Perhaps just in time for tariffs that are expected to cause automakers a host of headaches, Swedish car maker Volvo has opened its first U.S. plant. The new 2.3-million square-foot facility, which broke ground in 2015, will build the 2019 Volvo S60 and employ approximately 1,500 by the end of this year. In addition, the company plans to begin manufacturing the new XC90 SUV at the plant in 2021.
The factory is sited on 1,600 acres of land and includes an office for up to 300 research and development staff in addition to the line workers. Ultimately, the $1.1 billion plant will employ a total of 4,000 people and make 130,000 vehicles a year. Volvo has committed to using 100 percent hybrid or all-electric engines in all its new car and SUV models by 2019.
The expected auto industry tariffs – not only on vehicles, but also on steel and aluminum — may be doubly troubling for Volvo, a European company with a Chinese parent corporation, Geely Holding Company.
“We will export as many cars from this factory as we will import in the U.S.; Volvo will in three years‘ time have a neutral balance of trade. That is a good example of how trade with cars should work in an open and free economy,” Volvo Cars CEO Hakan Samuelsson said.
According to U.S. News & World Report, the plant opening event was attended by Sweden’s ambassador, Karin Olofswdotter, as well as former South Carolina Governor and current U.N. Ambassador Nikki Haley and current Governor Henry McMaster. The ambassador implored Haley and McMaster to remember that tariffs harm the auto industry.
“A plant like this does not need it,” Ambassador Olofswdotter said. “We are all a part of global value chains. That’s what creates the jobs we have today. That’s how the economy works.”
If the tariffs do go ahead, the plant could help take the edge off the harm they would do Volvo’s business.
“With all the nervousness we have now in the business, we are very glad that we are here with a local factory,” CEO Hakan Samuelsson told Bloomberg Television. “Without that, we would be even more worried about the future.”
With the opening of the plant, Volvo joins a club that includes Mercedes-Benz, BMW, Volkswagen, Honda, Subaru, Toyota, Nissan, Hyundai, and Kia, all foreign car makers that operate manufacturing plants in the United States. With a base model price tag of $34,100, the Volvo S60 will be Volvo’s premium compact sedan and has been positioned to compete with the Audi A4/S4, BMW 3 Series, Cadillac ATS, Infiniti Q50, Lexus IS, and Mercedes-Benz C-Class.
