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paladin
03-04-2010, 04:57 PM
SAN JOSE, Calif. (AP) -- A new report says it will cost California taxpayers $2.3 billion to replace jobs lost from the closure of a factory that makes Toyota cars and trucks.

The report released Wednesday also says the layoffs that result from closing Fremont-based New United Motor Manufacturing Inc. will translate to a loss of $90 million in state and local taxes.

The report was prepared by a University of California, Berkeley professor for a panel studying the economic effects of closing the plant. The facility employs 4,600 and supports about 25,000 other related jobs in the state.

Toyota says it will stop production at the plant April 1. The decision came after GM, a partner in the factory, shed its share.

Earlier Wednesday, Toyota announced it will spend $250 million on bonuses to assist employees at the factory.

Dan McCosh
03-04-2010, 05:04 PM
Any explanation of why it will cost the taxpayers $2.3 billion?

B_B
03-04-2010, 05:12 PM
Any explanation of why it will cost the taxpayers $2.3 billion?
I understand that to be the payroll? i.e. California is losing payroll of 2.6 billion - I assume also that this is for jobs directly affected (i.e. the 4,600 jobs at the factory) and indirectly affected (i.e. 25,000 "other related") jobs.

Dan McCosh
03-04-2010, 05:38 PM
I understand that to be the payroll? i.e. California is losing payroll of 2.6 billion - I assume also that this is for jobs directly affected (i.e. the 4,600 jobs at the factory) and indirectly affected (i.e. 25,000 "other related") jobs.


I never heard of a lost payroll referred to as "costing taxpayers" before.

mmd
03-04-2010, 06:19 PM
Is Brad happy about this?

Bruce Hooke
03-04-2010, 06:22 PM
Any explanation of why it will cost the taxpayers $2.3 billion?

I think the thinking here is that to bring in new jobs California will have to spend money to attract new businesses, educate workers, and so on. I am not sure how they calculate this but I believe this is what they are getting at, rather than what Braam said.

Phillip Allen
03-04-2010, 08:00 PM
I'm a tax payer...if something costs me money it follows it cost a tax payer...you can see spin like this any time you see a political argument on this forum...generally from one side in particular. It's not limited to the one side though

LeeG
03-04-2010, 08:49 PM
I remember when that plant reopened as NUMMI, the new Chevy Nova was a Toyota Corolla.

Good while it lasted.

http://en.wikipedia.org/wiki/NUMMI#Past_products

LeeG
03-04-2010, 08:59 PM
I wonder what a Corolla cop car would look like?

http://www.gmphotostore.com/images/53219364_pr.jpg

seafox
03-05-2010, 02:16 AM
if you devide the 2.6 billion by the 4600 jobs you get less than 600 dollers each which I would guess is the state income tax paid. way government works is they figure out how much money they want and if a bunch of people lose their jobs well it will just have to take it from other people who are still working.

heavan knows cutting government costs is never the first thought.

mmd
03-05-2010, 08:15 AM
Was I being 'flip', Brad? Well, yeah, mostly, but I was also slipping in a bit of a jab at your hard-line distain for everything Toyota. Trust me, I am very aware of what the vicissitudes of foreign corporations have on a local workforce - my home town's primary employment is a French tire maker and in my home region the major industries count among them a Korean heavy industries firm, a British/Norwegian forest products firm, an American aerospace firm, etc.

BTW, just so that you know my loyalties to auto manufacturers, I own a GM truck, my wife has a Nissan car, and I just bought a Volkswagen for my daughter. I haven't owned a Toyota, but only because the ones that I would want are above my comfort zone in price.

B_B
03-07-2010, 03:09 PM
I think the thinking here is that to bring in new jobs California will have to spend money to attract new businesses, educate workers, and so on. I am not sure how they calculate this but I believe this is what they are getting at, rather than what Braam said.
report (http://www2.calaborfed.org/userfiles/doc/2010/blog/NUMMI%20Blue%20Ribbon%20Commission%20white%20paper .pdf) in question and how they arrive at the 2.3 billion figure is on page 21: As noted in the introduction, the Council of Economic Advisors estimates that it
costs $92,000 to create a job for a year. This means that creating the number of jobs lost just at NUMMI—4,700—would cost more than $430 million and the cost of creating the number of jobs in the statewide NUMMI network would total $2.3 billion.

paladin
03-07-2010, 03:54 PM
I have been pretty quiet on this subject for a reason.....My daughter in law's Uncle is on the board of directors at Toyota. And several other family members are involved in various ways. Her aunt is married to the prime minister, another uncle is the second weenie from the top (and "undersecretary") of the treasury if you will etc...with the family. I have visited with them extensively so I "know" them as well as anyone I guess.....My son is an area head of accounting.....
In my brief conversations, and I do not bring this up at "family" gatherings is that there was never any intentional ignoring of possible mechanical problems. I also know that there has been a helluva lot of hand wringing over the subject on how to handle things. The engineers design things.....they are contracted out......the parts were made and installed.....and all the decisions were made and executed in the U.S. by U.S. citizens ...or in Canada, by Canadian citizens, and installed in autos basically designed in Japan but with U.S. designed and developed/ordered/manufactured parts. The people at the top in Japan were assured that everything was in compliance and all problems would be handled in the U.S. and by the American business partners.......they are worried about saving face without harming or causing loss of face to their business partners. I could say more....but I've probably said enough. I don't own stock in Toyota but I do own one that I bought for a daughter, who only drives it when she comes here...

Phillip Allen
03-07-2010, 03:57 PM
the media is interested in big headlines...not saving lives

paladin
03-07-2010, 10:03 PM
Brad...were/are you a Toyota dealer? I seem to think that you're in the car game...perhaps I'm wrong.....

Dan McCosh
03-08-2010, 07:02 PM
I have been pretty quiet on this subject for a reason.....My daughter in law's Uncle is on the board of directors at Toyota. And several other family members are involved in various ways. Her aunt is married to the prime minister, another uncle is the second weenie from the top (and "undersecretary") of the treasury if you will etc...with the family. I have visited with them extensively so I "know" them as well as anyone I guess.....My son is an area head of accounting.....
In my brief conversations, and I do not bring this up at "family" gatherings is that there was never any intentional ignoring of possible mechanical problems. I also know that there has been a helluva lot of hand wringing over the subject on how to handle things. The engineers design things.....they are contracted out......the parts were made and installed.....and all the decisions were made and executed in the U.S. by U.S. citizens ...or in Canada, by Canadian citizens, and installed in autos basically designed in Japan but with U.S. designed and developed/ordered/manufactured parts. The people at the top in Japan were assured that everything was in compliance and all problems would be handled in the U.S. and by the American business partners.......they are worried about saving face without harming or causing loss of face to their business partners. I could say more....but I've probably said enough. I don't own stock in Toyota but I do own one that I bought for a daughter, who only drives it when she comes here...

What would the role of the Japanese executives on site at all US operations be?

paladin
03-08-2010, 07:27 PM
A good many of them are "good will ambassadors and folks with "family" connections, they are sup[posed to provide "continuity" between the U.S. partners and the home office. Unfortunately, many of them do not want to be the bearer of bad or derogatory news and will generally "dance around" a subject in order to present the best spin. Many have become too "Americanized"...
My son has recognized much of this. I told him to stay out of it and merely be honest in keeping the books etc.....do not alter anything to look good or might be construed as erroneous.....the suggestion was made that he should talk briefly over dinner to his wife as a matter of fact about day to day business, and if she deems it necessary to pass the info along to family over a hello telecon...then he is out of it.

Keith Wilson
03-08-2010, 07:55 PM
NUMMI was a joint venture between Toyota and GM. They built the Corolla/Nova/Prizm and the Matrix/Vibe, among other things.

MiddleAgesMan
03-16-2010, 11:47 AM
Bob Herbert has some pithy words for the Toyota brass, but will they listen?

Will they even read this?

http://www.nytimes.com/2010/03/16/opinion/16herbert.html

LeeG
03-16-2010, 12:05 PM
MAM, isn't the problem that the US has a capacity for auto construction that is dependant on a particular level of growth of sales and when that growth slows down or stops, those plants can't be maintained anymore. Growth of auto sales has been encouraged by different factors and those factors are changing. Collapse of credit, higher energy costs and the simple fact we have more cars per capita than any large country in the world. Car sales can't keep increasing until there's a three cars in every one car garage.

oznabrag
03-16-2010, 12:28 PM
MAM, isn't the problem that the US has a capacity for auto construction that is dependant on a particular level of growth of sales and when that growth slows down or stops, those plants can't be maintained anymore. Growth of auto sales has been encouraged by different factors and those factors are changing. Collapse of credit, higher energy costs and the simple fact we have more cars per capita than any large country in the world. Car sales can't keep increasing until there's a three cars in every one car garage.

That sounds about right.

When knowledgeable people describe cancer, they use terms like 'unlimited growth'.

The US cars from the fifties may have had enormous drawbacks, but they could be maintained/rebuilt for a long, long time. Therefore, they were/are a better environmental 'investment' than anything rolling off the line today.

LeeG
03-16-2010, 01:13 PM
unless you've got 100 millions of them and it leads to massive pollution. Engineers saw the problem coming to Los Angeles in the 50's and if it wasn't for those environmental laws the place would be as bad as Mexico City.

oznabrag
03-16-2010, 01:36 PM
unless you've got 100 millions of them and it leads to massive pollution. Engineers saw the problem coming to Los Angeles in the 50's and if it wasn't for those environmental laws the place would be as bad as Mexico City.

Good of you to point that out, Lee.

Still, the environmental cost of producing a car is almost too much to wrap one's head around. No doubt it's a 'cleaner' industry today than it was in 1957, but it's still a horror. Also, the pollution from manufacture is spread all over, from the plastic dashboard made in one place to the engine cast somewhere else.

When the car gets to LA, it pretty much stays there, and all its pollution is released in one place.

It probably dies there, too.

LeeG
03-16-2010, 03:43 PM
I think it gets chewed up and shipped back to the east to be remade into other products. It'll be interesting to see how affordable that cycle is when oil costs go up.

Dan McCosh
03-16-2010, 04:24 PM
MAM, isn't the problem that the US has a capacity for auto construction that is dependant on a particular level of growth of sales and when that growth slows down or stops, those plants can't be maintained anymore. Growth of auto sales has been encouraged by different factors and those factors are changing. Collapse of credit, higher energy costs and the simple fact we have more cars per capita than any large country in the world. Car sales can't keep increasing until there's a three cars in every one car garage.

US capacity for auto production is mainly based on the replacement of cars already on the road, not anticipated growth. The competitive nature of the industry, and individual carmakers estimate of thier own market share, does create over capacity. GM, for example, estimated an unheard-of 15 million car market when it dramatically retooled in the mid-1980s. The estimate was actually very conservative for the total market, but the loss of market share made GM's capacity seem excessive.

Dan McCosh
03-16-2010, 04:25 PM
unless you've got 100 millions of them and it leads to massive pollution. Engineers saw the problem coming to Los Angeles in the 50's and if it wasn't for those environmental laws the place would be as bad as Mexico City.

The main problem with this analysis is that Mexico City has more stringent auto emission laws than Los Angeles.

Keith Wilson
03-16-2010, 04:33 PM
Mexico City has more stringent auto emission laws than Los Angeles. Laws are one thing, reality another. What are the actual emissions of an average vehicle in Mexico City compared to one in LA?

hokiefan
03-16-2010, 04:40 PM
US capacity for auto production is mainly based on the replacement of cars already on the road, not anticipated growth. The competitive nature of the industry, and individual carmakers estimate of thier own market share, does create over capacity. GM, for example, estimated an unheard-of 15 million car market when it dramatically retooled in the mid-1980s. The estimate was actually very conservative for the total market, but the loss of market share made GM's capacity seem excessive.

How is longevity factored in? In my experience, cars last longer now than they used to. So when times get tight like now, there aren't as many people who have to replace their car as there used to be. They can more easily keep the old one going till things get better. Like I'm doing right now.:D

Just a thought.

Cheers,

Bobby

Dan McCosh
03-16-2010, 04:45 PM
Laws are one thing, reality another. What are the actual emissions of an average vehicle in Mexico City compared to one in LA?

Mexico City autos meet European emission standards, and older cars beyond a certain mileage are only given limited license plates that allow driving every other day--the latter discourages old cars from being on the road at all. Also, the dramatic increase in credit availability prompted a major turnover in the car population, to where most cars are relatively new, hence much lower in emissions. Dunno how the fleet compares to LA, but it should be considerably cleaner, as Los Angeles exempts old cars, rather than restricting their use. I would also guess that Los Angeles air is considerably cleaner, due to a more comprehensive approach to air pollution rather than concentrating on cars. Modern passenger cars are one of the cleanest ways fuel is burned today, and other non-automotive sources tend to be much more significant. The heavy use of bottled propane in Mexico City is one area that contributes, as well as industrial polluters.

Dan McCosh
03-16-2010, 04:53 PM
How is longevity factored in? In my experience, cars last longer now than they used to. So when times get tight like now, there aren't as many people who have to replace their car as there used to be. They can more easily keep the old one going till things get better. Like I'm doing right now.:D

Just a thought.

Cheers,

Bobby

The key factor is looking at the scrappage rate, as determined by registration statistics indicating the car is off the road. This is currently about 12 milion cars per year. Cars do last much longer, and they always lasted a long time. There also is an apparent surplus of cars, with many multiple-vehicle households. This can have a very strong effect on sales in a given year, as many households can cut back without buying a replacement.

Stiletto
03-16-2010, 04:54 PM
In NZ most people drive a second hand Japanese car.
Most of these are imported second hand/nearly new from Japan which has an increasing worldwide trade in these vehicles that make space for the new ones off the production line for their domestic market.

I believe that in Japan the compliance rules for keeping cars on the road are very strict, which makes buying a brand new vehicle an easy economic decision..

Dan McCosh
03-16-2010, 04:59 PM
In NZ most people drive a second hand Japanese car.
Most of these are imported second hand/nearly new from Japan which has an increasing worldwide trade in these vehicles that make space for the new ones off the production line for their domestic market.

I believe that in Japan the compliance rules for keeping cars on the road are very strict, which makes buying a brand new vehicle an easy economic decision..

Japan sells many vehicles in the Pacific after they are deemed unsafe for Japanese drivers.

LeeG
03-16-2010, 05:03 PM
The main problem with this analysis is that Mexico City has more stringent auto emission laws than Los Angeles.

in the 60's when the California Air Resources Board started setting stringent standards for pollution?

LeeG
03-16-2010, 05:06 PM
US capacity for auto production is mainly based on the replacement of cars already on the road, not anticipated growth. The competitive nature of the industry, and individual carmakers estimate of thier own market share, does create over capacity. GM, for example, estimated an unheard-of 15 million car market when it dramatically retooled in the mid-1980s. The estimate was actually very conservative for the total market, but the loss of market share made GM's capacity seem excessive.

and when people don't have the money to replace their car every five years after a boom in credit , steady low cost fuel and incentives to buy big cars what is a manufacturer to do?
I don't get the vilification of auto companies for closing plants if they can't afford it.

LeeG
03-16-2010, 05:11 PM
I would also guess that Los Angeles air is considerably cleaner, due to a more comprehensive approach to air pollution rather than concentrating on cars. .

I read that the big "trucks" used to move containers around at the LongBeach/LA ports are being turned over to hybrids to reduce pollution. Is there some kind of legislation to also make big trucks 18wheelers able to turn their rigs off when idling within LA county limits? I think that's one of the pushes for better batteries or other generation units so that the cabs can run air conditioning while sitting overnight without having the truck engine idling away.

LeeG
03-16-2010, 05:15 PM
Japan sells many vehicles in the Pacific after they are deemed unsafe for Japanese drivers.

Just heard from a friend about the expense involved in owning a car in Japan. I forget all the fees but it sounded like a lot of people opt out of having them like some folks opt out of insurance when income drops.

Stiletto
03-16-2010, 05:18 PM
Japan sells many vehicles in the Pacific after they are deemed unsafe for Japanese drivers.

The vehicles imported into NZ have to meet fairly stringent safety and emission requirements.

The 'deeming unsafe' is a considered technique to keep their vehicle stock being replaced with new.

In the early days of these imports they were popular because the cars were usually fully spec'd, whereas those sold new here werent, usually as a means to keep the purchase price down.

NZ used to have a thriving car assembly industry with many brands coming in 'KCD' (Completely knocked down)

The problem in transposing that model to the USA is that the number of countries wanting your second hand cars would be fairly limited.
Mexico, South America?

Dan McCosh
03-16-2010, 05:21 PM
I read that the big "trucks" used to move containers around at the LongBeach/LA ports are being turned over to hybrids to reduce pollution. Is there some kind of legislation to also make big trucks 18wheelers able to turn their rigs off when idling within LA county limits? I think that's one of the pushes for better batteries or other generation units so that the cabs can run air conditioning while sitting overnight without having the truck engine idling away.

There is a long string of new federal emission regulations just being instituted for heavy trucks, as well as marine engines and small engines. These are aimed at smog-forming emissions, and have been phased in for several years now. Anti-idle laws are part of the package.

Dan McCosh
03-16-2010, 05:25 PM
The vehicles imported into NZ have to meet fairly stringent safety and emission requirements.

The 'deeming unsafe' is a considered technique to keep their vehicle stock being replaced with new.

In the early days of these imports they were popular because the cars were usually fully spec'd, whereas those sold new here werent, usually as a means to keep the purchase price down.

NZ used to have a thriving car assembly industry with many brands coming in 'KCD' (Completely knocked down)

The problem in transposing that model to the USA is that the number of countries wanting your second hand cars would be fairly limited.
Mexico, South America?

There is a huge global market for second-hand cars, but most countries ban them on the grounds that they destroy the balance of payments, and insist on local assembly instead as a way of diminishing the impact on the local economy of imports.

Dan McCosh
03-16-2010, 05:29 PM
FWIW, Fremont is the last of the four major California assembly plants to close in recent years. Most were closed when Calfornia tightened emission laws in advance of national standards, making it prohibitive to assemble cars there.

Cuyahoga Chuck
03-16-2010, 05:41 PM
Building cars in California can't make much economic sense to a company like Toyota that has other US plants in states that are friendlier to manufacturers and have lower costs, No doubt it will more than pay to make a car down south and then truck or rail it back to California to sell it. California can kiss those Toyota jobs goodbye for good.

1
California has 30 million people and it is the principle market for all the Japanese manufacturers. Californians have been very loyal to Japanese brands from the very beginning. If Californians get on their hind legs and quit buying Toyotas in retaliation it will make a mighty big hole in Toyota's bottom line.
2
California is a heavily industrialized state. It has nearly all the ancillary industries needed to feed a car-building operation. No need to truck in parts from hell and gone places.
3
California is on the Pacific Ocean and has many port facilities. Any supplies or equipment that have to come from Japan will likely go to California first, anyway.
4
California isn't perfect . It has air quality problems and is hell on anything that gives off vapors. All the required containment equipment costs money. And California has a high cost of living so skilled workers don't come cheap. With all the bad PR Toyota is suffering now pulling out of California seems like a gamble.

LeeG
03-16-2010, 05:45 PM
There is a long string of new federal emission regulations just being instituted for heavy trucks, as well as marine engines and small engines. These are aimed at smog-forming emissions, and have been phased in for several years now. Anti-idle laws are part of the package.

how are trucks getting satisfying that? It seems like it would take a ridiculously large battery bank to keep air conditioning running and a clean generator would be very expensive to purchase and maintain.

Dan McCosh
03-16-2010, 05:51 PM
Funny nobody mentioned that Fremont is Toyota's only UAW plant.

paul oman
03-16-2010, 05:57 PM
Of course, since you and I now own General Motors, who cares? Toyota is simply the competition now. Free cars and years and years of government unemployment checks for everyone. Isn't that what we voted for?

LeeG
03-16-2010, 06:26 PM
you tell'em Paul, buncho socialists

MiddleAgesMan
03-16-2010, 07:19 PM
MAM, isn't the problem that the US has a capacity for auto construction that is dependant on a particular level of growth of sales and when that growth slows down or stops, those plants can't be maintained anymore. Growth of auto sales has been encouraged by different factors and those factors are changing. Collapse of credit, higher energy costs and the simple fact we have more cars per capita than any large country in the world. Car sales can't keep increasing until there's a three cars in every one car garage.

I think you're correct on all points except perhaps your implication, my perception of it anyway. If you're implying closing a plant due to a decline in the need for what it produces is part of the natural progression, that doesn't seem to apply with the Fremont plant. Herbert says: "....from Jan. 1 to Feb. 27 this year, with G.M. gone, Toyota produced 61,000 sparkling new vehicles at the plant. That was more than double the 27,000 that were produced in the same period in 2009, when G.M. was part of the operation."

It doesn't appear they are closing because of a lack of a demand for the cars--if demand is down why would they more than double production in the last two months?

Herbert seems to be implying Toyota is closing the plant so they can take advantage of a more favorable business environment in Texas, or cheaper labor in Mexico: "California (and Californians) be damned."

Dumah
03-22-2010, 06:05 AM
seems everyone has missed the obvious, the "Big Three" contracting to firms like Toyota, Mazda, etc. to supply rebadged "imports" as domestic. Chrysler deals with Mitibushi, GM with Toyota and Suzuki, Ford and Mazda. How dare you thrash Toyota because domestics can't measure up! The anti pollution laws are far stricter in California than the rest of North America, justify the smaller market. As for used Japanise autos being imported, as I understand it, antipolution laws are so strict there that engines with less than 100,00Km (60,000 Mi) are scrapped or exported. Given the high resale of Japanise cars here is it any wonder that one would buy one of these "discards"? In my poor but honest opinion, the only market foregners haven't matched with domestics would be full size pickups and vans and they are rapidly approaching equality, fit and finish is usually better. Face it, America has lost their lead and needs to be educated by foregn investment.

painfully, Dumah, Halifax

Dan McCosh
03-22-2010, 08:13 AM
Since you raised the issue; how much is a Toyota worth in Guam?

paladin
03-22-2010, 08:30 AM
Or GM may be removing their participation to enable Toyota to "destabilize" and therefore remove the competition.

Dan McCosh
03-22-2010, 08:42 AM
Might note that Toyota, like all Japanese automakers, is under considerable pressure from the auto worker's union to keep jobs in Japan during this global downturn.