By James T. Hammond
Published Dec. 10, 2012
South Carolina continued to ride the wave of expansion in its automotive sector in 2012, as six of the top 10 capital investments announced this year were automotive-related, totaled almost $2 billion and are expected to create 1,880 jobs.
Overall, the automotive sector contributed $2.165 billion in new capital investment plans that aim to create a total of 2,704 new jobs across the state.
Richland and Lexington counties reaped their share of the growth.
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And Richland County learned last month that JTEKT Automotive South Carolina Inc. will spend $130 million to double the size of its Koyo brand bearings plant near Blythewood, creating 175 new jobs in the process. That was JTEKT’s second major expansion in the state; in April, the Japanese company said it would spend $102 million at its Greenville plant, creating 80 new jobs.
Based in Nagoya and Osaka, Japan, JTEKT is an automotive systems and industrial components supplier.
“Customer demand continues to increase for our bearing products, and this expansion will provide the capacity needed to meet this demand,” said Bobby Rowell, JTEKT plant manager.
Doubling size of the plant
JTEKT’s expansion will double the size of the facility to more than 500,000 square feet. The plant makes bearing hub units for automotive customers including Toyota, BMW and General Motors. Construction is expected to begin in early January and hiring will begin later in 2013.
These developments made 2012 a banner year for South Carolina’s automotive sector, which started the year with BMW Manufacturing’s announcement that it would invest an additional $900 million to expand production in Spartanburg County and build a new model, the X4, at the plant near Greer.
The key to BMW’s success always has been its focus on exports, said Josef Kerscher, president of the Germany-based company’s manufacturing operations in the United States.
“We’ve always been focused on exporting because Germany is not a big market,” Kerscher said. “So we’ve always had to learn how to be competitive in the world market.”
Germany and China are the top two destinations for S.C.-made products, Kerscher said, adding that BMW has the flexibility to respond to demand anywhere on the globe.
Also, Kerscher noted, every car built at the BMW plant has been ordered by an individual customer or a dealer.
Automotive sector’s unique role
A study released in January 2011 by the Darla Moore School of Business’ research division showed the auto cluster plays a unique role in economic development.
“Notably, few other sectors of the economy have the real potential to scale up employment, which is the most pressing economic imperative in South Carolina today,” the report stated. “Automotive and ground transportation-related businesses contribute to about 5.4% of the state’s jobs base, according to 2008 data compiled by the Division of Research.”
Doug Woodward, the Moore School’s research director and an author of the 2011 study, said the dynamics of South Carolina’s automotive sector continue to strengthen.
“We’re developing a pretty good supply chain here,” Woodward said. “It’s not just about BMW. These suppliers sell to many automakers. And people are driving pretty old cars right now. Demand will rise. Automotive will always be an industry making investments. They plan long term.”
A key German automotive sector player in South Carolina is Schaeffler Group USA. The automotive component supplier announced last month it will expand its existing operations in Chesterfield County, investing $40 million and generating 190 new jobs.
“Schaeffler Group USA is proud to continue our long standing partnership with the town of Cheraw, Chesterfield County and the state of South Carolina. We have a skilled team capable of manufacturing high-quality bearings and engine components for our automotive and industrial customers,” said Bruce Warmbold, CEO of Schaeffler Group North America.
Schaeffler has been making bearings for more than 40 years in Cheraw and has two plants in Chesterfield County. Both will expand to make bearings and engine components for automotive applications. The expansions will be completed by 2013.
Gov. Nikki Haley and commerce officials met with the Schaeffler Group in Germany in 2011 after the Paris Air Show. The company has multiple plants in South Carolina, including Fort Mill and Spartanburg, employing 2,300, and making it one of the largest German manufacturers in S.C.
Huge footprint in state
The overall automotive cluster has a huge footprint in South Carolina, the Moore School report states.
The 2008 data found there were 314 automotive-related manufacturing establishments that contributed $27.1 billion annually to the state’s economy. In the almost two years since the study was published, more companies have located in the state, added billions in additional investment and created thousands of new jobs.
“The study buttresses the argument that South Carolina should focus strategically on attracting and retaining automotive manufacturers,” the authors of the study wrote. And no one is working harder to make that proposition a reality than S.C. Secretary of Commerce Bobby Hitt, a former BMW Manufacturing executive.
Since January 2011, South Carolina has recruited more than $4.4 billion in capital investment and more than 6,800 jobs in the automotive-related sector.
When asked recently about the future of Continental AG in South Carolina, Hitt responded, “Remember, they make more than just tires.” Continental is building a $500 million tire plant near Sumter. But the German company also is a major manufacturer of automotive components.
It is significant that the lion’s share of new investment over two years has been by companies with a large presence in the state’s automotive sector. Those results suggest that the “cluster” acts as a magnet for future investment.
Reach James T. Hammond at 803-401-1094, ext. 201.