California Out of Running for $300-Million Mercedes Plant : Commerce: German car maker prefers Eastern states because most of the vehicles would be shipped to Europe.


California is out of the running for the $300-million factory that German luxury car maker Mercedes-Benz plans to build in the United States, state Trade and Commerce Agency Secretary Julie Meier Wright said Thursday.

Up to 1,500 manufacturing jobs might have been created by the plant, so the loss clearly is a blow to California.

But Wright said the process itself of competing for the factory was heartening. Dozens of communities and economic development entities across the state were gearing up to bid on the plant--a dramatic change from the more complacent attitude of only a few years ago.


Wright said she received a letter Thursday confirming the state’s elimination from what continues to be a stiff competition for the factory, which will build four-wheel-drive sport-utility vehicles.

Mercedes is looking only at states east of the Mississippi River, according to the letter from J. Robert Fluor II, vice president of corporate relations for Irvine-based Fluor Corp., which is helping Mercedes parent Daimler-Benz pick a site.

The proposed factory would ship two-thirds of the 60,000 vehicles it builds each year back to Europe. Wright said the added transportation costs and delays in getting cars to European customers knocked western U.S. locations out of the competition.

Mercedes officials have said that 19 states are in the running for what will be the company’s first passenger vehicle factory in the United States.

Wright said she had met with top Mercedes officials in Germany to plead the state’s case, but to no avail.

“Nothing worked,” she said. “They have a game plan, and that game plan is to export vehicles back to Germany. . . . They can’t afford to put a plant out West and still have it be viable.”


But Wright refused to be discouraged by the rejection, pointing to the huge response from communities and economic development agencies--”at last count, about five dozen and growing”--that were beginning to put together proposals to attract the Mercedes plant.

“To me that is a sea change from where we were five years ago,” Wright said. “I can’t tell you how gratifying that is. . . .

“Five years ago, we didn’t have to compete the way we have to compete today” to attract and retain companies, Wright added.

Now, not only is California struggling to recruit companies to resuscitate a devastated economy, but recruiters for numerous other areas--from New York state to the small Colorado city of Pueblo--have found California to be fertile territory, she said.

Wright’s Trade and Commerce Agency has a conference room papered with solicitations that California companies have received from out of state. In response, the state has formed an economic development network called Team California that links public and private agencies in campaigns to recruit and retain business.