BILL ANALYSIS SCR 53 Page 1 Date of Hearing: August 25, 2009 ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY V. Manuel Perez, Chair SCR 53 (Corbett) - As Introduced: July 23, 2009 SENATE VOTE : 38-0 SUMMARY : Memorializes the Legislature's priority to take swift and decisive action to protect California workers and industries including doing everything in its power to keep the New United Motor Manufacturing Inc. (NUMMI) facility open. EXISTING LAW authorizes a variety of economic and workforce development incentives including, but not limited to: 1)Designating an area as an enterprise zone (EZ) and other geographically targeted economic development area; 2)Designating an area as a Free Trade Zone; 3)Offering preferences for state procurement contracts; 4)Providing funding for workforce training; 5)Authorizing income tax credits; and 6)Streamlining state permitting requirements. FISCAL EFFECT : None COMMENTS : 1)Purpose of the Resolution : The purpose of this resolution is to formally recognize the Legislature's desire and intent to take action to retain the last auto manufacturing plant in California. As part of its bankruptcy proceedings, General Motors (GM) is ending its 25-year joint venture with Toyota Motor Corporation (Toyota) at NUMMI. Given the current global economic situation and Toyota's reported $4.4 billion year-end loss, Toyota is also considering whether it will abandon the 380-acre NUMMI automobile and truck assembly facility in Fremont, California. 2)Impact of the Closure : Should NUMMI close, thousands of workers would become unemployed at NUMMI and in the various supply houses SCR 53 Page 2 that support the plant. According to news reports, California officials have been in contact with Toyota and letters have been written to Washington D.C. regarding the federal government's majority investor position at GM and the potential impact the NUMMI closure would have on California. When fully operational, the NUMMI facility produces 250,000 cars and 170,000 trucks on an annual basis including the Pontiac Vibe, the Toyota Corolla and Toyota Tacoma. Operations at the facility are supported by 4,700 plant workers and 3,600 North American suppliers, 1,100 of which, are located in 35 California counties. The 1,100 NUMMI suppliers, vendors and small-parts manufacturers in California employ approximately 15,000 workers and provide $523 million in annual payroll and benefits. In July, the Governor established a "Red Team" coalition of stakeholders to work with NUMMI to help keep the facility open. According to an economic impact assessment prepared by the California Manufacture and Technology Association (CMTA), in its 25 years of operation, NUMMI invested $3.5 billion in its manufacturing facility. Automobile and truck assembly facilities are considered to have one of the largest job multipliers of any of the nine major industry sectors. Overall, manufacturing is considered to have a job multiplier of 2.5. The Center for Automotive Research has further refined this estimate for automobile assembly facilities at 7.5. In its related jobs estimate, CMTA uses a more conservative multiplier of 4.0 reflecting NUMMI's use of both in- and out-of-state suppliers, which results in the estimation that the NUMMI plant is responsible for another 18,800 jobs in California. 3)Related Legislation : Since word came out that GM was leaving the NUMMI partnership, a number of bills have been introduced that would provide incentives and new economic opportunities for areas affected by the potential plant closure. Below is a list of related bills: a) AB 31 (Torrico), 4th Extraordinary Session : Authorized a sales tax exemption on new equipment put in place at the NUMMI plant. Status: Pending in Assembly Rules SCR 53 Page 3 b) ACR 85 (Torrico) : Memorializes the Legislature's intent to take swift and decisive action to protect California workers and industries including utilizing its vested powers to keep the New United Motor Manufacturing Inc. (NUMMI) facility open. Status: Senate Third Reading c) SB 32 (Corbett), 4th Extraordinary Session : Requires the designation of an EZ within the City of Fremont, upon the submittal of an application by the City. The new EZ would not count toward the overall cap on EZ designations. Status: Pending in Senate Rules Committee d) SB 483 (Corbett) : Requires the designation of an EZ within the City of Fremont, upon the submittal of an application by the City. The new EZ would not count toward the overall cap on EZ designations. Status: Pending on the Assembly Floor e) SB 830 (Wright) : Provides a number of incentives including: i) Authorizing the Governor to designate NUMMI as an enterprise zone and further authorizes the Governor to waive any requirements for designation by executive order. ii) Providing a 20% bid preference for state procurement of automobiles or trucks that are manufactured at NUMMI. iii) Directing the Public Utilities Commission to reduce the public goods charges on the NUMMI plant by 70% for each of two years. iv) Authorizing an exemption from paying sales and use taxes received from the sale, storage, use, or consumption of manufacturing machinery or equipment. v) Providing a priority for all federal and state workforce training moneys. Status: Pending in Assembly Appropriations Committee REGISTERED SUPPORT / OPPOSITION : Support None received SCR 53 Page 4 Opposition None received Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916) 319-2090