Roots of the joint venture

Competition and cooperation is the underlying principle of the growth of the world economy. Our joint venture is founded on this approach. We hope to make this project a success as a model of economic cooperation between Japan and the United States – one that contributes to the American economy. -Eiji Toyoda, then chairman, Toyota Motor Co.

General Motors Corporation and Toyota Motor Corporation formed NUMMI as an experiment. For Toyota, the joint venture was an opportunity to test its ability to use its production methods in an American setting. For GM, it provided a way to learn how to build cars more efficiently using Toyota's "lean" production system. Since GM also wanted to manufacture a small, high-quality car, Toyota seemed like the perfect partner.

To help raise the $450 million needed to prepare the plant for production, GM contributed its Fremont, California, plant, which had closed in 1982. Toyota provided $100 million. NUMMI raised the additional capital as an independent California corporation.

Because of possible antitrust and anti-competition implications, the Federal Trade Commission conducted an extensive investigation. Ford and Chrysler rigorously opposed the joint venture and filed a lawsuit to block it.

Following a 15-month investigation, the FTC approved the formation of the company. In granting approval, the FTC stated that the venture would provide a wider range of automobile choices for consumers. In addition, it saw NUMMI as a potential role model for U.S. companies in cooperative labor-management relations. Although the FTC placed a 12-year limit on the joint venture, this was lifted after a dozen successful years of business, and NUMMI was allowed to operate indefinitely.

Building our team
Former GM workers were invited to apply for jobs and told of the need for employees willing to contribute to an atmosphere of trust and cooperation.

Potential production employees went through a three-day assessment that included production simulations, individual and group discussions, and written tests and interviews. Once hired, team members attended a four-day orientation covering the team concept, production system, quality principles, attendance policies, safety policies, labor management philosophies and the competitive condition of the auto industry.

About 450 group leaders and team leaders traveled to Toyota's Takaoka plant in Japan for three weeks of classroom and on-the-job training. This training is now conducted almost exclusively at the NUMMI plant in a two to four week program referred to as "Foundations In Training," or FIT. Classes include an introduction to the Toyota production system, team building, union-management relations and safety. These are followed by on-the-job training with team members working side-by-side with experienced trainers.

The first NUMMI team, approximately 700 team members, built the Chevrolet Nova in December of 1984. Automotive writers compared its quality to similar cars being produced in Japan. Consumer Reports commented that the Nova was "a class act among small cars... was virtually identical to the Corolla and it is assembled, fitted and finished as well as any Toyota we have seen." The NUMMI team is now more than 5,740 strong and NUMMI quality continues to be among the best in the industry, having received several J.D. Power and Associates Initial Quality Study vehicle and plant awards through the years.

NUMMI and UAW as Partners
Another historic first was the participatory labor agreement between NUMMI and the United Auto Workers. In return for NUMMI’s acceptance of the UAW as the bargaining agent for NUMMI’s team members and its willingness to pay prevailing U.S. auto industry wages and benefits, the UAW agreed to be an active participant and take a cooperative role in labor-management relationship at the plant. The UAW also agreed to accept Toyota's production methods and to work with the company to improve productivity and quality.

Labor Relations
NUMMI and UAW Local 2244 signed their first collective bargaining agreement in June 1985. Both parties committed to resolving problems together and seeking ways to improve quality, efficiency and the work environment. This commitment to NUMMI’s future continues today.

A unique part of the contract is the emphasis placed on job security. NUMMI’s position is that it will not lay off employees "unless compelled to do so by severe economic conditions that threaten the long-term financial viability of the company." NUMMI has stood by its "no lay off" policy even through lean periods.

Due to poor market conditions in 1988, NUMMI was forced to reduce the line speed but it kept its promise of not laying anyone off. Instead, displaced team members worked in special project teams, such as continuous improvement (kaizen) teams.

While the contract between NUMMI and the UAW emphasized the philosophy of mutual trust and respect, it also contained a number of concepts not found in most labor agreements, including:

	Non-confrontational problem-resolution procedures based on discussion and consensus.
	Advance consultation with the union on relevant business issues.
	Minimum job classifications that provide work flexibility.
	"No strike" provision over production or safety standards.

While the contract provides the formal wording for management-labor relations at NUMMI, the success of the relationship is based on daily communication between the company and the union.

To that end, the human relations philosophy practiced at NUMMI is in reality more important than the words of the contract. This philosophy is carried out to the extent that there are no traditional management benefits such as an executive cafeteria, reserved parking spaces or private offices. These amenities are considered barriers to a cooperative management relationship.

NUMMI feels strongly that team members are its most important asset and should be treated as equals and as professionals.

In the late 1980s, then Secretary of Labor William Brock visited the plant to announce that NUMMI had been selected as the U.S. model of labor-management cooperation. This model was presented as a case study at the International Labor Organization Conference.

Summary
NUMMI’s roots were established in an environment of mutual trust and respect, team member involvement and precedent-setting labor management relations. NUMMI has flourished in this "greenhouse," which requires constant attention by team members at all levels. NUMMI realizes that its most important assets are its people. By living these philosophies, coupled with a world-renowned lean management system, NUMMI continues to produce world-class quality cars and trucks.