BMW AG plans to boost its North American content.

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BMW set to boost local content of U.S.-made vehicles

By LINDSAY CHAPPELL | Automotive News

BMW's Spartanburg, S.C., manufacturing subsidiary will build a $16.9 million component development center there to increase the local content of its U.S.-made vehicles.

The German-based automaker is being spurred into action by an eroding currency exchange picture.

The euro has appreciated 30 percent against the dollar since January, making European-made items more expensive to buy in dollars. BMW imports 50 percent of the content of its U.S.-built vehicles, including engines and transmissions.

BMW declined to reveal details of the plan, saying arrangements are being worked out. But South Carolina's legislature this month approved a $103.5 million incentive package for a previously announced expansion by BMW.

Contained within that package is $16.9 million for a "development center/testing facility" that will link BMW electronically with factories of North American suppliers to do pre-production parts testing.

BMW Manufacturing Corp. spokeswoman Bunny Richardson says increasing local content is a primary motive for the plant.

"Most of our suppliers have research and development centers, but not here," she says.

The Spartanburg operation has 128 North American suppliers, and 39 of them have plants in South Carolina. Among its locally sourced parts are seats, fuel pumps, fuel tanks, exhaust systems, steel and glass.

"This will help both our overseas supplier base as well as our U.S. supplier base," Richardson says. "With the change we've seen in the exchange rates, we see this as a hedge against currency rate fluctuations in the future."

Japan's manufacturers have tried to shift more content to North American suppliers for more than a decade, citing currency exchange protection as a motivating factor.

But BMW has faced little pressure on the issue. Its U.S. factory volume has been relatively low. In the past five years, the South Carolina plant has produced an average of about 7,250 vehicles a month.

When U.S. trade officials fretted over the automotive trade imbalance with Japan in the 1990s, political pressure fell on Japanese mass producers, not German sports car makers.

But BMW's U.S. output is growing. This year the subsidiary has produced close to 13,000 vehicles a month. But the company has also hinted at the possibility of adding another model to the mix, which consists of Z4 roadsters and X5 SUVs.