GM-Toyota assembly plant in California sets a standard for auto management Japanese style helps revive a failed factory

FREMONT, CALIF. — FREMONT, Calif. -- Back in the 1970s, the General Motors Corp. assembly plant here was no ordinary American factory. It was far worse.

Managers viewed employees as ignorant inferiors, rebuffed suggestions as back talk and even denied simple favors, like the use of office bathrooms.


The workers fought back -- skipping an average of one day of work a week, calling wildcat strikes and slapping together one of the worst-built cars on the market, the Oldsmobile Cutlass.

Today, with most of the same workers, the Fremont auto plant is one of the most efficient and peaceful in America. And it makes some of the most reliable cars in the world, the Toyota Corolla and Geo Prizm.


Workers have been given job security, cross-training and power to design their workstations. Managers put into action about 80 percent of the thousands of suggestions the workers send in annually.

"We used to say, 'Just lick 'em and stick 'em,' " Willie Anderson, a 17-year veteran, recalls of the Fremont plant's haphazard assembly line. "We're doing the right things now."

In fact, as the nation prepares to celebrate Labor Day, the Fremont plant is being touted by the Clinton administration as the right model for all American workplaces.

Labor Secretary Robert B. Reich recently called on U.S. companies and workers to adopt strategies proved at New United Motor Manufacturing Inc., this 9-year-old joint venture of GM and Toyota Motor Co.

Workplaces like NUMMI, featuring "high-performance production practices and progressive human resources policies . . . are vital to America's prosperity," Mr. Reich said.

NUMMI's path isn't easy to follow, as shown by the failure of many similar efforts. As a result, many U.S. workers and managers remain skeptical about transplanting this Japanese system.

Still, the turnaround here serves as a manual for managers of all sorts -- from those at the Mack Trucks Inc. engine plant in Hagerstown to administrators at the University of Maryland's College Park campus -- who are trying to reform their workplaces to boost productivity and service.

NUMMI's success was made possible by the Cutlass plant's failure in 1982. Employees were unprepared for the shutdown. A few committed suicide. Many more were destroyed financially; some lost their homes and set up tents in the plant's parking lot.


The desperation created by the shutdown made managers and assembly-line workers willing to experiment with a new kind of workplace.

In 1983, GM, which was losing sales to Japanese imports, agreed to set up an experimental joint venture with Toyota. GM provided the shuttered Fremont plant; Toyota put up $100 million and most of the operation's top executives. And the United Auto Workers union, eager to have its members rehired, agreed to scrap its inflexible work rules.

By the time the first Chevy Nova rolled off the assembly line on Dec. 10, 1984, NUMMI boasted a unique structure:

* Related assembly-line jobs were formed into teams of five or six workers, each directed by a leader chosen from their ranks. Teams received small budgets to buy supplies, like standing mats, without bothering supervisors. And each team member changes jobs every 2 1/2 hours to reduce boredom and strain.

* To create an egalitarian atmosphere, perks were stripped from managers. For example, in one vast office full of open desks sits everyone from the plant manager down to clerks.

* And perhaps most important of all, the joint venture promised, in writing, that it would take extraordinary measures to prevent layoffs. If work slacked off, the company promised it would stop sending work out to contractors, and instead would cut the pay of managers and ask for voluntary work-force reductions.


The goal, said Michael Damer, a spokesman for NUMMI, was to provide workers with "financial needs and emotional needs, their need to participate in the company and own their jobs, and their need for security. If they are confident they won't lose their job, they can bring forth ideas" that might otherwise cost them or their friends work.

"A person is not going to think himself out of a job," he added.

That philosophy changed the atmosphere at the factory -- sometimes in unforeseen ways. To reduce alcohol and drug abuse -- especially the workers' habit of walking to girlie bars for a liquid lunch -- Toyota offered to pay workers for their lunch break if they stayed inside the factory. The move dried up the bars' business, forcing them to close.

But the first real test of the new management style came in 1988. Although the Nova had won rave reviews for its quality and value, sales weakened because of GM's worsening image. By 1988, production at Fremont had fallen to 110,000 Novas -- only 60 percent of capacity.

Despite the slack work, and the loss of nearly $100 million that year, NUMMI did not lay off a single worker. Instead, managers sent hundreds of otherwise idle workers to training classes to improve their skills.

"Until 1988, everybody withheld judgment," said Charles Curry, president of the UAW local at the plant. But the extra training "convinced everybody it was for real. . . . That's when the members really got into it."


And the joint owners' designers started over. NUMMI retooled to build a new Corolla and the newly named Geo Prizm.

Today, NUMMI produces about the same number of cars as the old GM plant, with about half as many production workers. Absenteeism is an industry low -- 3 percent, down from the former plant's 20 percent. Although NUMMI does not release financial information, industry consultants believe that the joint venture is profitable.

And the Corolla has been named as one of the top 10 highest-quality cars in annual driver surveys by J.D. Power. The Prizm is rated a Best Buy by Consumer Reports magazine.

Fremont expands

Meanwhile, as GM shutters plant after plant, Fremont expands. Staffing has risen to 4,250 this year, up 1,200 since 1990. Toyota is ramping up production at a $350 million Hilux pickup truck plant it built next to NUMMI. And NUMMI managers expect to add 100 workers at a new bumper-making facility next year.

"NUMMI has demonstrated very poignantly that Americans are quite capable of building very good cars," said Jack Gillis, author of "The Car Book" and a longtime critic of the U.S. auto industry.


"Hundreds of companies are now in there, watching how they operate. . . . It has had a wonderful ripple effect," he added. GM, for example, incorporated much of what it learned in its Saturn division, which has also received top quality ratings.

Yet despite nine years of collaboration in Fremont, GM and the UAW have been slow to adopt NUMMI's lessons at some of the older auto plants, like the company's Broening Highway minivan plant.

While not commenting specifically on operations at the Baltimore Chevrolet plant, Kari Hulsey, a GM spokeswoman, said that the company has adopted worker teams and quality programs at some plants.

"But you just can't drop the team concept into a very traditional plant," she said. "The culture has to be right to accept it."

Some union leaders fear that the Japanese model won't fit Americans.

Japan is a country of one race and a single culture of cooperation, said Rodney Trump, president of the UAW local that represents the Baltimore plant workers. America is an immigrant nation, built on a history of individualism, he adds.


And unions ought to keep their distance from management, the UAW officer said.

"You each have to have your own role," Mr. Trump said. "That doesn't mean you can't work together 85 percent of the time, but if you sit at a table and cannot determine which person is management and which is labor, something is wrong.

"I can't work in a team-concept environment. I am a free-thinking, independent, God-loving American. I kind of like diversity and differences. That is our greatness."

The troubles GM is having in learning from its own lesson are being echoed across the economy.

Casey Ichniowski, a Columbia University professor who has studied the steel industry's attempts to adopt NUMMI-like management, found that it was very hard for operating companies to reform. The only ones able to adopt the new systems either went through a crisis like the Fremont plant -- shutting down or suffering severe layoffs -- or started a new plant with new workers and managers.

Many companies' quality programs have failed because they weren't complete enough, or managers weren't patient enough, he said. "You have to change 30 to 50 employment practices, including training, job security, compensation, sharing of financial information. . . ."


And sometimes quality programs can't solve a business' larger competitive problems. For example, a quality award winner, Preston Trucking Corp., sold out to a competitor after a widely praised labor-management program failed to return the company profitability. And Armco Inc.'s local stainless steel rod plant closed this year, despite having trained its workers to use Japanese-style quality techniques.

And as NUMMI's experience shows, it takes at least two years -- and often some painful sacrifice by management -- for the reforms to take hold.

Many plants that Mr. Ichniowski visited tried the reforms but eventually failed for lack of patience, or even after a single slip-up.

It takes years to build up the trust and make the changes," he said. And it can all be destroyed in a moment -- "If I get burned once, I don't trust you forever."


NAME: New United Motor Manufacturing Inc.


PRESIDENT: Iwao Itoh, 52, formerly a vice president of Toyota's Georgetown, Ky., plant

OWNERS: Joint venture of General Motors and Toyota

LOCATION: Fremont, Calif.

EMPLOYMENT: 4,250 employees working two shifts

PRODUCTION: 75,000 Geo Prizms and 130,000 Toyota Corollas this year. Adjacent factory will make 115,000 Toyota Hilux trucks.



1963: General Motors Corp. opens Fremont, Calif., factory. It makes GM trucks, Chevrolet Malibu and Century.

1976: Employment at the plant hits peak of 6,800.

1982: GM closes the plant, which had shifted to production of Oldsmobile Sierra Cutlass.

1983: GM and Toyota agree to form NUMMI joint venture in which Toyota will run a U.S. plant, and GM will get a chance to learn Japanese production techniques. Toyota will provide the plant president and 35 other top executives; GM will provide about 15 executives. Toyota agrees to put up $100 million; GM provides the Fremont plant.

1984: The first Chevy Novas roll off the production line.

1986: NUMMI adds production of the Toyota Corolla because sales of the Nova have been disappointing.


1988: Production of Novas is halted because of poor sales. Despite a 40 percent drop in business, NUMMI doesn't lay off workers. Instead it sends them to training classes.

1989: GM replaces the Nova with the Geo Prizm.

1990: Toyota announces plans for a $350 million truck assembly facility adjoining the factory. Hilux trucks start production a year later.

1994: Target date for NUMMI to complete a 100-worker plastics manufacturing facility that will allow the plant to produce its own bumpers.