Toyota Motor Corp will end production at a California plant it has shared with General Motors for 25 years, prompting regret and criticism from labor and politicians facing more job losses in an industry and a state pummeled by recession.
The move to cease operations at the plant in Fremont by March 31 puts at risk more than 4,500 jobs and highlights significant overcapacity global carmakers are facing as they try to shake a recession-fueled sales downturn.
The decision on the venture with GM known as New United Motor Manufacturing Inc, or NUMMI, was part of the Japanese automaker's plans announced earlier this week to slash production more broadly to stem losses.
GM pulled out of the partnership in June as part of its bankruptcy reorganization, prompting Toyota to follow suit.
Atsushi Niimi, Toyota's executive vice president responsible for North America, said in a statement that it was not economically viable to continue production.
This is most unfortunate and we deeply regret having to take this action, Niimi said.
California production will shift to Texas, Canada and Japan.
The United Auto Workers, which represents workers at the facility, called the decision devastating and accused Toyota of abandoning workers and the state.
This is no time to close a highly successful manufacturing facility, Jimmy Settles, a United Auto Workers vice president, said in a statement. California is one of the most important markets for Toyota.
It was the only UAW facility operated by Toyota.
The decision stung even more for labor and lawmakers in light of news this week that Toyota was the biggest beneficiary of the $3 billion U.S. government cash for clunkers incentive program designed to jump-start industry sales.
Officials say up to 35,000 supplier and other jobs in California are indirectly related to the plant's operations. California's unemployment rate was 11.9 percent in July, according to the U.S. Labor Department.
California Governor Arnold Schwarzenegger called it a sad day and said efforts were underway to transform the site to alternative uses. The state offered Toyota a package of tax breaks and other business enhancements to keep it open.
Senator Dianne Feinstein said Toyota told her staff that GM's decision to pull out of the venture in June left Toyota operating a facility at less than full capacity with no demand to justify expanded production.
I'm profoundly disappointed, Feinstein said. I very much regret this.
Feinstein said she was also told by Toyota the Fremont plant was aging and could not compete with two other plants in the South, and that production costs were too high in California.
Feinstein said Toyota grew more remote and less transparent over attempts by her office to determine NUMMI's fate and weigh options.
Her staff has met with the Obama administration's autos task force to discuss other manufacturing options for the facility.
Niimi said the decision to close its California operation followed a thorough review of its alternatives in light of current market conditions.
The plant had been a ground-breaking venture that brought Toyota's lean manufacturing techniques to a U.S. workforce.
Toyota builds the Corolla compact car and the Tacoma pickup truck at the NUMMI plant.
Tacoma production will shift to Toyota's San Antonio, Texas, plant, which specializes in trucks. Corolla output will move to Cambridge, Ontario, and Japan to meet near-term demand, the company said.
This will enable an uninterrupted supply of vehicles to dealers and customers in North America, Toyota said.
Niimi said Toyota would consider moving back more of the Corolla production to North America over time.
GM, which had built the Pontiac Vibe at the plant until August 17, plans to wind down the Pontiac brand in its restructuring and left its stake in the joint venture with other assets to be liquidated in bankruptcy, in an entity known as Motors Liquidation Co.
Toyota employs about 40,000 people in North America at more than a dozen wholly owned plants.
(Reporting by David Bailey and Soyoung Kim in Detroit, John Crawley in Washington, and Jim Christie in San Francisco; Editing by Leslie Gevirtz, Gerald E. McCormick, Matthew Lewis and Richard Chang)