Section 3. Local Production Starts in North America

Item 2. Joint Venture with GM

NUMMI starts production

NUMMI adopted as its fundamental policy "achieving high productivity through the Toyota Production System to supply high-quality, low-cost passenger cars". Achieving this would require that numerous issues be resolved including maintaining stable labor-management relations, effectively transplanting a production system based on the Toyota Production System, and building close cooperative relationships with local parts manufacturers.

The labor-management issue made it difficult to introduce the Toyota Production System. The scope of duties of employees affiliated with the UAW was strictly determined by union rules, and this was incompatible with the Toyota Production System, which was based on multi-skilled workers who can flexibly cover multiple processes. In negotiations with the UAW, TMC gradually gained the understanding of the union by continuously and persistently emphasizing the fundamentals of Toyota's manufacturing, which is based on the customer's perspective and the idea of long-term and stable improvement of working conditions as the basis of a stable labor-management relationship.

In September 1983, an agreement was reached with the UAW headquarters providing that "labor and management are partners for achieving shared goals", a revolutionary labor-management agreement at the time. This made it possible for NUMMI to adapt its work duty rules and employment regulations to Toyota policies. Specifically, Toyota-made systems, such as a team system, a multi-process handling system, and a system for workers to immediately stop the line in the event of a defect, were introduced. The agreement also included provisions concerning a small number of job types, which allowed for flexible transfers, hourly wages and the company's rights concerning promotions and transfers as well as a no-strike clause effective during the term of the agreement, establishing a personnel system that could support the Toyota Production System.

The Fremont Business Preparations Department was established in March 1983 to facilitate cooperation between TMC in Japan and the local operations and to achieve an effective start of production. The department included personnel and accounting sections and established a comprehensive interdepartmental implementation organization not previously seen. In addition, the "mother plant system" where a plant in Japan provides support and training to a specific plant outside Japan was introduced. The vehicle planned for production at NUMMI was the Sprinter-based Chevrolet Nova, so the Takaoka Plant became the mother plant. The Takaoka Plant trained a total of 257 group leaders and team leaders from NUMMI during nine sessions conducted from the mid-1984 to early 1985, providing basic education and on-the-job training in quality control activities and other areas.

NUMMI initially imported key components and parts such as engines and transmissions and functional parts from Japan and locally procured glass, interior parts, paint, and so on. Ordering parts was conducted in cooperation with GM, but there were major differences between TMC methods and local procedures concerning the parts manufacturer selection process and quality control, and reviews of technical information including drawings and quality targets became necessary. Continuously reaching mutual understanding among Toyota Group companies and cooperating companies even while a project is under way was a business practice carried out smoothly in Japan. But this business practice became an obstacle in the United States, where areas of responsibility are made clear through technical information that is exchanged and transferred at the time of contract negotiation. These issues were addressed through company-wide efforts to immediately adopt practices that were in common use internationally.

The NUMMI plan, which called for annual production of 200,000 vehicles, was TMC's first full-scale overseas production project. There were many hurdles to overcome before the start of production, but many techniques that could be applied to future overseas expansions were established including the introduction of mother plant systems and enhancement of technical information.

Three full years after the initial approach from GM concerning the alliance, NUMMI completed its production preparations, and in December 1984, the first Chevrolet Nova came off the production line. When the mass production systems were completed in April 1985, a lavish plant opening ceremony was conducted with the heads of TMC and GM, the governor of California, the mayor of Fremont, and many other guests in attendance.

NUMMI begin producing Toyota vehicles in September 1986 with the Corolla FX. And, as for the 12 years the joint venture was to last after the start of production, TMC and GM agreed in 1993 to continue the joint venture and undertook the procedures necessary for an extension, including obtaining approval from the FTC.

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