BMW To Build More Cars In U.S.

On one side of the Atlantic Ocean, BMW says it will cut 7.5 percent of its work force over two years. On this side of the water, the company says it plans to increase production by more than 50 percent by 2012.

"This is completely driven by the plunge in the dollar," said Greg Gardner with Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity. "It is untenable to produce at a much higher cost in Germany."

The euro climbed to record heights Friday, reaching $1.5463 before falling back to $1.5335 in late trading after the Federal Reserve announced it would provide more cash to banks that need it. That means European goods cost more for Americans to buy.

By building the cars in the U.S., BMW can save money on the lower dollar and on wages since its South Carolina workers make less than German workers, Gardner said.

The declining dollar also means BMW and other foreign automakers likely will start buying locally for more of the parts used by their U.S. plants, he said.

That shift in production has led to the cuts at home for the Munich-based luxury car maker.

BMW's head of personnel, Ernst Baumann, said last month that 5,600 jobs would be cut by the end of the year. That's on top of 2,500 positions already eliminated. That adds up to 7.5 percent of the company's total work force of almost 108,000, including both permanent and temporary employees.

In the U.S., BMW Manufacturing Co. in Greer expects to increase production to 240,000 cars by 2012, company spokesman Bobby Hitt said last month. That's up from 155,000 last year.

"Conceivably, as the volume increases and the manufacturing system at the Spartanburg (S.C.) plant improves, costs may come down enough to cut prices of their cars," Gardner said.

The company has not said what impact the increase in production will have on employment in Greer, which is about 4,500 permanent employees and up to 900 temporary employees.

The company has scheduled an announcement for Monday at the BMW Zentrum in Greer, S.C., to discuss an addition to the plant, which makes the X5 and Z4 models. A spokeswoman at the Greer plant did not return phone messages seeking comment.

While luxury car sales are expected to be flat or a little down from last year, "BMW will still show growth," said Jack Nerad, executive market analyst for Irvine, Calif.-based Kelley Blue Book.

The company said BMW Group, which includes the Mini and Rolls-Royce brands, sold 198,628 cars worldwide in January and February, up from 191,357 for the same period last year. Sales of the BMW brand for February rose to 89,983 up from 85,310 for the month last year.

Nerad and the company say launches of new 1-Series models and the X6 also are expected to lift sales in 2008.