Start-up costs and a slower-than-expected production ramp-up at the Mercedes-Benz Vans plant in North Charleston is creating a drag on its parent company's bottom line.
Daimler AG of Germany recently said its global van division lost the U.S. equivalent of about $107 million during the first quarter of 2019 following a $192 million gain during the same period last year. The slumping financials forced Daimler to cut the unit's full-year profit outlook to between zero and 2 percent — down from earlier projections of 5 percent to 7 percent
Bodo Uebber, the Daimler board member in charge of finance, called the North Charleston plant "a challenge" during a conference call with analysts but said he expects an eventual turnaround.
"Over the quarters to come, we will get into a better situation," he said.
Daimler invested $500 million into the expansion of its local Mercedes-Benz Vans campus to build next-generation Sprinter commercial vehicles for the U.S. and Canadian markets. The plant — which previously re-assembled Sprinters exported in kits from Germany — started production in September and eventually will employ 1,300 workers.
"As usual for a new model ramp-up it takes some time to reach the planned production numbers while ensuring the highest quality," spokeswoman Alyssa Bean said.
Sprinter sales in the U.S. totaled 2,682 units in April and 10.158 for the year. The year-to-date figure represents a 7.7 percent drop from 2018. Daimler is projecting a slight sales gain for the full year.
Uebber told analysts that Daimler plans to analyze its van portfolio "and make sure that we get back to our long-term profitability." He did not provide details of any changes that might be on the horizon.
The ongoing trade war between the United States and China probably won't impact Boeing Co.'s commercial jet backlog in the short term, including the 787 Dreamliner built in North Charleston, according to analyst Ken Herbert with Canaccord Genuity.
In a note to investors, Herbert said the lack of significant plane orders from the world's most populous nation over the past few years "limits the near-term risk of cancellations and exposure relative to the broader backlogs."
China has said it will retaliate against U.S. tariffs on its products by reducing orders for American-made goods. A report in The Global Times newspaper singled out Boeing planes as a potential target.
Chinese airlines have 231 Boeing aircraft orders on the books, and likely hundreds more that the planemaker hasn't yet identified by specific customer.
Chinese carriers have announced 37 orders for the wide-body 787, which is also built at Boeing's plant in Everett, Wash. Most of China's plane orders are for the single-aisle 737 Max, which has been grounded worldwide since March, following a pair of fatal crashes within five months. Chinese carriers have announced 192 orders for that plane.
"The actual capability of Chinese airlines to purchase enough Airbus planes to satisfy their demand and growth ambitions remains unlikely," Herbert said, referring to Boeing's France-based duopoly competitor.
Still, it's not all clear skies for Boeing if the trade war continues to drag on.
"If relations do materially deteriorate further, Chinese influence on other countries could eventually also be a headwind for the (airline) sector," Herbert said.
Marcio Van der Put is taking over as acting general manager of the Liberty Steel USA plant in Georgetown while the company searches for a full-time replacement for Revansidha "Rohit" Gulve, who is moving to the Liberty Steel Peoria plant in Illinois.
Van der Put ran the South Carolina wire rod mill for three years under previous owner ArcelorMittal before taking up senior posts beginning in 2009 with the firm in Brazil. Most recently, he was chief technology officer for long products in that country.
Gulve led the reopening last summer of Liberty Steel Georgetown, which had been idle since August 2016.
Liberty Steel now has annual electric arc furnace melting capacity of 1.8 million tons at mills in Illinois, Ohio, South Carolina, New Mexico, Texas, Georgia, Florida and New York. The U.S. operations employ about 1,300 people.