It’s official – Toyota is going to close NUMMI. Toyota has a list of good reasons for closing the plant – it’s unprofitable, it’s in a bad location, building cars in California is only going to get harder with environmental regulations and increasing taxes, etc. A couple of weeks ago we came up with a list of reasons Toyota wouldn’t close NUMMI (we were wrong).

NUMMI closes 25 years after GM's Roger Smith and Eiji Toyoda created their joint venture.

NUMMI closes 25 years after GM's Roger Smith and Eiji Toyoda created their joint venture.

First and foremost on our list was the PR nightmare that comes with closing a plant. While “nightmare” might be a little over the top, there’s no denying this decision will negatively impact Toyota’s image. Here’s why:

  • California is in a bad way. The economy in California is down, and the California legislature is in the middle of a series of budget cuts. Closing a plant that directly employs 5,000 and indirectly effects the jobs of 300,000 isn’t going to go over well. Throw in the fact that California is Toyota’s largest market in the USA and it seems likely sales are going to fall (at least temporarily).
  • Toyota’s “no layoffs” policy is in tatters. Granted, NUMMI employees work for a separate company that’s not technically Toyota, but so what? We all know Toyota is a joint partner.
  • Many consumers will assume Toyota is in trouble. A lot of casual observers will fail to draw a distinction between bankrupt GM, bankrupt Chrysler, and Toyota: They all close plants and put workers in the street, right? Add in Toyota’s 30% sales decline and their recent decision to fire half of their execs and Toyota looks like a company on the ropes.
  • Xenophobes will feel justified. People crying “don’t buy vehicles from foreign companies” and “remember Pearl Harbor” will have yet another reason to speak out against Toyota. It’s not as if these people need a reason to complain – it’s just that consumers are more likely to listen.

Can Toyota fix this? Perhaps. Regardless of what happens, best wishes to all the NUMMI employees, suppliers, and anyone else who depends on NUMMI for employment.

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