By the time you read this, Volvo’s first U.S. plant will be up and running in the South Carolina Lowcountry.
It’s a significant step for the Gothenburg Sweden-based brand, which has been a subsidiary of Chinese multinational automotive manufacturing company Geely Holding Group since 2010. The $500 million plant, sited on 1,600 acres in Berkeley County is expected to eventually employ somewhere near 4,000 people producing 150,000 cars a year.
Vice President of Manufacturing Jeff Moore talked about the reasons for the South Carolina investment, and how Volvo Cars is positioned in the current economic climate. He’s joined, particularly for a discussion of why workforce development is so important to the company, by Volvo Corporate Communications Manager Stephanie Mangini.
Q: What specifically made Volvo want to open a facility in the US?
JM: I think it’s a commitment to the market…you know, the dealers I know have been clamoring for it for a long time, but it demonstrates Volvo’s commitment to this market. They’ve got a presence in Asia; they’ve got a presence in Europe; and now in North America.
Q: And why South Carolina?
JM: So, like most folks, infrastructure is kind of a big driver of site selection. And we have the convenience of the interstate… I-26 is a direct connection to I-95, which is a good – logistically good infrastructure from highways. The other driver for us being a global company is access to the port at Charleston; so that was also a key factor in the selection. So there’s a basic priority placed on infrastructure; beyond that it’s really based on the people in South Carolina. So from the state government, to local government, to the people here in the community, and the employees that we’re able to attract,…I think Volvo’s just had a great experience in South Carolina.
Q: What are the specific advantages of the locale in terms of hiring and personnel?
JM: We’re in Ridgeville, outside of Charleston, South Carolina, we’re able to draw from a pool of about… a population of about 850,000 people here, which is…you wouldn’t really think that if you’d ever been here. But you know, that’s part of that…the benefit to being as close to the interstate as we are, if you look in a radius of an hour out, it’s 850,000 people here. So it’s a large pool of folks and we’re able to attract some really good people and enthusiastic folks. It’s been a good experience.
Q: Volvo’s US plant is in early days now [the plant was scheduled to open within a month of the interview]. What challenges are you facing right now?
JM: I wouldn’t say…from my experience that the challenges that we’re facing are particularly unique, it’s simply getting a large plant up and running, bringing equipment in and getting it operational, and getting folks…We’ve got almost a thousand people now so bringing those people in and introducing them to Volvo culture, teaching them how to build cars. But we’re ramping up.
Q: How will the workforce expand over time?
JM: By the end of the month it will basically be a thousand. As we add volume and content through next year and beyond that, we’ll go… eventually over three thousand. We’ll be pushing close to four thousand.
Q: So what’s the goal in terms of the number of cars produced this year?
JM: Yeah, this year we’re ramping up, so the capacity of the plant, you know – we’re going to launch with the S60 this year is for basically domestic, focused on domestic sales. Next year we start exporting. And beyond that we add the XC90 production. And once we ramp up on XC90, we should be pushing our 150,000 vehicle capacity.
Q: When do you hit capacity?
SM: Beyond 2021. So it’s over the next five years.
Q: How is Volvo positioned to deal with the trade climate in view of the ongoing movement around tariffs?
JM: Yeah, a little bit difficult to anticipate where that’s heading, but… we’re a global company, we favor globally free trade, right? But specific to this plant, you know, I kind of mentioned the Port of Charleston. We’re Volvo’s first U.S. plant, but we’re not intending to simply produce for the U.S. market. Next year we’re adding exports, and this plant from the beginning was planned to be at least fifty percent export, so how are we positioned to be able to deal with the lack of exports? Well, we’re not. It would be a significant impact to this plant if we are unable…you know, if there’s tariffs or retaliatory tariffs in place that limit our exports, then it’s going to limit our output and how much we can expand here.
Q: So obviously with the uncertainty, Volvo must have plans to address whatever eventualities are coming. Can you talk about any of that?
JM: Yeah, again from a Charleston standpoint, the reason why we have a thousand employees now and not four thousand is because we’re going to add as we go. So, you know, we’re planning to export next year and if we can’t export then we won’t hire those people. I prefer to focus on the upward flexibility, though, than the downward. (Laughs)
Q: Can you talk about how the U.S. plant is positioned to sort of drive innovation, respond to innovation, etc.?
JM: Yeah, so from a product standpoint, certainly Volvo is pushing the envelope and continuing to, I think, lead the industry from a safety standpoint. I think with the product revamp, it’s safety with performance would be the way I’d say from our product portfolio. So from a manufacturing standpoint, it’s our responsibility to be able to bring those products to market. I think it’s the ambition of Volvo to ensure that no one is seriously injured in a car by 2020. I think it speaks to the commitment to safety that’s really driving the company. And all those vehicle technologies we’re capable of and will be putting in our car – the S60s that we produce here – there’s, as you know, a lottery list of those for Volvo. Environmentally, the same way so we’re launching this year with conventional power train and we’ll add hybrid power trains to the S60 next year. So we’re positioned to meet those commitments from an environmental standpoint, as well.
Q: How does this U.S. plant fit in to the ongoing evolution of what you do at Volvo?
JM: I think that’s really one of the driving factors of being here in the local market – you want to be able to capture the innovations and the market needs locally. So between the plant here, the sales and marketing folks up in New Jersey; we have technical operations out in California as well that are very focused on the innovation side. Another benefit of having a plant here….We’ll continue though as the operations in California are expanding, we’re expanding and we’ll be able to contribute more from the manufacturing side with that innovation.
Q: How has Volvo changed under Chinese ownership?
JM: What I think is changed is the investment in Volvo from Geely. That investment has allowed a total redo of the product portfolio, right? And I think that’s what’s driven any kind of a change within Volvo – to be able to have access to that capital and make those kinds of changes and …the trickle-down effect of the pace of change and innovation has increased.
Q: In the immediate future with ramp up coming before this story comes out, what are you looking forward to in the next couple of months there at your plant in the U.S.?
JM: Well, I think our team members, you know, we’ve been running production trials and training…. Improvement spirit is all the way down to the shop floor. They’re making improvements to their processes and they can’t wait to get started. It’s just like everyone is really itching to hit the go button and start from job one and get into mass production, so that’s what everyone is really focused on and looking forward to here.
Q: How does the workforce development climate suit Volvo’s needs?
JM: What I’ve been pleasantly surprised since I’ve been here is with workforce development here in South Carolina. We’ve worked with the state of South Carolina, and with local technical schools and the local high schools to implement this Lean Manufacturing Certification Program. And that’s been very effective for us to get folks prepared before they even start at Volvo. I don’t know that that’s unique to us, so much, as just because we are a start-up and hiring so many people at once, it’s clearly highlighted how important that is in our position and I think that continues to be the thing that we need to work on as an industry.
Q: Right. And South Carolina has some unique programs for workforce development.
SM: You know, we knew that coming here we would have a workforce that may not have the manufacturing experience, but certainly wanted the job opportunities. You know, when we spoke to the community as we were setting up the construction, one of their biggest concerns were are you going to hire people here, or are you going to bring people in from the outside? And so we knew we had to make a commitment to hiring locally, but we also knew that in terms of what we needed for talent, we needed people with manufacturing experience, at least one year.
Q: How does Volvo work with the state?
SM: We worked with the Commerce Department and state and local officials to say we need to come up with a program that is compressed, that somebody who doesn’t have the manufacturing experience, but has a high school diploma and wants to get involved in manufacturing as a career, can take a 62-hour compressed curriculum through our local technical school. And once you receive that certificate, that satisfies one year of manufacturing experience for us. Now this program has expanded so it’s not just Volvo. Mercedes is accepting this; BMW is accepting this; our key suppliers in the upstate and here are also accepting this certificate as one year…in lieu of one year of experience. So this program has truly expanded and it started as a pilot here with Volvo.
Q: How important is it to get to young potential workers early?
JM: Stephanie…talked about the kind of post-high school approach, but we’re now pushing that into the high schools which I think is even more powerful from a long-term standpoint.
People have an image of manufacturing and they have a lot of parental pressure to go to college and all this thinking that they’ve got to do that, you know, so it’s great to get into the high school in front of the parents and let them know what manufacturing is really like these days, high technology and all.