BMW said Tuesday it has not changed its plans to invest another $600 million and hire an additional 1,000 workers at its Spartanburg plant, even though the company announced it would step up production of new vehicles in China.
The German automaker and Chinese partner Brilliance Automotive Group Holdings on Monday announced a joint venture called BMW Brilliance Automotive, which will boost the number of vehicles produced annually at two facilities in China to 520,000 in 2019.
BMW spokesman Kenn Sparks said the company’s new electric iX3 SUV will be produced in China only, and that none of the expanded vehicle production in China will detract from any production of the X models made at BMW’s Plant Spartanburg.
The timing of BMW’s China expansion comes as the Chinese government and the Trump administration have enacted or plan to enact tariffs on vehicles, which has raised concerns about the cost of goods rising here in the United States.
Sparks said the Spartanburg plant exports about 70 percent of the 400,000 vehicles produced each year, including SUVs. The number one export destination for American-made BMWs is China, followed by Germany.
Sparks said tariffs could cause cars shipped to China to cost more, but it remains to be seen whether demand will fall significantly enough for the company to change its production plans in Spartanburg.
In the meantime, Sparks said BMW has not altered its planned $600 million expansion, the startup of the new X7 model later this year and the addition of 1,000 new jobs by 2021. The investment is designed to lay the foundation for future generations of the BMW X models, and it will bring the total number of jobs at the Spartanburg County plant to about 11,000.
He said multiple media outlets asked him Tuesday whether Spartanburg is shifting any of its production to China.
“It is not true in any way, shape or form that BMW is moving production from Spartanburg to China,” Sparks said. “BMW is soundly and firmly committed to South Carolina, and that hasn’t changed.”
BMW Brilliance Automotive produces 1-, 3- and 5-series models, along with a compact 2-series model and the X1 SUV for the Chinese market, Bloomberg News reported. The company started producing its X3 SUV in China in May and plans to produce the electric version, the iX3, exclusively in China to export around the world starting in two years, according to Bloomberg.
BMW’s Chinese production increase “is happening because the Chinese market is growing and is now the largest single market for BMW,” Sparks said. He added that air pollution concerns in China have sparked a bigger demand for electric vehicles there.
In a separate announcement Monday, BMW and China-based Great Wall Motor announced a partnership to build the electric MINI vehicles in China, setting a goal for annual production at 160,000 units, the Associated Press reported.
In a recent letter to U.S. Commerce Secretary Wilbur Ross, BMW said tariffs would raise its cost of doing business in the United States and could risk cutting production and jobs at its Spartanburg plant. The company said the tariffs could hike manufacturing costs and jeopardize 45,000 jobs in the Upstate — 10,000 at the Spartanburg plant and 35,000 at BMW suppliers — that are dependent on the company’s local operations.
Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce, said many BMW suppliers in the Palmetto State are in the dark about whether a trade war with China will force them to adjust their production and employment levels.
He said BMW needs to provide more details to suppliers.
“What is the timeline for expanding production in China?” Knapp asked. “Are they guaranteeing that production in Spartanburg will not be cut in 12 months, 24 months? Don’t local small business suppliers deserve to have advance warning now of eventual production cuts so that they can plan for the future?”
BMW has invested nearly $9 billion since it opened Plant Spartanburg in 1994 and has produced more than 4 million vehicles. The facility now produces X3, X4, X5 and X6 models, and the BMW X7 goes into production later this year.
The Spartanburg County BMW plant is the company’s largest worldwide by volume, with a maximum production capacity of 450,000 vehicles per year.
http://www.goupstate.com/news/20180710/bmw-china-deal-not-altering-spartanburg-plans