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Are we Experiencing a “BMW Effect” in the Aerospace Industry?

December 17, 2015
Upstate South Carolina, and the state as a whole, has earned an impressive reputation as one of the world’s leading automotive clusters. With more than 150 automotive-related companies calling the Upstate home, including BMW, Bosch, Magna, Michelin and ZF, the region has played a significant role in the state of South Carolina’s success in the automotive industry—a sector that has a $27.1 billon impact on the state. With the tremendous growth in the automotive sector, has the “BMW effect” crossed over into the aerospace industry as well?

The foundation of Upstate South Carolina’s position as a modern automotive leader was set in the 1970’s when Michelin tabbed Anderson to serve as the home for its first U.S. plant and eventually established its North American headquarters in Greenville.
While Michelin’s presence helped to put the Upstate on the map, BMW’s move to Upstate South Carolina is what most consider to be the catalyst to the region’s significant growth in the industry. Like Michelin, BMW saw the advantages that Upstate South Carolina had to offer, and in 1993 selected the region to establish its first full manufacturing facility outside of Germany. At the time, the company planned to hire 2,000 employees by the year 2000 and help bring at least nine automotive suppliers to the state.
Today, BMW’s plant in Greer employs more than 8,000 workers on-site and by the year 2016, the facility will become BMW’s largest operating plant world-wide. BMW’s presence—and tremendous success—in Upstate South Carolina created a ripple effect, often referred to as the “BMW Effect,” bringing in a significant number of related automotive suppliers to the state, as well as automotive manufacturers Mercedes-Benz and Volvo.
And now, the state is in a position where it may experience similar growth in the aerospace industry.
In 2009, Boeing chose South Carolina to establish a second, final assembly line for its 787 Dreamliner. More than five years later, the aerospace giant is continuing to grow in South Carolina and many experts feel that this could be the state’s “BMW Effect” for the aerospace cluster:
“You could argue that with Boeing South Carolina, we’re seeing Boeing replicate the investment and expansion we saw in Washington from the post-war era that finally brought us the 707 in the true jet age,” said Saj Ahmad, chief analyst for Strategic Aero Research in an interview with the Charleston Post & Courier. “Boeing South Carolina has a 50- to 75-year plan and the billions being invested there is just a fraction of the eventual showcase we’ll see decades from now.”

Today, South Carolina’s aerospace cluster accounts for over 103,000 jobs and a $17.4 billion economic impact on the state.

While the aerospace industry might be benefiting from a large, global brand establishing operations in the state similar to the automotive industry’s start, the growth of the aerospace sector has been far more rapid.
According to studies, private sector employment in the state’s aerospace industry grew 15.5 percent between 2010 and 2012. That’s impressive compared to South Carolina’s southeastern neighbors. During that same period, North Carolina saw just 10.7 percent growth, 2.5 percent in Alabama and Georgia fell 2.3 percent. Consider the perspective of Steve Townes, CEO/Founder of Greenville-based Ranger Aerospace, LLC and Chair of SCAerospace:
“From an economic perspective, comparing and contrasting aerospace to automotive is something we have looked at in S.C. In an economic impact study done earlier this year, it showed that since Boeing’s arrival in South Carolina, the aerospace cluster in this state has generated the same number of direct jobs per year as the automotive cluster did between 1990 and 2007 following the arrival of BMW in Spartanburg. In other words, the aerospace industry has had a significantly faster impact.
The aerospace industry is a global and national economic engine, and South Carolina’s future as an aerospace hub is already in front of us. The expansion of this sector promises to bring higher skilled jobs and increased wages as our existing OEM base expands, adds suppliers, and provides opportunities for growth to manufacturers and service companies already in the state. The aerospace industry offers real potential to scale-up employment opportunities for South Carolina’s workers. Employment multipliers for aerospace are higher than other industry sectors, so the total economic impact is greater and ripples strongly throughout our economy. Just look at the 400-plus small to medium sized aviation supply chain companies already growing in South Carolina to understand the multiplier effect—the aerospace sector here is growing like Carolina Kudzu.”

But like the automotive industry, what fuels the aerospace industry’s growth are the competitive advantages found only in the state of South Carolina, and specifically in the Upstate region. Attracted by the region’s strengths in materials research and manufacturing, engineering and workforce training, companies such as GE Aviation, Lockheed Martin, Michelin, Cytec and Champion Aerospace proudly call the Upstate home. Additionally, synergies with the existing automotive industry, drive train technologies, wind turbines and blades and other advanced manufacturing are beneficial to aerospace suppliers and subcontractors.

So as the state of South Carolina’s aerospace cluster continues to take off, look to Upstate South Carolina to pilot that success.

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TOPICS: Upstate Thoughts