Localizing Volvo Suppliers

Charleston Regional Business Journal

Volvo plans to localize supply chain

By Liz Segrist 
lsegrist@scbiznews.com 
Published March 15, 2016

When Volvo begins producing its S60 sedan exclusively in Berkeley County in late 2018, the company plans to source the parts that make up the body of the car largely from S.C. suppliers, Volvo executive Katarina Fjording said after an event Thursday in Charleston.

“We’re going to localize basically all of the body parts here, which is something we normally don’t do. Normally, we take parts from our own component shop in Sweden or we make the parts ourselves. ... So we’re going to localize those parts here,” Fjording, Volvo Car Group’s purchasing and manufacturing vice president, said after theCharleston Metro Chamber of Commerce’s presentation of its Economic Forecast.

Volvo executive Katarina Fjording said the company plans to use local suppliers at the future Berkeley County plant that will produce the S60 sedan.“We’re going to localize basically all of the body parts here, which is something we normally don’t do. Normally, we take parts from our own component shop in Sweden or we make the parts ourselves.” 
— Katarina Fjording, Volvo Car Group’s vice president of purchasing and manufacturing

The Sweden-based, Chinese-owned company first identifies desired suppliers and then economic developers engage them. One of Volvo’s major suppliers visited Charleston this week to scout the area and talk with state and county officials about incentives, Fjording said, declining to disclose the company’s name.

In September, Gov. Nikki Haley, S.C. Commerce Secretary Bobby Hitt and other state officials traveled to Gothenburg, Sweden, to recruit Volvo suppliers to locate near the S.C. plant. Upon returning, Haley said that she talked to more than 100 suppliers during the visit and that many expressed interest in building a plant in South Carolina.

Hitt has said he plans to “build an industrial city” in the Camp Hall Tract and fill it with automotive suppliers.

Campus update

Since Volvo’s announcement in May that it would build its first North American facility in the Lowcountry, construction has been underway for months at the company’s future 2,800-acre automotive campus. The campus will sit within the 6,880-acre Camp Hall Tract a few miles off Interstate 26 at exit 187 near Ridgeville.

Piling has been placed for the paint facility, and the assembly building will follow soon. Crews will pour the cement foundation for the buildings before steel is delivered and building construction begins — likely in April or May, Fjording said.

When the $500 million manufacturing plant opens in late 2018, 30,000 vehicles will be exported annually through the Port of Charleston. That number is expected to jump to 100,000 cars annually in the early years of production.

Palmetto Railways, a division of the state Commerce Department, recently announced plans to build a new rail line to connect the Camp Hall Tract to an existing railroad right-of-way near the Santee Cooper Cross Generating Station in Berkeley County, pending regulatory and environmental approvals and permits.

Workforce update

Volvo Car Group currently has a 13-person staff working in the Charleston area. The automaker is hiring logistics and purchasing employees to build out its office operations. Fjording said the company plans to begin hiring engineers and assembly workers in 2017. The plant will initially employ 2,000 workers.

The company will work with ReadySC to train potential employees. Volvo will select from that pool and continue workforce development with an internal training program on-site, as well as at its facilities in Sweden and China.

Fjording stressed the importance of getting young students interested in building cars and becoming engineers. She said finding enough talent with technical and engineering skills — particularly maintenance engineers — can be difficult and is crucial for meeting production goals.

“We need to find ways to show that this type of work is cool and this is fun,” she said during a presentation at the chamber’s 25th annual Economic Outlook Conference.

Boosting demand

Volvo officials hope the new S.C. automotive plant will spark a renewed demand for the Volvo brand within the U.S. market, which was formerly its largest.

Volvo has been selling cars in the United States for nearly 60 years. Those sales dropped significantly over the past decade, from more than 120,000 in 2004 to 56,000 cars in the U.S. in 2014. China surpassed the United States as Volvo’s largest market, with 81,000 Volvos sold in 2014.

Since the company announced plans to build the Lowcountry campus and build the new S60 sedan solely at that plant, U.S. sales have been buoyed.

“We mistreated this market a little bit when the recession came,” Fjording said, noting that the company funneled resources into other markets during that time. “We are here now to show we are serious about this market again. ... It took us a really long time to come here. Now we’re here and we’re going to stay. We are very committed to this and to continuing this journey.”

Reach staff writer Liz Segrist at 843-849-3119 or @lizsegrist on Twitter.