BILL ANALYSIS
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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
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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
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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
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Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090