GREER, S.C. - Following a rapid improvement in the quality of purchased parts, BMW plans to buy more components from North American suppliers.
Last year, the company bought $400 million worth of North American content to ship to its plants in Germany. That volume will increase, said Richard Boorne, vice president for procurement at BMW Manufacturing Corp. here.
'We're hitting our production targets right on the nail,' Boorne said. 'We've seen significant improvements in performance.'
In addition, BMW is following the path of other foreign-based automakers in the United States by increasing its U.S. engineering capabilities. In April, BMW opened a technical center here to test components and perform engineering work on vehicles before they enter production.
BMW's scale of interest is disproportionate to its North American production volume. The South Carolina auto plant has been building about 60,000 cars a year. The recent launch of the X5 sport activity vehicle will boost total factory volume to about 100,000 vehicles a year.
North American suppliers produce 60 percent of the Z3's parts, and 50 percent of the X5's components.
BMW decided to buy more parts from North American suppliers after its existing suppliers met BMW's increasingly tough performance standards.
Last year, BMW notified suppliers that it was raising its performance bar. In previous years, the automaker used a grading system that required parts makers to meet at least a 70 percent average rating on a scale that evaluates delivery, logistics and product quality.
Three years ago, about 40 percent of its suppliers fell below that target.
Now BMW wants parts makers to maintain an 80 percent grade. Only five suppliers fell below that threshold last year, Boorne reported. In those few cases, the recurring problem was logistics, he said.
'That is the area where we are now focusing our attention,' Boorne said.
Even BMW's lagging suppliers are making gains. In one case, a supplier who experienced 43,000 problems per million parts in 1996 improved to 300 problems per million last year.
The gains are spurring BMW to dig deeper into the North American supply base. Last year, BMW opened a purchasing office in Palo Alto, Calif., to be closer to U.S. high-tech and computer-science firms. The automaker recently held a workshop in Monterey, Calif., that drew together companies in fields ranging from automotive and electronics to aerospace and the movie industry. BMW is looking at U.S. offerings in advanced materials, entertainment products and consumer electronics.
'We want to be closer to what's emerging in those industries in the way of new technology,' Boorne said. 'Our goal is to find out if we can get those ideas into a car without interfering with safe driving.'
BMW's South Carolina-based purchasing operation also is evaluating North American suppliers for parts that could be used at other BMW factories. The automaker long has been sourcing here through the New Jersey headquarters of its U.S. sales arm, BMW of North America Inc.
Boorne now leads a consolidated effort with the New Jersey office to draw in parts and material from the United States, Canada and Mexico. Boorne has a second office in Mexico City that focuses on Mexican purchasing.
Earlier this year, BMW's purchasing operations took direct control of purchasing for its British subsidiary Rover Group.
That new activity signals more early involvement with vehicle components, Boorne indicated. In some cases, South Carolina was able to qualify suppliers to the X5.
Boorne's group also led the decision to use Budd Co. of Troy, Mich., as its second body-in-white supplier. Magna International Inc. of Aurora, Ontario, had built a local stamping plant to supply the Z3 roadster body in white. BMW tapped Budd to provide the X5 body in white.