BMW has put $6.3 billion into manufacturing luxury cars in South Carolina’s Upstate, and it has put close to 8,000 people to work in the state in the past two decades.
The international carmaker has long-since exceeded public expectations – dwarfing the $600 million capital investment and 2,000 jobs it promised when it announced in 1992 it would open its only North American manufacturing plant in Greer.
The ripple effect of that announcement 22 years ago and the growth that has come have had a profound impact on the state’s economy, touching lives from the Upstate to the coast. BMW helped kick-start a vital shift in the state’s historically textile economy, transforming South Carolina into a manufacturing powerhouse and major exporter in the global economy.
And the German automaker isn’t finished making its mark on the Palmetto State yet.
On Friday, BMW, which has manufactured more than 2 million vehicles in South Carolina, is expected to unveil its next major expansion to manufacture what is widely speculated to be a new luxury X7 sports activity vehicle, larger than its existing, top-selling X5 model. The expansion could spur another $1 billion in investment and add a third factory on the plant’s 1,200-acre site.
The automaker has invited news media for a “significant economic and product announcement” at 1 p.m. at its sprawling 1,200-acre manufacturing plant in Spartanburg County, where U.S. Commerce Secretary Penny Pritzker and BMW Manufacturing president Manfred Erlacher and other dignitaries will attend.
‘a real economic development coup’
Headquartered in Munich, the capital of Bavaria in southern Germany, BMW has manufactured automobiles, motorcycles and engines since 1916, but touched off a tremendous competition between states when it decided in the early 1990s to locate a plant in the United States.
The Spartanburg plant, situated along Interstate 85 between Charlotte and Atlanta is the only BMW manufacturing plant in the United States.
It is solely responsible for the global construction and delivery so far of seven BMW X models that are shipped to more than 140 countries.
South Carolina ranked second in the U.S. in automobile exports in 2013, according to the S.C. Department of Commerce, and ranked second to California for all exports to Germany.
BMW, short for Bayerische Motoren Werke AG, produced 300,000 cars in Spartanburg last year alone, Commerce said, and exported 210,000 of them, or about 70 percent, through the Port of Charleston.
“Getting an automotive plant is a real economic development coup,” said S.C. Commerce Secretary Bobby Hitt, “and so it was for (the late) Gov. Carroll Campbell and the Department of Commerce when it occurred in 1992.”
Car manufacturing, Hitt said, is seen as “the pearl” of economic development because it has the greatest economic multiplier of any kind of manufacturing operation. “It’s considered to be a real wealth creator – every automobile plant – that’s why the competition for them is so great.”
A 2008 study by USC’s Moore School of Business set the broad annual economic impact of the BMW plant on South Carolina at more than $8.8 billion.
But Hitt, a Charleston native who worked at the BMW plant in Spartanburg as its corporate affairs manager before being tapped by Gov. Nikki Haley to lead the Commerce Department, often casts BMW’s greatest impact on South Carolina in non-monetary terms. BMW created an identity for South Carolina that didn’t exist before, he said.
“To my mind, it changed the way we thought about ourselves, that we could play on an international stage,” said Hitt, who drives a BMW. “I don’t know of a company that has had a profounder impact in South Carolina. I’m not sure of any company that’s ever had an effect on the psychology of the state that BMW did. It was a major change.”
Economics are prolific
It was Campbell, who served as governor until 1995 and died 10 years later, who set the stage for that shift. He saw a critical need in the state, said former Republican Gov. David Beasley, who succeeded Campbell for a term from 1995 to 1999.
“South Carolina’s economy was in a very serious state of transition,” said Beasley, now a Darlington businessman.
While the U.S. economy was growing strong, “South Carolina’s was on the brink of disaster,” he said. Its textile-based manufacturing economy was reeling, Beasley recalled, even as the state was under further threat from a severe round of U.S. military cuts in the form of base closings.
“BMW has been and still is extremely vital to South Carolina’s economic well-being,” Beasley said. For the company to make a significant economic announcement in the Palmetto State at this time of continued global economic turmoil, Beasley said, indicates that BMW, recognized for its commitment to excellence, feels that South Carolina has a seat at that table, too.
The economics of a powerhouse manufacturer such as BMW are prolific, though, and even more so in a largely rural economy like South Carolina’s.
“Their wages and fringe benefits produce a tidal wave of spending that lifts the incomes of approximately three more workers for each BMW worker employed,” said Bruce Yandle, a Clemson University economics professor emeritus.
Then one has to consider the second- and third-tier suppliers who produce components used in the assembly of the BMW vehicles, Yandle said. Forty of the company’s suppliers are located in South Carolina, employing more than 20,000 people.
“Spread across the region, these employers add a sizable ripple effect that supplements BMW’s direct impact,” Yandle said.
Finally, Yandle said, there is the not-so-insignificant value of branding. “BMW is known throughout the world for producing ‘the ultimate driving machine,’” Yandle said, “with unstinting attention paid to quality and performance.
“Their reputation has now been affixed to South Carolina’s brand. Industrialists worldwide know that South Carolina workers, suppliers, and supporting government agencies have passed the BMW test.”
South Carolina Department of Commerce Secretary Bobby Hitt sat down with The State to talk about BMW’s impact:
BMW’s major SC expansions