For several months, Daimler AG has been kicking around the idea of setting up a full-blown North American production site for its Mercedes-Benz Sprinter cargo van to supply a fast-growing market.
While the company hasn’t disclosed any preferred locations, it would make sense for its existing North Charleston factory to be at or near the top of the short list.
But now the German automaker is looking at whether to tap the brakes on the idea.
The culprit, in this case, is the strengthening U.S. dollar.
Right now, Daimler makes the Sprinter back home at plants in Dusseldorf and Ludwigsfelde.
To avoid stiff import tariffs, the vans that are shipped to the U.S have to be partially disassembled. Workers in Germany remove the drivetrains, fuel tanks and batteries and pack the loose components in containers. The parts and vehicles are then ready for their ocean voyage to the U.S. — only they must make the journey on separate cargo ships.
The next stop is the Daimler Vans plant on Palmetto Commerce Parkway in North Charleston. Inside, South Carolina employees put the pieces back together again, rebuilding dozens of vehicles a day. The extra handling adds between 7 percent and 9 percent to the production costs, the company has estimated.
Being that North America has become the No. 2 market for the Sprinter — it accounted for about 26,000 unit sales last year — Daimler has been looking at ways to lower the production costs. One idea was to consider making the utility vehicle from scratch on this side of the Atlantic.
“We can cover the growing demand for large vans in the North American market economically only if we produce the vehicles locally in the NAFTA region,” Mercedes-Benz van division chief Volker Mornhinweg said in October.
But the economics of the deal have since changed thanks to the surging dollar. The euro has skidded in value against the greenback, dropping to an exchange rate of $1.14 from $1.35 a year ago. That makes the idea of investing in a U.S. plant a whole lot less compelling, at least in the short run.
Daimler is now studying what to do.
“If the situation stays like this over a longer period, then the question is: ‘Do I go in now, or can I do it later?’ ” Michael Brecht, the company’s labor chief, told Reuters news service last week.
Daimler hasn’t said whether its North Charleston location is in the running for the project, but it would be shocking if it isn’t.
The company reportedly has looked at least at one other site. In mid-January, a news report out of Atlanta said the automaker was eyeing a big tract near I-95 in Pooler, just outside Savannah. It was the same piece of land Daimler considered 13 years ago for a full-blown 3,200-worker Sprinter factory in a deal that never materialized.
However it pans out, the company’s plant off Ladson Road is assured more work. As previously announced, Daimler still plans to import a German-made, American version of its Vito commercial van for reassembly in South Carolina.
The first Metris shipments will arrive by summer, “with a planned dealer launch date/ramp-up time of on/around Oct. 1 nationwide,” spokesman Christian Bokich said in a statement Thursday.
Contact John McDermott at 937-5572.