S.C. auto suppliers could benefit from Daimler AG's decision to send some of Mercedes Benz's C-class sedan production to its Alabama plant, automotive experts said.
Like BMW, which is expanding the capacity at its assembly plant in Greer, Daimler said it wants to take advantage of a growing U.S. market and lower production costs while avoiding currency fluctuations.
They're not alone. Honda and Toyota recently announced plans to increase their U.S. capacity, and Volkswagen plans to build a new plant in Tennessee.
Doug Woodward, director of research and an economics professor for USC's Moore School of Business, said more than 40 auto suppliers in the state who feed BMW and other automobile manufacturers "will benefit from this."
"We'll have multiplier effects spill over from Alabama," he predicted.
Many of the automotive-based suppliers in South Carolina provide components for multiple carmakers rather than for a single company, with some already supplying Mercedes' U.S. plant.
"We're going to look forward to seeing if we could supply the new car," said Bryan Johnson, spokesman for ZF Lemforder, which has a plant in Alabama as well as in Duncan.
The Alabama facility is dedicated to making complete axle systems for the vehicles now made at that plant, he said.
"With the increased volume in Alabama, I would assume all the suppliers would have a chance" to become suppliers for the new C-class car, he said.
Fred Suggs, an attorney with Ogletree, Deakins, Nash, Smoak & Stewart who works with many of the regional auto suppliers, agreed.
"We are within the service range of the plant in Alabama," said Suggs, who is president of the South Carolina Bar Association. "This could be good for us."
Although many carmakers "want you to be close enough to be a just-in-time supplier," a distance of half a day actually is close enough, he said. And that includes the Upstate.
Daimler said production of the new generation C-class, which includes a sedan, coupe and wagon, should begin in 2014. The move is expected to maintain the company's competitiveness and give it the ability to respond to market conditions faster and with more flexibility.
The U.S. market is expected to grow, Daimler said, which the company said makes it "essential to have production facilities of the C-class close to the market. The sedan version of the series is already the best-selling Mercedes-Benz model in the U.S. market."
Currently, the Alabama plant produces the R-Class, M-Class and GL-Class vehicles, all SUVs or SUV-like vehicles, and will continue to do so.
The plant in Vance has expanded several times over the past decade to keep up with the demand for large vehicles. But the crashing U.S. market for SUVs has left the plant underutilized for the past two years, according to Automotive News Europe.
The production move could increase employment at the 2,800-worker plant by about 1,000 employees, Rainer Schmueckle, Daimler's chief operating officer, said in a conference call after the announcement.