At about the same time, GM was struggling to profitably build high-quality and fuel-efficient small cars that consumers demanded after the energy crisis of the 1970s. Consumers started turning to foreign automakers for these vehicles, prompting the U.S. Congress to consider import restrictions to protect the domestic auto industry.[5][6] That led GM and Toyota to team up and create New United Motor Manufacturing, Inc. (NUMMI), a joint venture to manufacture vehicles to be sold under both brands.[3]
GM saw the joint venture as a way to get access to quality small cars[6] and an opportunity to learn about the Toyota Production System and The Toyota Way, a series of lean manufacturing and management philosophies that had made the company a leader in the automotive manufacturing and production industry.[9] For Toyota, the factory gave the company its first manufacturing base in North America allowing it to avoid tariffs on imported vehicles[10] and saw GM as a partner that could show them how to navigate the American labor environment, particularly relations with the United Auto Workers union.[11][12][6]
The companies made the unusual choice to remake the troubled Fremont Assembly into the new NUMMI plant. The leadership of the UAW union insisted on re-hiring the same union leadership that had overseen GM's worst workforce. GM was against it, but Toyota agreed, believing that their system could turn things around. However, Toyota insisted that the plant would need to operate differently and old seniority rules would not apply. The workers hated the proposed changes, but desperately needed jobs. Ultimately, over 85% of NUMMI's initial workforce were the workers laid off at Fremont Assembly in 1982.[11] GM would also assign 16 managers to the plant and Toyota sent 30 managers and production coordinators from Japan, including the CEO, Tatsuro Toyoda, part of the company's founding family.[13]
Ahead of the reopening of the plant, Toyota sent many of the workers to Toyota's Takaoka plant in Japan[11] to learn the Toyota Production System and actually work for a few days on the assembly line.[5][6] Workers who made the transition identified the emphasis on quality and teamwork by Toyota management as what motivated a change in work ethic.[5][6] Among the cultural changes were the same uniform, parking and cafeterias for all levels of employment in order to promote a team concept, and a no-layoff policy.[11] Built-in process quality and employee suggestion programs for continual improvement[11] were other changes.[11]
By December 1984 (two years after the closure of Fremont Assembly), NUMMI's first car, a yellow Chevrolet Nova, rolled off the assembly line. The plant started producing the Toyota Corolla in September 1986.[3] Almost right away, the NUMMI factory was producing cars at the same speed as the Japanese factories and Corollas produced at NUMMI were judged to be equal in quality to those produced in Japan with a similar number of defects per 100 vehicles.[11][5][6]
In 1990, for the 1991 model year, Toyota started building the Toyota Hilux (also known as the Toyota Pickup) at NUMMI, allowing the company to completely avoid the chicken tax, a 25 percent tariff on light trucks imposed in 1964. Previously, the company had avoided a large portion of the tariff by importing the truck as an incomplete chassis cab (which included the entire truck, less the truck bed) which only faced a 4% tariff.[14] Once in the United States, Toyota Auto Body California (TABC) would produce the truck beds and attach them to the trucks. TABC was the first manufacturing investment in the U.S. for Toyota.[15] This tariff loophole was closed in 1980.
NUMMI did face some financial challenges, with cars costing more to build than at other GM plants and only operating at 58.6% capacity by 1988.[16] The plant had not reached break-even by 1991.[11]
In January 1995, NUMMI began producing the Toyota Tacoma, a pickup truck designed exclusively for the North American market.[3]
Up to May 2010, NUMMI built an average of 6,000 vehicles a week, or nearly eight million cars and trucks since opening in 1984.[5][6] In 1997, NUMMI produced 357,809 cars and trucks.[17] Production reached its annual peak of 428,633 units in 2006.[18]
