GM to Stop Making Cars in California
General Motors this week announced it is quitting its three-decade joint venture with Toyota at the vaunted NUMMI plant near San Francisco. The facility has been much ballyhooed over the years for its cooperative symbolism — it benefited then-neophyte Toyota to employ UAW labor as it entered a wary, protectionist-minded, 1980s U.S. market, while GM was eager to learn Toyota’s vaunted manufacturing techniques — but that has outlived its usefulness now that GM and Toyota are struggling with overcapacity today.
But the little details of the NUMMI plant are equally newsworthy.
NUMMI is Toyota’s most expensive manufacturing facility in North America — and it is the only auto manufacturing plant in California, period (despite the Golden State’s status as America’s largest auto market). Why? Because California is a nightmare for large manufacturing.
Its high energy costs, high taxes, and heavy-handed environmental regulation make it prohibitively expensive to build cars relative to other states in the union. Yet Washington is rushing headlong to adopt California’s economic and regulatory model for the entire country.
And that means future large manufacturing will be going overseas.