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