[8] Bmw Princeton Becomes Monthly Talks

Today, Spartanburg sprawls across 1,150 acres. Despite the name BMW uses, the plant is actually midway between Spartanburg and Greenville, near the cities' 13-gate international airport in Greer.

A $1 billion investment announced in 2014 to support the X7 included an assembly expansion and a new 1.2 million-square-foot body shop with 2,000 new robots. The project will bring the complex up to 7 million square feet.

Spartanburg history

1992: Plant is announced

1994: Plant opens and assembles first vehicle, a 3 series

1995: Z3 roadster production begins

1999: X5 production begins

2002: Z3 ends and Z4 begins

2006: 1 millionth vehicle produced

2007: X6 production begins

2008: Z4 production ends

2010: X3 production begins

2012: 2 millionth vehicle produced

2014: X4 production begins; expansion for X7 announced

2015: 3 millionth vehicle produced

2017: 4 millionth vehicle produced

2018: X7 production scheduled to begin

Source: BMW Manufacturing Co.

The plant assembles the X3 and X4 in one hall and the X5 and X6 in another hall. When the X7 comes online late next year, it will be assembled alongside the X5 and X6. But BMW also will add X5 capability to the other hall, Flor said.

Preparations to build the redesigned X3 and X5 have caused plant output to fall 11 percent this year through September, though that's expected to be a temporary dip. BMW plans to add 1,000 workers at the plant by 2021.

All vehicles built at Spartanburg are produced for a customer or dealer order. BMW touts the plant's ability to let a customer change the order until six days before the scheduled build. One way the plant gets such flexibility is through kitting, Flor said. That's when a worker picks certain parts for a specific vehicle and puts together a package delivered just in time to the assembly line.

"This little package walks down the line with the car," Flor said. "It requires one more person to pick these parts and some equipment, but this is a great tool to achieve flexibility."

Engines used at Spartanburg are imported from BMW plants in Austria and Germany. Now that the plant is so big, some manufacturing experts question whether BMW should find a spot in the U.S. to produce engines.

"It comes back to the whole philosophy that powertrain is the heart of BMW, and they really want to keep that last bit of Germany attached to their vehicles," Langley said. "But eventually I wonder what is the tipping point to say, 'We have to do something locally.'"

BMW's second North American assembly plant, under construction in Mexico and slated for a 2019 opening, could provide the impetus for that, Langley said. It is expected to increase BMW's annual capacity in North America by 150,000 units.

A BMW spokesman said there are currently no plans for a U.S. engine plant. The industry's move toward electrification could play a role in whether local engine production makes sense.

Bimmer boom

BMW's sole U.S. plant has increased production significantly over the past decade.

Vehicles built

2006

104,632

2012

301,519

2007

154,999

2013

297,326

2008

170,739

2014

349,949

2009

121,666

2015

400,904

2010

157,703

2016

411,171

2011

276,065

2017

275,385

Through September

Source: Automotive News Data Center

BMW is readying Spartanburg to flex between powertrain types. The company aims to hedge against uncertain forecasts for electric vehicle demand by offering combustion, hybrid and electric versions of core nameplates with all powertrain types integrated into existing assembly lines.

Spartanburg already produces a plug-in hybrid X5 with battery assembly onsite. The plant will expand battery assembly as needed for additional models, Flor said. BMW will make a fully electric X3 in 2020.

Going forward, the just-redesigned X3 won't be built only in Spartanburg. BMW will launch assembly of the X3 next year in South Africa and China. That was the first decision Zipse made two years ago after being named global production boss.

More capacity was needed, and "it was too dangerous to put all X vehicles into this market," Zipse said.

BMW also is said to be planning secondary assembly of the X5 in China, though officials haven't confirmed that. Still, multiple assembly sites offer flexibility not just for change in market demand but also in trade policy.

Going forward, BMW says it expects to continue exporting about 70 percent of Spartanburg's production. But Krueger could make an exception if U.S. policy changes — threatened by the Trump administration — jeopardize BMW's business model.

"If we would have trade barriers," Krueger said, "maybe we would need to shift that production from here to somewhere else because it can no longer be affordable."

Christiaan Hetzner contributed to this report.