The BMW Group is investing $750 million in the expansion of its Spartanburg plant. The move will raise production capacity from 160,000 to 240,000 units by 2012, and boost the company's total investment in the plant to $4.2 billion. The plant will grow in size by 60% to 370,000m, and 500 new jobs will be created on site.
The expansion will also lead to a hike in purchase and export volumes into and out of the NAFTA region, which will contribute considerably to the BMW Group's natural hedging strategy.
After expansion, the Spartanburg plant will manufacture BMW X3, X5 and X6 models for world markets. "Centralizing our BMW X models in Spartanburg will enable us to work more efficiently. In addition, it was a logical step for the BMW Group as a global player to increase production capacity in its largest market," said BMW AG Board Member Frank-Peter Arndt.
The three-year construction project includes a new 112,000m assembly facility to accommodate the next generation of the BMW X3. The existing body shop will be modernized to prepare for the demands of the future, while the paint shop will expand by 8%.
"The boost in production capacity will positively impact the logistics, suppliers and distribution networks that support the manufacturing process," said Josef Kerscher, President of BMW Manufacturing. While the supplier network may grow, existing suppliers will ramp up operations to provide automotive parts for the higher production levels, doubling parts container traffic and significantly increasing exports through the Port of Charleston.
When the BMW Group announced in 1992 that it would build its first full manufacturing facility outside of Germany in South Carolina, it put forward some ambitious plans. The company was looking to invest $600 million. Its aim was to create 2000 new jobs and attract at least nine suppliers to the state by the year 2000.
The reality exceeded the company's expectations. BMW was employing more than 3000 people at Spartanburg in 2000, and by 2004 that number had grown to more than 4600. As 2007 dawned, the on-site workforce had grown to more than 5400.
BMW has invested $3.5 billion in its South Carolina operations to date. Taking the $750 million of new money into account, the $600 million originally pledged has now swollen to a total investment of $4.2 billion. The nine new suppliers in South Carolina aimed for in the company's original plans have now become 52. Of those, 40 chose the state explicitly because of BMW's presence. BMW's North American supplier network has grown from 22 in 1992 to 194 companies today.
The success of local manufacturing in the USA is highlighted by the company's rising production and sales figures. Vehicle production at the Spartanburg plant has grown from 429 vehicles in 1994 (the first year of production) to 157,530 units in 2007. In the same period the BMW Group's sales volumes in the United States increased from 65,000 to 335,000 units.