NUMMI shutdown hits Central Valley hard

03/24/2010 10:54 AM

03/29/2010 9:34 PM

TRACY – When California is hurting, much of the pain usually falls on the Central Valley. So it's no surprise that the biggest layoff of the recession in California will hit the Valley hard.

The imminent closure of Toyota Motor Corp.'s NUMMI auto factory in the East Bay is creating serious spillover effects. It will erase thousands of manufacturing jobs in the Valley, a region where unemployment already tops 18 percent once you get south of Sacramento.

In Merced, 53 jobs were lost when Arvin Sango, a manufacturer of engine exhaust components, closed its plant.

Phanna Kang is among those headed toward an uncertain future. He's worked the past eight years at Pacific Coast MS Industries in Tracy, a Japanese-owned company that makes air ducts and fuel and brake lines for NUMMI. The Tracy plant will close when the last Toyota rolls off the assembly line at NUMMI on March 31.

Kang, the father of a 3-year-old daughter, was already struggling to pay the mortgage on his Modesto home. Now he's pretty sure he won't be able to pay.

"I'm going to lose the home," he said.

Pacific Coast, which employs 130 workers, is one of several Valley auto-parts plants that sprang up to serve NUMMI and are now headed for oblivion. The Tracy plant opened in 1984, the same year as NUMMI.

"How do you work on closing a factory? This is something I had never done before," said Jasper Bullock Jr., 50, general manager of the Pacific Coast plant.

The NUMMI disaster will hit the Valley in several ways. At least 1,200 Valley residents commute to Fremont to work at NUMMI directly. An unknown number of Valley residents work at Bay Area plants that make parts for NUMMI. And at least 1,000 work for parts manufacturers in the Valley itself, like Pacific Coast.

Throw in the "multiplier effect" – the jobs that vanish when laid-off workers curtail their spending in restaurants, stores, etc. – and the total job loss in the Valley will hit 6,000 over the next few months, said economist Jeff Michael of the University of the Pacific.

Michael estimates the total statewide job loss at 20,000, including the multiplier effect. NUMMI itself employs around 4,500 workers.

Michael said the ripple effects from NUMMI will eliminate about 5 percent of San Joaquin County's factory jobs. But the impact goes beyond the numbers. The layoffs will stifle the region's efforts to diversify its manufacturing base beyond food processing and construction materials, he said.

"This is devastating," said Debbie Duplichan, a rapid-response coordinator at the WorkNet jobs agency in San Joaquin County. "I don't think anybody truly has their head around what's going to happen – the economic impact is going to be substantial."

Unemployment stands at 18.4 percent in the Stockton area and 18.9 percent in Modesto.

The last auto plant in California, NUMMI, or New United Motor Manufacturing Inc., once stood as a symbol of the revival of American automaking. The Fremont plant was closed by General Motors Corp. in 1982 and reopened two years later by NUMMI, a joint venture between GM and Toyota.

The plant was a model of efficiency. But when auto sales plummeted last year, NUMMI's production fell by 25 percent. The plant's existence was further imperiled when GM pulled out of the joint venture following its bankruptcy reorganization. Toyota announced last August that the plant, which makes Corollas and Tacomas, was closing, with production moving to Canada, Texas and Japan.

Labor leaders and some elected officials held out hope that Toyota, its reputation shattered by a recall crisis, would reverse its decision and keep the plant open to generate good will. But the automaker held firm.

In recent weeks the Valley parts factories, many of them owned by Japanese companies and dedicated almost entirely to supplying NUMMI, have announced their closures. Among those shutting down is Kyoho Manufacturing of California, a Toyota subsidiary that arrived in Stockton just two years ago to make stamped and welded body parts. It employs 154 workers.

"They showed up in 2008 and here they are shutting down in 2010," Michael said. "It's a … sign of how unanticipated the collapse of the auto industry was."

Pacific Coast tried to save itself in spite of the NUMMI shutdown. The Tracy plant dedicates about 5 percent of its production to Toyota plants in Canada and Mexico, and Bullock explored the possibility of making parts for a Toyota truck plant in Texas.

Ultimately, the plant was done in by geography. A sister facility in Kentucky makes parts for Toyota plants in the Midwest and South, and shipping finished parts halfway across the country from California didn't make sense.

The Tracy plant, spread across three buildings just north of Interstate 205, remains busy even as the final days approach. Black plastic tubing is molded into brake and fuel lines; larger pieces become ducts for the air conditioning system. Asphalt is used to make pliable mats placed inside doors to muffle street noise.

"It's a hard laboring job but it pays the bills," said John Thor, 27, an employee who lives in Modesto. He said he might try to go back to school to become an electrician when Pacific Coast closes.

The last day of production in Tracy will be March 30. The next day, a caterer and disc jockey will be brought in for the plant's final day of existence.

"We're having a party on the 31st," Bullock said, dabbing his eyes. "It's over with and we're going to have a party."

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