Business

BMW drives Charleston's need for port space

Dockworkers offload a trainload of BMW cars at the State Ports Authority’s Union Pier in Charleston.
Dockworkers offload a trainload of BMW cars at the State Ports Authority’s Union Pier in Charleston.

BMW marked the 15th anniversary of the first car to roll off its South Carolina assembly line this month. The same day the luxury automaker heralded the completion of the 1.5 millionth vehicle produced at the Upstate plant.

But the German car company would have never reached those dual milestones without an assist from the Charleston waterfront, some 240 miles from BMW's only U.S. manufacturing factory.

The point wasn't lost on state Commerce Secretary Joe Taylor.

"Without Charleston, none of this would be here," Taylor said recently while admiring the automaker's sleek Zentrum museum in Greer.

It's a little-known fact that the Charleston-based State Ports Authority is BMW's landlord, leasing the acreage under the sprawling factory to the company for just $1 a year. Also, local port workers have chalked up a remarkable track record in their handling of inbound parts and BMW cars.

"One of the great things ... is that in the 15 years of production, we have never stopped production because the Port of Charleston caused us to have an interruption," said Robert Hitt, BMW's manager for corporate and public affairs.

But for all the good work of the past, the Sept. 8 anniversary rekindled a smoldering question about the future: With the Upstate plant expanding and preparing to crank out more cars than ever once the economy is back on track, can Charleston keep meeting the automaker's port needs for another 15 years?

At issue is a key weigh station for BMW: the SPA's Union Pier. More than 1 million of the company's cars have been brought into and shipped out of the state from there since 1994. But with no room to expand, the downtown terminal probably won't cut it over the long haul.

"There's a finite ability to manage cars there, and right now there's no other facility," Hitt said. "So in times, it gets full. And, in fact, it gets beyond full."

It's a logistical dilemma that the new executive regime at the SPA says it is already working on, with the underutilized Veterans Terminal on the old Navy base emerging as the most likely relief valve. Paul McClintock, the agency's recently hired chief commercial officer, has already met with Hitt and other BMW officials.

Jim Newsome, who started Sept. 1 as chief executive officer of the SPA, said plans for a new vehicle processing site are far from finalized but noted the port needs to be "working consistently" to retain and attract as much business from BMW as possible.

"It's obviously very important for us," Newsome said. "They're here in the state. They're a great company, a very profitable company. And it's a marquee brand."

SPACED OUT

The first shipment of South Carolina-made BMWs came through Union Pier in early 1995 and consisted of all of 11 vehicles. Today, the 45-acre terminal handles as many as 400 a day.

The challenges of accommodating the carmaker at Union Pier aren't new. In May 1998, the SPA board was told that vehicles being exported from the Upstate plant, coupled with BMW imports from abroad, were accelerating faster than projected. "We're anticipating a space crunch at Union Pier," commented William Bethea, the agency's chairman at the time.

The port has made the most of its limited space by demolishing old warehouses, relocating customers and bringing in more ships to cut the amount of idle storage time BMW requires. Those measures have freed up enough space to store as many as 4,500 vehicles, but they will only go so far.

While not the only reason, BMW said the shortage of real estate factored into its decision last year to steer some of its Charleston-bound imports to Brunswick, Ga.

These days, Union Pier almost solely handles exports, which the carmaker says are the main profit center for its Upstate factory. McClintock called BMW's remaining import business "negligible."

"That's gone to Brunswick," he said. "I can tell you, though, we're trying to get it back."

On average, about 70 percent of the 500 to 600 automobiles made daily in Greer are hauled by train to Charleston, where they are unloaded, parked and driven one by one onto huge car carriers for delivery to overseas dealers.

Hitt, who has been BMW's spokesman since the South Carolina plant was opened, said "we hit the wall at certain points in 2008" at Union Pier, but added that the space issue has since eased as demand for news cars has skidded.

"The slack is on now, but it will come back," he said.

Hitt said the automaker has maintained "a vital and good relationship with the port." He doesn't see that changing.

For instance, Hitt said, local dockworkers now handle about 7,000 containers annually filled with BMW engines, transmissions and other Greer-bound parts. That figure is expected to more than double to 15,000 by 2015 as production expands - and it doesn't include the dozens of BMW suppliers in South Carolina that ship goods through the port.

Also, Hitt said, finished vehicles from the Upstate will continue to make their journey to overseas market via the Holy City.

"I can't imagine any other location that would be as suitable as the Port of Charleston," he said.

GROWING PAINS

Just a few weeks into his new job as the port CEO, Newsome hasn't had a chance to meet with BMW officials in person. But he said he recognizes the problem they face in Charleston in trying to plan the most cost-effective way to get their cars from the factory to the sales floor.

"Union Pier is not going to support them," Newsome said. "We know that."

He sees a solution at an underutilized port facility a few miles up the Cooper River - an alternative that port officials previously have studied to accommodate BMW.

"We have another terminal in Veterans Terminal that can support them," Newsome said. "And that's probably what we would target."

Newsome said that section of the former Navy base already is served by a nearby rail line, which is important since most of the cars BMW assembles in the Upstate leave the plant by train.

"We think that could be used," he said.

Newsome also stressed that plans to relocate BMW are preliminary.

"We're thinking about how we might approach it," he said. "We obviously think this might be an area for a private-public partnership. ... This might be a way to leverage that concept."

If the SPA can secure a new home where BMW can stretch its legs, Newsome said he'd push to "recapture" some of the import business the automaker has moved elsewhere and attract other car business.

For its part, BMW is noncommittal.

"Basically, the business needs to be managed by the port, not by us," Hitt said. "They understand their role in it. And we've met with them. They know."

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