FREMONT, CALIF. -- For the second time this year, the New United Motor Manufacturing Inc. here is cutting auto production because of sluggish sales.
No immediate layoffs are expected at the three-year-old GM-Toyota joint venture, but many of the 2,500 Nummi employes are anxious about their futures, according to a United Auto Workers official.
"They're getting that fearful feeling in their minds," said Denny Lemmond, recording secretary for UAW Local 2244. "They've been through a layoff before, and they don't want to go through it again."
Auto analysts said they do not expect layoffs at Nummi in the near future, but they cautioned that the whole industry is heading for a showdown in 1988.
"The consensus is that next year is going to be even softer than this year," said George Peterson, analyst at AutoPacific Group Inc., auto industry consultants in Newport Beach. "At the same time, the competition is going to get tougher."
With that in mind, Nummi officials have chosen to act conservatively as they begin building the 1988 models of the Chevrolet Nova and Toyota FX next week.
In a letter to employes, Nummi Executive Vice President Osamu Kimura said the company will cut production by about 8 percent because the Nova and FX are not selling well, and said that "the outlook for the 1988 model year does not appear to be much better."
Kimura assured workers that the cut will not mean immediate layoffs. In its unique contract with the UAW, Nummi agreed to "take affirmative measures before laying off any employes."
The measures include cutting management salaries, seeking voluntary resignations and assigning UAW members to jobs that previously were done by outside companies.
Nummi officials would not say what cost-cutting steps they had tried so far, but the UAW's Lemmond said he believes the Japanese management at the plant will avoid layoffs at all costs. "The Japanese take a lot of pride in providing job security," Lemmond said. "If they lay off people, they'd have to admit failure, and they don't want to do that."
In the future, however, they may have no choice unless the U.S. auto market turns around, according to auto experts. Nationally, auto sales fell 12 percent in the first six months of 1987, and the Nova and FX models are continuing to struggle in the crowded small-car market.
Lower-than-expected Nova sales already forced an 8 percent production cut at Nummi four months ago.
Nova sales have bounced back since then, but much of the rebound came because GM sold nearly one-third of its 150,000 1987 Novas to rental-car companies. Chevrolet dealers admit that the Nova has been a disappointing seller this year.
Maryann Keller, an auto analyst for Furman Selz brokerage in New York, believes the Nova is having trouble partly because GM does not make it a high priority. "The fact is that General Motors is having a tough year all around, and when it comes to putting a push behind one of their products, it's going to be a product that they build themselves," Keller said.
Since Toyota owns half of Nummi, GM has to share the profits of the Nova with a competitor, she said.
Keller said Nummi's other product, the FX, is falling short of its first-year goals because it is overpriced. Toyota dealers have sold fewer than 22,000 FX cars -- whose prices range from $10,000 to $14,000 -- in the first 10 months of the 1987 model year. The goal had been 30,000 to 50,000 cars in the first 12 months.
Keller said the industry will rise or fall in the next year largely on what happens to the U.S. economy, which she said was not stable.
Peterson said that even if the economy is healthy, increasing competition will make it difficult for GM and Toyota to raise their sales of the Nova and FX.
And Arvid Jouppi, an independent auto analyst in Detroit, said GM and the other major auto makers may be drawing on next year's auto demand by offering 1.9 percent financing rates in the last weeks of this model year.
The uncertainty about 1988 is what persuaded Nummi officials to cut production, at least until early November. Daily output will drop from about 820 cars to about 760, according to the UAW's Lemmond.
The situation is trying for Nummi employes, most of whom were laid off when the old GM plant in Fremont closed in 1982. "I'm just trying to keep my head down and keep going," said assembly-line worker Bill Stevens, who spent 19 years at the GM plant.
While Stevens and others are concerned about layoffs, most analysts said they believe Nummi workers are more secure in their jobs than most other U.S. auto workers. Jouppi, the Detroit analyst, said GM had much to gain by keeping alive its Japanese-American experiment in Fremont.
"If GM wants the Japanese ideas to spread to other plants," Jouppi said, "they can't very well give up on this one."