Germany’s BMW (BAMXY.PK) hit significant milestone on Friday: July 11 marks the company’s 20th year of producing vehicles in the United States at its Spartanburg, South Carolina facility. In addition to being hugely beneficial for the local economy and the U.S. overall, BMW’s presence in the largely rural state — it’s the only auto manufacturing facility in South Carolina — is crucial to the company’s bottom line as it competes to keep costs down amid heated competition from Audi and Mercedes.
And to the detractors who don’t believe foreign cars can be of economic benefit to the U.S. or its respective states, listen to this.
BMW has, since 2012, infused $7.3 billion into the Spartanburg facility, making it one of the company’s most productive plants in the world. That’s about seven times the amount Volkswagen AG spent on its Tennessee plant, Bloomberg reports. Additionally, the factory will employ 8,800 people by 2016, and eventually, BMW wants to get production up to 450,000 units per year from the 50,000 cars that it first produced when it opened in 1994.
“At the time, we thought 100,000 was a big number,” Harald Krueger, BMW’s head of production, told Bloomberg. “If you look back, you realize how important this step turned out to be.”
BMW will begin producing the X7, its largest SUV yet, at the facility, alongside virtually every other SUV in the company’s portfolio. About 70 percent of those units are exported to more than 140 countries. But as beneficial as BMW’s presence is to South Carolina, it’s certainly a mutually beneficial relationship: BMW’s labor in the United States is about 47 percent cheaper than the equivalent labor in Germany, according to Bloomberg.
“Spartanburg can compete with any German plant in terms of quality and efficiency now,” Manfred Erlacher, who took over as factory chief in November after relocating from BMW’s plant in Leipzig, Germany, said to Bloomberg. “One of the big advantages here is a pretty high flexibility when it comes to work times. There’s also very good know-how regarding products and processes that’s developed over the years.”
“There was some skepticism in the beginning about what the factory will mean for the people who live here,” Mark Kent, the head of family owned textile maker Kentwool in Greenville, South Carolina, told the publication. “Will local businesses lose skilled workers? How will they settle into our community?” As it turns out, quite well — the decision was made after BMW reviewed about 200 sites worldwide before ultimately settling on Spartanburg because the port of Charleston about 200 miles away, which made for ease of shipping engines and transmissions from BMW’s home in Germany.
“BMW’s investment decision here has been a phenomenal success,” South Carolina’s secretary of commerce, Robert Hitt, told the news outlet. “Both sides have to benefit when you make a decision like that. Otherwise, it doesn’t work.” Virtually every X-branded BMW vehicle you see in the U.S. has at one time made its way through South Carolina, and in America, BMW’s sport utility vehicles are a crucial element to its sales success.
“The plant overcame qualms to show the world that good cars could be made at a reasonable cost in the U.S.,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, told Bloomberg. “That led to a renaissance of carmaking, first in the southern states and then in Detroit itself.”