From SCDigest's On-Target E-Magazine
- June 9, 2015 -
Supply Chain News: Volvo Picks South Carolina for New Plant, as Battle Royale with UAW Likely on Schedule for 2018
Big Win for the Palmetto State, as Most New North American Auto Plants Going to Mexico of Late
SCDigest Editorial Staff
Volvo, the Swedish automaker now owned by Chinese company Geely Group, has selected the Charleston, SC area for its first North American manufacturing plant, but comments by the state's governor almost ensures a major battle with the United Auto Workers as to whether the site becomes the first foreign transplant to unionize.
Volvo says it will invest $500 million to build the new factory, after the company - like most of its international rivals - decided to locate the facility in the Southeast region, where Hyundai, Daimler, BMW and others foreign automakers already have plants.
SCDigest Says: |
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None of the international car company factories in the South - all in "right to work" states - is unionized, a fact that galls the UAW, which was devastated by the VW vote. |
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Volvo said the site needed to be near major highways, an international airport and a port with a track record of shipping cars - important because Volvo plans on exporting many of the autos built at the new plant. The company also said it wanted to establish roots in a state that promoted business and offered a skilled, trainable workforce.
That set off negotiations with a number of states, with Georgia, Kentucky, and North Carolina among the frontrunners, but with the selection ultimately going to South Carolina. That decision came after a visit to the port of Charleston, where Volvo officials saw dock workers drive BMWs off trains and onto containerships.
South Carolina initially proposed an attractive site in Dorchester County off Interstate 26, but environmental studies later revealed the land held too many wetlands. Building there could limit the size of Volvo's footprint and harm the site's ecosystems.
So six months into negotiations, the state had to present an entirely new site to Volvo, across Interstate 26 in Berkeley County. After some tense negotiations, Volvo ultimately selected South Carolina, which already boasts BMW and Mercedes-Benz factories.
Of course, large incentives were involved. 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.
However, the wave of new car factories in the Southeast area the US overall has slowed in recent years - 10 new vehicle assembly plants have been announced in North America since 2009, and of those, eight have been in Mexico and two have been in the Charleston region. The rest of the US has been shut out over the last six years.
Governor Haley Calls Out the Union
Perhaps surprisingly, not long after the South Carolina win was announced, Governor Nikki Haley took a shot at the United Auto Workers union, saying that "Our best advice to the UAW is to ask the IAM about how South Carolina workers view unions."
(Manufacturing Article Continued Below)
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The IAM reference is to the International Association of Machinists and Aerospace Workers, which sought to organize 3,000 employees at a new Boeing airplane factory in the state. The union wound up abandoning the organizing efforts at the plant earlier this year after it appeared unlikely to succeed..