By April Wortham, Automotive News
Detroit, Michigan -- Michael Geaghan, general manager of Stankiewicz International Corp., sees plenty of growth in the US auto industry, as long as you're looking south.
In April, Stankiewicz GmbH, an Adelheidsdorf, Germany-based maker of sound-dampening components, said it will invest $16.4 million in a second US factory, in Vance, Alabama. When it opens in 2010, that plant will manufacture acoustical components, wheel wells and flooring systems for Mercedes-Benz US International Inc. and General Motors Corp.
Stankiewicz makes complete sound insulation systems for reducing external and internal noise on cars and commercial vehicles. Many of its products are based on polyurethane, and it produces rubber-to-metal springs, bushes and suspension mounts for automotive vibration damping.
The company has been supplying components to BMW from its Spartanburg factory since 1994. But Geaghan said a combination of factors - including a weakening dollar, rising transportation costs and the prospect of landing business with other auto makers in the American Southeast-justifies a second factory.
"There is a growing regional presence. You've got Mercedes, Honda, Hyundai," said Geaghan, ticking off a list of auto makers with assembly plants within 100 miles of the planned Alabama factory. "All of those are certainly opportunities."
During the past two years, there were more than 160 instances of automotive suppliers with headquarters outside the US either expanding factories in the Southeast or adding to their North American manufacturing base with new plants in the region.
What's driving the immigration? Many foreign-based suppliers are simply following the lead of their import-brand customers. Those auto makers are building or expanding assembly plants in the Southeast in answer to rising US demand for their products.
Take BMW. When the German auto maker announced in 1992 that it would build its first full manufacturing facility outside of Germany in South Carolina, it pledged to bring at least nine suppliers to the state. Today that number stands at 52, mostly foreign-owned.
Now, as BMW prepares for a $750 million expansion of its Spartanburg factory, the local economic development authority said it expects the state's BMW supplier base to double by the time the plant reaches full capacity of 240,000 units annually in 2012.
Add in recent news that Volkswagen AG.'s short list of sites for a proposed US factory includes two Southern states-Alabama and Tennessee-and suppliers such as Germany's ZF Lemforder GmbH are salivating at the chance for more business. ZF Lemforder is the car chassis technology division of ZF Friedrichshafen.
"We see a lot of opportunities," said Peter Holdmann, ZF Lemforder executive vice president for chassis systems. "VW is the second-biggest ZF customer beyond BMW worldwide, so in all other areas of the world we have huge business with VW."
Currency pressures also are a factor. The US dollar's weaker value against other major world currencies, particularly the euro, over the past several years makes it cheaper for foreign companies to build and buy goods here.
"We have all seen what has happened to the dollar," said Lars Holmqvist, CEO of the European supplier association CLEPA. "It has been a surprise to all of us, and the length of the downturn has made a lot of people think. The people who have stable business in the US will think about production in the US"
But why the Southeast? Whether they're following their customers, following other suppliers or stepping out on their own, Holmqvist said the reason is the same: It isn't Michigan.
"Nobody in their right mind goes to Michigan because of the problems everybody can see there with the union," he said.