BMW Cuts Workforce As It Increases US Factory Capacity

Blame the weakness of the dollar. It is now clear that, while BMW is cutting jobs in Europe, it hopes to increase production at it’s US plant. Here’s the official press release.

Official BMW USA Press Release: The BMW Group is investing US$ 750 million in an expansion of its Spartanburg plant. The move will raise production capacity from 160,000 to 240,000 units by 2012 and boost the company’s total investment in the plant to US$ 4.2 billion. The plant will grow in size by 140,000 m² – or 60 per cent – to 370,000 m², and 500 new jobs will be created on site.

The expansion will also lead to a hike in purchase and export volumes into and out of the NAFTA region, which will contribute considerably to the BMW Group’s natural hedging strategy.

After the expansion, the Spartanburg plant will manufacture the BMW X3, X5 and X6 models for world markets. “Centralizing our know-how for BMW X models in Spartanburg will enable us to work even more efficiently going forward. In addition, it was a logical step for the BMW Group as a global player to increase production capacity in its largest market,” said BMW AG Board Member Frank-Peter Arndt.

The three-year construction project includes a new 112,000 m² assembly facility to accommodate the next generation of the BMW X3. The existing Body Shop will be modernised to prepare for the demands of the future, while the Paint Shop will expand by 28,000 m², or 80 per cent.

“The boost in production capacity will positively impact the logistics, suppliers and distribution networks that support the manufacturing processes,” said Josef Kerscher, President of BMW Manufacturing Co. While the supplier network may grow, existing supplier companies will ramp up operations to provide automotive parts for the higher production levels, doubling parts container traffic and significantly increasing exports through the Port of Charleston.

When the BMW Group announced in 1992 that it would build its first full manufacturing facility outside of Germany in South Carolina, it put forward some ambitious plans. The company was looking to invest US$ 600 million. Its aim was to create 2,000 new jobs and attract at least nine suppliers to the state by the year 2000.

Reality far exceeded the company’s expectations. BMW was employing more than 3,000 people at Spartanburg in 2000, and by 2004 that number had grown to more than 4,600. As 2007 dawned, the number of on-site workforce had grown to more than 5,400.

BMW has invested US$ 3.5 billion in its South Carolina operations to date. Taking the US$ 750 million of new money into account, the US$ 600 million originally pledged has now swollen to total investment of some US$ 4.2 billion.

The nine new suppliers in South Carolina aimed for in the company’s original plans have now become 52. Of those, 40 chose the state explicitly because of the presence of the BMW plant. BMW’s North American supplier network has grown from 22 in 1992 to 194 companies today.

The success of local manufacturing in the USA is highlighted by the company’s rising production and sales figures. Vehicle production at the Spartanburg plant has grown from 429 vehicles in 1994 – the first year of production – to 157,530 units in 2007. In the same period the BMW Group’s sales volumes in the United States increased from 65,000 to 335,000 units.