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Volvo Fuels Global Ambitions with US Factory

April 26, 2017
Volvo breaks out of its Scandinavian roots with plants in Asia and its first in the U.S., a $500 million factory in South Carolina that begins building S60 sedans in late 2018.

RIDGEVILLE, SC – Volvo is on track to complete its sprawling $500 million factory here in time to begin production of S60 sedans for the global market by fall 2018, but the Chinese-owned Swedish automaker still is building its local supplier base to support the facility.

Volvo officials initially projected about 30% of its parts would be sourced from suppliers in North America, many within range of the plant located about 35 miles (56 km) northwest of the port city of Charleston, SC.

But since the September 2015 groundbreaking, that number is up to 40%, including the addition of Gestamp Automocion, a Spanish-owned metal-stamping specialist that supplies BMW’s plant in nearby Spartanburg, SC, says Lex Kerssemakers, senior vice president-Americas and president and CEO-Volvo Cars of North America.

Volvo’s investment helps enlarge Gestamp’s capacity to provide body panels for the ’19 model year S60. Those parts originally were expected to be produced in Sweden and shipped to South Carolina for assembly, but by sourcing the stampings locally Volvo eliminates transatlantic shipping costs as well as losses associated with in-transit damage and subsequent repairs, Kerssemakers notes.

In addition to Gestamp, Volvo has inked supplier contracts with Autoneum for carpets and insulation, Lear for seats, Plastic Omnium for bumpers and Continental for tires.

An area set aside for a supplier park north of the 1,500-acre (607 ha) plant site remains vacant for now, but Volvo expects that to change as it grows its supplier base. For now, the plant will draw on some 400 automotive-related companies already supporting BMW and a Mercedes-Benz Sprinter van factory, also near Charleston.

Volvo relies on some 4,000 suppliers globally, including 1,200 direct material suppliers, and many of those with links to the automaker in Europe are likely candidates to support the South Carolina plant.

​Kerssemakers says the effort to find local suppliers and the decision to locate the plant in the U.S. in the first place are part of the deliberate transformation strategy Volvo CEO and President Hakan Samuelsson put into motion in 2011.

Reinventing Volvo

“We are definitely on the journey,” Kerssemakers tells journalists visiting South Carolina to tour the partially completed plant. “We have totally reinvented Volvo. We’re growing and we’ve invested in new products. In four-and-a-half years we’ve totally refreshed our product portfolio.”

The global business plan followed the purchase of Volvo Cars from Ford by Zhejiang Geely in 2010, and just a few short years removed from the global economic downturn and the possibility that Volvo would disappear altogether from the U.S. market, much like its Swedish counterpart Saab.

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