BMW announces $750M expansion in US

BMW will spend $750 million to expand its South Carolina production facility and create 500 new jobs, doubling the size of its U.S. manufacturing operations, the company said Monday.

The German automaker will add 1.2 million square feet of production space, and construction of new paint shop facilities already has begun, said Frank-Peter Arndt, a BMW board member in charge of global production.

Arndt said the company will add a new generation of its X3 sport utility vehicle to the site, making the plant the exclusive source for the X3 and X5 SUV as well as the X6 sports coupe unveiled earlier this year at the Detroit auto show. The X line of vehicles are four-wheel drive.

The announcement comes about two weeks after BMW said it plans to cut 5,000 jobs in Germany and 600 elsewhere, or 7.5 percent of its work force over two years.

Bunny Richardson, a spokeswoman for the South Carolina plant, said Monday that the rising value of the euro against the dollar does help, but it's not the primary reason for the expansion, Richardson said. On Monday, the euro cost $1.5336.

But Greg Gardner with Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity, has said the move was "completely driven by the plunge in the dollar."

By building the cars in the U.S., BMW can save money on the lower dollar and on wages since its South Carolina workers make less than German workers, Gardner has said.

BMW also will begin making a diesel version of the X5 and a hybrid vehicle at its South Carolina plant.

The expansion more than triples what BMW initially said it would invest in 1992, Gov. Mark Sanford said. Years of expansions have increased that investment to $4.1 billion and a payroll of 5,400 people.

As the expansion is completed during the next four years, production will increase to 240,000 vehicles yearly from 155,000.

BMW said the state was spending about $15 million on site preparation and the automaker may yet seek job development tax credits.