It's a saga straight out of the Rust Belt: auto giant closes its factory, laying off nearly 5,000 auto workers, and leaving behind an aging structure and contaminated site of 370 acres. Businesses throughout the region, which supply parts to the factory, also take a hit.
But this is California, and in the second act, the plot takes an unexpected turn: along comes a company that, for $42 million, takes over the factory and 200 acres of land and promises to build electric cars there. The auto giant, which has faced bad publicity for closing the plant, decides to invest $50 million in the green tech manufacturer. Auto giant raises hopes of locals that it will even return to site for a joint venture someday. Factory jobs are now expected to number in the hundreds instead of thousands, but parts suppliers expect a renaissance as well.
If a new Industrial Revolution � characterized by green technologies and not infernal smokestacks � is to take place in the United States, then the City of Fremont may be poised to be the Detroit of the 21st century.
Fremont, in south Alameda County, has been through highs and lows in recent months as Toyota closed its New United Motor Manufacturing, Inc. (NUMMI) plant in April, then resurrected it in May by announcing plans to sell the property to Tesla Motors, the well-known startup that has advertised grand plans to bring high-end electric cars into the mainstream. For years, Toyota had operated the NUMMI plant jointly with General Motors, but GM pulled out of the partnership when it declared bankruptcy in 2009, thus leading to the demise of the last major automobile manufacturing plant in the western United States.
How major Tesla will become � and how deep its impact on Fremont will be � remains to be seen.
Based across the San Francisco Bay in Palo Alto, Tesla is expected to go public with an initial public offering June 29, which should provide $178 million for its expansion. The company has said it hopes to begin manufacturing its roadsters and luxury sedans by 2012. Car prices will start at $50,000.
The company has said that, initially, it will not need all the manufacturing space that it has paid for at the NUMMI plant. But the Tesla announcement has already helped Fremont, a city of 210,000, cement its reputation�and that of all of adjacent Silicon Valley�as a center of green tech. The city has about a dozen green tech companies, including Solyndra, a solar panel maker that is building a manufacturing facility less than a mile from the NUMMI plant. Solyndra has 500 employees; another company, Solaria has 50 employees in Fremont. Many of the companies are benefiting from money invested in green and alternative technology by the Obama administration.
Tesla's plant is intended to be only one piece of this larger revitalized industrial base. City officials began laying the groundwork for the future of the NUMMI area before the plant closed in April. They secured a federal grant for $333,000 for four studies of the future of the site, and surrounding land that totals 850 acres. The studies are set to begin soon, and should be completed in eight months, said Fremont Economic Development Director Lori Taylor.
The area surrounding NUMMI is currently an amalgam of low-slung research parks, industrial buildings, and a few hotels, interspersed with acres of vacant land.
Several transit options already work in the area's favor: there is easy access to the Port of Oakland, two freeways run through the area, and a Bay Area Rapid Transit extension is under construction. The Warm Springs BART Station is slated to open in 2015.
"This site is a prime location and adjacent to several acres of vacant and underutilized land, and right adjacent to a future BART station," said City Councilwoman Anu Natarajan. "There could be several uses including green tech businesses, higher density mixed use, potentially a convention center in the future."
The city is also exploring whether to make an 850-acre area, which includes the NUMMI plan, a redevelopment project area, said Natarajan and city councilmember Bob Wieckowski.
Wieckowski said that Tesla's arrival means that the plant may become the hub of green industry located on adjacent land. NUMMI's suppliers were scattered throughout Northern California, but the adjacent land would be a good spot for the new businesses that will likely arise to supply Tesla � thus vertically integrating the green economy in Fremont. "Part of the trick to having a green economy and green jobs is to have them right next to each other," he said.
Tesla officials toured the NUMMI plant in the months before the plant was shut down, as had many other companies, Wieckowski said. But Tesla appeared to be headed towards Downey, a city in southeastern Los Angeles County, which had put together a package of incentives to lure the company to a portion of a former aerospace facility.
"We never had a clue," Downey City Councilman Mario Guerra said of Tesla's decision. "We had been working with them for over a year."
Guerra thinks the money Toyota is giving to Tesla Motors swayed the company to back out of its plans for Downey. Wieckowski said Fremont is also much closer to the firm's Palo Alto headquarters, and that proximity must have played a role.
If Tesla thrives in Fremont, it will be a major victory for a city that has suffered its share of loses. In 2006, the Oakland A's announced they were going to build a 32,000-seat baseball stadium in Fremont, on vacant land near the 880 Freeway. The stadium project was to be financed in part by housing and retail development on 260 acres. But after local residents complained about the impacts, and the housing market tanked, the team began looking at sites in downtown San Jose and in Oakland. Team owner Lew Wolff has been quoted in the Oakland Tribune as saying he is no longer interested in a ballpark in Fremont, because a housing component is no longer a viable option for financing it.
Councilmembers Natarajan and Wieckowski say there is land near the former NUMMI site for a ballpark, if a team is interested. "Is it likely it will happen?" said Natarajan. "Maybe not with the A's."
Fremont's Taylor said a committee from Major League Baseball "has been studying this site since NUMMI has announced its closure." The MLB task force is also considering other Bay Area sites.
Though it's considered the first mover in the electric car field, Tesla's success is not a sure thing, notes economist Robert Fountain, consultant and retired economics professor at Sacramento State University.
"There is lots of new technology not yet proven in production," he said, "and there are other competing efforts at an all-electric vehicle which may blow Tesla away. So there is lots of risk and at best several more years of local losses before Tesla has the economic impact in the region which NUMMI had, if it ever does."
Meanwhile, Downey may yet prove to be Fremont's competition in electric car production. Guerra said his city is currently talking to another electric car company about opening a factory on the site that Tesla once seemed certain to claim.
Contacts:
Lori Taylor, Economic Development Director, City of Fremont,(510) 284-4024
Anu Natarajan, City Councilmember, Fremont (510) 284-4082
Bob Wieckowski, City Councilmember, Fremont (510)790-2732
Robert Fountain, Regional Economics Consultant, Benicia (916)719-2037
Mario Guerra, City Councilmember, Downey (562)904-7274
