Toyota and Kalifornia: You Hardly NUMMI?

The New United Motor Manufacturing, Inc. (NUMMI) was originally a joint venture between Toyota and GM.  The Toyota Corolla and the Geo Prizm was one early product of the venture.  The NUMMI plant (pictured right) was built in Fremont, California and has been in operation since 1984.  The plant will soon close and, with it, 4,700 jobs will end:

California Treasurer Bill Lockyer said Wednesday that Toyota’s plan to close the New United Motor Manufacturing Inc. plant in Fremont on April 1 would cost taxpayers an estimated $2.3 billion and cripple the state’s economy.

Why would Toyota close the plant?

NUMMI’s factory workers are paid about $27 to $28 an hour in wages. In contrast, Toyota’s other Northern American plants pay workers about $15 to $20 an hour.

It is not simply the workers making more than they do in other places (it costs more to live in Kalifornia than in most other states).  Kalifornia, with its high taxes, numerous fees, red tape, and regulations is one of the most unfriendly places for business to operate:

California’s tax system is the 48th least business-friendly among the 50 states, according to the Tax Foundation, a Washington, D.C.-based research group.

The foundation’s 2010 State Business Tax Climate Index, released Tuesday, ranked California ahead of only New York and 50th-ranked New Jersey.

Let’s not forget New York and New Jersey are also in a financial mess (though the Republican governor of NJ say’s he’s cutting spending any way he can).

But let’s get back to NUMMI for a minute…  Although 4,700 people work at the plant, it is reported up to 25,000 people could be affected.  GM, when they went bust thanks to Obama’s help, ended its relationship with the plant after it killed Pontiac and, thus, the Vibe, the sole car it produced there.  Toyota was left holding the bag.  They decided the plant was not economically feasible and announced it would be closed.

Toyota has offered, as of March 3, 2010 to pay out final severance to the NUMMI Union workers but the union has not allowed its workers to vote on the package.

To make the ironies even sweeter, more than 80% of the Union NUMMI workers are upset with the UAW and the UAW has said it will take 3% off the top of whatever severance the workers do get from Toyota!

And the severance package has been reported to be between $13,000.00 and $43,000.00!

Obviously the high taxes and heavy regulations of Kalifornia make it business unfriendly and corrupt unions make it too tough for employers.  And Big Union wonders why its membership has been in decline for over a decade and Kalifornia wonders why its drowning in debt.

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