Toyota seeks $2 million from California for training NUMMI workers
Back in February, New United Motor Manufacturing Co. (NUMMI), the now defunct joint agreement between Toyota and General Motors in Fremont, CA, entered an agreement with California's Employment Training Panel that would provide training to 1,400 workers. Since the time of the agreement, GM has backed out of the partnership with Toyota and ceded the plant to the Japanese automaker. For its part, Toyota has announced it will close the plant by March 2010, leaving 4,700 workers unemployed.
That isn't stopping Toyota from trying to collect the $2 million it says is owed to them for completing the training program. The training covered improved manufacturing techniques, automotive training and computer skills, but critics say the training is effectively useless since the NUMMI plant is the last automotive assembly plant in California. Labor Union lobbyist Barry Broad went as far as to call the request "corporate welfare" in light of the fact that the training will likely never be utilized in the Golden State. Toyota, on the other hand, is sticking to the company line, with a statement saying, "These skills have made our team members greater contributors to NUMMI and will make them more attractive to prospective employers when they conclude their employment here in April 2010."
The California Manufacturers and Technology Assn, which provided the training and later worked hard to keep the NUMMI plant open, is on Toyota's side in the dispute, saying "a deal's a deal." While Toyota's request for $2 million even though it is closing the plant sounds like a PR nightmare given the horrible financial state California is in, it's hard to deny that they deserved to be compensated for the training. After all, the agreement was for training, not for continued employment. Perhaps next time the Employment Training Panel makes a deal to provide money for training, it'll stipulate that the workers being trained stay employed long enough to reap the benefits of their education.
[Source: LA Times | Image Source: Justin Sullivan/Getty]
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Reader Comments (Page 1 of 2)
BigMcLargeHuge 9:18AM (9/25/2009)
If it is in a contract, Toyota likely has the law on their side.
But $2 million? Toyota probably spends that on a one-day executive conference. That's just being petty at this point.
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nrb 10:18AM (9/25/2009)
Toyota should just cut their losses on this PR nightmare.
the4thheat 9:56PM (9/25/2009)
Not to mention it's not Toyota's fault GM dumped NUMMI and left Toyota to shoulder the cost of an entire plant themselves at a time when they already have plenty of extra capacity at their other plants. So now if Toyota wanted to keep NUMMI open they'd basically have to close off a newer and cheaper to operate plant, which is obviously not going to happen.
Avinash machado 9:21AM (9/25/2009)
Where is the California government going to get the money to pay Toyota from?
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Farris 11:25AM (9/25/2009)
That was the first thing I thought of. Something about blood from a stone.
HotRodzNKustoms 9:24AM (9/25/2009)
Good luck collecting that in any other form than an IOU or through a bankruptcy court.
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FitFan 10:08AM (9/25/2009)
The state of California doesn't have a bankruptcy option.
A deal is a deal, but this is certainly a bad time for Toyota to be asking California for money.
Trent 9:34AM (9/25/2009)
Never in a million years will Toyota see the money.
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tanooki2003 9:34AM (9/25/2009)
This is definitely an unfortunate situation and you really can't blame Toyota for wanting compensation. In fact what most people who do not own businesses fail to understand that it does cost a lot of money to train employees. Money goes into training materials, allocating staff time...etc which can run a company almost close to $10,000 just to train 1 or 2 employees on the job. The cost is then made up during the duration of the employment of the new-hire.
Now being that NUMMI has been ditched, due to GM's financial situation, Toyota is just doing what any business would do. They seek to recover losses that were spent on training new-hires, which amounts to $2 million.
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Mike 10:06AM (9/25/2009)
Yeah,
Toyota was really stepped on here, asking govenment for money to train their employees despite the fact they are pulling out of the plant and state that's footing the bill for the training.
Maybe it's commonplace and not talked about but since when did state government need to start paying companies to train their employees? Shouldn't that responsibility be on the company that's going to make money on their newly trained employee?
Let's also be serious here, the writing was on the wall for Pontiac back in February, Toyota had to have some idea that GM would be vacating, they signed the deal anyway knowing full well they'd probably ditch the plant, but hey, it's not their money.
mortonb11 10:15AM (9/25/2009)
Dont forget Toyota is in a real bad spot financially right now, they are trying to get money from the japenese gov for months now. And GM said almost 2 years ago it planned to replace the vibe with its own creation for the next generation. Toyota knew this day was coming, they just didnt know they would be in this financial position.
Franz 10:18AM (9/25/2009)
Yeah, I can't see why anyone would wanna dispute this. It seems petty at first glance, but the fact is that if they're owed money they'll wanna collect. That's how you run a business. They got royally shafted when GM pulled out, so they'll be trying their hardest to make the best of a bad situation.
Judy Zik 10:46AM (9/25/2009)
Justify it any way you want this is corporate stupidity at it's highest levels. Yes Toyota probably is owed the cash in theory. But asking for it right now when they are closing the plant is a PR nightmare and will read as just plain wrong to anyone with common sense. Especially with the state of California being in such financial difficulty.
Here are the facts.
1) 2 million is nothing compared to what Toyota spends on PR trying to convince people that they are nice tree hugging people who care about you and your family.
2) Making this request now will get them more publicity than they can afford to buy and all of it negative. That of course sits on top of the bad press from closing NUMMI already out there.
3) California is Toyota's key market. They were the first to really adopt Toyota's and they are often trend setters. Closing Nummi was already a risky thing to do as it may piss off the California market. Sending them a ridiculous bill for training costs is just icing on the cake.
Chris 11:34AM (9/25/2009)
Judy Zik's spot-on. It would be a BAD BUSINESS DECISION to pursue the money. They risk losing $2 million if enough people get pissed and change their next car purchase.
Polly Prissy Pants 2:37PM (9/25/2009)
" Money goes into training materials, allocating staff time...etc which can run a company almost close to $10,000 just to train 1 or 2 employees on the job."
Wait, what? Training for what? I thought any ole dumazz off the street could walk into an auto manufacturing plant and build anything for $8/hour?
bathtub gin 10:36PM (9/25/2009)
@Polly Prissy Pants - looks like they have the marching & sign-waving thing down pretty well. :-)
F50 10:32AM (9/25/2009)
They should build a new Supra or Celica there or just sell the damn factory to someone else.
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Glock23 10:45AM (9/25/2009)
If California got rid of the useless organizations like CRAP (excuse me CARB) it would free up 100's of millions.
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Rar 10:49AM (9/25/2009)
Top-selling vehicles through Cash for Clunkers
TOP SELLERS
1. Toyota Corolla 29,488
2. Honda Civic 28,456
3. Toyota Camry 27,137
http://www.google.com/hostednews/ap/article/ALeqM5iZoB_s-ZQeGF169daIEwmk5u2NdgD9ARUSV83
I think toyota is very ungrateful. US goverment support their sales. but why toyota won't help US?
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LesPaul1 11:14AM (9/25/2009)
Oh Oh, I know
It's because Japanese are bloodsucking leeches who want to take advantage of this country any way they can.