A Green Future
KEMET Corporation is preparing to expand its domestic production scope, bringing in new manufacturing lines and highly-skilled positions to answer an ever-growing need in the hybrid vehicle and alternative energy markets.
The $34.1 million expansion uses funds provided by a grant from the Department of Energy, the state of South Carolina and KEMET itself. In August 2009, KEMET was one of 30 companies across the nation awarded grant money through the Department of Energy as a part of President Obama's American Recovery & Reinvestment Act (ARRA). Monies, cumulatively totaling $2.4 billion, were allotted for grants to aid companies accelerate manufacturing and development of the next generation of U.S. batteries and electrical vehicles. As one of three South Carolina-based companies to receive stimulus funds through this program, KEMET was awarded $15.1 million from the federal government, which was supplemented by another $2.5 million from South Carolina and $16.5 million internally. The award allows KEMET to expand production of film and electrolytic capacitors domestically to best support emerging green technologies here in the U.S.
With 54,000 square feet of plant space already reserved and being prepped to accommodate the new lines in the Simpsonville facility, the grant funds are specifically allocated for use in the purchase of manufacturing equipment to ensure the successful implementation of cutting-edge technology to get new production underway. The new production lines will enable KEMET to fulfill component needs for more than 100,000 electric-drive vehicles nationwide every year from the local plant.
"We are moving forward with our plans to build manufacturing capability at our headquarters in Simpsonville for the capacitors that are needed in the United States to support the development of green technologies and alternative energy," says Per Loof, KEMET's chief executive officer. "As we already have the physical facility, the Department of Energy ARRA grant will be supporting the purchase of the actual manufacturing equipment, giving us the opportunity to bring capacity on-line quickly. This is truly a win-win-win opportunity as it creates jobs, helps the environment and benefits our shareholders."
KEMET is currently producing these specialized components in its European facilities but, with the assistance of stimulus funding and as a response to automotive industry trends, decided to start-up production stateside in order to most efficiently provide for domestic need and assert its position as the premier provider of components for hybrid vehicle applications. The statistics speak for themselves: There is an anticipated 20 percent growth per year over 10 years for the electric-drive vehicle segment with 35 percent of this growth expected in North America. Currently, KEMET gets 17 percent of its revenue from the automotive industry, already producing critical components for many of the world's major auto suppliers, including Bosch, Continental, Delphi, Lear, TRW and Visteon.
"The decision to expand our production capabilities was an obvious choice," says Johnny Boan, vice president, Sales/Specialty Products Development. "The automotive industry is exhibiting enormous growth potential going forward, with the fastest-growing segment in electric-drive vehicles. With this production expansion, KEMET is poised to become a major player in this industry sector."
The initiation of domestic production also makes good economic sense for KEMET. The components, about the size and weight of a brick, are expensive to ship in from overseas. Such high costs incurred would render KEMET uncompetitive, but domestic production will alleviate supply chain risk as well as dependence on non-American suppliers.
KEMET's expansion into the alternative energy sector also promises positive impact on the Upstate community. The company has hired six, including an operations manager, a production manager, a designer and three technicians, to-date with plans to add another 110 to 120 positions over the next three years.
"Initial hires have come on board to assist in implementation of the new lines with more hires expected. We are currently in the process of preparing the factory for production start-up, and the first line of equipment is on order," says Boan. "KEMET is dedicated to instilling the best, most innovative technology and expertise into our production facility."
KEMET management believes the expansion into electric-drive components production coincides with and furthers the flavor and tradition instilled in the Greenville community by CU-ICAR (Clemson University International Center for Automotive Research), adding to the momentum of establishing the region as an automotive Mecca. KEMET's technology expansion also provides for more business opportunity going forward with opportunities to expand the automotive industry to include other alternative energy markets such as solar, wind, tidal and geothermal energy generation.
Greenville Area Development Corporation president and CEO Jerry Howard says the impact of KEMET's expansion will extend well beyond the company itself. "Greenville and surrounding communities are actively seeking opportunities to attract green projects in a variety of industries that will further enhance the local economy. The GADC is collaborating with our senators and house representatives in putting funding and other resources in place to secure these green companies. We are excited for KEMET's expansion into the alternative energy market and hope to utilize the company's example in helping others achieve success in a variety of green pursuits."
"Once our facility is in place and fully operational, we will take our position as one of the leading Electric Vehicle DC Link Capacitory manufacturers worldwide, supplying domestic needs for these components from our Greenville County plant," says Boan. "The investment in this new line heralds positive impact for both KEMET and the Upstate community by increasing our competitiveness, bringing on new employees, and adding to the innovative spirit embraced by our home community."