US factory gamble by BMW pays off

The BMW factory in Spartanburg, South Carolina is vital to the company's plan to keep its profit margins high and maintain its position ahead of rivals Mercedes-Benz and Audi. As it is the only car manufacturing plant in what is a very rural state, it is also seen as an industry model.

BMW, pushed by high German energy costs, will have invested over $7bn into the plant by the time the new expansion has been completed over the next two years. This means that more BMW models are made in South Carolina than anywhere else in the world.

Because of the capital investment, the factory is now the biggest exporter of light US-made vehicles to foreign markets. The plan to increase the capacity of the plant in Spartanburg by 50% means that it will eventually be producing 450,000 cars a year.

Nearly all the company's SUVs, which include the top-of-the-range X7, are manufactured here, and 70% are exported to over 140 countries. Factory head Manfred Erlacher, talking about the success, said: "Spartanburg can compete with any German plant in terms of quality and efficiency now. One of the big advantages here is a pretty high flexibility when it comes to work times. There's also very good know-how regarding products and processes that's developed over the years."

The good news for BMW is that exports are likely to grow due to a new proposal for a free-trade agreement between the EU and the US.