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Toyota departure to impact Stanislaus County

A Japanese news agency reported Thursday that Toyota Motor Corp. plans to stop making vehicles in Fremont, a move that could wipe out more than 1,000 supplier jobs in the Northern San Joaquin Valley.

Toyota is close to pulling out of New United Motors Manufacturing Inc., a joint venture it set up with General Motors in 1984, Kyodo News reported.

A Toyota spokesman confirmed the report to The Associated Press.

GM earlier announced that it will withdraw from the plant as of next month as part of its post-bankruptcy restructuring.

The plant employs about 4,600 people, producing Corolla sedans, Tacoma pickups and Pontiac Vibe station wagons.

Between 200 and 300 of the NUMMI workers commute from Stanislaus County, said Bill Bassitt, chief executive officer of the county Economic Development and Workforce Alliance.

"It's just sad to see, but not unexpected at all," said Bassitt, noting the plant's higher wages and other costs compared with Toyota plants elsewhere.

About 1,150 other people work in north valley plants that supply parts to NUMMI, mostly in San Joaquin County.

Modesto has one such company, Trim Masters Inc., which makes interior door panels for Tacomas. The McClure Road plant had laid off 83 of its 232 workers in the spring because of slowed production at Fremont.

The work force has since rebounded to 203 thanks to demand at NUMMI and at a Toyota plant in Mexico, said Larry Carter, vice president for human resources at the Kentucky-based company.

Carter said that if the Fremont plant closes, the Modesto site might continue to supply the Mexico plant, but the number of jobs that would remain is not known.

San Joaquin County has 10 suppliers with a total of about 900 workers, said Michael Locke, president and CEO of the San Joaquin Partnership.

They include Amtex Inc., which makes carpet and other parts in Manteca, and Lathrop companies that make glass and fuel tanks. Companies in Stockton and Tracy supply electronics, door frames, springs, brake parts and other products.

Locke said every lost job likely would result in two more layoffs because these companies and their employees support other businesses with their spending.

He said he holds out hope that Toyota will remain at NUMMI because of the high cost of moving the operation and the advantages of making vehicles within its large California market.

"The Northern San Joaquin Valley is a cost-competitive location for component manufacturing," he added.

In Merced, about 50 employees of Arvin Sango Inc. make parts for NUMMI.

Word of the possible closure of the Fremont plant is just another blow to the economy of the Northern San Joaquin Valley.

The region has seen unemployment soar to double-digit levels not seen in more than a decade. The steady rise in unemployment has closely followed the housing market decline, which prompted jobs cuts in related businesses and then spread to other areas.

Toyota spokesman Paul Nolasco said early today that Toyota has decided to begin discussions with "Old GM" — Motors Liquidation Co., the company in charge of the sale and liquidation of Old GM's assets — toward dissolving the joint venture.

Yoshimi Inaba, recently appointed CEO of Toyota Motors North America, hinted at a closure in remarks reported Thursday by the Detroit Free Press.

"I don't want to use the word 'liquidate,' but we are looking at the viability of NUMMI, so we may have to make a painful decision" Inaba said in Troy, Mich.

The plant can assemble 420,000 vehicles annually but is on track to produce less than half that number this year, the Detroit paper reported.

Toyota lost $7.7 billion in the quarter ending in March and next month is expected to report a loss for the quarter that ended June 30.

A four-year labor contract with the United Auto Workers, Toyota's only contract with the union, expires in August. That contract and the high cost of living in the Bay Area make NUMMI Toyota's highest-cost facility in the United States, industry experts say.

California legislators have offered to eliminate a sales tax on equipment in the NUMMI plant, along with providing incentives that would reduce the company's utility costs.

Bee staff writer John Holland can be reached at jholland@modbee.com or 578-2385.

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