While economists worry about the rising dollar, falling consumer demand in China and declining exports in other parts of the country, the Port of Charleston is posting numbers topping pre- recession levels, thanks in large part to one customer — BMW.
The German automaker, with its American plant a little more than 200 miles away in Greer, is sending between 800 and 1,000 vehicles every day, seven days a week, to Charleston for export to foreign countries. Ships — an average of eight a month to Europe, three to Asia — can’t come quick enough to carry off the BMWs, with the port stacking as many as 10,000 of them at its Columbus Street Terminal at one point this month.
“There is just no other way to say it — volume-wise the auto industry is booming,” said Jim Newsome, president and CEO of the State Ports Authority, which operates the Port of Charleston. “And all forecasts are for auto sales to continue fairly strong, with some exceptions in emerging market economies.”
Automobile exports, primarily BMWs, account for nearly one-third of the value of all exports leaving South Carolina, according to the state Commerce Department. The $9.2 billion worth of passenger car exports in 2014 is up more than 21 percent from the previous year and is 10 times higher than at the start of the decade. South Carolina now is the nation’s top exporter of passenger vehicles.
“Claiming the top spot for U.S. automobile exports rounds out a very successful year for BMW in South Carolina,” Manfred Erlacher, CEO of BMW Manufacturing Co., said in a statement. “Our company’s significant contribution to the U.S. balance of trade strengthens our position as the leading manufacturer of premium vehicles for the world.”
BMW recorded an 8.1 percent jump in sales during the first quarter of 2015, compared to a year ago, with 526,669 vehicles delivered to customers. The Greer plant, which started production in 1994, recently celebrated the completion of its 3 millionth vehicle.
“The automotive sector is a big driver of our state’s economy and export growth,” said Bobby Hitt, the state’s commerce secretary. “South Carolina leads the nation in the export of cars and tires. And as production continues to ramp up at BMW and our tire companies, it follows that the port will post strong numbers in handling these products for the global market.”
Exports, nationally, have been a concern because a strengthening dollar makes American-made goods more expensive for overseas buyers. One dollar now is worth about 0.93 euro — up about 28 percent from a year ago. The U.S. Trade-Weighted Dollar Index, which measures the dollar against 26 foreign currencies, is up more than 20 percent during that same period.
Estimates for first-quarter gross domestic product growth in the U.S. have been revised downward to zero.
“No question a stronger dollar means less competitiveness in export markets than otherwise would be the case,” Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, told The Post and Courier last week. “But the effect varies from market to market, from product to product, from company to company, and it depends on whether they (exporters) have a real strong market position, a good niche and a paucity of substitutes ... on the world market.”
BMW, a leader in the world’s luxury car market, has positioned itself to withstand economic rumbles by increasing the efficiency of its production, according to a report in The Economist magazine.
However, strong American currency isn’t the only worry.
A slowdown in China’s economy — the country notched its slowest growth in six years during the fourth quarter of 2014 — could have a ripple effect across the world.
“They’ve been voracious consumers of everything, from copper to new autos to jet planes,” Newsome said.
China recently started lowering interest rates to boost spending, but gross domestic product still fell three percentage points. There also is weakness in other BRIC — Brazil, Russia, India and China — economies, with India the only country holding its ground against slower consumer demand.
The impact is hitting some U.S. ports. Exports nationally are down 2.9 percent from a year ago, according to the U.S. Bureau of Economic Analysis.
Southeast ports are doing better — exports at the Port of Charleston are up 7.8 percent from a year ago while exports at its top competitor, the Port of Savannah, have increased 17 percent. And unlike many ports, exports make up a greater percentage of cargo in Charleston than imports — about 53 percent to 47 percent.
“I still believe that in the Southeast, because we’re growing so much manufacturing here and because the U.S. labor is all of the sudden very competitive on a world scale, I still think we’ll look at the end of this decade and say export growth was the dominant story,” Newsome said.
The parade of BMWs is well choreographed at the Columbus Street Terminal.
An 8,000-foot-long train brings 800 vehicles from the Upstate plant — 10 in each boxcar, five stacked on top of another five — every morning. The SPA recently spent $20 million to improve the terminal’s rail infrastructure, primarily for the BMW shipments.
Dockworkers unload the boxcars by driving them down ramps and then segregate the vehicles according to their model — either the X3, X4, X5, X6 and, soon, X7 made in Greer. The cars are then parked according to where they are headed, as they await the ships that will carry them overseas.
By midafternoon, the train is on its way back to Greer to pick up another load.
“The train comes in full, and it goes back empty 12 hours later,” Newsome said.
BMWs certainly aren’t the only export going through the Port of Charleston. Gas turbine engines and tires are close behind, with exports totaling $1.7 billion and about $2 billion, respectively, last year.
Newsome says much of the future export growth will be driven by foreign investment in U.S. manufacturing, such as the Daimler plant to be built next year in North Charleston. That German-owned facility will create 1,360 new jobs making the company’s popular Sprinter vans.
BMW estimates that 70 percent of the cars it makes in Greer are exported to foreign countries.
Another foreign carmaker, Volvo — coincidentally headquartered in China — also is looking to open a U.S. plant, primarily for domestic sales. An environmental permit application for a company believed to be Volvo was filed last week for a site at the Camp Hall Commerce Park in Berkeley County. Whichever the manufacturer turns out to be, it will employ up to 4,000 people in an industry that will require the same type of transportation, distribution and logistics network as the automotive and aerospace sectors, according to the permit application.
A proposal to deepen Charleston Harbor to 52 feet from 45 feet and nearly finished expansion of the Panama Canal to accommodate larger cargo ships also could boost export growth, Newsome has said.
“This business is not shrinking, it’s going to grow,” Newsome said, adding that the 135-acre Columbus Street Terminal already gets packed some days with cars waiting to leave the country. “That’s one of the challenges of the port business — figuring out the future and where you do all this stuff.”
Reach David Wren at 937-5550 or on Twitter at @David_Wren_