Local Employers Levi Strauss & NUMMI Paul Losch's Community Blog, posted by Paul Losch, a resident of Palo Alto, on Jul 13, 2009 at 4:12 pm Paul Losch is a member (registered user) of Palo Alto Online
Good news and bad news. Levi's will remain HQ'd in San Francisco for at least 10 more years. GM has pulled out of the joint venture with Toyota at the NUMMI plant in Fremont.
I do see a connection. Both at their core are "creative" companies, and create value because they attract and foster creativity in their work forces.
Neither is a high tech Silicon Valley type company where creativity is highly sought, but both are among the most creative in their respective markets, both of which date back to the 1800's.
This part of the world is very good at fostering innovation, and sometimes we forget that it is not just IT related.
It is not clear just what will happen with NUMMI, but since it became a joint venture inherited from GM, it is a very profitable and successful auto plant. Whether that is enough for Toyota to fully take it over remains to be seen. Nearly 5,000 people work there.
Much of Levi's production is now off-shore. I am of the opinion that "off-shoring" creativity in a brand like Levi's is a more daungting and risky challenge, and I am glad that Levi's management came to a similar conclusion, and will remain here, and attract the types of creative minds which endow the Bay Area.
Posted by Kevin, a resident of the Midtown neighborhood, on Jul 13, 2009 at 5:39 pm
I happen to know a real insider with Levi's. He said the company was driven into a hole by a focus on PC nonsense, rammed through their HR department. Instead of focusing on emerging market demands, like functional multi-pocketed apparel, they focused on affirmative action promotions, womens' rights, diversity, health care enhancements. He has told me that managers were completely distracted with PC stuff. All this happened in San Francisco. If Levi's had been HQ'd overseas, Levi's would probably be in much better shape. So much for your "creativity" arguments in the Bay Area.
Posted by PAmoderate, a resident of the Old Palo Alto neighborhood, on Jul 15, 2009 at 7:29 am
Actually no. NUMMI has only been profitable 1 year (1992).
Bloomberg story: "Nummi, the only large auto-assembly plant on North America’s West Coast, has the capacity to make 420,000 cars and pickups each year. It only made money in 1992, the result of California’s taxes and labor and pollution rules, as well as the plant’s UAW contracts, according to an estimate by Tokyo-based Credit Suisse Group AG analyst Koji Endo."
Posted by Paul Losch, a resident of Palo Alto, on Jul 15, 2009 at 9:31 am Paul Losch is a member (registered user) of Palo Alto Online
Thanks for that posting, I must admit that it seems odd that it has continued operations all these years if it only has been profitable one year, nearly 20 years ago. Of course, it could be a function of how the accounting is done, it may "report" losses in order to reduce its tax exposure, this is something that large corporations can do when they are opertaing in multiple locations and can modify transfer pricing and other such charges to get the most favorable tax treatment.
Otherwise it would appear both GM and Toyota were keeping NUMMI open for something other than sound business reasons.
Posted by Been There Done That, a resident of Mountain View, on Jul 18, 2009 at 5:11 pm
It was kept open as a gesture of good will while GM tried to learn as much as it could how a SUCCESSFUL automotive company operated. GM and Toyota collaborated on new designs and models in the hopes that defraying the costs would pan out. Unfortunately California has systematically been driving heavy and manufacturing industries out of the state by making it exceeding difficult and costly to do business here. I hope we are all ready when the only jobs left are service oriented jobs. We all know an economy based on service industry jobs alone will not succeed.