BMW announces $750M investment in S. Carolina factory

BMW on March 10 announced it will invest an additional $750 million in its Upstate South Carolina factory to add 1.5 million square feet and 500 new jobs on site to produce three models and to increase production capacity to 240,000 units by 2012.

The investment is the largest ever announced for the Spartanburg County factory, increasing investments of the BMW Group in its South Carolina operations to $4.2 billion.

The three-year construction project includes a new 1.2 million-square-foot assembly facility north of the existing factory to accommodate the next-generation BMW X3 Sports Activity Vehicle. In addition, the paint shop will expand by about 80 percent, or 300,000 square feet. The existing body shops will be renovated.

The additional investment will prepare the factory to increase production from 160,000 units to 240,000 units. The expansion of the Spartanburg plant also means a bigger purchase and export volume in and from the NAFTA region, which will contribute considerably to the company’s natural hedging position.

After the expansion, the Spartanburg plant will manufacture the BMW X3, X5 Sports Activity Vehicle and X6 Sports Activity Coupe and their respective variants for world markets.

“Centralizing our know-how for BMW X models in Spartanburg will enable us to work more efficiently, thus supporting our long-range corporate strategy. 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 board member Frank-Peter Arndt.

A highlight will be the production of a diesel X5 Sports Activity Vehicle for the United States market starting later this year.

“The boost in the production capacity at BMW Manufacturing will positively impact the logistics, supplier and distribution networks that support the manufacturing processes,” said Josef Kerscher, president of BMW Manufacturing.

While the supplier network may grow, existing supplier companies 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 BMW Group announced in 1992 that it would build its first full manufacturing facility outside of Germany in South Carolina, the company pledged to invest $600 million, to employ 2,000 associates by the year 2000, and attract at least nine suppliers to the state.

By the year 2000, BMW had grown to more than 3,000 BMW associates and by 2004 that number grew to more than 4,600 associates. Within that same timeframe, in order to provide greater flexibility, BMW began to employ contract workers to primarily provide specialty and administrative services. As BMW entered 2008, the number of on-site workforce, including BMW associates and contract workers grew to more than 5,400 with a total payroll of more than $450 million annually. In addition, BMW has a contingency workforce of about 900 workers with an average annual payroll of more than $50 million.

Today, BMW has invested $3.5 billion in its South Carolina operations, more than 5,400 people work on the site. Fifty-two suppliers are located in the Palmetto State, and 40 of those 52 suppliers have chosen to place new North American operations in the state to partner with BMW. And, BMW’s North American supplier network has grown from 22 in 1992 to 194 companies today.

To meet growing customer demand, vehicle production at BMW Manufacturing has grown from 429 units in 1994, which was the first year of production to 157,530 units in 2007. In the same period the sales volume in the United States increased from 65,000 to 335,000 units in 2007.

BMW Manufacturing Company is a subsidiary of BMW AG, based in Munich, Germany.