July 21, 2009

Toyota faces plant decision

It may close Calif. facility or open Miss. site as it adjusts capacity

BY JUSTIN HYDE and GREG GARDNER
FREE PRESS BUSINESS WRITERS

WASHINGTON — Toyota Motor Co. has yet to decide whether to close its former joint venture with General Motors Co. or if it should open a half-built Mississippi plant as it seeks ways to cut excess capacity, its chief U.S. official said Monday.

Yoshimi Inaba was named to head Toyota’s U.S. sales and manufacturing in June, part of a shakeup on the heels of Toyota’s $7.7-billion loss for the quarter ending March 31.

In addition to the problems of underused plants and U.S. sales down nearly 35% through June, Inaba said he wanted to inject more passion into the Toyota brand in North America and vowed to revive the Scion brand, targeting younger buyers.

He said Toyota was trying to decide quickly what to do with the NUMMI plant in Fremont, Calif., a joint venture that GM ended as part of its bankruptcy. The factory employs 4,700 people, including the only UAW workers at any U.S. Toyota plant.

Inaba said Toyota would prefer to keep the plant open.

"Last we heard a decision is expected at the end of the month," said Cindy Bonior, president and CEO of the Fremont Chamber of Commerce.

Gino DiCaro, spokesman for the California Manufacturers and Technology Association in Sacramento, said California legislators have assembled incentives that would exempt NUMMI’s equipment from sales taxes, reduce electricity costs by 70% over two years and require the state to purchase a set number of Tacoma pickups and Corolla compacts produced at the plant. Toyota has not sought favors.

A 4-year labor agreement between NUMMI and UAW Local 2244 expires next month. With GM’s withdrawal, the plant likely will produce less than half its annual capacity of 420,000 vehicles.