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BMW will build new supply base in Mexico

Karla Salinas | 01.08.2016

The factory will begin production in 2019, making BMW’s best-selling car in the United States, the 3-series sedan.

To reach productivity benchmarks at its Mexico factory, BMW AG will embrace a new and innovative supply chain and logistics plan.

The German luxury maker won’t simply transfer its supply base from its other North American factory, which opened 22 years ago in Spartanburg, S.C. And it won’t demand that suppliers serving the South Carolina plant set up shop in Mexico, says Oliver Zipse, BMW board member for production.

Instead, it will create a new North American supply base.

“We will see all the latest state of the art here,” Zipse promised.

Those innovations will include:

• Assembly of parts modules for sequential delivery by BMW employees, operating apart from the vehicle production line.

• A GPS-based logistics web “geo-fence” that will track components coming into the plant and alert BMW about delays or problems.

• A nearby supplier park that can ship products in sequence as they are needed.

The factory will begin production in 2019, making BMW’s best-selling car in the United States, the 3-series sedan. It will be capable of building any of the automaker’s rear-wheel-drive vehicles that use BMW’s new flexible Cluster Architecture on one line. At capacity, the plant will be able to produce 150,000 vehicles annually and has been designed for easy expansion, Zipse says. It will include body and paint shops and an assembly line, but not metal stamping. The press shop will be outsourced.

The Mexico factory also has been designed so components come in at one end of the plant — a logistics advantage over the Spartanburg layout. The South Carolina plant layout has evolved over the last 22 years as the plant expanded. It now has what the company calls “fingers” of activity protruding along three corridors for 80 percent just-in-time deliveries to the assembly line.

In Mexico, BMW has the luxury of making parts delivery more streamlined from the beginning.

“You will have a substantial amount of direct assembly, where trucks end up at the delivery line,” Zipse said.

The venture also will make BMW a bit chummier with General Motors. The 300-acre San Luis Potosi site is adjacent to an established industrial park where many suppliers make components to serve a nearby GM plant, in operation since 2009.

Spartanburg does not have an adjoining supplier park, or even one in the near vicinity. And when that plant started from scratch in 1994 making the 3-series sedan, it also did not have the luxury of taking advantage of a neighbor’s established local supply chain. Compared with Mexico in 2016, Spartanburg of 1994 was a remote spot on the North American automotive supply chain map.

BMW began the search for a second production site in 2011, when the German automaker foresaw the global car market expanding quickly. BMW has ridden the wave of that market growth since launching North American manufacturing. Spartanburg started with the capacity to build about 70,000 cars a year. It is now the company’s largest auto plant, with expectations to produce 450,000 crossovers this year.

By comparison, with an initial capacity of 150,000 vehicles a year, San Luis Potosi is beginning at more than twice the scale that Spartanburg had.