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New South Carolina Incentives Spur BMW's $400M, 400-Job ExpansionBy JACK LYNE Site Selection Executive Editor of Interactive Publishing
GREER, S.C. BMW (www.bmw.com) picked an apropos way to celebrate its 10th anniversary in South Carolina (www.callsouthcarolina.com): It announced that it's adding 400 workers in a US$400-million expansion of its sprawling 2.4-million-sq.-ft. (222,960-sq.-m.) plant in Greer, S.C. The expansion continues the German automaker's life-in-the-fast-lane modus operandi since it first announced that it was coming to the Palmetto State in 1992. With the 400 added employees, the total work force at the huge production operation in the Greenville-Spartanburg metro (www.greenvillechamber.org) will swell to some 4,900 workers. And the $400 million in new capital expenditures will push BMW's total outlay for the plant past US$2 billion. The company's expansion in South Carolina has been on such a fast track, in fact, that one in every six BMWs sold worldwide is now made in the state.
"Our decision to place our U.S. plant in South Carolina has proven to be a successful one as we strive to keep up with customer demand for our X5 sports activity vehicle and begin to build the new Z4 roadster," BMW President Helmut Leube said in announcing the project.
Current demand is straining the plant's resources, BMW officials explained. Employees at the Greer facility are working 110 hours a week on two shifts; that's 65 percent of a week's 168 total hours, and it's almost the equivalent of a three-shift setup.
With the added employees and investment, the Greer plant's 2003 production total will rise to 155,000 units. The facility's projected 2002 production will total 130,000 units, according to company officials.
Bond Act Greased Project's SkidsBMW, however, wasn't the only party in this deal focused on meeting demand. State lawmakers worked to meet the needs of South Carolina's corporate clientele, in the process giving the automaker's expansion a forceful nudge.
That nudge came from the General Obligation Economic Development Bond Act, which took effect on May 15th. The South Carolina legislature recently passed the bill, which provides infrastructure to boost economic development.
BMW was no idle sideline observer in the legislative change. The automaker earlier this year lobbied for a state law to reward companies that undertake major expansions.
And the new law is a virtual blueprint for BMW's expansion. The bond act specifies that qualifying programs must involve a $400-million investment and 400 new jobs - precisely the numbers that BMW nailed with its expansion.
"The General Assembly understood that infrastructure development was essential in bringing large projects of a minimum of $400 million and 400 jobs to the state when it passed the Economic Development Bond Act," Secretary of Commerce Charles Way said after BMW's announcement. "We appreciate their ability to see how good planning today produces a high yield for tomorrow."
BMW, state officials said, will qualify for as much as $80 million of the $250-million economic development pool created by the General Obligation Economic Development Bond Act.
Aid Also Bolsters Intellectual InfrastructureFull details of the incentive package haven't yet been fully disclosed. State officials, however, did say that BMW's project support will include a $35-million I-85 interchange to handle the added traffic at the automaker's plant.
Other infrastructure support will likely include a wastewater treatment plant, auto industry analysts speculate.
One of the deal's key supportive elements, however, bolsters intellectual infrastructure. And that support reflects the new role that BMW envisions for the Greer operation.
South Carolina is donating $25 million to nearby Clemson University for the school to create an automotive engineering graduate program. BMW, in turn, is donating $10 million to the Clemson program.
"As we look to the future, Clemson's graduate program will create an additional quality source of engineers for BMW, as well as for the larger automotive industry," Dr. Leube said.
Universities' Role in Economic Development The Clemson program dovetails with BMW's strategy to reposition the Greer plant, moving it beyond its current manufacturing focus into design and engineering.
"BMW envisions this as the next generation of leaders who will lead the country in designing customized vehicles," Clemson President James Barker said of the university's automotive engineering program.
The Clemson program also represents a shift in the state's economic development strategy, Way said.
"South Carolina must go beyond teaching basic skills for manufacturing if our goal is to move into a knowledge-based economy," he noted. "Clemson's graduate engineering education center is a tremendous step toward building our new economy by educating our future work force. State support for Clemson's program is imperative if we want to reach our goal of increasing wages and improving the lives of South Carolinians."
Automotive and transportation technology is one of eight target areas in which Clemson is aiming to create world-class programs. In picking its target programs, the university made bolstering the state's business climate a major consideration.
"In identifying these emphasis areas, we looked for areas where our faculty's strengths and interests overlap with the state's economic development needs," Barker said. "This partnership demonstrates the role strong research universities can play in economic development."
Second Plant in the Cards?Further expansion could be in the cards for BMW's South Carolina plant.
The automaker in the spring of 2001 offered a glimpse of the shape of things that could possibly come. That glimpse came in BMW's application for an air-quality permit for the entire 1,039-acre (420.5-hectare) Greer site. The permit application sketched out a future that would include a second production operation and a work force of 10,000. BMW officials called the permit specifics "a best-case scenario."
BMW certainly has the room to grow in Greer. Only 30 percent of the huge site that the state gave BMW has been developed.
Norbert Reithofer, a member of BMW's Board of Management, may have tipped the automaker's long-term expansion hand at a Swedish auto-industry conference in June. BMW, Reithofer said in a speech, anticipates doubling the Greer plant's production sometime after 2005.
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