When General Motors pulled out of the New United Motor Manufacturing Inc. joint venture during its bankruptcy last year and Toyota Motor Corp. subsequently closed the Fremont, Calif., plant, the shuttered company left behind an employee pension plan that was only 55 percent funded.
After more than a quarter of a century, the NUMMI/UAW Hourly Defined Benefit Pension Fund had $161 million in assets and $292 million in liabilities, leaving a shortfall of $131 million.
GM's liability disappeared in Chapter 11. That left Toyota with two choices: It could take the high road and assume the pension obligation on behalf of the defunct joint venture, or it could turn its corporate back on the American workers and walk away. Toyota chose to walk away, tossing responsibility for pensions owed NUMMI workers to the U.S. government-funded Pension Benefit Guarantee Corp., which says it will cover $126 million of the $131 million shortfall.
Legally, Toyota was out from under the pension obligation, but that doesn't make it right. It's hard to imagine Toyota acting the same way toward workers in Japan -- or toward the Japanese government, for that matter.
It may seem insignificant to some. But in this era of economic uncertainty, pensions are a serious issue. For example, last week Sen. Sherrod Brown, D-Ohio, threatened to block President Barack Obama's nominee to head the pension board because Brown doesn't like the way Delphi Corp. salaried retirees have been treated.
Toyota could have paid the pensions. It's not a bankrupt company. As of March 31, the Japanese automaker had cash and cash-equivalent reserves of $20 billion. That's not even counting its equity stakes in other Toyota Group companies, finance receivables or other assets that could be turned into cash easily if Toyota needed to. Toyota is beyond rich.
It also was by far the greater beneficiary of NUMMI's 27 years of production. Seventy-four percent of NUMMI's vehicles were Toyotas. GM, though supposedly a half owner of the venture, got only 26 percent of its output.
So Toyota has the money and drew the lion's share of the value in output terms from the factory.
With all the other issues facing Toyota, it makes sense to generate good will. If Toyota wants to be viewed as a good corporate citizen here, it ought to live up to its responsibilities.