Volvo To Make History With New Factory In South Carolina [Video]

In an effort to boost its American sales, Volvo will make history by building a new factory in South Carolina — making it the first Chinese-owned auto maker to build a factory in the United States. Volvo will invest $500 million into a new factory that will be based in Berkeley County, South Carolina, outside of Charleston.

Volvo’s sales, although up nine percent world-wide according to the New York Times, dropped eight percent in the United States last year, prompting the Swedish car maker to consider building a factory in South Carolina. The factory should employ approximately 2,000 people to start out, with plans to increase the staff to 4,000, in an area hit hard economically and with an unemployment rate higher than the national average.

“It illustrates how critical the North American region continues to be, even with China’s ascension to the largest new-car market on the planet” Karl Brauer, Senior Analyst at Kelley Blue Book told the New York Times.

North Carolina was a second choice, though that state was edged out by South Carolina Governor Nikki Haley’s promises of $200 million in state and local incentives, including $120 million in state-issued economic-development bonds, $30 million in grants, and $54 million from a state-owned utility company called Santee Cooper, according to the News and Observer.

South Carolina was also chosen because of its proximity to ports and facilities, according to Lex Kerssemakers, President and Chief Executive of Volvo Cars of North America. “One of the main criteria for us was infrastructure. South Carolina has people who know the industry, can work in the factory, and who understand our business,” said Kerssemakers.

Construction will begin this fall, and the first vehicles will roll off the assembly line in 2018.

Volvo, which has plans to release a self-driving car in the next two years, joins luxury car manufacturers Mercedes Benz and BMW in South Carolina. In March, Mercedes Benz announced it will pour $500 million into a plant in North Charleston, South Carolina, to produce its next generation of Sprinter cargo vans, according to the New York Times. BMW builds sports utility vehicles in its plant in Spartanburg, South Carolina.

Auto manufacturers have begun expressing interest in building plants in Southern areas like South Carolina not just because of the state incentives, but also because the factories are close to engineering hubs. “There is a war for manufacturing talent and the South sells well,” Paul Harty, president of the Boston-based recruitment firm Seven Step RPO, told the Wall Street Journal. Seven Step RPO filled more than 30,000 positions in the U.S., with the majority of those jobs in the auto industry.

[Image Credit: Scott Olson/Getty Images]