♠ Posted by Emmanuel in Labor at 8/28/2009 10:07:00 AMA few days ago, I described America as an amalgamation of Calibankruptcy and Government Motors: insolvent state governments and businesses leeching the life out of a once-healthy entity with little hope of recovery. As it so happens, we have perhaps another notable entry in this line of argument. One of the semi-successes in GM's recent sorry history was its plant in California run jointly with Toyota--a company that actually knows a thing or two about profitably running a car business. This entity is (was) known as the New United Motor Manufacturing, Inc. (NUMMI). With GM entering bankruptcy, it pulled out of its end of the bargain, ending its involvement in the Fremont plant where it had made cars since 1962.
It was only a matter of time until the other shoe dropped. Whatever your view is of Southern states rolling out generous incentives to foreign automakers to set up shop, the lure is proving too great for Toyota. Some say these incentives are too generous for the benefits received; others would argue otherwise. In the end, it doesn't matter. Toyota has decided to shut down its last factory with--you guessed it--a unionized workforce. Certainly, it is very difficult to portray automaker unions positively after they helped leech the life out of GM and Chrysler. While their main problems had to do with selling undesirable cars, the money drain from becoming retirement and health agencies for retiring autoworkers certainly didn't help. From the LA Times (itself a bankruptcy victim, BTW):
Toyota Motor Corp.'s decision to abandon its assembly line in Fremont marks the end of large-scale auto manufacturing in California, which over the years boasted a dozen or more plants building vehicles ranging from Studebakers to Camaro muscle cars. The Japanese automaker said Thursday that it would end production at the plant March 31 , throwing 4,700 people out of work, and return some production to Japan.Well of course the California state government couldn't throw money at Toyota. Not at this point in time. And here is the most important part:
It's another hard blow for California, a state already grappling with an 11.9% unemployment rate -- its highest since World War II and the fourth-worst in the nation. In addition to wiping out the jobs directly tied to the plant, closing the facility will send ripples through the web of suppliers that make components for the factory and through nearby stores, restaurants and bars that depend on its workers for business.
Overall, closing the plant could cost more than 40,000 jobs, according to Sen. Dianne Feinstein (D-Calif.), who has worked with other public officials to try to keep the plant open. But communications with Toyota eventually broke down, she said.
It is the first time that Toyota has ever closed a major auto assembly plant...Assembly line worker Jose Hernandez, 40, who commutes 75 miles to the plant from the Central Valley town of Ceres, said the news was a bit surprising because the plant had been busy since the government's "cash for clunkers" program jump-started auto sales this month.So the Toyota Corolla was a model very popular with cash-for-clunkers program buyers. This isn't surprising to me as I'd proudly own one myself. But what now that the program is coming to a close and there are more affordable manufacturing locations that beckon? Let's be honest here: A large reason why Toyota decided to close the plant was to eliminate future entanglements with the UAW. It still puzzles me why UAW-style organized labor does not mind winning benefits that will ultimately drive their employers into the ground. I would not put Ron Gettelfinger in charge of a lemonade stand, let alone a corporation (good luck, Chrysler). See GM and Chrysler for shining examples of the benefits of union membership. With friends like these, you're better off losing them and moving elsewhere.
Expect further exodus from California along these lines, although there is really not much left for the process to go.