Detroit, Mich. — The other shoe has dropped.
Just weeks after GM announced it was pulling out of California’s only auto manufacturing plant (the so-called NUMMI facility outside San Francisco), it’s long-time partner in the venture, Toyota, announced this week it is likely to call it quits, as well.
Why? Because, reports Automotive News, “The plant is simply not competitive. NUMMI itself released a separate statement late Friday acknowledging that it has become a problem for Toyota.”
The problem? “Neither NUMMI’s labor costs nor business conditions are competitive,” reads NUMMI’s own statement.
That’s shorthand for the fact that NUMMI is Toyota’s only unionized plant in the U.S. — and that California’s energy and regulatory costs (envied by the Obama administration as a national model, natch) make it prohibitively expensive to make cars — even in Toyota’s largest U.S. market.
NUMMI’s collapse confirms what industry insiders have known for years: That NUMMI was a political arrangement between the two auto giants to give Toyota cover from protectionists by hiring UAW labor while giving GM exposure to Toyota management methods. Now that both companies are bleeding recession red, NUMMI is a luxury they can no longer afford.
The difference is, while Toyota sheds NUMMI to eliminate its only UAW plant, GM is emerging from a Democrat-arranged bankruptcy more beholden to Big Labor than ever (the union now owns 17 percent of the company). The GM bankruptcy was supposed to deliver a new, competitive GM — now that the UAW has agreed to lower its wage rates on par with Toyota’s, to $28 per hour.
But, as the NUMMI statement reveals, $28 an hour is so 15 minutes ago.
“NUMMI’s hourly workers earn national UAW rates of about $28 an hour at a time that Toyota and other automakers have been opening new auto plants in Mississippi, Texas, Georgia and Tennessee where assembly workers start $15-$20 an hour,” reports Automotive News.
Fixed fast to another contract while its nimbler competitors have no union to deal with, GM is once again behind the labor 8-ball.