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California Braces as NUMMI Auto Plant Nears Closing

February 9, 2010 at 12:00 AM EDT
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This spring, Toyota expects to slam the brakes on one of its California-based assembly plants. About 5,000 workers are preparing for unemployment at the New United Motor Manufacturing Inc. plant, as well as hundreds more in the auto pipeline across the state. Spencer Michels reports.
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JIM LEHRER: Now a second story involving Toyota.

In California, the company was making headlines even before the safety recalls of the past few weeks.

“NewsHour” correspondent Spencer Michels reports.

SPENCER MICHELS: At the same time Toyota is dealing with a huge recall, it is about to shutter a major auto plant. In just a few weeks, all this activity will grind to a halt; 4700 jobs will disappear, and so will California’s only auto assembly plant, and a unique joint operating agreement between General Motors and Toyota will officially be dead.

The two automakers have been building cars at the New United Motor Manufacturing, Incorporated plant, or NUMMI, since 1984. But, last year, General Motors went into bankruptcy and decided to pull out of the deal. Then Toyota announced it would halt production here on March 31, a date that Toyota says remains unaltered by the brake and accelerator problems some of its cars are having.

Walter Odisho, manufacturing manager, has been with NUMMI 21 years.

WALTER ODISHO, manufacturing manager, New United Motor Manufacturing, Inc.: We are the victim of the times and the economy and the downturn that was experienced.

SPENCER MICHELS: NUMMI spokesman Lance Tomasu says, without GM, the plant was no longer viable.

LANCE TOMASU, spokesman, New United Motor Manufacturing, Inc.: Unfortunately, when General Motors pulled out of the joint venture, that’s what precipitated the closure of the plant.

SPENCER MICHELS: So, you don’t think that one company like Toyota could run this plant all by itself?

LANCE TOMASU: Well, again, when the joint venture was formed in ’84, it wasn’t built to survive without one of its partners.

SPENCER MICHELS: Even though this plant closes soon, Toyota and NUMMI are making use of every day, running two shifts a day five days a week and cranking out Corollas and Tacomas, one every 54 seconds.

A few changes were made in the Corolla manufacturing process following the recall, but the line never shut down. The plant is huge, 5.5 million square feet in Fremont, California, near San Jose. Since it opened, about eight million new cars and trucks have rolled on to American highways, Novas, Pontiac Vibes, Geo and Chevy Prizms, Corollas and Tacoma pickup trucks.

Toyota, a “NewsHour” underwriter, says a key factor in closing the plant was efficiency, especially in a depressed market.

Irv Miller is vice president for corporate communications.

IRV MILLER, vice president for corporate communications, Toyota: The Fremont plant is the oldest plant that is operating in our system. We have new plants in San Antonio that’s building our pickups trucks. The move to take Tacoma from NUMMI to San Antonio is a commonsense move.

SPENCER MICHELS: The idea of the joint operation 25 years ago was that GM would learn Japanese production methods from Toyota, and Toyota would learn how to operate in an American environment.

U.C. Berkeley Business School Professor Robert Cole, who studies the auto industry, says the collaboration was mostly successful, especially for Toyota, which, back in 1984, had several goals.

ROBERT COLE, professor, University of California, Berkeley: To figure out how to manage U.S. workers, perhaps deal with unions. Also, they wanted to figure out how to replicate their just-in-time delivery system that they had in Japan. And both of those objectives were accomplished.

SPENCER MICHELS: For GM, Cole says, the venture was less successful.

ROBERT COLE: For at least 10 years, they showed very little interest in serious learning from that plant. So, a lot of the GM managers that were sent there were put back into low-level positions, where they had no influence, because people didn’t want to hear that Japan is doing things better.

SPENCER MICHELS: And, for the auto companies, the cost of getting supplies to NUMMI sitting all alone on the West Coast was becoming a burden, since most supplies come from the Midwest or elsewhere.

IRV MILLER: For example, all of the engines that go into the Tacomas and the Corollas that are produced in NUMMI right now come from West Virginia. So, we have to in fact ship engines across country to California, and then ship them back in ready-made products throughout the balance of the United States.

SPENCER MICHELS: Wages for the workers here average $28 an hour. And the work has been steady for people like Jose Enciso and Shea Church.

JOSE ENCISO, worker, New United Motor Manufacturing, Inc.: I was shocked. I mean, I was expecting to retire from this place. So, it blew my mind away. The deadline has been set. And that’s what I’m going by. And I’m hoping for the best and planning for the worst.

SHEA CHURCH, worker, New United Motor Manufacturing, Inc.: I’m a single mom, so it’s pretty scary. And the — it seems like there’s, you know, lots of other people out there looking for jobs as well.

SPENCER MICHELS: Which is why some employees, like Marcella Alvarez, are trying to keep the plant open.

MARCELLA ALVAREZ, worker, New United Motor Manufacturing, Inc.: I have three kids. You know, it’s been hard, maybe lose my home, you know, having — not being able to, you know, pay the bills and the mortgage.

SPENCER MICHELS: Alvarez and fellow members of the United Auto Workers are gathering signatures around the country and threatening a boycott of Toyota, even in the face of Toyota’s troubles, hoping to persuade the company to keep production going in Fremont.

Some local union members disagree strongly with their own leadership. As this amateur video shows, recent union meetings have erupted in chaos, with dissidents arguing that increased benefits, not keeping the plant open, should be the goal. Union rep Juan Castillo spent 12 years on the assembly line.

JUAN CASTILLO, union representative: Well, in my opinion, the plant is shutting down. And we’re more concerned about our medical benefits. We’re concerned about whatever monetary aid that we’re going to get after we get out of here.

SPENCER MICHELS: Some members fear Toyota’s recent troubles and drop in sales could affect negotiations over benefits. The leadership doesn’t buy that. Their concern is workers without jobs.

Adding to the job losses will be layoffs, perhaps as many as 40,000 at San Francisco Bay Area companies that do supply parts to NUMMI and will lose much of their business. The impending closure has been portrayed in the press as a huge blow to the local community.

But Bob Wasserman, the mayor of Fremont, who drove us around his town of 220,000, paints a brighter picture. And he insists Fremont, with a median family income of $93,000 and on the edge of Silicon Valley, won’t suffer the way Detroit has.

BOB WASSERMAN, mayor of Fremont, California: In Detroit, the auto plants were the center of the activity. That was never the case in Fremont. Most of the people lived outside of — of Fremont, and they came to work, and then went home.

SPENCER MICHELS: Still, union negotiator Javier Contreras says the job loss shouldn’t be dismissed so cavalierly.

JAVIER CONTRERAS, union negotiator: It may not be Detroit, but, at the same time, the jobs that we work are good-paying jobs with good benefits. It helps the economy.

SPENCER MICHELS: The mayor points to a new solar manufacturing plant as the kind of thing that could take up the slack in the local economy.

BOB WASSERMAN: This is a company that will employ 3,000 people. And we’re hoping, if we can do it, to try to put together some arrangement where employees from NUMMI can be retrained into some of the jobs that they will have here.

SPENCER MICHELS: The town may not suffer, but the workers probably will. Whether NUMMI’s blue-collar assembly line employees can find work in green industry is unclear.

Local officials, trying to be optimistic, see NUMMI’s closing as a chance to bring new, cleaner industry to the area. Professor Cole sees it as the end of California’s large-scale auto industry, but also as a limited experiment that paid off for American business.

ROBERT COLE: When Toyota learned to operate their system in the U.S., to treat workers with some respect, that — recognized that they had brains, and not just physical skills, it got a lot of American companies to sort of rethink what is the contribution of workers to quality, to productivity.

SPENCER MICHELS: Fremont and NUMMI are trying to figure out what to do with the huge site that the plant occupies. And Toyota has more on its plate right now than reconsidering a firm decision to close this plant at the end of next month.