Breaking: GM Dumps NUMMI Partnership with Toyota

After 25 years, GM ditches NUMMI tie-up with Toyota

In the news this afternoon:

PRESS RELEASE:

2009-06-29

GM Media Statement Regarding GM’s Ownership Stake in NUMMI

Attributable to Troy Clarke, president, GM North America

“As part of its long-term viability plan, General Motors has decided that its ownership stake in the New United Motor Manufacturing Incorporated (NUMMI) joint venture with Toyotawill not be a part of the ‘New GM’. After extensive analysis, GM and Toyota could not reach an agreement on a future product plan that made sense for all parties. Accordingly,NUMMI will end production of vehicles for GM in August, and there are no future GM vehicles planned for the joint venture at this time.Given that, GM believes it is in the best interest of the ‘New GM’ and its stakeholders that we placeour ownership interest in NUMMI in ‘Old GM’. We have enjoyed a very positive and beneficial partnership with Toyota for the past 25 years, and we remain open to future opportunities of mutual interest.”

Click the “NUMMI” link at the bottom of the post for more/old stories about NUMMI, including my tour there in 2005.

NUMMI was such a wasted opportunity. My plant manager (the second one) during my time at GM’s Livonia Engine was one of the first GM managers to rotate through NUMMI. He got it, what an incredible leader he was.

When I was there touring, we got some time with GM managers who were rotating through at the time. The guys there in 2005 were more interested in bad-mouthing Toyota to our group of MIT alumni than anything else (we got insights NOT in the public tour). Sad. Their apparent arrogance led them to highlight how Toyota wasn’t as perfect as everyone thought and that GM was a lot better in many regards.

For context, this 1989 NY Times article is interesting to revisit:

Thoughts?

 

 


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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an eBook titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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10 Comments on "Breaking: GM Dumps NUMMI Partnership with Toyota"

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  1. Peter P Patterson, MD MBA says:

    This press release is indeed sad news. The end of an era — makes you wonder if Troy Clarke's statement about inability to reach agreement about "a future product plan" is the real story.

    But thanks for linking the New York Times article from 1989 and your 2005 NUMMI tour. It brought back a lot of memories. When I was doing my mid career MBA in the early1980s, one of the cases we studied in our Organizational Development course was the GM plant in Fremont, California. The case was all about the horrendous labor-management dysfunction there, which included frequent sabotage of the assembly line by the union workers. The book containing the case was published before the plant was shut down in 1982, so it is very interesting to get the next chapter in the story.

    One thing that struck me first was how much of the old GM culture the re-hired workers brought back with them — fear of layoffs, et cetera. It makes you recall how we think we hire "new people". In truth, we only hire "used people" who bring all their old baggage with them. Another striking thing was the mistaken impressions regarding the method behind Andon cords, maintaining the pace (Takt time) and problem solving.

    The comments from the union leaders and the People’s Caucus are truly hilarious. It's a demonstration of how we humans are much better at tracking "being offended" than we are at tracking "being effective". It has me appreciate the courage of Toyota in taking all this on and the mainly positive results it produced.
    /Dr. Pete

  2. MikeNZ says:

    I don't get it Mark, does this mean NUMMI is going down or do they have Toyota contracted vehicles to fill?

    Our early introductions to Lean included Paul Adler's articles on the creation of NUMMI so it does hold an important place in our learning, like Dr Pete too.

    And what is all this "Old GM" vs "New GM" how old & how new are these businesses. Didn't at least one fail as a business model?

    Thanks for advice on this one, we are a bit out loop down under.

    Mike

  3. Mark Graban says:

    Seems to early to tell Mike.

    Some analyst on Bloomberg said:
    Does Toyota “take full ownership of a plant that’s in the most expensive place in the U.S., and that’s also got a UAW workforce, or close it and eliminate thousands of jobs?,” said Ed Kim, director of industry analysis at AutoPacific Inc. in Tustin, California. “Both scenarios are bad.”

    Art Smalley (associated with the LEI) was quoted as:

    “It’s always been a high-cost facility,” said Art Smalley, a production efficiency consultant with the Cambridge, Massachusetts-based Lean Enterprise Institute. “They have to lean toward closing it, unless they can figure out some kind of high-volume product to put in there that can really generate a profit,” said Smalley, who is also a former Toyota engineer.

    The LEI's Jim Womack was quoted in the NY Times as saying:

    “It’s the end of a remarkable educational experiment,” said James P. Womack, the chairman of the Lean Enterprise Institute, an organization in Cambridge, Mass., that promotes efficiency in manufacturing and commerce.

    “The product was never the point at this plant,” Mr. Womack said. “It was a way for Toyota to figure out how to apply its system in the United States and for G.M. to try to figure out how Toyota was doing the things it was doing.”

  4. Adam Zak says:

    I'll echo Jim Womack's comments that "the product was never the point." But it also seems pretty obvious to me that the bargain was a bit one-sided, as GM never did "figure out how Toyota was doing the things it was doing."

    In my work as the Lean Recruiter I've interviewed at least several dozen former NUMMI executives and managers over the last 10+ years. Not one of those returning to GM truly believed that he or she ever had a chance of actually implementing TPS back at the mother ship.

    How sad.

    Adam Zak

  5. Mark Graban says:

    Adam – your comment puts my experience in some context. If the GM guys were convinced they couldn't be successful with Lean at GM, what better way to pass your time than, while at NUMMI, convincing yourself that Lean/TPS isn't really that great anyway.

    Seems like a perfectly reasonable defense mechanism.

    Still sad. I don't blame those guys as much for their bad attitude now.

  6. MikeNZ says:

    OK so now I get it after reading a short update in the press today or was it the daily joke!

    GM is popping NUMMI in the "Old GM" basket to be liquidated so they can focus their energy on the "New GM".
    Is it just me or am I missing something here?

  7. Mark Graban says:

    MikeNZ – you're not missing anything, this is patently ridiculous.

    "New GM" refers to the smaller part of the company that will be kept going.

    Since Pontiac is being killed, and since NUMMI makes the Pontiac Vibe, the excuse for dumping NUMMI is that they aren't making Pontiacs anymore.

    But why not make something there, if Toyota was willing to continue as partner?

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