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Greenville Business Magazine

25th Anniversary: The BMW Effect

Oct 04, 2018 03:56PM ● By Chris Haire
In many ways, the numbers alone illustrate the impact of the automotive industry on the Upstate, an impact that began to reshape the area in ways that had not been seen since the heyday of the textile industry.

Today, 22,000 Upstate men and women are employed by automotive-related business, spread across 223 different firms, according to a recent Brookings Metropolitan Policy Program study on the area’s automotive cluster.

Across the state, the number of auto-related employees hits 66,000, with 20,000 of those holding jobs that were created between 2011 and 2017, according to the S.C. Department of Commerce. Over two decades, the auto industry has quadrupled in size, standing at more than 400 companies strong today, with a combined annual economic impact of $27 billion.

While it would be wrong to say that the rise of this industry over the last quarter century is the result of one single company — after all, the mighty Michelin Tire Co. broke ground on its first Upstate plant in 1973, with Bosch opening its Anderson plant in 1985 — there is little doubt that this stunning four-wheel industrial revolution would have happened without the arrival of BMW.

Furthermore, some would say it’s an error not to acknowledge how this single stroke of good fortune played a role in convincing the aerospace giant Boeing to build a factory in Charleston County and Swedish automaker Volvo to construct a facility in Berkeley County.

A man who was at the center of the efforts that brought BMW and Boeing to the Palmetto State certainly believes the former helped the latter.

“My friends at Boeing will tell you they wouldn’t have looked at South Carolina if it wasn’t for BMW,” says state Commerce Secretary Bobby Hitt, who was employed by the law firm Nelson Mullins at the time. The firm represented BMW. “It was a real change agent.”

“It put us on the map,” Hitt adds. “It changed the way we looked at the world.”

The Right Time
When the project was first announced in 1992, it arrived at a pivotal moment in the state’s manufacturing history.

Hitt says, “It was a time when the textile industry had been beaten down over a decade and we had lost somewhere in the neighborhood of 70,000 jobs, primarily in the Upstate.”

And the people of the Upstate knew that the German automobile manufacturer would be a transformative influence on the area — and quite possibly their lives. In fact, Hitt says, some 60,000 people initially applied to work at the factory; only 2,000 positions were initially pledged. Today, the number of people employed by BMW in the Upstate is an estimated 10,000.

But the jobs generated by the new factory weren’t BMW’s alone.

“After BMW arrived we saw a major automotive supply chain crop up,” says Joey Von Nessen, research economist at of the University of South Carolina Darla Moore School of Business. “Bottom line, BMW arrives, Michelin is already here, and then we see a wave of automotive suppliers come in.”

And the benefits most likely didn’t stop there. Consider the following: today, Von Nessen says, the employment multiplier in the automotive sector is 3.7. This means that for every 10 jobs created in the automotive sector in South Carolina, an additional 27 jobs are created elsewhere in the state.

If all goes as planned, BMW plans to add another 1,000 positions.

Teach Them Well
Open positions were one thing; finding people with the right set of skills to work at BMW was another. Enter: Special Schools, the workforce development program run by the S.C. Technical College and now called readySC.

At the time, Susan Pretulak, vice president of economic development for the S.C. Technical College System, said the task ahead involved taking a workforce that had a background in manufacturing and retooling it for the modern era of advanced manufacturing.

The group made several discovery trips, Pretulak says, with a goal of learning as much as possible about what skills and what kind of knowledge base were needed to transform Upstate workers into BMW employees.

The state created a training center, sent people to Germany to be taught, and welcomed German instructors here. Almost immediately, the South Carolina team was engaged in the recruitment of a much-needed, BMW supplier network.

Pretulak and company also had to learn about the automaker’s corporate culture.

“There are key and critical things in a company they want to replicate,” ” Pretulak says. “There were things that we needed to make sure we were doing here that were aligned with what they were doing.”

She adds that there were a “lot of moving parts” that helped her group make sure the two cultures — German and Upstate South Carolina — merged in a positive way.

These days, Pretulak says, that experience laid the groundwork for all that came next: “What we did for BMW is essentially the same kinds of things we are doing for Volvo and Mercedes Vans.”

“I think BMW gave us the confidence to do OEMs, to do those large OEMs,” Pretulak adds. “It provided other companies with the confidence level that we can do it well.”

The rise of the automotive industry also led to the creation of the Clemson University International Center for Automotive Research.

Since opening in 2007, CU-ICAR has become a vital player in the continued success of the automotive industry by offering master’s and doctorate degrees in automotive engineering and giving staff and students the ability to conduct cutting-edge research.

A large number of Upstate automotive firms like BMW, Michelin, and Bosch have partnered with CU-ICAR in its mission, while others, including JTEKT North America and Sage Automotive Interiors, have headquarters on the campus.

Nearby, the Center for Manufacturing Innovation, a partnership between Greenville Technical College and CU-ICAR, offers an in-house vehicle assembly center to train students.

What’s Past Is Prologue
Although the automotive manufacturing replaced the textile industry in the Upstate, the latter played a significant role in the success of BMW.

During the mid-20th century, “there were a lot of places in the South that had textile manufacturing, but Greenville had a number of machine manufacturers,” says Mark Farris, president and CEO of the Greenville Area Development Corporation.

Farris notes that these textile machine makers included German, Swiss, and Italian firms. And it was this prior relationship that made European companies more comfortable with an Upstate move.

First came Michelin in 1970s and then Bosch in the ’80s. Both helped pave the way for BMW. And BMW paved the way for other international manufacturers.

“That started the ball rolling downhill,” John Lummus, president and CEO of Upstate S.C. Alliance. Lummus says that because of the area’s automotive success, others international companies saw examples of how they could be successful in the Upstate.

Just as important: they became enamored with the Upstate.

“As those folks came in, they started telling the story about how great the quality of life was,” Lummus says.

And arguably nowhere in the Upstate gets talked about more than Greenville’s downtown.

Even during BMW’s earliest Upstate days, Downtown Greenville was well on its way to becoming the renowned small-town jewel that it is today. Farris says that the European city-like feel of downtown made Old World manufacturers feel right at home.

“Most of the towns and cities in western Europe have those characteristics,” Farris says. “They still value city centers.”

Today, there are over 130 companies from Germany alone.

And it’s not just European firms. Japanese manufacturers have long played a part in the Upstate, with more than 50 calling the Upstate home, while China is beginning to emerge as a regional job creator.

On the Street
These days, the international presence can be experienced in downtown Greenville and Spartanburg in what is arguably the most immediate fashion: foreign tongues.

“You walk around downtown and you’re going to hear German, French, and lot of different languages,” says Lummus. “It has made us more welcoming to international companies.”

Farris concurs, saying that when you can walk down Main Street Greenville, you can experience how international the city has become. “We have welcomed international folks to the area and continue to support them and make it a pretty diverse community,” he says

One group that has helped roll out the welcome mat for foreign-owned firms is Upstate International.

Formed two decades ago, the organization began as a way to help international families engage with the community, says Executive Director Tracie Frese. The group assisted families with a wide variety of needs, from teaching them English to helping them get a driver’s license and a buy home.

Over time, UI began to add cultural activities and even launched a successful international month.

“What we found was when international companies’ leadership engage from the top down, when those leaders become involved in the community, those are the companies that stay,” Frese says. “It’s important to engage those international families not only to bring in companies but to keep them here long term.”

According to Frese, the presence of so many international residents in the Upstate changed how those of us who were native to the U.S., and the Greenville-Spartanburg area in particular, viewed ourselves and our role in the world. Today, we are more prone to think globally and to teach our children to think with the broader world in mind.

“It’s around us. It’s become a part of our fabric,” she says.

And some don’t like it when fabrics risk being torn. All the talk in Washington, D.C. about tariffs against international companies, especially German automakers, has rubbed some in the Upstate the wrong way.

“You’ve seen people in the community stand up for BMW,” Lummus says. “They are a great company.”

The auto manufacturing sector makes up 5-7 percent of the total employment base for South Carolina, according to Von Nessen. Meanwhile, 70 percent of all vehicles made at their Spartanburg plant are exported to the rest of the world, with 87 percent of these being shipped out of the Port of Charleston, BMW notes in a February press release. In the same document, Hitt points out that South Carolina passenger vehicle exports account for “16 percent of the total U.S. market share.”

“If you look at South Carolina’s strategy currently, over the past 20-25 years or so, we are very much tied to export manufacturing,” says Von Nessen. “Export manufacturing has been the major driver of our growth.”

Down the Road
If the past is any indication, Volvo appears set to make a substantial impact on South Carolina, in particular Berkeley County and its surrounding Lowcountry neighbors.

Pretulak, for one, envisions the creation of a supplier network built around the Swedish automaker’s Palmetto State plant. “I’m really looking forward to how that landscape changes in the next 10 years,” she says.

But as good as the automotive industry has been to the state, there is a risk of putting too many eggs in the car-making basket.

“We need to look at having a diversity of industry. We don’t want to rely on any one sector for our growth,” Von Nessen says. However, he notes that growth should continue in the automotive and tire sectors for the next five to 10 years. The same goes for the aerospace industry.

But given that cars are key to the region, it’s an area we’ll have to pay attention to. “The industry is constantly changing. We have to say ahead of the curve,” Von Nessen says. “The supply chain is becoming more focused on electronic components.”

While it goes without saying the future is uncertain — The rise of self-driving cars! Why aren’t Millennials learning to drive!  — one thing is clear: life in the Upstate was changed forever when that first BMW rolled off the assembly line in Greer. As the automotive industry put its stamp on the Upstate, Greenville, Spartanburg, Anderson, and all of the other cities and towns were reborn and our place in the world remade.

“Our challenge is to stay ahead of the trends,” Farris says. Farris believes that CU-ICAR and Greenville Tech’s Center for Manufacturing Innovation are helping to do just that. He also points out that  manufacturing in the Upstate is evolving thanks to the life sciences and aerospace industries.

“The manufacturing arena has changed so dramatically, the image of a textile worker with a dirty T-shirt and lint in his hair is gone,” Farris says. “I know a lot of people say manufacturing is dead, but I can think of nothing further from the truth.”