By James T. Hammond
SCBIZ News Staff

COLUMBIA -- BMW Manufacturing’s economic impact on South Carolina more than doubled in the six years between two studies by the University of South Carolina’s Moore School of Business, to $8.8 billion annually in the just-released report from $4.1 billion in a 2002 report.

The impact of Spartanburg County plant alone was $6.3 billion annually, according to the Moore School estimates.

The latest study, released today by Moore School economists Douglas Woodward and Paulo Guimaraes, estimates that BMW’s South Carolina complex supports 23,050 jobs statewide, compared with 16,691 jobs in the 2002 report. Annual wages and salaries amounted to $1.2 billion in the latest study, compared with $691 million in 2002.

The study concluded that BMW has an out-sized impact on other employment as well: Each job at BMW’s automobile assembly plant near Greer sustains 4.3 jobs statewide.

A more typical employment multiplier for the state’s services and industries is about two, the study showed. This calculation attempts to measure the stimulus effect of a major manufacturer on its supply chain and other dependent businesses.

The study estimates BMW’s manufacturing complex accounts for 1.2% of South Carolina’s jobs.

In summary, the report says BMW has “an unusually large statewide impact. This is because it is a high-volume, high-wage final goods producer tied to an extensive network of local suppliers.

“Over 16 years, BMW has evolved to become more than a manufacturing branch plant of the famous German automaker. Combining manufacturing, community, and educational activities, it now occupies a distinctive position in the South Carolina economy. It ranks among the state’s leading sustainable businesses.”

Since 1992, when BMW announced its first investment in South Carolina, the German automaker has continued to expand operations near Greer, in Spartanburg County. Last March, BMW said it would invest an additional $750 million in Spartanburg County factory to add 1.5 million square feet and 500 new jobs on site to produce three models and to increase production capacity to 240,000 units by 2012.

BMW said its latest investment would be the largest ever announced for the Spartanburg County factory, increasing BMW investments in South Carolina to $4.2 billion.

In their study, the Moore School economists found that the construction activity from the latest expansion will generate in 2008 alone about $298 million in economic activity. Directly and indirectly, the construction will support about 5,000 jobs, and add $200 million to the state’s labor income in 2008.

The three-year construction project includes a new 1.2 million-square-foot assembly facility north of the existing factory to build the next generation BMW X3 sports activity vehicle. The paint shop will expand by about 80% or 300,000 square feet and the existing body shops will be renovated.

The plant expansion will prepare the factory to increase production from 160,000 units to 240,000 units, BMW said. After the expansion, the Spartanburg plant will make the BMW X3, X5 Sports Activity Vehicle and X6 Sports Activity Coupe, the company said.

With the dollar’s value sagging against other currencies, like many other American manufacturers, BMW has found a ready market for its U.S.-made cars overseas. And those foreign sales help sustain South Carolina jobs.

“We will move cars where the market tells us to move them,” said Bobby Hitt, BMW Manufacturing’s manager of media and public affairs.

In 2007, BMW produced 157,530 automobiles in its Greer plant, of which about 60% were exported. The Moore School economists found that by mid-2008, 65% of the plant’s output was shipped to foreign markets. Most of those exports are shipped through the port of Charleston.

Since the research for the economic impact study was conducted, exports of BMW’s built in South Carolina have risen to about 70% of the total production, Hitt said.

“That means three out of four workers are employed because of a car being purchased by someone overseas,” Hitt said. “It produces a positive cash flow for South Carolina. And it allows our workers to be fully engaged at a time when many auto plants are cutting back.”

When BMW announced in 1992 that it would build its first full manufacturing facility outside of Germany in South Carolina, it pledged to invest $600 million, to employ 2,000 employees by the year 2000, and attract at least nine suppliers to the state.

The late former Gov. Carroll Campbell, who made recruiting the BMW plant to South Carolina a personal quest, envisioned an industry that would change the manufacturing landscape of South Carolina from one dependent upon a shrinking, low-wage textile sector to an automobile manufacturing economy that initially promised jobs averaging $45,000 a year.

Today, not only are there many more jobs than expected, but the average factory wage at BMW has risen to about $55,000 a year, Hitt said.

And the initial promise of 2,000 high-paying jobs has been exceeded beyond Campbell’s wildest dreams.

By the year 2000, BMW said it had grown to more than 3,000 BMW employees and by 2004 that number grew to more than 4,600 workers.

“As BMW entered 2008, the number of on-site work force, including BMW (employees) and contract workers grew to more than 5,400 with a total payroll of more than $450 million annually. In addition, BMW has a contingency work force of about 900 workers with an average annual payroll of more than $50 million,” BMW said in its March news release.

Today BMW has invested $3.5 billion in its South Carolina operations, more than 5,400 people work on the site. Fifty-two suppliers are located in the state. Forty of those 52 suppliers built new North American operations in the state. BMW’s North American supplier network has grown to 194 companies today from 22 in 1992.

In addition to direct manufacturing jobs, BMW also draws many visitors to the Upstate to see its museum on the plant property, to pick up cars they have purchased directly from the factory, or to participate in BMW’s on-site driver training program.

The Moore School study found that the BMW Performance Driving School in 2007 hosted more than 10,000 visitors, who came to the center to pick up their new vehicle or as driving school attendees.

BMW ownership is not required to participate in the driving school, the automaker points out on its Web site. But BMW does offer a program in which a new owner can take delivery of his or her new car at the Performance Driving School in Spartanburg County.

BMW has found that about 22% of people who attend the driving education program and do not already own a BMW will purchase a car within three years, Hitt said.

“Beyond the typical South Carolina tourist attractions, the delivery center helps expose the state’s quality of life to some of the country’s more discerning consumers and tourists,” the economists wrote.

The study, which was financially supported by BMW, characterized the automaker’s presence as a bulwark of stability “in this age of often unsettling change.

“The presence of advanced manufacturing by one of the world’s leading companies provides proof that South Carolina remains competitive in global business, despite the challenges posed by an increasingly integrated economy,” the study states.

“Fundamentally, the company was attracted to South Carolina for its trained work force, supported by the Technical College System, and the state’s infrastructure – including the Port of Charleston, the airport in Greenville which is actually next to the (BMW) campus, and direct access to the U.S. interstate highway system.”