July 03, 2014 01:00 AM

BMW to invest $1 billion in new plant in Mexico, employ 1,500 workers

From staff reports

Harald Krueger, BMW board member for production, pictured (left) with Mexico President Enrique Peña Nieto. Kruger said: “The Americas are among the most important growth markets for the BMW Group."

MEXICO CITY -- BMW plans to spend $1 billion to build a plant in San Luis Potosi, Mexico, with capacity of about 150,000 units per year, the company said today.

Start of production is planned for 2019, with a work force of about 1,500 employees, said Harald Krueger, BMW board member for production, in a statement. BMW did not disclose what models it will build at the plant.

Krueger said the new plant, combined with BMW’s plant in Spartanburg, S.C., underscores BMW’s commitment to the North American Free Trade Agreement region -- Mexico, Canada and the United States.

“The Americas are among the most important growth markets for the BMW Group,” he said. “We are continuing our strategy of ‘production follows the market.’”

BMW’s announcement comes on the heels of last week’s announcement that, in a joint venture, Renault-Nissan and Daimler will build a $1.36 billion plant in Aguascalientes, Mexico, to build compact vehicles for their Infiniti and Mercedes-Benz brands.

BMW made its announcement here at the residence of Mexico president, Enrique Peña Nieto. He attended the ceremony along with Secretary of Economy Ildefonso Guajardo Villarreal and the governor of San Luis Potosi state, Fernando Toranzo Fernández.

BMW said Mexico’s “large number of international free trade agreements -- within the NAFTA area, with the European Union and the MERCOSUR [South American trade bloc] member states, for example -- was a decisive factor in the choice of location.”

The automaker also cited the quality of the work force, a supplier network that BMW already sources parts from, and infrastructure. Krueger said BMW has “already reached initial agreement with worker representatives in San Luis Potosi.”

BMW already has more than 100 suppliers in Mexico, Krueger said, and that number has doubled over the last four years. There will be more supplier opportunities in the future, he said.

Andreas Klugescheid, corporate and government affairs head of communications for BMW's production network, told Automotive News that supply sourcing in Mexico in 2013 totaled $1.61 billion dollars.

Krueger said BMW considered more than 10 sites in Mexico. Finalists were the states of San Luis Potosi and Hidalgo.

Site competition

Fernández, governor of the state of San Luis Potosi, said that the government of San Luis Potosi was in talks with BMW over the plant for five years.

Krueger said BMW considered more than 10 sites in Mexico. Finalists were the states of San Luis Potosi and Hidalgo.

Nieto said at the ceremony that "Mexico is sending a clear message to the world that it's in a state of transformation."

That was in reference to a number of fiscal, political and telecommunications reforms that his government has launched since he took office 18 months ago. He said his government has attracted $13 billion dollars worth of investment in the automotive sector.

BMW sales in Mexico

BMW Group sold 13,992 vehicles in Mexico in 2013, an increase of 18 percent year-over-year. Motorcycle sales last year were 2,064 units, up 17 percent.

In March, the BMW Group announced a further investment of $1 billion at the Spartanburg plant to boost capacity to up to 450,000 vehicles by the end of 2016. The expansion will make Spartanburg the largest plant in the BMW Group’s international production network.

BMW also is spending $200 million to expand its joint venture plant in Moses Lake, Wash., to manufacture carbon-fiber reinforced plastic.

Also, BMW is building an assembly plant in Santa Catarina state in Brazil. The start of production for the Brazilian plant is scheduled for later this year.

Stephen Downer contributed to this report.