Recently, a press release came across my desk from Geely Holding Group, a Chinese company that many of you may not have heard of. You might know them more familiarly as the owners of Volvo. Yes, that Swedish car brand is in fact owned by a Chinese company now.
Geely is now globalizing their production plans, opening up a plant in US. Interestingly, not in Detroit, not in Michigan, not on the West coast, but in South Carolina, near the port of Charleston. That plant is going to employ up to 4000 people, when it's fully up and running in 2018, and they're breaking ground in the fall of 2015.
Other manufacturers, like BMW and Mercedes, have chosen to set up shop in the American South and it's becoming the new nexus or hub for American auto manufacturing. I think there are several rational reasons for auto manufacturers to gravitate there.
One is incentives. There are a number of programs to entice more automotive manufacturers to move to the American South. Just as importantly, there's access to the port of Charleston, which is a significant port with a capacity for expansion, so it's easy to get the cars in and out.
The primary stated purpose for Volvo to build these cars in Charleston is for domestic consumption. They want to build about a hundred thousand cars a year, and that's a five hundred million dollar investment. Although those cars are primarily for the US market, they plan to export vehicles as well.
In the future, you might see Volvos for the European market built in a US plant – a remarkable thing; unthinkable 10 or 20 years ago.
Another factor is union influence. South Carolina is a Right-to-Work state. Will Volvo’s plant ultimately be a union operation? I doubt it. If it does organize, it will probably be a cooperative union arrangement with a two-tiered structure, similar to Michigan UAW contracts.
No matter what, it's good news for manufacturing in South Carolina and across the US that a significant European brand is going to be built on American shores.