SPARTANBURG, SC - Ever sinceManufacturing Corp. began producing vehicles in the U.S. four years ago, the company has planned toexpand its operations here. It just didn't know what vehicle would be added to the production mix when capacity was increased.
That all changed earlier this year when the company announced plans to build an all-new sports-activity vehicle in Spartanburg. The new vehicle, called theX5, will debut next month at the North American International Auto Show in Detroit.
"When we launched the plant, we had no idea that we'd be building this vehicle," explains Robert M. Hitt, BMW's manager of public relations in South Carolina. "But once BMW determined there was a need for this type of vehicle, it made sense to build it here."
The vehicle, which will be built on a new platform, was developed at BMW headquarters in Munich. But there was a lot of influence from the U.S. market, says Mr. Hitt, which likely will account for a larger share of the vehicle's sales than the plant's current offerings. Last year, about 60% of the vehicles produced in South Carolina were exported to markets outside of the United States.
Although he's sketchy about details - such as pricing and powertrain options - Mr. Hitt says the X5 will further blend the car and truck markets. "BMW already is well positioned in the traditional sport/utility market with Land Rover," he says. "The X5 is designed to appeal to people who are looking for something a little different, but still want BMW driving characteristics."
To make room for the X5, BMW is adding 900,000 sq. ft. (84,000 sq. m) to its Spartanburg facility, boosting the plant size to 2.1 million sq. ft. (196,000 sq. m). The $600 million expansion enlarges both the body and assembly operations, and increases the flexibility and efficiency for multiple model production.
Until now, everything has run like clockwork. The plant began producing 318i sedans in 1994, then switched to the Z3 roadster a year later. This fall, BMW added two new models - the Z3 coupe and the high-performance M coupe - and is on pace to produce about 55,000 vehicles this year
During model changeover in July, BMW significantly widened and lengthened its existing assembly line, Mr. Hitt says, then split the line in half. One line will produce the Z3 roadster and M-coupe, while the other line will be used solely for the new X5 hybrid.
"The new SAV (Sport Activity Vehicle) is much more complex than the roadster, which is the least complex vehicle BMW produces," Mr. Hitt says. "The SAV falls somewhere between the 5-series and 7-series (in terms of complexity). It would have been impossible to build them both on the same line."
But don't expect any major differences in the way the two lines operate. This means there only will be a limited amount of automation, and a continued reliance on suppliers to provide modular components. There are no plans to locate suppliers within the assembly plant, as is the case with newer facilities launched by other automakers in South America and other emerging markets.
The expansion boosts BMW's North American capacity to 100,000 vehicles per year. In the past, BMW executives have hinted that this could be the threshold that triggers local sourcing of engines and transmissions, which currently are shipped from Germany. But Mr. Hitt says there are no plans to produce these components locally, adding that it would probably take volumes of 150,000 units per year before it would even be considered.
In conjunction with the expansion, BMW also plans to:
n Add 1,000 new employees within the next year, bringing total employment in South Carolina to 3,000.
n Build a $12 million performance center across the road from the plant. The complex will include a vehicle delivery center - for domestic and international customers - a 1.7-mile (2.7-km) driver training course and a conference center.
Existing suppliers, meanwhile, are expected to invest $75 million to expand their operations, and at least five new automotive suppliers are expected to locate in South Carolina, BMW says.