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Panel: Moore School study: BMW has $16B impact on S.C.

Author: James T. Hammond

Source: Columbia Regional Business Report

December 17, 2014

If what's past truly is prologue, then South Carolina can expect continued growth of an automotive sector led by BMW Manufacturing Co.

At the annual Economic Outlook Conference held Tuesday in Columbia, Doug Woodward, research economist at the University of South Carolina’s Darla Moore School of Business, discussed his latest research (.pdf) on the statewide impact of the German automaker’s $6.3 billion investment in its plant in Spartanburg County.

Woodward outlined a track record of investment that has resulted in direct employment of 7,654 workers, annual labor income of $677.4 million and annual economic output of $12.54 billion.

When indirect and induced economic impact are included, that result climbs to 30,777 jobs, $1.77 billion labor income and $16.63 billion total annual economic impact, according to Woodward’s latest research.

That’s an exponential increase over two previous studies by Woodward. In 2002, he estimated total annual economic impact of BMW Manufacturing’s operations at $4.1 billion. When he revisited the figures in 2008, the total impact had soared to more than $8.8 billion in South Carolina.

That broad measure of economic impact includes sales of goods and services to BMW and its employees from in-state vendors.

The study was financially supported by BMW Manufacturing. The research team at the Darla Moore School of Business independently designed the methodology and is responsible for the integrity of the results, the report says.

BMW had revealed some of the details of the new study in March, but on Tuesday, Woodward released the full report.

“By investing far more than initially promised and by forming a deeply rooted automotive cluster in the state, BMW’s legacy during its first decade has proven to be enormously positive—for the company and for South Carolina. The future appears just as auspicious,” Woodward said in his 2008 report.

On Tuesday, Woodward repeated his assertion that BMW has been a manufacturer that continues to over-deliver on its promises.

“It is now clear that BMW has had a potent, enduring effect on the state’s economy,” the new report says. “This study evaluates BMW’s contributions to South Carolina’s development at the 20-year milestone. The Spartanburg county campus engenders economic impacts that can be measured in terms of economic output, employment, income and value added.”

“The company has greatly exceeded its initial pledge of approximately 2,000 jobs and $600 million in capital investment,” the report says.

The report emphasizes the role BMW’s presence has played in stimulating indirect employment and workforce development.

“The plant has one of the highest employment multiplier (4.0) effects in South Carolina. In addition, BMW also facilitates improvements to South Carolina’s labor force, as the employment opportunities it creates give rise to an increase in demand for workforce training and higher education,” the report says.

BMW impact chart 12-17The report cites the pivotal role of BMW’s decision to make the Greer plant the sole manufacturing site for its X-series vehicles. BMW made repeated investments in the plant to boost production of the vehicles, including a $750 million commitment in 2008 that added 1.5 million square feet of manufacturing space in the depths of the recession.

Those investments were a reflection of the high demand for the X-series during the recession, while other ca makers and models saw demand plunge. With a solid record of sales worldwide, BMW announced yet another $900 million expansion in 2012.

But the investment did not end there.

“In 2014, 20 years after groundbreaking, BMW had produced 2.6 million vehicles in South Carolina,” the report says. “With global demand for the X series continually growing, BMW corporate leaders made one of their most significant announcements: The company committed to invest another $1 billion over two years in Plant Spartanburg. Once completed, the plant will have an annual capacity to produce 450,000 passenger vehicles.”

About 70% of those cars are exported to markets worldwide through the Port of Charleston.

“There’s demand everywhere for these cars,” Woodward said.

Woodward noted that this report measures only the supplier network for BMW, not the entire automotive supplier cluster in South Carolina. Woodward said the overall cluster is about three times as large as the BMW supply chain.

The USC economist said many of the automotive suppliers in South Carolina sell their products to automotive assembly plants in other states, such as Georgia, Alabama and Tennessee. But he said there’s no doubt that the larger automotive sector has been stimulated by the presence of BMW Manufacturing.

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