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BMW to increase US car production | |
(about 7 hours later) | |
The luxury carmaker BMW has announced it will invest $750m (£373m) as part of plans to increase production in the US. | |
The investment at the Spartanburg plant, South Carolina, is aimed at increasing capacity from 160,000 to 240,000 units by 2012. | |
The move is set to create 500 new jobs and comes after the firm recently said it would cut 7.5% of its German workforce in 2008. | |
The firm is facing both rising costs in Europe as well as slowing US demand. | |
Since last September, the dollar has tumbled against the euro, hurting firms that pay their costs in euros but receive payment in dollars. | Since last September, the dollar has tumbled against the euro, hurting firms that pay their costs in euros but receive payment in dollars. |
The euro touched an all-time high of $1.546 last week after punching through the $1.50 level at the end of February. | The euro touched an all-time high of $1.546 last week after punching through the $1.50 level at the end of February. |
BMW is not the only European firm affected by the swings in exchange rates. | BMW is not the only European firm affected by the swings in exchange rates. |
In December last year, the head of the European aerospace and defence company EADS, Louis Gallois, gave a strong indication that if the situation persisted, some of the manufacturing of the Airbus passenger jet would have to be moved outside Europe. | |
Changing gear | Changing gear |
"The boost in production capacity will positively impact the logistics, suppliers, and distribution networks that support the manufacturing process," said Josef Kerscher, president of BMW Manufacturing. | |
The firm said the plant would produce the BMW X3, X5 and X6 models for international markets. | |
Analysts say that by building more vehicles in its South Carolina plants, Munich-based BMW can pay less wages in euros and will also save money by sourcing locally for parts used by its US factories. | Analysts say that by building more vehicles in its South Carolina plants, Munich-based BMW can pay less wages in euros and will also save money by sourcing locally for parts used by its US factories. |
This shift in production has resulted in planned cuts of 8,100 positions in Germany. | This shift in production has resulted in planned cuts of 8,100 positions in Germany. |
"This is completely driven by the plunge in the dollar," said Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity. | |
"Conceivably, as the volume increases and the manufacturing system at the Spartanburg, South Carolina, plant improves, costs may come down enough to cut prices of their cars." | |
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