How Fremont’s NUMMI Plant Reshaped Auto Industry

Toyota and General Motors opened NUMMI in Fremont, California, in December 1984 after taking over a former GM assembly plant that had been shut in 1982. Toyota says the venture was a 50-50 joint operation, and Harvard Business School describes it as a test for whether GM could learn the Toyota Production System while Toyota learned to build cars in the United States. Within five years, Smithsonian archives say, the plant was operating as efficiently as Japanese factories. That record turned NUMMI into one of the most studied factories in American manufacturing history. ### Why did Toyota and GM pick Fremont in the first place? General Motors had closed the old Fremont Assembly plant in 1982 after years of labor conflict and poor performance. Harvard Business School says the factory had a “tumultuous history,” with wildcat strikes and constant conflict between management and the United Auto Workers, and says vehicle quality there was the worst in GM. Toyota agreed to manage the reopened plant while GM supplied the shuttered facility. (toyota-global.com) In February 1984, Toyota says, the two companies each contributed half of $200 million in capital to establish New United Motor Manufacturing Inc. The first Chevrolet Nova rolled off the line in December 1984, according to Toyota’s corporate history. ### What changed on the factory floor after NUMMI opened? (hbs.edu) NUMMI rehired many of the same workers from the old GM plant instead of replacing the workforce. A study by University of Southern California professor Paul Adler says 85% of the workers hired by the new company were former employees of the GM-Fremont facility and remained represented by the UAW. Smithsonian archives say the plant used Japanese management techniques, while worker and manager interviews from 1990 described team responsibilities, suggestion systems and quality-control methods. (toyota-global.com) Paul Adler wrote that NUMMI sustained “exceptional levels of productivity, quality, and worker motivation.” His study said the factory’s formal systems emphasized teamwork, standardization and problem-solving rather than the adversarial approach that had defined the old plant. ### How much did NUMMI matter beyond one Fremont factory? Harvard Business School says NUMMI gave GM a direct chance to study the Toyota Production System, which differed sharply from the mass-production methods common in Detroit at the time. (faculty.marshall.usc.edu) The case says Toyota turned Fremont into the most productive auto assembly plant in the United States, with quality comparable to its Japanese factories, and that GM then faced the harder task of transferring what it had learned into the rest of its operations. The Smithsonian archive’s historical note makes a similar point in narrower terms. It says the former Fremont plant had been the least productive in the GM system and that, within five years of reopening, it operated as efficiently as Japanese manufacturing facilities. ### Why did NUMMI close after 25 years? Toyota said on March 3, 2010, that it had committed $250 million to support NUMMI workers through the end of production on April 1, 2010. (hbs.edu) In the same statement, Toyota said GM’s withdrawal had “severely undermined the economic viability of the plant,” after GM had ended production of the Pontiac Vibe there in 2009 and left its 50% share in NUMMI among the assets of “old GM” during bankruptcy. (siarchives.si.edu) Toyota’s statement called NUMMI an independent company established in 1984 as a 50-50 venture of Toyota and GM. Tesla later said the former NUMMI factory closed in April 2010. ### What is left of NUMMI in Fremont now? Tesla completed the purchase of the Fremont automobile production facility from NUMMI on October 19, 2010, according to an 8-K filing with the Securities and Exchange Commission. (pressroom.toyota.com) The filing says Tesla paid $42 million for the land and facility, excluding manufacturing equipment, and separately bought equipment and spare parts for about $17 million, with another roughly $7 million tied to permit transfers. Tesla said in October 2010 that the former NUMMI factory would become the home of the Model S and future vehicles. The site remains one of the clearest physical links between NUMMI’s manufacturing experiment and the current auto industry in Fremont. (ir.tesla.com) (ir.tesla.com)