Automotive plants spark supplier expansions

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The Lowcountry attracted two major investments from automakers in 2015, and as those projects get closer to coming online, the state’s automotive supplier base continues to expand.

Sweden-based Volvo Cars will begin production of the new S60 sedan at its new campus in Berkeley County in the fourth quarter. Germany-based Mercedes-Benz Vans plans to produce the new Sprinter vans at its expanding site in Ladson within the next two years.

Those massive projects will initially result in 3,300 jobs, more than $1 billion in investment and the launch of full-scale car and van production in the Lowcountry for the first time.

The automakers also have expanded their supplier networks in South Carolina in preparation. Sometimes this means existing companies expand; other times it means companies move into the state to launch operations. Selected suppliers typically invest in more space and workers to meet manufacturers’ strict production schedules.

Katarina Fjording, purchasing and manufacturing vice president for Volvo Car U.S. Operations, said each supplier undergoes an intense assessment before an agreement is reached. She said Volvo likes a mix of suppliers with new sites and existing operations, to mitigate risks.

Rob Krulac, business development manager for the Clemson University International Center for Automotive Research in Greenville, echoed Fjording, saying automotive manufacturers want to avoid being reliant on one supplier in case something goes wrong, such as a fire or a shipping delay. He said automakers also want original equipment manufacturers that can keep pace.

“The No. 1 thing for OEMs is quality and on-time delivery. … It’s about scale, being able to ramp up when an OEM needs to grow,” Krulac said.

Suppliers look to diversify their customer base, as well, to ensure they do not have to rely on one major manufacturer for business. Many Volvo Cars suppliers also produce parts for BMW Manufacturing Co. in Greer, for example.

Building supplier networks

While Volvo and Mercedes-Benz aim to have a national and S.C.-based supplier network, they also maintain a substantial global supply base that is dependent on a global supply chain.

About 40% of Volvo’s direct material suppliers — companies that produce parts for the car — are based in North America, with about 25% based in the United States.

“All of that is since the announcement happened. The 25% is what my team has built up from scratch,” Fjording said last year during a tour of the new car campus.

Michael Balke, Mercedes-Benz Vans’ president and CEO, did not disclose the percentage of suppliers in the United States. He did say the company looks to localize parts that are the most difficult or costly to transport, including seats and gas tanks.

“The local supplier base is growing here,” Balke said during a campus tour in November. “We are working to localize where we can.”

S60 suppliers

Much of Volvo’s existing supplier network in South Carolina is in the Upstate — Lear Corp., Plastic Omnium and Roechling in Duncan; Gestamp in Union; and Yanfeng Automotive Interiors in Fountain Inn. Others are in the Midlands and Lowcountry, including Autoneum in Aiken and Kion North America in Summerville.

Automotive seating supplier Lear is working on a $7.7 million expansion at its facility in Spartanburg County to supply for BMW and Volvo.

Plastic Omnium is expanding its Spartanburg County plant to supply painted exterior parts to Volvo and BMW.

Gestamp plans to add 300,000 square feet to its facility in Union County to supply metal-stamping parts to Volvo and BMW. Those firms did not return calls by press time.

Yanfeng Automotive Interiors in Fountain Inn, also a BMW and Volvo supplier, produces injection molds for automotive plants. The company acquired Faurecia’s Fountain Inn operation in 2016, becoming a supplier for BMW.

It then leveraged its Upstate location and existing relationships with Volvo to become a supplier for the S.C. site, said Mike Driver, the company’s managing director for the Volvo business unit. Yanfeng will produce floor consoles for Volvo’s new S60.

“Once we had the footprint in South Carolina and Volvo announced they were coming to the U.S., specifically Ridgeville, it opened up opportunities for us with Volvo,” Driver said.

Driver said Yanfeng’s 344,000-square-foot facility and 800-employee workforce in Fountain Inn can handle the incoming work to supply the S60 sedan.

In the Lowcountry, Summerville-based Kion North America will supply Volvo with material-handling equipment, such as forklifts, reach trucks and narrow aisle trucks.

In 2017, the company announced plans to add 50 jobs and invest $5.7 million to increase its production capacity from 3,000 units per year in 2015 to 12,000 units by 2020.

Sprinter suppliers

Germany-based Isringhausen GmbH, which has 50 plants in 20 countries, decided to open a manufacturing plant in Ladson after Mercedes announced its expansion plans.

Isringhausen will lease a facility in the Palmetto Commerce Park to manufacture seats and seat assemblies for the new, U.S.-made Sprinter model. The company plans to hire more than 130 people in the coming years.

The Mercedes plant also spurred Innovative Vehicle Solutions to launch operations in Ladson in 2012. The company takes completed commercial trucks and vans from manufacturers like Ford and Mercedes-Benz Vans and outfits their interiors. Workers might install shelves, decals or ladder racks, based on their customers’ needs.

The company invested $2.5 million to build a 27,500-square-foot facility next to its existing building along Benchmark Drive to handle new orders. The facilities are within 5 miles of the Mercedes-Benz plant.

David Witner, a senior analyst for Innovative Vehicle Solutions, said the extra space will make room for incoming orders, including when Mercedes starts full production of Sprinter vans — expected to begin by 2020. Currently, the automaker builds the vans in Europe, disassembles them for shipment and then reassembles them in South Carolina.

Innovative Vehicle Solutions COO Matt Kuhn said the expansion “will allow us to build innovative products for some of America’s most prominent companies on a larger scale.”

Thermo King, which outfits trucks and vans with refrigeration and temperature-control systems, also is expanding its Lowcountry operations.

The manufacturer supplies Mercedes dealers with upfitted vans, and it will also install heavy-duty mobile air conditioning solutions for the new Sprinter van model.

The company will invest $2.6 million to triple its size, relocating in the fall from Hanahan into a new, 20,000-square-foot facility along Interstate 26, at exit 194 — Jedburg Road — in Berkeley County.

“We needed more room to do the work for our existing customers, and we also want to grow our customer base. … This move will enable us to work on the vans faster,” Thermo King CEO Ritchie McQueeney said.

Editor’s Note: An earlier version of this story incorrectly stated the type of vans in the main photo. Ford manufactured the vans; Innovative Vehicle Solutions then outfitted them into Tesla Mobile Service vehicles.