Economic Driver: BMW's Impact On South Carolina's Manufacturing Growth, Psyche Has Been Immeasurable

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BMW couldn't have come along at a better time for South Carolina.

The decline of the textile industry a few years earlier had seen roughly 60,000 manufacturing jobs flee the Palmetto State for foreign countries and cheap labor. South Carolina's other economic driver — tobacco — was under attack by health care leaders, personal injury lawyers and federal regulators. And many of the state's tourism businesses were still dealing with the devastating after-effects of Hurricane Hugo.

If any state's self-image was in need of a makeover, it was South Carolina's.

So it's no surprise BMW's announcement on June 23, 1992, that it would build an automobile manufacturing plant in Spartanburg County had even grown men crying tears of joy.

"It seems silly that a chunk of metal could become something so emotional, but you have to remember what the background was at the time," said Bobby Hitt, a former newspaper editor who spent nearly two decades as BMW's chief spokesman before taking his current job as South Carolina's commerce secretary.

"You talk about game-changers," Hitt said. "Well, this was beyond anything that anyone could imagine."

At the time, Munich-based BMW was a relatively small — though highly regarded — automaker, selling fewer than 600,000 vehicles worldwide. Although no European carmaker had successfully transferred its production and corporate culture to the United States, BMW realized that to conquer the American market, it had to build cars in America.

Now, 25 years later, BMW is a major cog in South Carolina's economic engine, employing nearly 9,000 workers at its sprawling Greer campus where more than 400,000 vehicles are made each year.

A University of South Carolina study puts the German automaker's annual economic impact at $16.6 billion. More than 40 of BMW's major suppliers followed the automaker to South Carolina, creating thousands of additional jobs and billions more in economic output.

"BMW's economic effects extend across the state," the USC report notes, with 36 of South Carolina's 46 counties home to at least one automotive-related manufacturer. "BMW has become a mainstay in South Carolina and one of the state's leading sustainable businesses."

Were it not for BMW, business leaders say, South Carolina likely never would have landed the Boeing Co., Mercedes-Benz Vans or Volvo Cars plants now operating or under construction in the Charleston region. The hundreds of foreign companies that have built plants all over the state during the past two decades — names like Honda and Haier Group — probably wouldn't have given places like Florence and Camden a second glance.

"We got a lot of looks from companies that said if our workforce could build the best vehicles in the world, we could build anything," said Jack Ellenberg, a former deputy commissioner with S.C. Commerce Department who now recruits customers and oversees special projects for the State Ports Authority.

"Keep in mind that for BMW, this was their first plant outside of Germany, which was an enormous risk for them to take," Ellenburg said. "Certainly everyone had a desire to see them succeed and grow, but I don't think anyone who was there then would have expected what we have today."

Willkommen BMW

BMW broke ground on its Greer facility on Sept. 30, 1992, pledging a $600 million investment on about 1,000 acres adjacent to Interstate 85 that the SPA had bought for $5 million specifically for the automaker. The company said it would hire up to 2,000 people to make the entry-level 318i sedan, one of BMW's least expensive and easiest-to-build cars.

The Upstate was eager to welcome its new German neighbor.  

Hitt remembers a group of BMW dealers from the Atlanta area had been invited to the plant's groundbreaking, and they formed a makeshift caravan that snaked its way along Highway 11 through Greer and to the plant site.

"The community knew they were coming and the roads were lined with people," Hitt said. "You would have thought it was a Christmas parade."

Steve Wilson, now a BMW spokesman, remembers the dealer convoy had stopped at a restaurant in Table Rock, and someone had tipped off the staff that they were on their way.

"The restaurant even had a woman playing German music for them," Wilson said, recalling the region's support for BMW and the jobs it would create.

Carroll Campbell Jr., who was governor at the time, recognized the potential BMW had to turn the state's economy around, and he helped secure about $140 million in incentives to lure the automaker. The state spent another $5 million on a rail spur connecting the Greer plant to Norfolk Southern's line, and local business owners ponied up $2.5 million they raised as part of a grass-roots effort to snag the manufacturer.

BMW also liked the Upstate site's relative proximity to the Port of Charleston and a worker training program run by the state's technical college system that could be tailored to the company's specific needs.

All of that helped tip the scales in favor of South Carolina as BMW eliminated the state's last competitor — Omaha, Neb. — from a list of potential sites that began with about 200 locations.

Seemingly everyone in the Upstate wanted to work for BMW — the company received 60,000 applications for the first 1,200 jobs.

If people weren't looking for employment at BMW, they were looking to capitalize in every way imaginable on the growth the plant would bring. Ken Westmoreland, Greer's city administrator at the time, told the Associated Press that he even received a call from a man wanting to establish an escort service catering to the plant.

"We hired people from all walks of life," Hitt said. "People who had been shoe clerks or school teachers were now making BMWs. I remember one woman named Eileen, who was a bagel chef, and she became a test driver. The media loved that — a grandmother bagel chef who test drives BMWs."

Creating chatter, sales

BMW built its Greer factory with expansion in mind from the very beginning, but the automaker took things slow at first. About 28,000 cars rolled off the production line the first full year. BMW now makes that many vehicles in less than a month.

"The whole world was watching us," Hitt said. "BMW was a sophisticated company that had located in a place that no one would have expected, and we were doing something that no one expected us to do. Everyone wanted to know if we could pull it off."

The 318i essentially was a practice car for what BMW really had in mind for its Greer plant — a new roadster, called the Z3, that would evoke the German company's 1950s-era two-seaters.

BMW introduced the first Z3 in September 1995, and it sparked a sales boom, not only for the roadster — which found 100,000 owners in two years — but also for BMW's other models.

"The idea was that we would build this car that would create chatter, and we would drive people into dealerships," Hitt said. "It worked. People came to the dealerships to see this new, two-seater BMW. But while they went in and looked at the Z3, more than half of them bought another model. That threw us on a trajectory of growth that has not stopped since."

BMW has announced expansions in 1996, 1998, 1999, 2000, 2002 and 2008. Most recently, in 2014, the automaker said it will spend another $1 billion to create 800 more jobs, expand annual capacity to 450,000 vehicles and start production of a new X4 SUV.

All told, the company has invested more than $7.8 billion in its Greer plant, which now ranks as the German firm's largest facility. Today, the plant builds four SUV models and exports roughly 70 percent of the vehicles it makes through the Port of Charleston's Columbus Street Terminal to more than 140 countries worldwide.

"From that first 318i that rolled off the production line to today, they've been a great partner," said Ellenberg, the ports authority executive. "When we are out talking to companies, the fact that we handle X vehicles for export sends a very strong message."

BMW also was the impetus behind the SPA's inland port in Greer, where the large metal cargo boxes that travel on container ships are moved between trucks and rail cars for their journey to and from  Charleston. That project has spurred even more development through distribution warehouses for companies like discount retailer Dollar Tree and tire maker Michelin.

"BMW has been the leader, and other industries have flocked to what they are doing," Ellenberg said.

Transformative change

South Carolina's embrace of BMW has hardly been a one-way street. The automaker has given back to the community in more ways than jobs and economic benefit.

BMW is a key supporter of Clemson University's International Center for Automotive Research, pledging $10 million to pay for instructors in the graduate automotive engineering program, lending its engineers to teach students and helping to pay for research laboratories and the program's Information Technology Research Center.

The company's annual pro-am golf tournament has raised more than $11.5 million for more than 200 charities and nonprofits.

And BMW has teamed with environmental groups to create and fund programs that protect land and nature while also investing in solar energy and equipment that has lowered water and energy consumption more than 50 percent since 2006.

"They are very forward-thinking — very green in their approach and sensitive to the environment," Ellenberg said. "BMW is setting the stage for how advanced manufacturing should be done."

Perhaps as important has been BMW's ability to shift the perception of South Carolina, both for its own residents and for those looking in.

Hitt remembers getting a telephone call from a reporter with the Paris-based International Herald Tribune during one of BMW's earliest days in the state.

"The reporter asked me why a sophisticated company like BMW would locate in some backwater place like South Carolina," he said.

Those kind of put-downs are rare these days.

"Before BMW, the world saw us in a particular light," Hitt said. "We were not seen as a can-do state. We were not seen as a sophisticated or complex state. The beginning of that change was BMW.

"We are seen in a totally different light today."

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Source : http://www.postandcourier.com/business/economic-driver-bmw-s-impact-on-south-carolina-s-manufacturing/article_29b50b10-51e4-11e7-b3dc-83f7d1a3d4c0.html

Economic driver: BMW's impact on South Carolina's manufacturing growth, psyche has been immeasurable
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