Don Worthington

Can our region compete for a piece of the Volvo supply pie?

A worker installs wheels on a car at a Volvo factory in Chengdu in southwestern China's Sichuan province. The Swedish company will export these cars to the United States from this plant as well as make Volvo at its planned new plant in South Carolina.
A worker installs wheels on a car at a Volvo factory in Chengdu in southwestern China's Sichuan province. The Swedish company will export these cars to the United States from this plant as well as make Volvo at its planned new plant in South Carolina. AP

Planes, trains and automobiles.

The first two-thirds of the transportation trinity are the selling points that economic developers along the Interstate 77 corridor and Lancaster use regularly. The region is ideally located along air and train routes.

But will the combination of air and rail be the deciding factor in whether the region gets a piece of the Volvo supplier pie?

It depends on whether Volvo’s first American car manufacturing plant brings new suppliers or causes those suppliers already in South Carolina to expand production, serving not only Volvo but also BMW and Mercedes-Daimler, which is expanding manufacturing of its Sprinter vans in South Carolina.

The result will likely be a bit of each possibility.

Volvo’s announcement that it had selected South Carolina over Georgia was another big win for the Palmetto State. Credit goes to Gov. Nikki Haley for her persistent personal touch. But it was the expertise of Secretary of Commerce Bobby Hitt that helped swing the deal. The former newspaperman, now Commerce secretary, worked for many years at BMW in Greer.

Hitt knows how to talk cars and to how to tell Volvo that South Carolina had what it needed.

Volvo plans to build a $500 million plant that will employ 4,000 people on a former timber plantation off Interstate 26. The state sweetened the deal with more than $200 million in incentives. The plant will join two other Volvo manufacturing plants. All of the Volvo trucks sold in the U.S. are made in Dublin, Va., and the powertrains for the trucks are made in Hagerstown, Md. If Volvo meets its timetable, the first U.S.-made Volvo car will come off the assembly line in 2018.

The former timber plantation near Ridgeville where the plant will be built is just 30 minutes from the Port of Charleston. Volvo officials reportedly made several visits to the port, each time seeing long lines of BMW cars being exported from South Carolina.

Regional economic development officials are hoping our own port – Charlotte Douglas International Airport – can be an advantage when attracting automotive suppliers. Those companies – or a “cluster” in economic development terms – have long been a goal for regional economic developers.

Time and time again, Charlotte Douglas has been a key factor in wooing international firms to come here, say economic developers. The fact that there are direct flights from Charlotte to Germany is a plus as BMW, and Mercedes-Daimler is headquartered there. While Volvo is technically Chinese owned, the company still is based in Gothenburg, Sweden.

York County has a connection to Volvo. Schaeffler, an international automotive and industrial supplier, has its American headquarters in Fort Mill. The Fort Mill headquarters is responsible for engineering, sales and marketing of the company’s three brands, INA, FAG and LuK.

In January, The Schaeffler Group USA announced plans to expand its Fort Mill headquarters and two York County plants, as well as other plants in South Carolina. In all, the company said it will invest $163.8 million to expand in the state.

Internationally, Shaeffler has been a Volvo supplier. Could that connection work to our advantage?

Our (air)port also is an intermodal port, which means shipping containers can be moved on or off rail cars quickly. Norfolk Southern built the intermodal yard on 170 acres at the airport. The yard has a current capacity of between 140,000 and 200,000 containers a year. Trucks take the containers their final miles.

The region’s proximity to the airport and intermodal facility are a prime selling point, say economic developers.

Location may be another advantage. While just-in-time delivery by suppliers is a given in the auto industry, not every supplier wants to be outside a carmaker’s gate. Being between BMW and Volvo could be an advantage for the region.

But as with any economic development project, three factors will decide where Volvo suppliers are located: the availability of a skilled workforce, location and what economic developers call product – existing buildings capable of being adapted to high-tech uses.

That could be the rub for the region. It’s getting harder and harder to find strategically placed product in the region. It’s even more critical as economic developers report a higher percentage of companies – sometimes as high as two out of every three prospects – would rather have an existing building than build one themselves.

Planes, trains – and automobiles. Will that economic trinity drive our regional economy?

Don Worthington •  803-329-4066 • dworthington@heraldonline.com

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