Is JLR paving the way for a US plant?

Is JaguarLandRover (JLR) mulling an ambitious plan to build a 200,000 cars-a-year assembly plant in the US? According to the London, UK-based Sunday Times it is.

The news comes as the company officially opens a new 130,000 vehicles-a-year plant in China and later this month is set to open its much-heralded i54 engine manufacturing facility in Wolverhampton, UK.

Tata Motors-owned JLR is understood to be investigating a number of sites in the US, most notably South Carolina where, in Spartanburg, BMW already has a 300,000 cars-a-year plant building premium X3, X4, X5 and X6 models.

BMW’s Spartanburg plant is a good benchmark for JLR. The plant employs around 8,000 and, in 2013, it turned out 297,326 vehicles or 37 cars per employee. Last month, September, Spartanburg built 9,404 X3s, 4,699 X4s, 12,283 X5s and 1,978 X6s.

All told, the German-owned plant has 140 North American suppliers of which 40 are based in South Carolina. These, or similar, would be key to JLR.

Selling directly into the US would allow JLR to avoid import tariffs and smooth the impact of monthly fluctuating currency rates, although at the end of the financial year currency differences would have to be taken into account.

Like the new engine plant in Wolverhampton, which it set to have two phases, the US plant could be arranged in a similar manner with engines being supplied from Wolverhampton. In the first phase the car assembly plant could employ upwards of 3,000 people.

Eventually, however, the Wolverhampton will have to introduce the second phase if the company continues its current upward trajectory towards one million vehicles by the end of the decade.

In 2013, JLR sold 55,000 cars into the US, so a plant in the first phase edging up to the size of the plant in China of 130,000 would accommodate sales growth for the next five years.

In nearby Mexico, the automotive sector accounts for four per cent of Gross Domestic Product (GDP) and 20 per cent of manufacturing with forecasters predicting an output of 3.7 million vehicles by 2015, Fiat, Ford, General Motors, Mazda, Nissan, Toyota and Volkswagen have plants. This could be another potential location for a JLR plant.

Meanwhile, having already signed a deal for a plant in Brazil as well as exploring three locations in the UK for a new logistics hub, there will be plenty to keep senior executives busy for next five years at least.

There is no sign yet of JLR taking its foot off the accelerator, which is good news for premium component suppliers, and vendors of shop-floor automated body-in-white (BIW) equipment as well as facilities for press shops, and end-of-line vehicle test. The US plant is almost certain to need a press-shop to provide the assembly plant with both steel and aluminium pressings.