Silicon Valley / San Jose Business Journal - by David Goll
Media
Nina Moore realized it was a long shot when she and other members of a blue ribbon commission made a whirlwind trip to Japan in early March to persuade Toyota Motor Corp. officials to keep operating the New United Motor Manufacturing Inc. plant.
Toyota officials hadn’t wavered since first announcing Aug. 27 they would shut down the plant.
But the stakes were large for the Bay Area’s fourth-largest city. Losing a 5.3 million-square-foot facility that produces thousands of Toyota Corollas and Tacoma trucks will mean a $2 million drop in property tax revenue for Fremont. The layoffs of 4,700 plant employees and up to 25,000 at supplier companies statewide represents a loss of $1.4 billion in annual payroll and benefits.
“It was an 11th hour attempt to try to get the decision reversed,” said Moore, director of government and community affairs for the Fremont Chamber of Commerce.
NUMMI has been a unique, 25-year partnership between the Japanese auto giant and the industry’s former behemoth, General Motors Co. It all started to unravel in June 2009 when financially troubled GM pulled out of NUMMI.
“My message to Toyota was how related NUMMI is to our community and how much it has contributed to Fremont and our nonprofit organizations,” Moore said.
Up until last year, Moore said, the company has regularly made generous contributions to the Fremont Unified School District and Fremont Education Foundation, a nonprofit organization that provides supplemental funding for after-school programs, teacher grants and sports equipment for the 32,000-student K-12 district. Milt Werner, district superintendent, said for many years NUMMI funded a program to assist new teachers in the district with grants of $500 to $1,000 each.
The auto manufacturer also contributed $25,000 for the construction of the Ohlone College Newark Center for Health Sciences and Technology, which opened in 2008, according to Dave Smith, executive director of the Ohlone College Foundation. He said the company also made a $100,000 donation to help fund construction of a black box theater at the Gary Soren Smith Center for the Fine and Performing Arts at the Ohlone College campus in Fremont.
“NUMMI is ingrained here,” Moore said. “We’d like to see that continue, for the company to produce the Prius and electric plug-in vehicles. We have a growing cleantech business community in Fremont, with companies like (solar panel manufacturer) Solyndra. We’d like to have NUMMI, too.”
Other than property taxes, Moore said it’s tough at this point to quantify the entire cost to Fremont of losing NUMMI. It has yet to be factored into the 2010-11 budget for the city of 213,000, she said.
“Even businesses in other parts of town are going to be affected,” she said of the sprawling, 92-square-mile city.
She said two NUMMI employees who went along on the trip to Japan, a married couple, are preparing to put their San Jose house up for sale and move out of the area.
Christine Friday, economic development coordinator in neighboring Union City, has similar concerns. She said tahe plant closure’s effect on the already slumping local housing market is a major issue.
“Simply put, the closure will have a devastating impact on this area, both short-term and long-term,” Friday said. “We don’t see most NUMMI workers getting back into the work force immediately. That could have a major impact on the level of housing foreclosures because many of our residents who work at NUMMI are two-income families where both work at the plant.”
However, Friday said she doesn’t expect businesses in her city of 73,000 to suffer major impacts from NUMMI’s demise.
Terrence Grindall, community development director in Newark, said the Tri-City area should be competitive when it comes to drawing the cleantech industry, given the success of companies like Solyndra Inc.
“The challenge will be to match NUMMI workers with the new jobs,” Grindall said. “The emergence of the cleantech industry locally is a good sign, and NUMMI workers are the highest-skilled auto workers in the world. But, of course, I still have a lot of concerns about their futures.”
As does Lori Taylor, Fremont’s economic development director. The loss of thousands of jobs with average annual salaries of $65,000 during a recession is a big blow.
“It’s not good news during a time of tight budgets,” she said. “It’s a big loss to our city. We have really been proud to have such a major manufacturing plant.”
Tom Means, professor of economics at San Jose State University, is also worried about future prospects for NUMMI workers and what their loss in incomes will do to the local economy.
“Cities aren’t hiring and a lot of companies aren’t, either,” Means said. “When we’ve had downturns before, it still has been easier to find a job than it is today.”
Because manufacturing jobs are scarce and housing prices high, it will be tough for many NUMMI workers living locally to remain in Silicon Valley, Means said.
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