BMW says it will cut 7.5 percent of its work force in Germany over two years while increasing production in the US by more than 50 percent by 2012.
"This is completely driven by the plunge in the dollar," said Greg Gardner with Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity. "It is untenable to produce at a much higher cost in Germany."
The euro climbed to record heights on Friday, reaching US$1.5463 before falling back to US$1.5335 in late trading after the Federal Reserve announced it would provide more cash to banks that need it. That means European goods cost more for Americans to buy.
By building the cars in the US, BMW can save money on the lower dollar and on wages since its South Carolina workers make less than German workers, Gardner said.
The declining dollar also means BMW and other foreign automakers will likely start buying locally for more of the parts used by their US plants, he said.
That shift in production has led to the cuts at home for the Munich-based luxury car maker.
BMW's head of personnel, Ernst Baumann, said last month that 5,600 jobs would be cut by the end of the year. That's on top of 2,500 positions already eliminated. That adds up to 7.5 percent of the company's total work force of almost 108,000, including both permanent and temporary employees.
In the US, BMW Manufacturing Co in Greer, South Carolina expects to increase production to 240,000 cars by 2012, company spokesman Bobby Hitt said last month. That's up from 155,000 last year.
"Conceivably, as the volume increases and the manufacturing system at the Spartanburg, South Carolina plant improves, costs may come down enough to cut prices of their cars," Gardner said.
The company has not said what impact the increase in production will have on employment in Greer, which has about 4,500 permanent employees and up to 900 temporary employees.
The company had scheduled an announcement for yesterday at the BMW Zentrum in Greer to discuss an addition to the plant, which makes the X5 and Z4 models.
A spokeswoman at the Greer plant did not return telephone messages seeking comment.
While luxury car sales are expected to be flat or a little down from last year, "BMW will still show growth," said Jack Nerad, executive market analyst for Irvine, California-based Kelley Blue Book.
The company said BMW Group, which includes the Mini and Rolls-Royce brands, sold 198,628 cars worldwide in January and last month, up from 191,357 for the same period last year. Sales of the BMW brand for last month rose to 89,983 up from 85,310 for the month last year.
Nerad and the company say launches of new 1-Series models and the X6 also are expected to lift sales this year.
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