Monday, August 24, 2009

Job Loss Exagerration: NUMMI edition

The Friends of NUMMI are claiming that closing the Toyota plant (called NUMMI from its days of joint operation with GM) will cost 50,000 jobs. The plant itself employees 4,500, so this would be a multiplier in excess of 10. I find that a bit hard to believe. [Addendum: I see the source is NUMMI itself, see comment for link. I would be interested in seeing the report the tabulated this to know all that is included.]

I'm not downplaying the significance of this potential plant closure. I think this closure would be significant enough to derail the economic recovery in the East Bay and Northern San Joaquin Valley. It is the most important looming risk to the regional economy, and auto manufacturing has just about the largest ripple/multiplier effects of anything. And this would be a permanent loss of high-paying jobs. At this point, I haven't done any detailed research on this plant, but my educated guess is that the total employment impact would be closer to 20,000.

Of course, the big 50,000 lost job figure will prove to be much more effective in wringing incentives out of state government, and reports suggest the state is pulling out all the stops to keep them building Toyotas in California. No sales tax on new equipment (similar to farmers' tax break on farm machinery), reduced electricity costs, investment in new infrastructure for shipping, offsets of losses against future taxes on profits, etc.

After so many posts beating up on the Agriculture community for exagerrating water job losses in an effort to get the Federal and State government to waive environmental restrictions and invest in increased water supply; it seems fair for me to point out that they are not alone in using very large lost job estimates to push for favorable action from government.


  1. According to the press release (which includes statistics directly from NUMMI's Web site There are 4,600 direct jobs that will be lost and then when you factor in the 1,000 suppliers that work indirectly for the NUMMI plant, it will equal as many as 50,000 jobs throughout the state. These numbers don't even consider all of the smaller businesses including restaurants, convenience stores, etc. that will be at jeopardy if the economy worsens and the families that have been employed by NUMMI need to relocate.

  2. I believe that Nummi has 5,440 people working directly at the Fremont plant. There are another 1300 employees of various suppliers effected by the plant closure... 321 at Johnson Controls in Livermore, 387 at Injex Industries in Hayward, 186 at Trim Masters in Modestor, and another 154 at Kyoho Manufacturing in Stockton and 104 at Toyota Tsusho in Fremont, etc.

  3. I have seen reports of 15,000 supplier jobs, most of which will probably disapear; so it looks like my guess of 20,000 in this post is too low.

    I still think 50,000 is too high, but the effect is almost certainly 30,000+. It's huge.