Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 6, 1993 TAG: 9304060191
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: Los Angeles Times
DATELINE: DEARBORN, MICH. LENGTH: Medium
AMERICA CORRALS MERCEDES PLANT
Signaling the growing attractiveness of the United States as a manufacturing location, German luxury carmaker Mercedes-Benz said Monday it will build a $300 million plant in the United States to produce a new sports utility vehicle.A site for the factory has not been chosen, but Mercedes plans to start production of the $25,000-to-$30,000 vehicles by 1997. It is the first time Mercedes will produce passenger vehicles in the United States.
The decision by Mercedes comes as the European auto market - the second-largest after the United States - is particularly weak and German carmakers are facing severe problems. A weak U.S. dollar and the high cost of labor in Germany have made it difficult for the Germans to export cars to the United States.
For Mercedes, the decision is part of a broader strategy to increase efficiency and expand its product offerings worldwide. It follows an earlier decision by competitor BMW to build a $300 million factory near Spartanburg, S.C.
"The enormous potential of the United States as a market, as a production location and as a base for exports has been clearly demonstrated," Mercedes-Benz Chairman Werner Neifer said at a press conference.
The factory will produce 60,000 vehicles a year, with about two-thirds to be exported to Europe.
The plant will employ 1,500 workers and support another 5,000 supplier jobs. Company officials said it would be two to three months before a site is chosen.
Mercedes is mulling more than 30 proposals from localities throughout the United States, Hubbert said. Speculation has centered on the Carolinas because Mercedes' corporate parent, Daimler-Benz, has three truck plants in North Carolina. The Southeast is less unionized and has lower costs than other U.S. regions, and the Carolinas have been particularly successful at luring German companies.
"The Carolinas offer some big advantages," said Helmut Werner, deputy president of Mercedes. "But some of the other offers are very attractive."
He told reporters that Nebraska and Texas also are in the running. He declined to identify other states.
The new plant likely would be built from scratch, Mercedes officials said, but they did not rule out the possibility of acquiring a facility abandoned by a U.S. automaker.
As the Japanese have entered the luxury car market, Mercedes has seen its sales slide. Its worldwide sales dropped to 530,000 vehicles in 1992 from 580,000 in 1991. Worse, BMW outsold Mercedes for the first time ever.
Analysts said Mercedes' flagging sales left it little choice but to seek new, less-costly products.
The company hopes to energize sales with new products in proven markets. The sport-utility sector has been one of the hottest in the United States, with annual sales soaring from 240,000 vehicles in 1980 to 1.1 million in 1992. It also is growing rapidly in Europe.
Mercedes offered scant details of its four-wheel-drive sports utility vehicle, but said it would offer technological innovations that its competitors do not have.