BMW might add 4th model at Spartanburg plant
Jan 16, 2011 (Herald-Journal - McClatchy-Tribune Information Services via COMTEX) -- BMW's American family is growing.
And it may not be long before production of another model will be added to the Germany-based automaker's Spartanburg County assembly plant.
Company officials have not yet named a vehicle that could join the three models currently being made at the facility. But they said there is plenty of room for growth at the 4 million-square-foot plant.
"(BMW) has no reason not to add another vehicle (at the plant)," said Lindsay Chappell, an analyst for Automotive News. "They've been extremely pleased with everything that has come out of Spartanburg over the years, and there's no reason to believe that they're done with it. It's a key part of their global identity now." In October, Bloomberg reported that BMW CEO Norbert Reithofer said the automaker has "ambitious plans" for the U.S, the world's largest market for luxury cars.
Frank-Peter Ardnt, BMW's production chief, said the company was lining up an additional "volume" model for the U.S. that could be produced in South Carolina, according to Bloomberg.
This week, Ian Robertson, a member of the board of management for BMW AG, said the company is thinking about adding 3- and 5-Series production lines to its Spartanburg plant, according to bmwblog.com. Robertson told the site the plant "still has enough capacity to allow the production of additional models." BMW sold 100,910 3-Series units in the U.S. last year, which was nearly an 11 percent increase from the 90,960 sold in 2009. The vehicle accounted for 38 percent of the automaker's 2010 North American sales, which totaled 265,757 cars.
The company said its new compact X1 was well-received in 2010. Although not imminent, its move to the company's competence center for X vehicles -- the Spartanburg plant -- could be forthcoming.
"The success of the BMW Group is so closely connected to this country, that we consider the U.S. our second home," Robertson said Monday during a speech at the 2011 North American International Auto Show in Detroit. "I can say with confidence that BMW is firmly planted in the American business landscape. And our commitment to the U.S. continues." Moving up Last year, BMW completed an additional $1 billion investment in the U.S., the company's second largest market behind Germany.
A majority of that investment was for the expansion of the Spartanburg plant to make room for the next generation X3 sports activity vehicle, which was added to the plant's production of the X5 and X6 models.
The expansion included the addition of a new 1.2 million-square-foot production building and 1,600 jobs.
Reithofer told Bloomberg that BMW was investing in the facility to reduce foreign currency exposure, which stood at more than 10 billion euros ($14 billion) at the time of the X3 launch. About 70 percent of the vehicles built at the site are exported to 130 countries around the world, according to the company.
It would make sense from a competitive standpoint as well for BMW to assemble a high-volume vehicle like the 3-Series in the U.S., Chappell said.
In December, Germany-based luxury automaker Daimler AG, BMW's biggest rival, announced it will move some of the production of its new generation Mercedes-Benz C-Class model to its factory near Tuscaloosa, Ala., by 2014.
The Alabama plant currently produces Mercedes-Benz crossovers and SUVs, the M-class, R-class and GL-class.
The company said C-Class production will bring 1,000 jobs back to the facility, which has seen its work force numbers shrink during the past few years from 4,000 to about 2,800.
Base MSRP prices of the Mercedes 2011 C-Class and the 2011 BMW 3-Series are $33,990 and $33,150, respectively.
Full of surprises Chappell said it's difficult to predict BMW's next move. The company has a history of making surprise announcements, such as the one it made in 1991 to build a plant in Spartanburg.
"They wanted a small factory to do some things that weren't being done," he said. "They did that for a couple of years, but only as practice for what they said they were going to do all along, which was to build the Z3. Their end game was to produce a sports car. When they opened it up, it was a small operation ... and they're now doing big quality mass production of global models." Adding a new model at the plant would keep the company from having to import another model to the U.S. and strengthen BMW's North American operation, Chappell said.
The company's drive to bring new products and technologies to market also could play into the Spartanburg plant's favor, as it will help BMW "keep the flame burning" during periods of economic decline, he said.
The Z3 and X5 didn't exist before the company built them in Spartanburg. In 2011, the company will have many more products to juggle around, including its entry-model 1-series, 2-series, X models and the electric Megacity car, Chappell said.
"As we've seen in the last two years, there are no guarantees for the future," Chappell said. "BMW is not a stagnant company. They are regularly creating new models, not continually adding facilities." Suppliers expanding BMW's investment in its Spartanburg plant, which is $4 billion to date, has rippled across the state's economy.
The plant currently has 7,000 full-time and contingency employees from the Upstate. It has a network of 170 North American suppliers, and 40 of those companies are in South Carolina.
Many of those suppliers have expanded or are in the process of expanding to meet increased demands on parts and services brought on by the X3.
A few local examples are ZF Lemforder's addition of 115 jobs at its Duncan facility, Roechling Automotive's investment of $25 million for new machinery at its Duncan plant, Lear Corp.'s investment of $10.8 million to create 140 jobs at its Spartanburg County plant and Union-based LSP Automotive Systems' addition of 40 jobs.
New suppliers also have been attracted to the area, including Astra/CFX in Greer and ZF Transmission in Laurens County.
Draexlmaier Automotive of America in Duncan has already expanded and is expected to make another announcement on Wednesday.
According to a 2008 economic impact study by the University of South Carolina's Moore School of Business, the plant's employment multiplier effect -- the ratio of total employment supported throughout the state to direct employment at the factory -- is 4.3.
By that math, the facility plant props up more than 30,000 jobs statewide.
"Adding a new model does actually require more people ... a lot more people," Chappell said. "And there's the multiplier effect among all suppliers. All of those extra people have to go somewhere for lunch. They have to buy groceries. You're talking about an impact across the whole economy." Poised for growth A vehicle like the 3-Series, combined with the X models, would also give the company enough volume to do something experts have said BMW should do all along -- build an engine plant in the U.S.
Local leaders eager to pave a path to future success and put local residents back to work have expressed their desire to see the automaker continue to grow.
"We would roll out the red carpet to help them make any decision that would benefit them and us because it has been a win-win experience from day one for Spartanburg County, the state and the nation," said Spartanburg County Councilman David Britt. "They're in a class amongst themselves. It is refreshing to walk through their doors and see the teamwork and love their associates have for the company. Everybody wants to work for them." BMW has set the target of selling 1.5 million vehicles in 2011. The U.S. will play a crucial role in hitting that mark, Robertson said.
Max Metcalf, spokesman for Spartanburg-based BMW Manufacturing Co., said the company has made no official announcements about adding a new vehicle at the plant, and officials and employees there are focused solely on the task at hand -- building the X3, X5 and X6.
"BMW has been the greatest success story in the history of South Carolina and Spartanburg County," Britt said. "It's the gift that keeps on giving. It's put us on the map. They make the finest cars in the world, and we make them for them." To see more of The Spartanburg Herald-Journal or to subscribe to the newspaper, go to http://www.goupstate.com. Copyright (c) 2011, Herald-Journal, Spartanburg, S.C. Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com.
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