The closure of NUMMI signifies a new era for California – for the first time in 95 years, California will not host a vehicle production plant for a major auto manufacturer. When NUMMI closes in March, 2010, California’s only notable auto plant will make only a few thousand Tesla all-electric roadsters per year.
The very first auto plant in California, opened by Henry Ford in 1914
California’s first auto plant was Ford Motor Company’s Los Angeles assembly plant, opened in 1914. Ford opened another plant in Long Beach in 1930, which operated until 1959. Ford’s last plant in California was the “Pico Rivera” plant, which was closed in 1981. General Motors has also had a presence in California for the better part of 73 years. The South Gate plant, opened all the way back in 1936, was likely GM’s first California plant. The last GM car made in California (the Pontiac Vibe) rolled off the NUMMI assembly line just a few weeks ago.
The question: Is California the problem? After all, automakers have been building and re-tooling plants elsewhere in the USA since the auto industry began. Ford’s Rouge plant, which opened in 1918, is still in operation. Toyota, Honda, Mercedes, and VW have all built (or are planning to open) new auto plants in the USA very recently, yet none of these plants are in California.
California is the largest auto market in the United States
Considering that California is the largest auto market in the United States (one of the largest auto markets in the world, in fact), wouldn’t it make sense to build cars in California? After all, establishing a presence in California might give a manufacturer a leg up in terms of local sales and market share…yet California has no auto plants and no prospects.
Perhaps California’s laws are to blame. From California’s strict auto emissions regulations (including efforts to surpass federal regulations) to the California Air Resources Board (CARB) cap-and-trade program, California makes manufacturing challenging.
California’s labor laws are no picnic for employers either – some argue that California’s emphasis on “progressive” policies actually hurt employees more than help them. Job seekers, for example, have struggled to find work in California for the last few years, and as of June 2009 California has the 4th highest unemployment rate in the United States.
According to the Tax Foundation’s 2009 State Business Tax Climate Index (pdf), California is one of the 10 worst states for business taxes in the US (ranking 48th overall). Chief Executive magazine’s 2009 survey of 543 CEO’s rated California as the worst state in the US for jobs and business growth. Forbes, which conducts an annual “Best States For Business” study has found that California ranks 45th in “regulatory environment” and last overall in “business costs.”
While there’s a lot of damning evidence here, some might say that the problem isn’t with California. The argument goes that “if the rest of the United States were as progressive as California, our costs and regulations wouldn’t be so high.” Perhaps.
Either way, one thing is clear. In March 2010, California all but loses the auto industry. No matter how you look at it, that’s bad for California.
What do you think – did California kill their auto industry?
Popularity: 1%
Governor Arnie did it.
They don’t call him ‘The Terminator’ for nothing you know.
He should have stuck with acting, not politicking.