1.

What economic development challenges did South Carolina

face in the early 1990s and how are they similar or different from
today?
- Economy was a big concern: economy was going down with high unemployment
rate.
- Loss of the major textiles and apparel industry. Few new major investments.
- Jobs in manufacturing industry started to decline.
- Today South Carolina also faces the challenge and pressure to create more and
better jobs, as well as seeking the sustainable way to develop economy.

2. Why did BMW choose South Carolina for a major investment in

North America?
- In the early 1990s, BMW decided to invest in the United States and establish its
first full manufacturing operation outside of Germany.
- A manufacturing factory presence in North America would give the company
flexibility in its global operations and a more diversified production platform.
- The United States was BMWs largest passenger car market in the early 1990s, so
the investment made sense. One of the core principles of the companys philosophy
is that production follows the market.
- South Carolina offers a highly advantageous location for automotive production.
Among the states pluses for manufacturing include the availability of skilled labor.
Workforce development has been central to upgrading the states competiveness,
led by the states customized training programs.
- The flexibility of the labor force is another key asset.
- South Carolina also boasts good transport and logistics infrastructure, notably the
port of Charleston, rail links, and an extensive interstate highway system.
- Cheaper labor and land, didnt need too much capital.
- Strong leadership and motivation: A strong,
sustained effort by the late Governor Carroll Campbell, the
South Carolina Ports Authority, South Carolina
Department of Commerce (formerly the State Development Board), and local leader
s helped woo the investment to the Upstate region.

3. What natural and competitive advantages does the state offer

a major multinational company like BMW?
- Workforce development has been central to upgrading the states competiveness,
led by the states customized training programs.
- The flexibility of the labor force is another key asset.
- South Carolina is near most of US market, also boasts good transport and logistics
infrastructure, notably the port of Charleston, rail links, and an extensive interstate
highway system, site off I-85 between Atlanta and Charlotte.
- Cheaper labor and land, so MNCs didnt need too much capital to establish their
companies.
- Strong, supportive leadership and active promotion.
- Good place for flexible productioninnovation in process.

4. What was the nature of the incentives offered to BMW in South

Carolina? Were they a net benefit or loss to the state and local
community? Was this a wise use of state and local resources?
1. The incentives offered to BMW in South Carolina take many forms. For instance,
free land, better infrastructure, job credits, labor training and adjustments to
statutory property taxes.
2. The FILOT offered to BMW provides a significant property tax savings.
3. Without the incentive, the local property tax was not competitive with other
states, because of a high property assessment ratio placed on manufacturers
4. There are distinct advantages for capital-intensive
- The ability to reduce the statutory manufacturing assessment ratio.
- The ability to set the millage rate at a fixed level without change over time.
5. The tax incentive allows for predictability in tax payments over a long time
horizon.
In general, it was a wise use of resources, it successfully attracted BMW and in turn
established the Auto cluster in SC. The job created and impact on economic has
proved that it was a right strategy in long term.

5. What competitive advantages does BMW enterprise bring to

South Carolina?
1. Technology:
- BMW endeavored to create an adaptable plant with minimum barriers and
maximum interaction across functions.
- The Spartanburg County facility is a model of adaptability and rapid response to
the continually changing demand for custom-built automobiles.
2. Production advantages:
- BMWs South Carolina facility employs cutting-edge production techniques to
assemble its vehicles. One of the first innovative production technologies in the
plant was the V-Star measurement system.
- BMW has designed and virtually assembled its products using advanced 3-D
modeling programs.
3. Supplier and Cluster Development:
- Highly developed supplier linkages create synergies by locating in close proximity.
- The supply linkages underscore the advantages of BMWs investment in South
Carolina. Not only is supplier improvement beneficial for BMW, but it also helps local
suppliers attract contracts from other automotive manufacturers.

The cluster bolsters local competitiveness through knowledge transfer and shared
management and production expertise. The major advantage of a strong cluster is
that it raises the regional productivity, which is widely accepted by economist as the
central driver of long-run competiveness.
4. Workforce Development:
- The transfer of expertise and skills through the global BMW networkneeded for
agile and adaptable productionbenefits the local labor force.
- To upgrade its labor force skills, BMW has ongoing training initiatives. And the
ongoing partnership with technical colleges demonstrates BMWs commitment to
improving the quality of South Carolinas work force.
5. Environmental Sustainability:
- BMW serves as a model for the private sector in South Carolina and across the
country, showing how the goals of profitability and shareholder value can be
compatible with a companywide dedication to raising environmental standards.

- BMW has created the worlds first green automotive paint shopwhich is powered
by recycled methane gas from the landfill.
- BMW is staying ahead of the curve on environmental issues has not only
contributed to the preservation of South Carolinas environment but it has also
helped BMW meet its customers demands.
6. Research and Development:
- The business activities of BMW augment the South Carolina automotive industrys
innovative capacity.
7. Brand:
- BMW contributes to the states tourism industry, helps promote the states quality
of life to consumers and tourists, and also contributes to the community through the
annual BMW Charity ProAm.

6. What was the economic impact of BMW on the state after 20+
years?
1. BMWs annual economic output amounts to $16.6 billion. This figure reflects the
dollar value representing all output produced in South Carolina that can be
attributed (either directly or indirectly) to BMW.
2. The production of BMW automobiles supports 30,777 jobs in South Carolina.
3. The BMW plant and associated businesses generate $1.8 billion in labor income
that would not exist otherwise in South Carolina.
4. The total impact of BMW on South Carolinas value-added (similar to state gross
domestic product) amounts to $2.8 billion.
5. BMW generates a large multiplier effect, spreading the benefits across the states
regions and industries.
- This total economic impact is associated with a statewide employment multiplier
of 4.0. Thus, for every direct job created at the BMW plant, an additional three jobs
are created elsewhere in South Carolina through the economic multiplier effect.
- BMWs employment multiplier is one of the highest in the state and is twice as
high as the average multiplier effect of all industries. The combination of BMWs
high total volume of activity and its high employment multiplier effect make it a
uniquely strong contributor to the states economy.
6. BMW has demonstrated a long-term commitment to the state through its
environmental leadership, community involvement programs, and dedication to
South Carolinas economic competitiveness.

- BMW is committed to workforce development.

- BMW has become a statewide leader in environmental stewardship by operating
as a sustainable enterprise and serving as an example for others to follow.
- BMW contributes to local economic development through advanced research and
development activities, which helps increase the rate of technological innovation in
the automotive and motor sports industry as well as to help promote a more highly
educated, technically proficient workforce.
7. BMWs South Carolina investment supports 7,654 direct jobs, and 30,777 total
jobs in South Carolina.
8. The total job impact yields a multiplier of 4.0. A typical employment multiplier for
South Carolina industries and services is closer to 2; the multiplier effects support
jobs in virtually every sector of the states economy.
9. Large effect on the Port of Charleston and the inland port.
10. BMW contributes to the states tourism industry; also helps promote the states
quality of life to consumers and tourists.
11. BMW spread competitive practices, along with technical and managerial
competencies, to local economies. In turn, they serve as conduits for upgrading
productivity and quality standards throughout the local economy.
12. Builds an auto cluster, raises the regional productivity, which is widely accepted
by economist as the central driver of long-run competiveness.

7. In what sense has BMW helped to advance environmental

sustainability in South Carolina?
- BMW serves as a model for the private sector in South Carolina and across the
country, showing how the goals of profitability and shareholder value can be
compatible with a companywide dedication to raising environmental standards.
- The Upstate BMW campus sources almost twothirds of its energy needs from
methane gas derived from a nearby landfill. This project has substantially reduced
greenhouse gas emissions in South Carolina.
- BMW has created the worlds first green automotive paint shopwhich is powered
by recycled methane gas from the landfill.
- The first automotive plant in the United States to use water based instead of
toxic, high solvent paints.
- BMW works with the South Carolina Research Authority to convert methane gas
from landfills into hydrogen.

- Staying ahead of the curve on environmental issues has not only contributed to
the preservation of South Carolinas environment but it has also helped BMW meet
its customers demands.

8. To what extent has BMW spawned an automotive cluster in

South Carolina?
- South Carolinas automotive cluster took off after BMW production began in 1994.
The major advantage of a strong cluster is that it raises the regional productivity,
which is widely accepted by economist as the central driver of long-run
competiveness.
- The BMW supplier network is the core of the regional automotive cluster and forms
channels for continual improvements in processes and organizational skills. In
general, highly developed supplier linkages create synergies by locating in close
proximity.
- BMWs South Carolina facility interfaces with suppliers through procurement and
logistics. Both groups work closely with suppliers to ensure that their competencies
are aligned with the needs of the South Carolina plant.
- BMW plays an active role in improving the supplier capabilities. BMWs
development group is dedicated to resolving any problems a supplier faces.
- Two systems set worldwide standards for all BMW manufacturing facilities:
production control and production logistics.
- The supply linkages underscore the advantages of BMWs investment in South
Carolina. Not only is supplier improvement beneficial for BMW, but it also helps local
suppliers attract contracts from other automotive manufacturers.
- BMW contributes to local economic development through advanced research and
development activities, and these collaborative efforts help increase the rate of
technological innovation in the automotive and motor sports industry as well as to
help promote a more highly educated, technically proficient workforce.