It seems like a lifetime ago, but in the not-too-distant past, California was a thriving center of auto manufacturing, home to three different GM assembly plants and two Ford factories.
But by 1992, four of these plants had been shuttered. More than 10,000 jobs with good wages and solid benefits evaporated, making it that much tougher for working-class Californians to enjoy a secure middle-class lifestyle. Today the last vestige of traditional, big-name auto manufacturing is about to disappear: The lone remaining GM plant, which had become a GM-Toyota joint venture, will shut down in 2010, taking with it another 4,500 jobs in the Fremont area.
The state’s golden era of manufacturing may be over, but nevertheless, California remains at the vanguard of auto design. Today there is an opportunity to build on that strength. If we move quickly and decisively, we can reclaim a leading role in car-making—one that looks toward the future rather than trying to recreate what we’ve lost in the past. By actively courting not just the design operations but also the building of alternative-fuel and electric vehicles, California can become a hub of green manufacturing.
Currently, California is the home to several cutting-edge electric car manufacturers. Although Fisker, Tesla, Aptera, and Phoenix Motors aren’t exactly household names yet, they might be one day soon.
The smaller firms among this group, like Aptera and Phoenix, already make their cars here in the state. Tesla Motors may represent an even more significant opportunity; the company is currently looking at converting idle aerospace facilities in Long Beach and Downey into factories that can turn out its new electric sedan. These empty facilities have been considered as film and television studios, but local leaders are actively courting auto manufacturing instead, offering a number of incentives like sales tax and hiring credits, financing guarantees, and breaks on business taxes. Although Tesla has yet to formally choose the location for its plant, it has publicly committed to building its factory here in California.
The looming vacancy of the Fremont plant provides an opportunity to attract another new vehicle line to California. If the state designates the area around the factory as an Enterprise Zone and makes it a priority to actively recruit another company’s manufacturing operations with the right incentives, it can secure the presence of thousands of jobs over the next two decades.
Rebuilding California’s manufacturing base will not be an easy task, since this sector has been bleeding for more than 25 years. The rash of plant closures that began in the early 1980s reflected the emergence of two key issues that continue to hobble the manufacturing sector to this day: First, the cost of doing business in California is a serious deterrent. To set up shop in California, firms have to cope with sky-high real estate costs, daunting workers compensation rates, and an increasing regulatory burden—problems that have only gotten worse over the past quarter century. And second, very few public officials understand the urgency of retaining high-paying jobs that do not usually require a college degree. State and local leaders have not made it a top priority to recruit or retain big manufacturing operations.
It’s time to put some real muscle and momentum behind the effort to restore manufacturing in the Golden State. Just a few weeks ago, California-based Fisker Automotive announced it was buying a former GM plant to build its new electric car—in Delaware. We can’t afford to let more opportunities like this one slip away.
The possibilities for growing California’s manufacturing base are not limited to small local firms. Toyota and Volkswagen are both planning electric vehicles. We need to make a strong case to them that building green vehicles in America’s tech hub and largest car market makes a world of sense—and that California won’t let high taxes and a byzantine regulatory process turn them away.