Tuesday's Investor's Business Daily posted an article about Toyota closing its NUMMI plant in Fremont, California. The plant was a hybrid General Motors and Toyota manufacturing facility.
In theory the plant was the type of manufacturing that the Obama Administration supports. The plant had won 42 environmental awards and 32 product excellence awards. Most of its 5,500 employees were members of the United Autoworkers Union, making an average of $65,000 a year. According to the article:
"Since 1982, the plant has cranked out more than 5 million vehicles, including the Toyota Corolla, Pontiac Vibe and Geo Prizm."
What happened? According to Thomas Lifson, a former Harvard business professor and consultant to two of the top five global auto manufacturers, the excessive 'green' rules in California are fine in a thriving economy, but make doing business difficult during a recession. The cost of doing business in California makes it difficult for business to prosper there. Toyota has announced that the manufacturing done in Fremont will be moved to San Antonio, Ontario (Canada) and Japan.
The other problem with the plant was union labor. The article reports:
"The UAW contract is a legacy of its ties to GM. After the government's takeover of GM ended GM's role in the plant, Toyota was left with the UAW's uncompetitive labor costs, which added $500 to the cost of a car and forced it to lay off 4,700 workers."
This is what happens when government oversteps its control of business. Corporations, like people, vote with their feet.
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