General Motors Corp. and Toyota Motor Corp., two of the world's largest automakers, today signed a historic "memorandum of understanding" to produce small, front-wheel drive cars in the United States.
The project received the immediate blessing of the Reagan administration despite antitrust concerns being examined by the Federal Trade Commission and Rep. Peter W. Rodino Jr.(D-N.J.), chairman of House Judiciary Committee.
President Reagan, expressing his "regret" that he could not attend the ceremony, sent Edwin L. Harper, White House assistant for policy development, in his place. Addressing the ceremony, Harper said the administration considered the joint venture preferable to mandatory trade restrictions and laws requiring foreign automakers to use regulated amounts of U.S. content in cars sold in the United States.
Such restraints "will not put a single unemployed autoworker back on the job in 1983 or 1984, and they will set back the effort of U.S. manufacturers to become productive and competitive," Harper said. "Domestic content proposals, like any protectionist barriers, will backfire on those who raise them. The joint venture we are here to honor today is the kind of fast action we need," he said.
Commerce Secretary Malcolm Baldrige, in a "Dear Roger" letter to GM Chairman Roger Smith, said, "Your decision to establish a joint production facility in this country is a sign of confidence in the strength of the American economy." The letter, read at the elaborate signing ceremony, added: "This joint venture is part of the significant effort of the United States auto industry to become competitive worldwide. We encourage this trend . . . "
Antitrust policy concerns were not the only potential problem to emerge from today's ceremony, however. Officials of Toyota, which will operate the plant under the agreement, also raised questions about the future of the United Auto Workers union in the new venture.
GM and Toyota officials had said that final approval of the pact also depends on working out "a satisfactory labor agreement" with the UAW, which represents some 6,800 laid off workers at the Fremont plant--shut down by GM last March 5.
But the auto executives seemed to reverse themselves today. GM's Smith, strongly indicating that joint venture managers will resist any union demands that laid-off UAW members will be rehired at Fremont on the basis of seniority, said: "Hiring priority will go to the best workers. We're not anti-union or pro-union. We're pro-workers."
And Toyota Chairman Eiji Toyoda said the management of the new company will not be bound by any former UAW contract with GM. "This is an entirely new company. We're going to start from scratch, and we're going to hire new people," Toyoda said.
Toyoda said that does not mean that the joint venture will rule out hiring UAW members. "The people who are going to work in the new company may be, partly, former members of the United Auto Workers, and maybe not," he said. "We have no commitment to hire anyone."
UAW officials, at a news conference in Detroit, said today that despite the talk from the companies they had "every reason to believe" that the union would be the bargaining agent for workers in the new plant.
UAW President Douglas A. Fraser and UAW Vice President Owen Bieber, director of the union's GM department, said in a Feb. 15 letter to Chairman Toyoda that they were "delighted" by Toyota's decision "to come to our country. We have a local work force that is available to you, which is experienced and knowledgeable about the auto industry. We are certain that we can together build quality cars."
Yoshio Okawara, the Japanese ambassador to the United States, called the joint production pact evidence of Japan's determination to "work together with the United States for free trade and for the benefit of the United States' economy."