Volvo’s decision to open its first U.S. manufacturing plant in Berkeley County is likely to lure other businesses from the Swedish automaker’s home country.
Nearly two dozen of Sweden’s automotive parts suppliers — part of a large trade association called FKG — visited South Carolina last week to meet with executives at Volvo and other manufacturers as part of a “Go Global” campaign to expand the burgeoning Swedish car parts industry to other countries.
It was the first visit to the United States for most of the suppliers, who don’t yet have a footprint in this country.
“This trip is a way of learning, seeing the possibilities and what cooperations with your team might be available — whether we can bring production here,” Fredrik Sidahl, CEO of the trade group, said as the group toured the Charleston region.
The visit was a follow-up to South Carolina’s trade mission to Sweden in September, when Gov. Nikki Haley and Commerce Secretary Bobby Hitt touted the state’s business advantages to dozens of companies, including a seminar for FKG members.
The state is now home to more than 250 auto industry suppliers employing more than 58,000 workers.
“Over the last two decades, we’ve added more then 45,000 jobs in automotive and aerospace, and we’re just at the beginning,” Hitt said of his agency’s focus on those industries during a business forum earlier this month in North Charleston.
“The automotive industry calls South Carolina a major homestead now,” Hitt said.
While Volvo is a household name, Sidahl said many people aren’t aware of how large Sweden’s automobile industry has become. In addition to Volvo, the country boasts a pair of truck manufacturers and more than 900 parts suppliers employing more than 110,000 workers. One of them is bearings maker SKF Group, which also has U.S. operations in North Charleston.
“It is a true automotive country, where you can take a decision from a design model to a completed product,” Sidahl said. “Our suppliers exist on the global market, some in Brazil or China, but for many of them, the United States would be a first.”
Volvo is the biggest South Carolina draw for suppliers.
“We know from experience that Volvo would like to see a high percentage of ‘local content’ in their vehicles,” FKG said in a statement. It added that Swedish companies also are looking to establish ties with companies like Mercedes Benz Vans in North Charleston and BMW Manufacturing in Greer.
The competition to land suppliers is fierce, with economic development officials in Georgia also meeting with Sidahl and the FKG entourage last week. The biggest push for Sweden’s suppliers, however, has been from Mexico, which offers cheap labor compared to U.S. workers.
Sidahl said he cautions suppliers to focus on more than just labor costs.
“There is a debate on whether we should locate here or in Mexico, and I just talked recently to one of the suppliers and I said there’s no reason we should be in Mexico,” Sidahl said. “This is a good spot because it’s much more than just labor costs. It’s the whole package that South Carolina can offer.”
A key part of that package, he said, is the Port of Charleston, which the FKG group visited.
“It’s extremely important to have a port nearby with good logistics,” Sidahl said, adding that he envisions a direct shipping line from Charleston to Sweden at some future point.
Sweden’s suppliers also were impressed with ReadySC, the worker training program that operates through the state’s technical college system.
“I also think it’s important to know how it is to live somewhere,” Sidahl said. “Besides taxes and regulations and an educated workforce and how quickly you can staff up, there’s quality of life. I think that’s one of your selling points in this region.”
Volvo’s $500 million manufacturing plant is under construction near Ridgeville, and the first car is scheduled to roll off the production line sometime in 2018. Sidahl said that means suppliers will have to move fast.
“They have to be in place when they start to do preproduction, which is a year ahead of the launch, so I would say somewhere during this year we should have the first announcement,” he said. “This is a process, and it starts now.”
Reach David Wren at 843-937-5550.