oblivious to. That’s not really a carrot, actually, and you’d think that Toyota would have their own ideas about making cars. Would consumers want to buy a “California Corolla” just because it’s made in Fremont? I don’t think so. Very possibly, Toyota having a big pickem-up factory in Texas helps sell big V8 pickem-ups, but the average Californian would prefer a Made In Japan label, it would seem.   

Another carrot the commission could dangle would be the synergy from making cars in the same state as tiny, troubled Tesla Motors. That’s not really a carrot either, huh?

Well, how about some sticks instead? What will happen to Toyota if it shuts down its money-losing plant in Fremont? Nothing, it would seem. One might suppose that quiet diplomacy would have been used on Toyota last year, to no avail.

Back in the day, down in Fremont:

   

via CanadaGood

Now, let’s read up on the news of the past weekend. Has Toyota really “lost its way?” No. Let’s see here, did Toyota make a mistake with how it handled the floor mat / plastic gas pedal parts / ?????? / issues? Yes, but that’s just a hiccup in the sands of time.

Is Toyota’s decision to discontinue production in California without GM as a partner “suicidal?” No. 

And is the success of the Prius model due to “enthusiastic Californians” or is it due to Toyota spending billions to develop the technology and then selling them at a loss for years and years? You Make The Call.  

And are the people of Mississippi looking forward to making hybrid vehicles for Toyota in a brand-new factory that’s going unused right now? Yes. Toyota decided last year to make Priuseses in Blue Springs, Mississippi instead of California. That’s California’s loss, no argument about that.

All right, here’s entire conclusion of the Blue Ribbon Commission’s report, in bold.

“The collaborative efforts of Californians, which have bolstered NUMMI’s success, are ongoing.”

Was NUMMI a success, really? Didn’t it lose money every year for the past quarter century? Yes.

“A ‘Red Team’ of state, local government, private sector and other officials have proposed significant tax and business incentives to retain the plant.”

Presumably, Toyota knows about this, but is not interested.

 “Closing NUMMI now is a decision of choice, not necessity.”

This is true. If Toyota were really afraid of the consequences of closing down NUMMI then maybe they’d run it at a loss, if necessary, forever.

“Closure abandons a loyal, highly-skilled workforce and places a heavy burden on communities and the state when they can least afford it. The decision is inconsistent with the values that have led Toyota to unparalleled economic success. It elevates narrow, short-term corporate interests above the interests of workers, the public and the long-term interests of Toyota itself.

Don’t really get this. Why should Toyota have a plant in California instead of some other state or nearby country?  

 “Looking at the pending NUMMI plant shutdown, and then you look at larger problems that Toyota is having in America” Richard Holober, from the Consumer Federation of California, told the NUMMI Blue Ribbon Commission.

Well, Toyota’s “having problems in America” primarily due to a decision to save a few pennies by using a plastic-on-plastic device to make holding your foot on the gas pedal a bit easier AND not reacting quickly enough to incident reports. This issue will get solved.

“I can’t help but conclude that this is not an isolated plant closure decision, but a symptom of a much, much deeper problem with what has happened to Toyota as a corporation.”

What has “happened to Toyota as a corporation” is that it’s become the best car company in the world. This was true last year, it’s true this year, it’ll be true next year.

“Akio Toyoda, the Toyota president whose grandfather founded the automaker in 1937, admitted at a February 24 Congressional hearing, “recently we haven’t lived up to the standards you’ve come to expect from us or that we expect from ourselves.” He also stated that one of the automaker’s great strengths was facing its mistakes and addressing them. The decision to close NUMMI reflects the period when the automaker pursued a hyper-expansion and abandoned its values in the interest of narrow, short-term financial goals.

“Hyper-expansion” = Making Popular Cars. “Narrow, short-term financial goals” = GM. Now, Toyota changed a bit after getting listed on the stock exchange in New Yawk, and Toyota has more hide-bound corporate culture than it probably needs but it’s doing all right overall.

“Toyota, however, has risen to outstanding heights by building its success precisely on strong core values. These included: 1) building only the highest quality vehicles; 2) customer safety first; 3) lifetime job security for its workers; 4) caring partnerships with communities; 5) concern for the environment. A very visible first step toward returning to this successful corporate ethic would be to keep NUMMI open, and show California and the world that the company has reached into its heritage to define its future.

I don’t know, Toyota participated in NUMMI during a time when there was a threat of massive tariffs being applied to cars imported from Japan. The 1981-1994 Voluntary Export Restraint plan of that era was a disaster for American consumers (and, speaking of “narrow, short-term financial goals,” the long-term health of the American automobile industry.) Something like the threat of massive tariffs on Toyota products would be a nice stick for the NUMMI Commission to wave about, but, for whatever reason, Toyota doesn’t seemed to be all that worried about that issue. 

“This is the moment for political leaders in Washington and Sacramento to address the closure. Millions of Californians are hurting in the worst job market in seven decades and are deeply apprehensive about the future. The most immediate, direct, and cost effective jobs program available is to keep NUMMI running.

There’s no question that keeping NUMMI running would benefit California. The question is why Toyota should lose money to finance an American stimulus plan?

“This stimulus plan delivers 25,000 jobs and could save $2.3 billion. The automaker and California would reap a triple bottom-line benefit: Toyota would restore its image and retain a world-class plant; workers and their families would make it through a dark economic winter; and California would get further down the road to economic growth and a green future.

O.K., the Blue Ribbon Commission is traveling home from Nagoya, Japan now.

Perhaps the their trip to Toyota City will prove useful even if the NUMMI factory shuts down on sked this month.

We’ll just have to wait and see what the Commission got.

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One Response to “California NUMMI Commission Offers Toyota No Carrots and No Sticks”

  1. friend of nummi says:

    The “Blue Ribbon Panel” sounds like just another bunch of liberals – cousins to the union people that are in massive denial of reality and who claim they are trying to help the NUMMI team members.

    The state offers NUMMI a tax incentive but what the public doesn’t know is that incentive is, to use your terms, just carrots and sticks – baby carrots and twigs is more like it. The amount they offer is less than peanuts compared to the amount they need to be even close to tempting. Another analogy is a drop of water in the Atlantic Ocean, or Pacific for us Californians.

    To give you an idea of the money NUMMI would need, the PG&E bills alone are millions as anyone would see if they toured the plant and saw the electricity and gas required to run the place. And, don’t forget the massive taxes the state charges for the new tooling and other machinery required every time there is any model change. NUMMI also has to pay property tax on what they have in the plant along with what suppliers have that is required to produce those NUMMI parts.

    And so it goes. California may lose a lot of money, but the pitiful management of finances by the state along with their greed to suck manufacturing dry, is their end.

    So, I say to CA politicians, suck it up guys, you did to yourself and all of the rest of us. Guess I will move out of state, if only I could sell my house…..