In a move that’s surprising to some, Volvo recently announced that it’s establishing a new factory outside of Charleston. The Swedes are following the growing trend of foreign automakers setting up shop in the South, making it a growing manufacturing center in the U.S.
The new Volvo facility will cost about $500 million to build. When the factory is finally operational, it will roll out about 100,000 vehicles annually and employ about 4,000 people in the area. Ground is set to be broken in the fall, with the first wave of vehicles expected to roll off the assembly line in 2018.
Already, Volvo makes cars in Europe (of course) and China as well. Making the manufacturing jump to the United States should be a smart move. One of the most obvious reasons is that the U.S. is the second-largest market for Volvo, one where the brand has performed not very well in the past several years, to be honest. Assembling the different vehicles locally will help Volvo establish more of a presence in the country, enabling it to react faster to shifts in market demand and build up more support. It’s a strategy that’s worked out well for many other automakers.
On top of that, most consumers in the United States still aren’t into the idea of buying a car that was made in China, even though getting iPhones and other technological products from there isn’t such a big deal to them.
The new Volvo factory will build vehicles for the North American market, plus other areas of the world. Many manufacturers have been drawn to the South because of right-to-work laws that have diminished the power of labor unions.
One other big advantage can be had with making expensive products like cars in the United States. The dollar is a strong currency right now, so importing cars from many other countries is too expensive of a proposition. Volvo can fatten up its profit margins by assembling more vehicles right here.