UPDATE: GM To End 25-Year Manufacturing JV With Toyota
June 29 2009 - 4:19PM
Dow Jones News
General Motors Corp. (GMGMQ) announced it will end its 25-year
manufacturing joint venture with Toyota Motor Corp. (TM) in
Fremont, Calif., dealing the Japanese auto maker another blow as it
struggles to right its U.S. operations.
Toyota said GM's withdrawal from the venture will exacerbate
already-difficult business conditions for the Japanese auto maker,
which last year posted its first annual loss in nearly 70
years.
"While we respect this decision by GM, the economic and business
environment surrounding Toyota is also extremely severe, and so
this decision by GM makes the situation even more difficult for
Toyota," the company said in a statement Monday.
Toyota said it will "consider alternatives" for the factory, but
didn't elaborate.
The plant currently produces the Pontiac Vibe, which GM will
stop making within 60 days, and the Toyota Corolla.
For GM, the joint venture was an opportunity to see first-hand
Toyota's revolutionary system of lean manufacturing, streamlined
business practices that have since been widely adopted throughout
the world. Toyota, then considering whether to begin producing
vehicles in North America, wanted an opportunity to test its
production system on a U.S. workforce.
The future of the factory became uncertain after GM announced
last week plans to discontinue the Pontiac Vibe, which is built
there, by the end of August. The auto maker is selling or ending
four of its eight brands and eliminating many models under a plan
to downsize and restructure in bankruptcy court.
Toyota had been accounting for nearly three-quarters of the
plant's output.
"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," said GM North America President
Troy Clarke.
GM's ownership interest in the venture will become part of "old
GM" to be sold off as part of the bankruptcy proceedings.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com
(Kevin Kingsbury contributed to this report.)