Toyota Motors and GM have lost a lot of money on their joint California car assembly plant since 1984, when New United Motor Manufacturing Inc. was created to defuse anti-Japan sentiment (Toyota’s motive) and learn lean manufacturing (GM’s.) No wonder GM and Toyota are ditching it amid the unprecedented global auto-industry crisis. GM announced its intention to walk away from Nummi earlier this summer, and today Toyota did, too. The Japanese car maker will shift production of Corolla compact cars and small Tacoma trucks to other factories in North America, where there’s idle capacity, WSJ colleague Kate Linebaugh writes. Toyota’s spare capacity is a global problem for the company; indeed earlier this week DJN reported the company will suspend a production line in Japan and may make similar moves in the U.K. next year. As DJN collague Yoshio Takahashi wrote, the company is avoiding shutting factories altogether so it can “quickly return to its current capacity in the event of a recovery in demand in the coming years.” That said, “the current outlook for auto demand remains pessimistic,” Yoshio noted. With the exception of a few hot markets – most notably China, where car sales are growing robustly – most other economies are likely to recover from the downturn slowly, with consumers clinging to old cars as long as they last. Layoffs are rare in Japan, where jobs are for life, according to social norms – so Toyota’s ability to cut costs is rather constrained. Sounds familiar? Labor-related limitations – many of them self-inflicted – damaged the U.S. auto industry, and now could slow Toyota’s own recovery.
Check out Paul Ingrassia’s column in today’s WSJ and on DJN: http://online.wsj.com/article/SB124199912671905001.html?mod=article-outset-box
It summarizes how the one U.S. auto maker, Ford Motor, did things right – developing hip new vehicles and avoiding the government dole, to name a couple gold-star feats – only to see its hapless rivals Chrysler and GM rewarded for poor behavior in the form of the Washington bailout’s special debt-reducing dispensations. Continue reading…