March 28, 2014

BMW will build new model X7 in Upstate

German automaker BMW kicked its investment in South Carolina into overdrive Friday. The car maker celebrated its 20{+t}{+h} year of production in the United States by confirming plans to invest another $1 billion and hire 800 workers at its Spartanburg County plant to build its new X7 model.

German automaker BMW kicked its investment in South Carolina into overdrive Friday.

The car maker celebrated its 20th year of production in the United States by confirming plans to invest another $1 billion and hire 800 workers at its Spartanburg County plant to build its new X7 model.

The expenditure represents the automaker’s single largest expansion at the Spartanburg plant – BMW’s only production plant in North America – since construction began 22 years ago.

Over the next two years, the automotive manufacturer said it will add another production facility at its 1,200-acre campus in Greer to build the new line of BMW sports activity vehicles.

Doing so will allow the carmaker to expand the plant’s annual production capacity to 450,000 vehicles per year and will make the plant BMW’s largest production facility in the world.

“This means 50 percent more (vehicle production) than today and these 150,000 additional cars is equal to a whole new plant,” said Norbert Reithofer, BMW AG management board chairman, during a celebration Friday afternoon at the Upstate plant. “More importantly, Spartanburg will become the largest plant in our global production network – a milestone in the history of the BMW Group.”

Announced in 1992 and opened for production in 1994, the Spartanburg County plant already was BMW’s second-largest plant worldwide, currently producing about 300,000 X3, X5 and X6 model BMWs per year and employing a workforce of about 8,000 people.

When the S.C. plant was announced in 1992, BMW said it would invest $600 million to build 1.5 million-square feet of factory space and intended to hire 2,000 people by the year 2000.

Friday’s announcement, attended by BMW’s top officials – including Reithofer; Group Board member Harald Krueger, head of BMW’s global production network; and Manfred Erlacher, BMW Manufacturing president – would push the plant’s workforce to 8,800 employees and raise the company’s investment in the Spartanburg factory to more than $7.3 billion.

No state incentives have been approved for the BMW plant expansion to date through the Coordinating Council for Economic Development, according to the S.C. Department of Commerce, but discussions with BMW on the issue are ongoing.

“I’m certain you would all agree with me that this underscores the BMW Group’s strong commitment to the U.S., to South Carolina, and to our associates here at this location,” Reithofer said.

U.S. Secretary of Commerce Penny Pritzker and S.C. Gov. Nikki Haley led a delegation of business officials, a national and international press corps and elected leaders such as U.S. Sen. Lindsey Graham and U.S. Sen. Tim Scott, both South Carolina Republicans, to the gleaming BMW facility off Interstate 85 in the Upstate.

Two years ago, BMW announced a $900 million expansion investment in the Spartanburg plant to build the new X4 model BMW that the company said Friday is ready for production.

The company rolled out its first X4 – red with cream-colored, leather interior – during the Friday expansion announcement.

The X7 expansion, however, represents a new dimension for BMW, the Upstate, and for South Carolina, officials said.

“I’ve been asked many times, why don’t you offer an X model beyond the BMW X5?” Reithofer told the audience seated inside a production area. “Today, I am happy to provide the answer to that question. We have decided to develop and build a totally new X model, the BMW X7,” he said to sustained applause.

The new X7 will be highly fuel efficient and offer outstanding driving performance – a true BMW, Reithofer said.

“And of course, this being the center of competence for X models, the X7 will be produced here in Spartanburg,” Reithofer said. “Ladies and gentlemen, we are never at a standstill.”

The U.S. is BMW’s second-largest market worldwide, the largest market for the BMW MINI and Rolls Royce brands and a key market for other BMW brands and services, Reithofer said.

BMW workers have produced more than 2.6 million vehicles at the Spartanburg plant since 1994, officials said. Last year, nearly 300,000 vehicles were built at the plant, a record year, the company said, and more than 70 percent of those vehicles were shipped to more than 140 countries worldwide.

The U.S. Commerce Department set the value of BMW exports from the Spartanburg plant at more than $7.5 billion annually, the company said, making BMW the largest exporter of U.S. vehicles to non-NAFTA nations.

“Clearly, BMW knows what a growing number of global companies are realizing – there has never been a better time to invest in America,” Pritzker said. She ticked off a number of reasons for foreign investment being dramatically up in the U.S. last year, including the rule of law, stable financial markets, low-cost and abundant energy, vibrant supply chains and world-class universities.

“It’s powerful, I think is the single word for it,” said Joseph Von Nessen, a USC research economist, speaking of BMWs decision to expand here and their unparalleled performance over the decades. “BMW has been an anchor for South Carolina’s manufacturing cluster since it began in 1994, and it’s helped to create this cluster throughout the state and the Upstate that provides really enormous benefits.”

BMW is a corporate model for South Carolina, Von Nessen said, because it embodies all the major components expected from a company. Those include its size, its effect on growth in other businesses here and its commitment to research and development, as well as environmental sustainability.

USC is currently updating a 2008 study of BMW and its effect on the state, which shows that the company has a $16.6 billion annual impact on the S.C. economy, supporting more than 30,000 jobs throughout the state. For every job created at the BMW plant, three others are created elsewhere in the state, known as the multiplier effect, Von Nessen said the study shows.

“The first thing, it’s a validation of the South Carolina workforce and business model,” Graham said. “They wouldn’t be doing this if it wasn’t a good place to do business with a reliable workforce.

“If you want to recruit business, here’s an easy thing to do: go talk to BMW about South Carolina,” he said. “They’re one of the leading manufacturers in the world and it helps to have them in your corner. It’s confidence in the workforce and they wouldn’t be doing this if they couldn’t make money here.”

But Graham also said a big debt is owed to early BMW plant executives, like Reithofer, who was on the first BMW board that decided to come to South Carolina, and the employees who made that big decision good.

“If they had failed, (Reithofer) wouldn’t be chairman and if BMW had failed in South Carolina, there would be no Boeing (in the state),” Graham said.

“We are proud of the people who work here,” said board member Krueger. “It is their passion for excellence which ensures that BMW cars from the United States excite and inspire customers all over the world.”

Ron Anderson, 57, who is a road tester for BMW, drove out the new, red BMW X4 to the crowd Friday, just as he did 20 years ago with the white BMW 318i model – the first car produced at the plant.

“That’s a wonderful car,” he said, speaking of the shiny X4. “I think it will put us in a position where we are going to be able to satisfy the most discerning customer.”

A Spartanburg native, Anderson is a married father of five and grandfather of three. He said the BMW plant changed his life and the expansion will change it again – and the lives of others.

“I don’t know where I would have been if BMW hadn’t come this way. But I can honestly say I don’t think I would be, at this point in my life, able to have taken care of my kids and my grandkids to this extent.”

BMW rolls out plans

BMW officials on Friday announced a massive expansion at its plant in Spartanburg County. Here are the details:

The company will make a $1 billion investment, adding another production facility on its 1,200-acre campus in the next two years.

A new X7 model – a large sports activity vehicle – will be built at the plant. Production also is set to begin on the X4 announced two years ago.

An extra 800 employees will be hired to produce the new vehicle, boosting the plant’s employment to 8,800.

The new facility will boost the plant’s annual production capacity 50 percent to 450,000 vehicles per year.

The expansion will make the German automaker’s only North American plant into its largest in the world.

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