Logistics is behind Toyota’s decision to close its New United Motor Manufacturing Inc. (NUMMI) plant in Fremont, California next March, according to the carmaker.
Answering questions from disgruntled workers who called into a show on KGO radio station in San Francisco to complain about the closure, James Lentz, head of US Toyota sales said: "Nobody likes to close a plant down. [Its] the economics of having a plant in California so far away from the supplier lines, most of the parts that come to that plant still come from the Midwest. It just doesn't make business sense for us to continue."
But the company is already facing logistics challenges at its San Antonio plant in Texas where Tacoma production will transfer. As Automotive Logistics News reported in September, the inclusion of Tacoma production alongside its Tundra output in Texas is creating headaches for Toyota over how to handle the supply of parts from its existing 21 on-site suppliers. The company has said officially that the existing supply base will meet most, if not all, of the demands made by the addition of Tacoma production. However, there may be a need to extend the supply chain into Mexico to make up the shortfall if Californian-based suppliers decide it is not cost effective to ship parts to Texas.
Toyota also makes the Corolla at the NUMMI plant but this will now transfer to its Canadian plant in Cambridge, Ontario, as well as from Japan to meet near term demand from dealers in the US.
Toyota says GM, which was its partner at the NUMMI plant, must take part of the blame for the closure because it pulled out of the joint venture when it declared bankruptcy earlier this year. Although Toyota was a 50% stakeholder in the facility it may end up carrying 100% of the closure costs. According to a report in The LA Times, Motors Liquidation, the company that took over GM’s assets, won’t fund any of the severance pay or other expenses to the closure of NUMMI.
The closure is also significant as it is the first time Toyota has closed a plant; it was also the last carmaking plant in operation in California.
One caller to the Ron Owens Radio Show – UAW president at NUMMI president Sergio Santos – talked of a possible boycott of Toyota cars and trucks in response to the closure.