Volvo’s ‘reshoring’ an effort to relaunch brand in America

Lex Kerssemakers, CEO of Volvo Cars North America, said the automaker initially considered Mexico for its first North American plant.

Volvo Cars’ decision this month to build its first U.S. manufacturing plant in Berkeley County is part of a growing trend of automakers moving their production from Asia to North America, according to commercial real estate analysts at CBRE Group.

“Both slumping sales and increased production costs in China, along with the growing complexity and risk of an Asia-to-U.S. supply chain, have forced manufacturers to consider reshoring a large portion of the production,” a CBRE newsletter states.

“The American South has been a beneficiary of these moves with recent investments being made not only in South Carolina but also Georgia and Texas, all states with relatively low-cost workers and deep connections to population and supply chain hubs,” CBRE states.

However, the biggest winner so far has been Mexico, “which saw auto production increase 10.2 percent in 2014 and another 15 percent in the first four months of 2015,” the CBRE newsletter states, adding that total production should exceed 5 million vehicles by the end of this decade.

Lex Kerssemakers, president and CEO of Volvo Cars North America, told The Post and Courier this month that his company initially considered following competitors Toyota and Ford, which have opened plants south of the border. “But putting all the pros and cons together and considering the fact that this is our first factory in the American region, we decided to put it in South Carolina,” Kerssemakers said.

Volvo is looking to boost its U.S. sales, which have been flat with 18,358 vehicles sold this year through April compared with 18,333 sales for the same period a year ago. The most popular model has been the XC60 SUV, with 7,754 sales this year through April.

The Berkeley County factory will produce about 100,000 cars per year once production starts in 2018.

“They are trying to re-launch their brand, which has been in something of a passive mode for a period of time,” said Bobby Hitt, South Carolina’s commerce secretary.

Volvo last week announced its 2016 model lineup, which includes two new variants of the S60 vehicle. The Cross Country version will come with all-wheel drive and turbocharged 5-cylinder engine generating 250 hp. The S60 Inscription will feature front- or all-wheel drive with standard luxury features, such as walnut inlays and a power rear sunshade. Volvo’s price points for all vehicles range from $33,950 to $68,100.

Kerssemakers said the Berkeley plant will make at least two models, including some that will be made only in America, but the company hasn’t yet decided which ones.

Although the CBRE report states the so-called reshoring of auto manufacturing will benefit Mexico more than its neighbor to the north, “it will have long-term material effect on the U.S. distribution and logistics business.

“With more than 70 percent of Mexican auto production exported to the U.S., markets that lie along the central transportation networks, especially in Texas and Midwest, will experience an increase in auto distribution demand,” the newsletter states.

S.C. ranks No. 10 in the nation for growth in the number of women-owned businesses, according to a new report from American Express.

The fifth annual “State of Women-Owned Businesses” report shows S.C. has an estimated 119,500 women-owned businesses — an 86 percent increase over the number in 1997, according to Census Bureau data. That growth rate ranks No. 10 in the nation.

Women-owned businesses in S.C. employ 100,300 workers and have revenues totaling more than $16 billion, the report states. Nationally, there are more than 9.4 million women-owned businesses with revenues topping $1.4 trillion.