NASHVILLE, Tenn. - Daimler-Benz AG's plan to create more capacity for its Alabama M-class factory will require its suppliers to follow suit.
The automaker's nine nearby parts suppliers will spend a combined $50 million to increase their output in line with Mercedes, says Andreas Renschler, CEO of Mercedes-Benz U.S. International Inc., the factory in Vance, Ala.
Renschler spoke last week at the Automotive News Southeast Conference.
Daimler-Benz builds the ML320 sport-utility in Vance. Its original plans were to build 65,000 of the sport-utilities annually. But in less than a year the plant has hit that capacity and now intends to raise its ceiling to 80,000 a year.
Even now, though, the plant is running enough overtime to produce at a rate of closer to 70,000. In early April, Mercedes-Benz of North America Inc. had only a nine-day U.S. inventory of the vehicle at a time when the venture was preparing to unleash world exports.
But the company is now looking into still more expansion.
Although the Alabama plant's output is relatively small by industry standards, several parts companies built new factories to supply it, or at least to use it as the cornerstone for new business development in the Southeast.
The result is that the suppliers have been ramping up over the past year step-by-step with Mercedes-Benz.
'We're now looking at how much more we can do,' says Mercedes-Benz U.S. Interna-tional spokesman Trevor Hale. 'We're talking to our suppliers to see how much more they can do.'
The plant uses only 65 Tier 1 suppliers on the M class. Parts come from across the South and Midwest. Despite importing its engine and transmission from Germany, the new vehicle has about 65 percent North American content, Renschler said.
DELIVERY IN SEQUENCE
Fourteen of the Tier 1 suppliers deliver to the plant in sequential order, with parts directed to specific vehicles that are in production. Four more suppliers will begin delivering sequentially this year.
Renschler said that the growth was part of Daimler-Benz's - and the auto industry's - continuing investment in the South.
'To be honest, five years ago, I didn't even know where Alabama was, much less think that I would be living there,' said Renschler, a native of Germany.
Renschler discounted reports of quality glitches in the M class. He said that only one part - a faulty chip inside the vehicle's door key fob - has led to a repair. The company sent letters to M-class owners alerting them to the problem, and the chips have been replaced, Renschler said.