Next, Toyolets

GM and Toyota stir an outcry

America's General Motors Corp. and Japan's Toyota Motor Co. are by far the biggest automakers in their respective countries and produce nearly 25% of the world's automobiles between them. So when the two giant firms signed a $300 million preliminary agreement last week to build a subcompact car in California, GM's U.S. rivals sensed a threat to their business and let out cries of alarm. The loudest came from Lee Iacocca, chairman of Chrysler Corp., which is counting on small cars to help fuel its comeback. Iacocca called the GM-Toyota arrangement "fundamentally bad," and then added: "As an American, I get mad when I hear of deals like this." Said Paul Tippett, chairman of American Motors Corp.: "It is our view that GM and Toyota will create jobs in Japan at the expense of U.S. autoworkers." In part, he was referring to the fact that the arrangement calls for half the innards of the jointly produced car (including engines and transmissions) to be made in Japan.

GM's rivals want the Federal Trade Commission to bar the venture as a violation of antitrust law. An official of the FTC, which is reviewing the deal, said that a decision on whether to challenge it would be "a very close call." The GM-Toyota linkup has congressional critics too. One opponent, Ohio Representative John Seiberling, has urged early hearings on the agreement.

Competing carmakers fear that the arrangement will make GM and Toyota even tougher to beat. GM, the world's largest car manufacturer, already commands about 44% of the U.S. market. Toyota, the third biggest automaker (after Ford), has a 6.6% U.S. market share, less han Chrysler (10%) but more than American Motors (1.9%).

The venture plans to start turning out 200,000 small cars a year in late 1984 in a GM plant in Fremont, Calif, that once employed as many as 6,000 workers but has been idle since March. The front-wheel-drive subcompact--quickly dubbed the Toyolet in Detroit--will be patterned on a new version of the Toyota Corolla and will sell for a base price of about $6,500. GM and Toyota will be equal partners in the plant, but Toyota has the right to pick the boss. The firms expect the enterprise to hire 3,000 workers in Fremont and create 9,000 more jobs in each country to produce parts.

Opponents of the deal maintain that those estimates fail to consider jobs that would be lost. They argue that the new subcompact would mean the end of GM's aging Chevette and thus the elimination of some 23,000 production and supply jobs. GM's rivals also contend that the new subcompact will eat into their sales and thereby reduce U.S. jobs even more.

Japan has been prodding Toyota for some time to begin producing cars in the U.S. to help ease trade tensions between the two countries. The company has been slow to move, although Honda Motor Co. is assembling Accord subcompacts in Ohio, and Nissan Motor Co. will build pickup trucks later this year in Tennessee. Growing protectionist sentiment in the U.S. may have given Toyota a nudge. The new venture will give the company greater access to the U.S. market. Fearing an American clampdown on their autos, the Japanese agreed to limit exports to the U.S. for the past two years; last week they said they would stick with the 1.68 million-vehicle limit in 1983.

The Toyota-GM deal has also aroused workers' anxiety. Toyota Chairman Eiji Toyoda, who signed the agreement with GM Chairman Roger Smith, said that the venture may not necessarily hire back laid-off GM employees. The companies have even stirred fears that they may try to run the plant without union labor. United Auto Workers President Douglas Fraser, who welcomes the enterprise, said last week: "Getting jobs for Americans is more important than whether or not they belong to our union." If that sounds magnanimous, it may be because Fraser is sure that without the U.A.W., there will be no Toyolet. This file is automatically generated by a robot program, so viewer discretion is required.