7.09.2007

Toyota Shifting Production to Lower Labor Costs? It Could Happen

Would Toyota, the embodiment of lean manufacturing and respect for people, ever consider relocating production to reduce labor costs?


            According to recent reports, that’s exactly what Toyota is considering.


            It wouldn’t be a case of shifting production from America to Asia. Rather, Toyota may pull production of the Tacoma out of the NUMMI plant in Fremont, California, and shift it to somewhere else in North America.


            NUMMI (New United Motor Manufacturing Inc.) is a partnership of Toyota and General Motors, formed in 1984. The Fremont plant is the only Toyota plant using UAW labor and one of the highest-labor-cost facilities in the entire American automotive industry.


            One report, in the San Jose Mercury-News, notes that


            NUMMI management stopped short of saying in a statement that it would move Tacoma truck production. It also did not say it would lay off any workers, or consider shutting down the plant. But it stressed that NUMMI must 'improve its competitiveness.'


'The industry's going through a very tough time and many plants have or are scheduled to close,' NUMMI spokesman Lance Tomasu said in a prepared statement. 'NUMMI will only retain its business if it is able to improve its competitiveness.'


The statement added that pressure to compete is felt more intensely at NUMMI than other auto manufacturing plants 'because of California's challenging business environment.' It said NUMMI's labor costs are higher than both the automotive industry average and U.S. manufacturing average, that raw material costs are rising, and that NUMMI's location is far from the majority of its suppliers.


            The Fremont facility also makes the Toyota Corolla and the Pontiac Vibe. But the Tacoma represents 40 percent of the plant’s total output, which was 428,000 vehicles last year.


 


            The current UAW contract at NUMMI expires in August 2009, and a no-layoff clause prevents workforce reductions. So unless the UAW is prepared to make concessions, moving production may be the most attractive alternative.


 


            Do you think this prospect is at odds with Toyota’s commitment to lean and respect for people? Post your comments below.


 


 


           

9 comments:

Ralph Bernstein said...

IMPORTED
7/10/2007 1:08:32 PM
Re: Toyota Shifting Production to Lower Labor Costs? It Could Happen
by: dcbliss

Like it or not, business conditions dictate change. When I'm asked about layoffs, I always say that there's a difference between layoffs due to Lean improvements (never adviseable) and layoffs due to business conditions (sometimes needed). Financial viability is part of business, and to suggest that making a change to ensure that viability doesn't show respect for the workers is, in my view, incorrect.

Anonymous said...

Somewhere in North America? Its Mexico. I know, I work there. They are going to move the Tacoma too Mexico and bring in the Prius line in its place. This will happen first part of next year from what I have been told.

Anonymous said...

The Tacoma production will be moved to the current Baja plant. The Prius will not come to NUMMI and most likely, Toyota will not renew the current contract. The Corollla is built in other locations and can absorb the amount of production that NUMMI puts out. If our union does not make concessions we will all be out of a job. That means we will have to start paying for things out of our check such as Benefits. Our Union Leadership is very weak, and believes strong arm tactics will work. This will not be the case and will not be THE BEST CONTRACT EVER. I know this because I work here, and I am currently looking for a job...

Anonymous said...

i am currently employed by NUMMI and the moral of workers here is at its lowest...every single day they are expecting not so good news coming out of either management and union....a lot of team members i interact with are willing to take paycuts just to save their job and the union need to look at these, i know some of the team members dont like the idea of cutting wages and reducing benefits but dont be selfish or we are all going to collect unemployment checks which will add more burden in our failing economy......

Anonymous said...

I work at TMMC and was wondering what was going on at NUMMI. Any info would be greatly appreciated

Anonymous said...

...NUMMI "management" & UNION "leadership" keep the employee knowledge of events at a minimal level...

...rumors circulate in a cyclonic fashion...compiling daily...and completely destroying worker morale, seems to be TOYOTAs' plan in lieu of the impending contract renewal process...

...it appears (to production workers, like myself) that this, "fall from grace" could have been avoided with a swifter reaction to a changing marketplace...

example: if truck sales slow beyond a feasible level in a quarterly period...explore GM & TOYOTA vehicle lines for possibly compatible alternate or additional manufacturing inserts...

...the TRUCK line is a BRAND NEW line & could relatively easily be re-worked to host an additional vehicle..at only the cost of MANPOWER & minimal equipment aquisitions..

..NUMMI is far superior to competition at NEW LINE START-UPS...and would require two months at an extreme timeframe..to train an entire workforce on a new product...

...unlike any other plant in NORTH AMERICA...the NUMMI worker contracts themselves for 10 hour work shifts...thus, the surge in employee cost...in our defense..our workforce is about HALF that of the other plants & we produce approximately 100k more vehicles..(roughly)...we are also contracted to extend our workweek to 6 days, twice a month, if need be...NO OTHER PLANT DOES THIS!! ..we are LOYAL.. our build quality is among the top..i believe it is 97 or 98%...i understand the fact, also that we strive for perfection..but our sheer VOLUME indicates a remarkable ability to build...

...SERVICE PARTS ..past and present models could also have been intergrated to bolster our profitability...there is ample room for expanse with minimal expense..

PRIUS, HYBRID or YARIS: these are widely used IN CALIFORNIA...& are on BACK-ORDER here & in MOST other states..or in some cases...WAIT-LISTED...if NUMMI had some or all of these high demand vehicles...we most definitely would have built a lot more than whats APPARENTLY not available to sell...keeping a positive influx of TOYOTA business and capturing back a market being absorbed by HONDA, NISSAN, HYUNDAI & FORD...

...that was just an example of what could have been done or still could be...and an inside look from a production workers point of view.. TOYOTA calls adaptation KAIZEN..funny how all of the "BIG-WIGS" missed the point of it..

...sometimes pure work experience is NOT best suited to lead...a combination of BUSINESS MINDS consulting those with ACTUAL EXPERIENCE can solidify a workforce..thus, the TEAM concept..


...and ...as it stands ...the majority of NUMMI workers are preparing for the seemingly unavoidable, ever looming lay-off...

...anybody hiring??? ...LMAO!!!

Anonymous said...

The uaw had weak leadership under united aliance,I wonder who,s retiring to a nice community in las vegas. S.A ,Salinas

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