Highly flexible Spartanburg plant will be expanded in the future

A third model series is being considered in the long-term

Munich. BMW plans to further expand its US assembly plant to build 200,000 units annually and add a third model.

"The plant has a great future," BMW's head of production Norbert Reithofer said. He believes that in the long-term "the capacity could be 200,000 or more." He added that it is very unlikely that the plant "will build only two model series forever."

Spartanburg plant manager Helmut Leube cautioned that the expansion will not happen soon.

"First we have to be able to cope with the amount of growth we had during the past few years," he said.

The plant achieved a new production record in 2003 with 166,090 vehicles.

The planned target for the X5 SUV, which was introduced in 1999, has long been exceeded.

Originally, an annual production of only 48,000 units was planned, but in 2003 109,501 units of the model were built. The plant's other 56,589 units were Z4 roadsters.

Now it is time for a consolidation period.

"This year we will probably not manufacture quite as many units," Leube said.

He said the plant needs a break to further stabilize and optimize the work processes.

The US plant continues to work to full capacity nonetheless. As of April 12, 42,779 units have been built for the year: 30,822 X5s and 11,957 Z4s.

Depending on the demand the plant's 4,500 employees will also produce more than the "normal capacity of 140,000 units" this year.

"Due to the high demand we continue to run the plant at full speed," Leube confirmed.

Both body shop and final assembly run 11 eight-hour shifts a week. The paint shop has 10 shifts.

The daily production volume is about 600 units. The plant's rated capacity is limited to 160,000 without changing the current structure. But expansions are possible "at any time" through "even higher flexibility with working hours" and temporary use of additional workers.

Flexibility is important at the plant, which builds a big variety of BMW models based on direct customer order.

"We are the benchmark here," Leube said. He believes Spartanburg is more flexible than any other US assembly plant. He said Spartanburg has the "same level of flexibility" as BMW's German plants in Dingolfing, Regensburg and Munich and can compete with any of those factories for production of future models.

Matching German quality

Leube said autos manufactured in Spartanburg match the quality of cars built in Germany. He said that the times when American BMWs required more time and attention to meet quality standards are long gone.

Spartanburg has clear cost advantages over Germany, especially on the number of working days a year. US employees work 40 hours per week and only have 10 days vacation per year. In Germany, workers typically have 30 days of paid vacation and work fewer hours.

"Each worker [here] on average works 1,800 hours per year. In Germany they only work 1,400 to 1,450," Leube said.

The wages seem fairly similar: "Our colleagues start at $16 per hour. A qualified worker earns more than $20 after three years."

There is no works council at the plant, so there are never any negotiations over working hours.

"We can add overtime and run additional shifts at any time," Leube explained.

Body assembling workshop, assembly and paint shop could even have different working hours.

Profitable plant

Spartanburg is a moneymaker for BMW and 40 percent of models that are manufactured at the plant are sold in the US.

The weakness of US dollar also helps boost profits, both lowering BMW costs for US content and giving BMW some so-called natural hedging with shipments to Europe helping to offset BMW German exports to the US market.

The share of suppliers producing on-site -- currently 60 percent -- will continue to increase, as well as their share in vehicle engineering.

Spartanburg's purchasing department is responsible for the whole of the BMW group within the region covered by the North American Free Trade Agreement. In 2003, the department achieved a purchasing volume worth $3.3 billion.

Tags: Automakers BMW

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