Toyota to pull out of California plant

A Toyota logo is seen on a sign at a Chicago dealership in a file photo.

DETROIT/WASHINGTON (Reuters) - Toyota Motor Corp has decided to end production at a California plant it has shared with General Motors for 25 years, labor officials and legislators said on Thursday.

The move to close the plant by March 31 puts at risk 4,200 jobs at the facility in Fremont and highlights significant overcapacity global carmakers are facing as they try to shake a recession-fueled sales downturn.

The decision on the venture 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.

A Toyota representative declined to comment, saying that the automaker expected to release a statement on the plant later on Thursday.

But 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's 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 cut ties to the plant in June left Toyota operating a facility at less than full capacity "with no demand to justify" expanded production.

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 her staff has met with the Obama administration's autos task force to discuss other manufacturing options for the facility.

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. It was not clear which plants would pick up the Corolla and Tacoma output.

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.

(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)