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NUMMI: Too Big to Fail?

Lt. Gov. John Garamendi speaking today at a meeting of the California Commission for Economic Development, is supporting the State’s efforts to make the NUMMI plant in Fremont an Enterprise Zone, but is also calling on the federal government to contribute as well:

Lt. Gov. John Garamendi says that he thinks federal stimulus money should be used as one of several steps to help keep the New United Motor Manufacturing Inc. plant in Fremont open.

NUMMI is a 25-year-old joint venture between General Motors and Toyota and Garamendi said he thinks it’s too big to fail.
GM announced in June that it will withdraw from the partnership and Toyota, which is still making Toyota Corolla cars and Toyota Tacoma trucks at the Fremont facility, said two weeks ago that it is also considering withdrawing from the joint venture but a final decision hasn’t yet been made.

Garamendi said that at a meeting of the California Commission for Economic Development, which he chairs, in Livermore on Thursday he will present information showing that the possible closure of the NUMMI plant is a statewide issue because it works with a vast supplier network of more than 1,000 companies located in 35 counties in the state and employing 20,000 people.

A total of 35,000 jobs are at risk, including those of the 4,700 people who work at the plant, Garamendi says.

In a phone interview, Garamendi said the Obama administration announced Wednesday that it is awarding grants to Ford, General Motors and other manufacturers to develop alternative vehicle technology, so he thinks “NUMMI should get part of it” as well.

Garamendi said he also hopes that Toyota will still consider building its popular Prius cars at the NUMMI plant even though the carmaker said it would build the cars at a new facility in Louisiana instead.

He said that he’s been told that the new plant in Louisiana “is not moving forward at this time” so he thinks stimulus money would be an incentive for Toyota to build Priuses in Fremont.

“We want to make sure that Toyota knows we want them in California and will do anything we can to keep them in California,” Garamendi said.

He said he also supports several bills in the state Legislature that aim to help keep NUMMI open.

Garamendi said state Sen. Elaine Corbett, D-San Leandro, has written a bill, SB 483, that would create an enterprise zone in Fremont, while a bill by Assemblyman Alberto Torrico, D-Fremont, ABX4 31, would provide a sales and use tax exemption for capital equipment used by automobile manufacturers.

He said the federal government bailed out Detroit when its auto industry was threatened, so now the federal government should help California keep its part of the auto industry.

Here is a Bay Area NBC affiliate report on the Lt. Gov.’s stance:

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The San Francisco Chronicle reports on continued and more specific overtures being made to Toyota by the California Legislature, Governor Schwarzenegger and Senators Feinstein and Boxer:

California officials have offered Toyota Motor Corp. tax breaks and other help, including the ability to buy cheaper electricity, in an effort to preserve the New United Motor Manufacturing Inc. plant in Fremont.

The fate of Nummi, which employs 4,500 people and supports 35,000 peripheral jobs, has been in doubt since June, when General Motors quit the 25-year-old partnership with Toyota that has run the plant.

A letter obtained by The Chronicle puts no overall value on a combined federal, state and local aid package to keep Toyota in Fremont, where 80 percent of the cars built last year carried its brand.

Toyota has said it will decide soon about the plant, the only auto manufacturing facility on the West Coast.

Nummi officials have said they have orders from Toyota that will keep the plant busy at least through October.

The letter, co-signed by Gov. Arnold Schwarzenegger, says the Legislature is working on a bill to designate Nummi an enterprise zone, one effect of which would be to let Nummi carry forward current operating losses to offset future profit for up to 15 years.

That designation would also waive sales taxes on $20 million a year in plant machinery upgrades.

Other proposals would create a special utility rate to let Nummi buy electricity at lower prices.

The letter also outlines an array of efforts to improve highway and rail access, including $20 million in state help to improve shipping facilities at Nummi.

Alameda County Supervisor Scott Haggerty and Fremont Mayor Bob Wasserman joined Schwarzenegger in pledging up to $29 million in interest-free financing to help Toyota and Nummi retool the plant and keep it viable.

The letter was sent to Toyota chief executive Akio Toyoda, grandson of the company’s founder and a former Nummi executive, who spoke Wednesday at an industry conference in Michigan.

A spokesman said Toyoda mentioned Nummi but simply repeated that a decision was coming soon without saying exactly when or what the company might do.

A spokeswoman for Sen. Dianne Feinstein said she and fellow California Sen. Barbara Boxer have “communicated their concerns to the (Obama) administration” that a way be found to preserve the Fremont factory.

A White House official said Wednesday that the administration has been “urging the old GM and Toyota to engage with all parties on this issue.”

As with the zone expansion initiative in Oakland and Berkeley to save the Bayer facility, there is a union component to the NUMMI deal:

All this occurs at a time when the United Auto Workers, which represents workers at the Fremont factory, is negotiating a contract renewal with Nummi that will have a big influence on efforts to keep Toyota interested in the plant.

“There is a willingness to make wage concessions,” Betty Sall, a rank-and-file union member said. “Most people are hopeful we will have a union contract and that Nummi will continue.”

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