Cornell University

May 24 2010

A Third Chance

Toyota-Tesla partnership, potential worker ripple analyzed by Wheaton

Art Wheaton of ILR has the back story on Toyota's surprise announcement that it will develop electric cars with Tesla Motors at a storied California plant where up to 1,000 jobs could evolve.

Toyota said last week it is acquiring a $50-million stake in the California-based company, which plans to build electric cars at the New United Motor Manufacturing Inc. plant better known as "NUMMI." The plant was co-owned by Toyota and General Motors Corp. for 25 years.

Before NUMMI formed, Wheaton said, "GM built cars in the plant with questionable quality and poor labor management relations. The plant was notorious in the GM system for hundreds of grievances between the United Auto Workers and GM."

A senior Extension associate based in ILR's Buffalo office, Wheaton is an expert on the domestic and international automotive industries. He has developed education and training programs for the United Auto Workers, General Motors, Ford Motor Company and other organizations.

In the 1980s, GM closed the Fremont, Calif., plant and laid off its United Auto Workers employees, he said. Later that decade, Toyota tested expansion of its production possibilities in the United States at the plant.

All new equipment was brought in using the Toyota production system, Wheaton said. GM agreed to the joint venture and built Chevrolet Nova cars on the same line as the Toyota Corolla.

"What was significant about this relationship was that Toyota hired back nearly all of the exact same United Auto Worker employees," Wheaton said.

"The new Toyota production system and equipment, along with significant training grants, helped transform the NUMMI plant into a world-class auto assembly plant," he said.

When GM filed for bankruptcy, it gave up on the joint venture and Toyota quickly decided not to continue the plant on its own, Wheaton said.

"United Auto Worker members and the Fremont community were outraged that Toyota would close its only California and United Auto Worker-represented plant," he said.

"This new Tesla announcement could be a third opportunity for the union workers at the former NUMMI facility to prove they are world class," he said.