The 'American Autobahn'--German and other suppliers cruise into South Carolina

The future looked bleak for South Carolina in the early 1990s. Alabama had beaten out its southern neighbor for the coveted Mercedes-Benz plant. Textiles and tobacco, two of the state's top industries, were struggling. When the Pentagon announced plans in 1992 to shut down the enormous Charleston Naval Base and Shipyard, many knew it couldn't get any worse.

They were right, and the automotive industry played a prominent role in the recovery that would follow. BMW Mfg. Corp. gave the state a badly needed economic development tool when it broke ground in 1993 for its first non-German plant, in Spartanburg County.

Along with BMW came 22 suppliers to South Carolina, and up to five new ones will locate there to support BMW's development of a "sports activity vehicle" at Spartanburg. The combined investments of BMW and suppliers should reach at least $1.6 billion, creating more than 5,500 jobs in South Carolina by 2000.

"There are a lot of people today who worked in textiles, or their parents did, and now they work in automotive," says John Nash, spokesman for the South Carolina Dept. f Commerce.

But the automotive investment goes far beyond BMW. While southeast Michigan is the hub for supplier engineering and technical centers, many foreign-based suppliers have discovered the South is a great, low-cost way to break into North America for manufacturing. Since 1988, the automotive sector has invested $4 billion in 96 facilities in South Carolina, creating 24,000 new jobs.

In 1997, nearly half of the $5.5 billion in capital investments in South Carolina came from international firms, with 57 German companies leading the way. There are so many German suppliers in the state that Interstate 85 has been dubbed the "American Autobahn."

But South Carolina had automotive roots well before BMW. Michelin Tire Corp. pened its North American headquarters in Greenville in 1975, just after Germany's Robert Bosch Corp. pened its Charleston site. Both companies now have several operations in the state.

Cummins Engine Co. made diesel engines at a 102-acre (41.2-ha) complex in Charleston when the company announced in 1985 that it was moving the operations elsewhere. Cummins was able to lease the space to 35 businesses, including 14 Cummins divisions or Cummins joint ventures. Today, the complex is virtually 100% occupied.

Other suppliers in South Carolina include Dana, Ingersoll-Rand, AlliedSignal, Borg-Warner, Emitec and Goodyear.

The state even had a carmaker at one time. The Anderson Motor Co. made 5,500 vehicles in Rock Hill between 1916 and 1925. Today, only eight are known to exist, and the Anderson has been replaced by BMW's zippy Z3 roadster as the vehicle of civic pride in South Carolina.

It's easy to see why a business would be interested in South Carolina. It has no state property tax, no intangibles taxes, no inventory tax, no tax on worldwide profits and no local government tax on corporate income. Expanding or new companies receive tax credits for job creation, for hiring people on welfare and for offering child care. Put your headquarters in South Carolina and get an even bigger tax credit.

Many counties negotiate a set fee in lieu of property taxes with expanding firms. Near Charleston, businesses may be eligible for a five-year abatement from county property taxes and in some cases municipal property taxes.

And then there are wages. The state's Commerce Dept. boasts in one brochure that South Carolina has the nation's lowest rate of union membership and "offers the third lowest manufacturing wages in the United States - 82% of the national average."

Hubert Schmidt, president of Stueken LLC, says finding skilled metal workers was no problem when his company opened a plant in Fountain Inn. The German-based company makes components for antilock-brake and fuel-injection systems.

Stueken Plant Manager W. Scott Culberson says the region has more to offer than just jobs. "The quality of living is great. The cost of living is low. It's a good business and labor environment, and it's a good family climate," he says. "People are coming here."

Robert Bosch GmbH will combine its bodywork and information electronics activities into one business unit - the On-Board Electronics Division, to be based in Schwieberdingen, Germany, employing 1,800 people worldwide. Helmut Schwarz, president of Robert Bosch Corp.'s Automotive Group, will oversee engineering, manufacturing and sales worldwide. The move stems from customers' need for a single-source supplier to provide total electronic system capabilities. Estimated 1998 sales: $500 million. Around the Industry Borg-Warner Automotive Morse TEC Europe has opened a new headquarters in Arcore, Italy, with 166 employees manufacturing chain systems and components for engines, automatic transmission and four-wheel drive systems . . . Lighting supplier Hella North America Inc. has a new headquarters and technical center in Plymouth, MI, to develop specialized automotive electronic controls. The facility represents a major push by the German company in North America . . . Hayes Lemmerz International Inc., supplier of wheels and brake components, is purchasing an additional 51.1% of its joint venture in Brazil, Borlem SA Empreendimentos Indus-triais, bringing its ownership to 98.7% . . . Gentex Corp. f Zeeland, MI, maker of automatic-dimming mirrors, has opened a sales and engineering office in Nagoya, Japan, and established a warehouse operation in Weins-berg, Germany . . . Textron Inc. will merge its North American automotive fastener operations with Ring Screw Works of Madison Heights, MI, a $200- million supplier of specialty threaded fasteners.