NEWS

Volvo selects South Carolina for $500 Million Assembly Plant

Tuesday, May 12, 2015

Volvo Cars will build a factory in South Carolina, the company said on Monday, making it the first time a Chinese-owned automaker will have an auto assembly plant in the United States.

Volvo will invest $500 million in the new factory, which will be in Berkeley County, S.C., outside Charleston. The company estimated that the plant — its first in the United States since entering the market 60 years ago — would employ 2,000 people in its early years and eventually be closer to 4,000. Construction will begin this fall and the factory will begin producing vehicles in 2018.

Volvo, which remains based in Sweden, has gone through a number of owners in recent years. In 2010, Zhejiang Geely Holdings, its current owner, bought it from Ford, which acquired it in 2000 from the Volvo Group.

Lex Kerssemakers, president and chief executive of Volvo Cars of North America, said in an interview on Monday that while Geely had been aware of the plans, the decision to build an American plant was made by executives in Sweden.

“We are a Swedish company, and continue to be a Swedish company,” he said. “This is a decision taken by Volvo.”

Volvo already operates two plants in Europe and two in China. It is hoping to increase its American sales volume, after an 8 percent decline last year from 2013, to about 56,000 vehicles. Globally, though, the company is growing, up 9 percent last year to nearly 470,000 vehicles — helped by surging demand in China.

The company’s new South Carolina factory will initially be capable of making 100,000 vehicles a year, though Volvo officials have yet to disclose what models may be produced there.

“It illustrates how critical the North American region continues to be, even with China’s ascension to the largest new-car market on the planet,” said Karl Brauer, senior analyst at Kelley Blue Book.

South Carolina officials lined up sizable incentives to lure the Volvo plant. The automaker will receive about $200 million in combined incentives. That includes $120 million in economic development bonds, $30 million in state grants and an additional $50 million of incentives from a state-owned utility company, Santee Cooper.

Volvo’s announcement is the latest in a series of production expansions by foreign automakers in the United States. In July, Volkswagen, the German automaker, announced it would spend $600 million to expand its plant in Chattanooga, Tenn., and build a new sport utility vehicle designed for the American market. The vehicle was described by executives as a “true American car” — big, tailored to American tastes and full of the latest technology. Volkswagen hopes it can help cure its anemic sales performance in the United States.

Mr. Kerssemakers said on Monday that Volvo was unlikely to take a similar approach at its first American plant. He said it would continue to focus on building “global cars,” vehicles that can be sold anywhere.

“Does it exclude, in the future, specific American cars? No. But we have absolutely no plans to do for now,” he said. “We think the cars we make are already perfectly suitable to the U.S.”

Mr. Kerssemakers said the automaker chose the South Carolina site for its proximity to seaports and the quality of autoworkers and facilities in the region.

“One of the main criteria for us was infrastructure,” he said. “South Carolina has people who know the industry, can work in the factory, and who understand our business.”

He said the company was looking long-term at its first production on American soil. “A commitment like this you don’t make for 10 or 15 years,” he said. “It’s designed for decades.”

South Carolina’s governor, Nikki R. Haley, echoed that sentiment on Monday, saying in a statement that Volvo’s presence “will be felt for decades to come.”

The Volvo factory is a coup not just for the state but also for the Charleston area in particular, which has had a series of deals with luxury auto manufacturers. In March, Mercedes-Benz announced a $500 million investment in a new plant in North Charleston, S.C., that would produce its next-generation line of Sprinter cargo vans, adding more than 1,000 jobs.

BMW also builds sport utility vehicles in South Carolina, at its Spartanburg plant.

 

nytimes.com