By on August 28, 2009

The typically boosterish San Antonio Business Journal sees nothing but blue skies and green lights ahead as the decades long move of manufacturing jobs out of California and into Texas continues  with the announcement that the Tacoma is moving into the brand spanking new San Antonio factory. San Antonio has been busy not building very many Tundras, so locals there are thrilled at the prospect of feasting on NUMMI’s loss. “Year to date through July, Toyota says it sold 42,419 Tundras — down 52.6 percent from the same seven-month period in 2008. The news isn’t much better for the Tacoma, a smaller truck. During the first seven months of this year, Toyota sold 65,713 Tacomas. It sold 95,732 Tacomas during the same selling period in 2008.” Toyota will have to spend an estimated $100 million tooling up San Antonio to build Tacomas, but the combined volume of Tundras and Tacomas still will not fill the San Antonio factory unless something dramatic happens to increase Toyota’s truck sales.
If you ask me, the real mistake was in building a huge new dedicated pickup truck factory in Texas with which to attempt to conquer a market segment Toyota has failed repeatedly to penetrate. The huge new San Antonio plant was a massive PR effort aimed at making Toyota a legitimate player in the US large pickup truck market. That gambit failed. The smarter move would have been to mothball San Antonio, go back to making the Tundra in Indiana and keep the fully depreciated NUMMI factory building small cars and small trucks. But, no, image is everything and Toyota would never admit to making a big mistake on the massive San Antonio project. GM’s exit from NUMMI makes it easy for Toyota to close that factory and blame someone else. Toyota closed NUMMI because it was the most face saving way to reduce overcapacity.
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32 Comments on “San Antonio Snags NUMMI’s Tacoma Production...”


  • avatar
    Bunter1

    I dunno John, Tundra was meeting projections before trucks dived and and they are down a similar amount to the others.

    Yes, the timing was bad, but I will go on record with this; in 5 years this plant will look like a great long range move.

    Esp. as the Ram will probably be RIP, heck GM, and with it, the ‘Rado could well by toast also.
    Even w/o that they will do fine in the long run.

    IIRC owner satisfaction is high and I think deprication is less than the ‘Rado. Not 100% sure.

    Regards,

    Bunter

  • avatar
    midelectric

    Any word of workforce addition as a result of the move?

  • avatar
    JG

    I wish Toyota would amalgamate the taco/tundra into a reasonably sized vehicle with a V8, and then built something 7/8ths or 3/4ths scale of the current taco featuring things like a 2.0 GTDI engine (or a diesel, dream on…), 6MT/6AT, and a good 4×4 system with a real diff in the back. I’m dreaming of a 25-30 mpg truck that can move dirt bikes around.

  • avatar
    menno

    I suspect that the next-generation Tundra will remain as is, and add a turbo-diesel V6; and that the next-generation Tacoma will slightly down-size and add a turbo-diesel four.

    Toyota have repeatedly said that for larger vehicles, diesel is better than hybrid. They make an exception for larger SUV’s, I think, because of the PR factor.

    Which is NOT a foolish move, given that most SUV drivers are simply driving tall oversized cars, essentially.

    For real truck work, a diesel is best and even Toyota know this.

    This, don’t forget, coming from a current Prius owner.

    I think this is completely logical and that the california plant was history the moment GM pulled out. Especially given that Toyota has so many non-union, lower cost, US plants to move producton to – like in Texas and Ontario….

    I’m also aware that given Toyota have been sourcing Corollas for North America from NUMMI, from Ontario AND from Japan – still will have 2 of 3 sources.

    Plus the very low cost truck parts plant in Baja California, Mexico.

  • avatar
    rnc

    I wonder if Toyota made some sort of deal with GM regarding NUMMI and the BK (you pull out under bk, then we can too) in exchange, for I don’t know, maybe licensing hybrid tech?

  • avatar
    JMII

    JG – I’m dreaming of the same vehicle, I’d like something between the size of the Dakota and Ranger that can tow a decent load and get atleast 20 mpg. A turbo diesel 4 with a 6 spd seems about right. But this is the US of A, thus huge trucks with gas V8 rule so I doubt we see our dreams come true any time soon (next 10 years).

  • avatar
    pnnyj

    “rnc :
    I wonder if Toyota made some sort of deal with GM regarding NUMMI and the BK (you pull out under bk, then we can too) in exchange, for I don’t know, maybe licensing hybrid tech?”

    Why would they need to do a deal at all? GM had nothing to gain from NUMMI going forward so they did the smart thing for themselves and left their stake with old GM. There isn’t much need to conspire (or coordinate, to put it more gently) when closing NUMMI made so much economic sense for both GM and Toyota.

  • avatar
    stars9texashockey

    3 letters: UAW. ’nuff said

  • avatar
    Geotpf

    NUMMI was an old plant, and tied to the UAW and (old) GM. I can see why Toyota would close it over a modern, non-unionized plant.

  • avatar

    The smarter move would have been to mothball San Antonio, go back to making the Tundra in Indiana and keep the fully depreciated NUMMI factory going building small cars and small trucks.

    But John, isn’t NUMMI the most expensive labor force in Toyota’s arsenal of factories? I’m guessing that walking away from the UAW more than made up for keeping the San Antonio project online.

  • avatar
    AndrewDederer

    Like they said above ALL trucks are down. If the market was a little swollen, the picket market was doubly so (and the margins were very high for what’s supposed to be a “competive” segment. Tundra’s first year started the discounting, the credit crunch did for the volume (gas prices didn’t help). Fact is, Toyota moved 200,000 Tundras (about 1 line-year worth) the intro year (which was the last peak year). We won’t know what the market will look like for at least 2 more years (we have to see what happens to Dodge and Nissan first).

    Remember, Toyota doesn’t need to make sick profits off trucks (just more than break-even), but they can (and did) make it hard for the domestics to keep their margins so high.

  • avatar
    bobkarafin

    Look, let’s tell it like it really is:

    NUMMI was Toyota’s only UAW plant and also the only plant where Toyota was losing money. Cutting NUMMI loose not only frees Toyota from having to deal with the UAW, but also from California and their loony, anti-business government. (NUMMI was their only plant in CA).

    I’d say GM did Toyota a big favor when they went bust and left Toyota holding the NUMMI bag all by themselves; it would’ve been much messier for them to get out otherwise.

    I’d have done the same thing without a second thought.

  • avatar
    segfault

    Full-size trucks have become monster trucks–you can no longer stand on the ground and grab something that’s sitting in the bed. Like it or not, that’s what Toyota has to compete with.

  • avatar
    Omoikane

    “Year to date through July, Toyota says it sold 42,419 Tundras — down 52.6 percent from the same seven-month period in 2008. The news isn’t much better for the Tacoma, a smaller truck. During the first seven months of this year, Toyota sold 65,713 Tacomas.”

    San Antonio’s capacity is 200k/year.
    108.1k Tacomas and Tundras were sold in 7 months. Correct me if I’m wrong, but wouldn’t that mean about 184k trucks per year? And that was during the worst recession since 1929, with SARR at 9 million!
    I think the sentence about Tundra and Tacoma not filling up San Antonio is BS.
    They don’t need anything “dramatic” to happen to get from 184k to 200k. Getting back from depression like levels to recession like levels would be enough.
    If anything, I think they will have to expand the plant in a year or so.

  • avatar
    superbadd75

    Toyota wanted to the UAW. GM backing out of NUMMI was the perfect excuse to shut it all down.

  • avatar
    menno

    Omoikane said “San Antonio’s capacity is 200k/year.
    108.1k Tacomas and Tundras were sold in 7 months. Correct me if I’m wrong, but wouldn’t that mean about 184k trucks per year? And that was during the worst recession since 1929, with SARR at 9 million!
    I think the sentence about Tundra and Tacoma not filling up San Antonio is BS.
    They don’t need anything “dramatic” to happen to get from 184k to 200k. Getting back from depression like levels to recession like levels would be enough.
    If anything, I think they will have to expand the plant in a year or so.”

    There is a Toyota plant in Baja California, Mexico which is capable of building Tacoma’s, I believe. Right now, I think it manufactures beds and parts; wouldn’t take a ton of time or money to build a plant on-site and ramp up extra truck capacity.

    60 cents an hour beats the hell out of even $11 or $15 an hour or whatever they make in Texas.

    Didn’t Ross Perot have something to say about all of this?!

  • avatar
    rnc

    Why would they need to do a deal at all? GM had nothing to gain from NUMMI going forward so they did the smart thing for themselves and left their stake with old GM. There isn’t much need to conspire (or coordinate, to put it more gently) when closing NUMMI made so much economic sense for both GM and Toyota.

    Because you can believe that there was some sort of negotiation b/t GM, UAW and PTFOA regarding which plants would be shut down. If GM decided to keep building there, then Toyota would have had a much harder decision to make (close a plant in your second largest market in the world (california). Toyota could have walked away without GM doing the same, but the negative press would have been huge. Instead its just GM, went bankrupt and abandoned NUMMI (thier image can’t get worse only better) so what choice do we have, “we deeply regret that this decision had to be made”, maybe they’ll plant some shrubbery along the highways, but all and all thier image will be unscathed and image is worth Billions to them.

  • avatar
    Arminius

    +1 Bobkarafin
    Not only does Toyota get to cut lose of the UAW, they get to leave the Poeple’s Republic of CA. This has to be one of the most business unfriendly states in the country. If I owned a manufacturing business I would leave skid marks getting out of CA. It’s only a matter of time before the state goes bankrupt, they have some of the highest taxes in the country, crumbling infrastructure, worse schools, and onerous regulations.

    And it’s not as if Californians will stop buying Toyotas because they leave NUMMI. I feel sorry for Fremont but the rest of the state could care less.

  • avatar
    mikey

    Take note B&B …….Whithin two years,one of the transplants will go UAW or CAW. The rest will fall like Dominoes.

    I can hear the guffaws and laughter before I even
    hit the submit key. Remember , you heard it here first.

  • avatar
    rnc

    Never, never happen, they all look at what the UAW has done to the B3 and say no way.

    I hired several people that worked for Mack Trucks. I had reservations about doing this, but during the interviews I learned, they hated the union, if Mack had come in and offered them a decent wage (I mean $14-$16/hour they literally tried to start them off at minimum wage ) then the union wouldn’t have stood a chance, when Volvo announced that they were closing the plant, the workers wanted to try and renegotiate, but the UAW did everything in thier power to keep that from happening, losing the plant was a better option than ONE UAW company taking significantly less than the others.

  • avatar
    Omoikane

    Menno,
    yes, there is the Baja California plant in Mexico. It is currently running at full capacity (50k/y Tacomas). It also makes al the truck beds for NUMMI (130k/year). Many processes are manual. It would take a few hundred million dollars to expand the plant and quite a bit of time to train the additional manpower. The more south you go, the harder it is to find qualified/literate workers. That being said, the Mexicans are hard workers- … well… except for the day after the payday, when they may not show up for work… tequila causes bad hangovers…
    In my opinion, the crunch time- when Texas plant will struggle to keep up with demand- is going to come in less then 12 months.

  • avatar
    mikey

    Yes I agree with you rnc. But times they are a chang’in. The UAW isn’t completly stupid,a new aproach,can and will happen.

    Speaking as someone as a retired guy that has gone for a few interviews lately. If you want me to bad mouth the CAW, wind me up and watch me go.

  • avatar
    John Horner

    “NUMMI was Toyota’s only UAW plant and also the only plant where Toyota was losing money.”

    I call bs on that last statement. How could Toyota be making money in the massive new San Antonio plant with about $1.5 billion to depreciate on the backs of 10k or so units per month? Toyota as a whole is loosing money, so it is pretty safe to assume that the majority of Toyota factories are loosing money.

  • avatar
    Runfromcheney

    John, I must disagree with this article.

    In case you forgot, NUMMI is a UAW controlled plant. Toyota is not dumb, they know the damage the UAW did to GM, and they have been trying to keep the UAW away for years. Although it was able to keep it under control because of GM’s share, If they kept NUMMI, Toyota will now have a fully owned UAW staffed plant, and that will be an open door for the UAW to come in and unionize the rest of Toyota’s American plants. THAT is why Toyota closed NUMMI.

  • avatar
    Tommy Boy

    >Take note B&B …….Whithin two years,one of the transplants will go UAW or CAW. The rest will fall like Dominoes. I can hear the guffaws and laughter before I even hit the submit key. Remember , you heard it here first.

    For the sake of argument, let’s say that you’re right.

    Then it won’t be too many years before those plants are shut down and production moved over the border or offshore.

    Not only have the Japanese and Koreans seen what the UAW did to the (formerly) BIg Three, Toyota dealt with UAW first hand at NUMMI. And the European transplants in large part are here because those companies sought relief from the unions in Europe.

    No company in its right mind is going to operate with the UAW unless they have no other alternative. Had the Big Three been able to shuck the UAW 20 years ago they would not have been forced into bankruptcy and federal bailouts.

    The most adamantly anti-union folks I’ve met are workers who used to be in a union and are now free of them.

    The only people unions benefit are union bosses, union staff and slackers. For everyone else, they’re parasites that suck dues out of paychecks and eventually cause those paychecks to disappear.

  • avatar
    seeseebutler

    Leave it to GM you walk away from a project that produced the Pontiac Vibe, one of the most reliable GM vehicles. I own one and it is a great little car

  • avatar
    50merc

    If anyone mentioned “card check” I missed it. That would make a tremendous difference. Would you be able to resist if a gang of bruisers surrounded you on the way into the plant and “invited” you to mark your no-longer-secret ballot for the union? So if the Dems can ram “card check” through Congress, then yes, I’d agree with Mikey that Toyota will be unionized within two years. Most other workplaces, for that matter.

  • avatar
    Tommy Boy

    >If anyone mentioned “card check” I missed it. That would make a tremendous difference. Would you be able to resist if a gang of bruisers surrounded you on the way into the plant and “invited” you to mark your no-longer-secret ballot for the union? So if the Dems can ram “card check” through Congress, then yes, I’d agree with Mikey that Toyota will be unionized within two years. Most other workplaces, for that matter.

    Good point.

    “I’m from da UAW, an my buddies here r from da Teamstuhs. Geez, does are kute kidz youz got there, it’d be a shame should sumpin happen ta dem. Anywayz, you wanna sign dis here card now don’t ya?”

    Funny how the unions don’t support card check to allow people to decertify a union, and don’t support individual right via “right to work.” So much for “union democracy” and “supporting the rights of the working man.”

    Follow the money – the union bosses want more dues paying members, however they can get them and force them to stay dues paying members.

  • avatar
    golden2husky

    No company in its right mind is going to operate with the UAW unless they have no other alternative. Had the Big Three been able to shuck the UAW 20 years ago they would not have been forced into bankruptcy and federal bailouts.…

    No, the D3 went bankrupt because of poor management, a poor car portfolio, an over-reliance on trucks, and a refusal to make amends for engineering failures. Detroit was raking in record profits during the SUV boom on the back of UAW labor. Had they invested these profits on redesigning their cars instead of buying needy foreign brands, perhaps they would have been in better shape today. Not saying that the high cost of labor isn’t a factor, but if there is no demand for your product, cheap labor is not going to be your savior.

  • avatar
    John Horner

    I’m not surprised that some view this situation as being all about the Big Bad Evil UAW. I disagree, but since none of us where at the executive meetings inside Toyota where this was decided then I guess we are all just guessing.

    The UAW was at best a contributing factor in the decline of the formerly big 3. Repeated management bungling was the primary factor.

  • avatar
    Tommy Boy

    Was the UAW the only factor? No.

    But many of the “bad management decisions” were compelled by the economic realities of having to cut corners elsewhere to offset the higher costs of the UAW being on the premises. Not just direct hourly labor costs but also legacy costs, strike costs, overhead having to deal with grievances and negotiating, and the featherbedding and inefficiency of UAW work rules.

    Costs not borne by their union free competition.

    Hence the squeeze on suppliers and lower quality components, the Fisher-Price interiors etc.

  • avatar
    John Horner

    Caterpillar management had the guts to drive a hard bargain with the UAW. GM & friends didn’t.


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