On April 1, 2010, the final Toyota Corolla rolled off the assembly line at the NUMMI plant in Fremont, California, which had been co-owned by General Motors and Toyota. This event came just after the global financial crisis that had battered many automakers, leading to massive layoffs and the collapse of entire brands like Pontiac and Hummer. NUMMI was one of the few facilities Toyota has ever closed. Even when GM—its partner in the venture—was teetering on bankruptcy and seemed set to abandon NUMMI, Toyota explored the possibility of continuing operations independently. Ultimately, though, the decision was made to shut down the plant, and Toyota focused on ensuring laid-off workers received severance packages, job retraining programs, and additional support.
While the closure of NUMMI was almost unavoidable given the challenges California presented for automotive manufacturing, it was an exceptionally rare occurrence for Toyota. Typically, the company avoids shutting down factories, and there are several reasons for this approach. Flame Retardant Polycarbonate Film
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Even amid excess capacity, Toyota rarely shuts down factories.Toyota Prioritizes Human Capital
“Since people create our vehicles, no progress can begin without properly training and educating our workforce.â€
This philosophy, articulated by Toyota advisor Eiji Toyoda, reflects the company’s commitment to valuing its employees. During the 2008 financial crisis, when Toyota’s truck sales dropped by nearly half, the company made a bold decision to keep its San Antonio plant fully operational instead of laying off workers. At this facility, which produces the Tundra and Tacoma models, the approximately 2,000 employees continued to work a two-shift schedule while receiving full pay.
When production slowed, these team members didn’t sit idle. They devoted their time to skill development and training. Toyota also encouraged participation in community service activities in San Antonio, paying employees for their hours spent volunteering.
By investing in workers rather than cutting jobs, Toyota treats human resources as a critical asset. Finding skilled labor is challenging, and Toyota recognizes this. The company works diligently to maintain a stable workforce by providing job security whenever possible.
Taking a Long-Term View on Capacity
Building Where Demand Exists
Toyota learned valuable lessons from the 2008 recession. One takeaway was the importance of adopting a “build where you sell†strategy to maximize long-term profitability. Instead of losing profits due to currency fluctuations, Toyota shifted toward diversifying production and expanding outside Japan.
Today, Toyota focuses on constructing new plants in regions expected to grow significantly in the coming decades. For instance, a new plant in Mexico will cater to the booming North American market, while another in China serves that vast and rapidly developing economy. Although these projects require significant investments—amounting to billions of dollars—they target markets with promising futures.
Additionally, Toyota is enhancing autonomy across its regional divisions, such as Toyota USA and Toyota Europe. Toyota USA, for example, is building a new headquarters in Plano, Texas, and upgrading its Kentucky plant.
In summary, Toyota’s factories remain active because the company always plans for the long haul. It only constructs plants with enduring potential and refrains from closing them due to temporary market shifts.
