Advertisement
YOU ARE HERE: LAT HomeCollectionsMarketing

AUTO VENTURE AT ROADBLOCK : GM-Toyota Fremont Plant Produces Happy Workers, High-Quality Product--and a Glut of Unsold Chevrolet Novas

December 21, 1987|VICTOR F. ZONANA | Times Staff Writer

FREMONT, Calif. — They still play exercise music at the beginning of every shift at the path-breaking joint-venture auto plant here that was designed to infuse Toyota values into a hardened General Motors work force.

Never mind that nobody bothers to do calisthenics now that the novelty of Japanese management has worn off.

Three years after the first Chevrolet Nova rolled off the assembly line here, this GM-Toyota joint venture has confounded the skeptics and is building a top-quality subcompact car on U.S. soil. The Nova has fewer defects per vehicle than any other domestic car, according to surveys by J. D. Power & Associates.

There is just one problem: Chevrolet can only manage to sell about about half the plant's 250,000-vehicle-a-year capacity.

Workers, by and large, are happy. Absenteeism has plunged to about 3% from 20% when General Motors ran the facility. Empty beer cans have vanished from the plant parking lot; union grievances are down sharply, and brawls among workers are a thing of the past.

In that sense, New United Motors Manufacturing Inc.--NUMMI for short--"is an unqualified success," says John Hammond, managing partner of J. D. Power, the Westlake Village-based market research concern. "Both partners have met their objectives," he adds. Toyota has won valuable experience with an American work force and gotten around U.S. import quotas, while GM has gained first-hand knowledge of Toyota's production system.

NUMMI's "team concept" is being phased in at General Motors' problem-plagued plant in Van Nuys; GM just announced another joint venture with Toyota in Australia, and Ford and Chrysler are opening U.S. plants with Mazda and Mitsubishi, respectively.

Production has gone smoothly. But sluggish sales have kept this joint venture from being the showcase that its founders envisioned. Despite plaudits from Consumer Reports magazine ("assembled, fitted and finished as well as any Toyota we've seen"), the Nova is languishing in the nation's showrooms.

NUMMI has cut production three times this year; still, a 222-day supply of Novas is glutting dealers' lots, according to Ward's Automotive Reports. (A 60-day supply is considered normal in the automobile industry.) Attrition has cut the number of production workers here by 8%, to around 1,600, but NUMMI has stuck to its commitment to avoid layoffs.

Toyota has day-to-day responsibility for running the plant, which produces Nova four-door sedans and five-door hatchbacks. Since September, 1986, the factory has also produced the Toyota Corolla FX, a three-door hatchback. The Nova is essentially a U.S. version of the Toyota Corolla and is priced about the same.

Union and plant officials at New United Motors are indeed united--in blaming Chevrolet for bungling the Nova's marketing. "It's very frustrating," says Mark T. Hogan, GM's top man at NUMMI. "I frankly think Chevrolet can be doing more to promote the vehicle."

"GM really shot themselves in the foot," adds Joel D. Smith, the United Auto Workers international representative for NUMMI. "First, they pitted this car against four other small cars in Chevrolet's lineup--the Sprint, Spectrum, Chevette and Cavalier. Then they came up with the brilliant idea of calling it the Nova, which was a dog the first time around."

Toyota Does Its Part

Even the normally diplomatic Japanese publicly question Chevrolet's performance. "Whenever I meet with (GM Chairman) Mr. Roger Smith, I say, 'Please sell more,' " says NUMMI President and Chief Executive Kan Higashi. "There are no adequate answers."

Higashi pointedly adds that Toyota, which took one-third of NUMMI's production under the Corolla FX nameplate when Nova sales faltered, "is doing a very good job." Unlike Chevrolet, says Higashi, Toyota's marketing officials "live with their commitments."

The Corolla FX is in much tighter supply than the Nova, with just 49 days' worth of cars in dealer inventories.

How can virtually identical automobiles fare so differently in the marketplace? "It is a question of customer perception," says Ted Sullivan, director of automobile research at the WEFA Group. Even though the engine, transmission and drive train are produced in Japan, "a lot of people view the Nova as a domestic car and won't even give it a thought."

Many consumers agree. "I didn't even look at the Nova," says Evan Nichols, a Pacific Telephone computer programmer in Dublin, Calif., who recently bought a Japanese-made Corolla.

Another Corolla buyer, Teri Brager, a Los Gatos, Calif., clinic business manager, said she would have bought a Nova had she known the cars were similar. "I guess I didn't do enough research," she says. Critics might say Chevrolet didn't do enough to reach her.

Of course, the Nova presents Chevrolet with a thorny marketing dilemma. "It's kind of hard for Chevrolet to advertise that Toyota's manufacturing system is superior to GM's," notes George Nano, a NUMMI worker and head of the UAW's bargaining committee.

Pricing Criticized

Advertisement
Los Angeles Times Articles
|
|
|