S.C.’s Journey to Advanced Manufacturing
By Kevin Dietrich
Ask the unknowing about South Carolina manufacturing and you may hear tales of woe, of a sector staggered by decades of textile mill closings and disappearing apparel jobs. That view, though, is dated and overlooks the segment’s rebirth and, with it, the restyling of the state’s business profile.
The success of BMW’s assembly plant in Greer is well known, with the 11,000-employee facility turning out 1,500 sports utility vehicles daily, but there are numerous other advanced manufacturers at work in South Carolina, slowly changing the perception of a state subsisting on cheap, semi-skilled labor.
Over the past few decades South Carolina has gradually brought in more and more high-end manufacturing, and it now produces everything from luxury automobiles and wide-body jets to medical devices and gas turbines. It has become a manufacturing powerhouse, according to Wells Fargo economist Mark Vitner.
“The industrial base has broadened considerably to include more industries and more companies, while steadily moving up the value chain,” he said. “South Carolina is home to one of the most proficient ecosystems for manufacturing in the country. Moreover, the state has consistently improved supporting infrastructure, including technical training, ports and roadways that should help maintain its competitive edge.”
In the past decade, manufacturing, particularly advanced manufacturing, has been the overwhelming stimulus behind South Carolina’s employment growth, said Joseph Von Nessen, a research economist with the University of South Carolina’s Moore School of Business.
“Between 2010 and 2019, overall growth in South Carolina was 2.4 percent, while growth in advanced manufacturing was 8.0 percent,” Von Nessen said. “Manufacturing has really been the driver for the state’s growth in recent years.”
In 2019 there were an average of 256,000 manufacturing employees in South Carolina, or nearly 17 percent of the state’s workforce, according to the National Association of Manufacturers. The value of the manufactured goods exported by the state has risen from less than $10 billion in 2000 to more than $40 billion in 2019, according to association data.
That growth has brought rewards to the state and those involved in the manufacturing sector.
The average wage for a manufacturing job in South Carolina is $60,850, compared to $45,694 for all jobs in the state, Von Nessen said.
“There’s a reason there’s a 33 percent wage premium with manufacturing jobs, and it’s because these are jobs that require training and high skills,” he added.
The occupations in highest demand in manufacturing are those that require significant training, though not all require four-year degrees.
Among companies requiring skilled workers are:
- Boeing, which has 5,700 employees spread between two sites in the Charleston area. In addition to being the aerospace giant’s only production site for the 787 Dreamliner, Boeing operates a propulsion engineering and assembly facility in North Charleston where parts for Boeing aircraft engines are designed and assembled;
- BMW, whose Greer plant produces the most vehicles of any BMW factory worldwide;
- Michelin, which has more than 9,000 employees spread across 14 sites in South Carolina. Products range from high-performance passenger tires to giant mining tires;
- Volvo, which is producing mid-size sedans at its plant in Ridgeville and is expected to begin building sport utility vehicles next year. The facility, which opened in 2017, employs nearly 1,500 individuals;
- Mercedes-Benz, which assembles Sprinter and Metris vans at its plant in Ladson. The facility, which opened in 2018, employs more than 1,600 workers; and
- Many others, including Lockheed Martin, which produces F-16 Fighting Falcons at its Greenville site; Honda of South Carolina, which manufacturers all-terrain vehicles in Timmonsville; and Samsung, which opened a home appliance manufacturing site in Newberry in 2018.
All of the above have supply chains that have brought in hundreds more companies and thousands more jobs for the state.
“We are grateful for the strong partnerships across the state that have contributed to the development of an advanced and growing manufacturing community and we look forward to a long future here,” said Lane Ballard, vice president and general manager of the 787 program and Boeing South Carolina site leader.
Laying the Groundwork
While South Carolina’s manufacturing growth has taken off recently, particularly over the past 10 years, the foundation for today’s industrial success was set decades ago.
In the decades following Reconstruction, South Carolina counted on cheap, plentiful labor as a draw for manufacturing, pulling in textile companies from the north interested in cutting costs by relocating to the South and hiring individuals willing to work for low wages. Manufacturing remained far behind agriculture in terms of employment well into the 20th century.
A well-defined, state-coordinated economic development plan didn’t begin to emerge in South Carolina until after World War II. Those efforts focused on the Palmetto State’s pool of nonunionized, low-paid labor, its favorable tax and regulatory climate, and state-backed financial incentives, all of which remain in its economic development arsenal today.
A defining moment in South Carolina’s postwar development was the election of Ernest Hollings as governor in 1958.
“Hollings immediately threw himself headlong into the development cause,” according to Lacy K. Ford Jr. and R. Phillip Stone in the spring 2007 edition of the quarterly publication Southern Cultures. “Unlike his predecessors, however, Hollings focused not simply on ad hoc recruiting measures and frequent visits with industrial prospects, though he did plenty of both, but also on developing a coherent state policy to facilitate economic development.
“Hollings wanted to construct a development policy that focused not merely on the aggressive selling of his product, South Carolina, as a place for business to locate and invest in, but on the development of an improved product – the state – to sell,” Ford and Stone wrote in an article titled “Economic Development and Globalization in South Carolina.”
Hollings set about remaking South Carolina’s business climate. During the 1959 legislative session Hollings took on a number of issues, including tax reform and the need to reorganize the State Development Board, in an effort to fashion a more aggressive and systematic development strategy.
He proposed a series of tax reforms, including the implementation of income-tax withholding, an increase in the top income tax rate to 7 percent and imposition of a two-cent-per-pack tax on cigarettes to raise revenue and bolster the state’s credit rating, Ford and Stone stated.
Hollings also pushed for improved technical education in the state, which resulted in the creation of a joint legislative study committee to develop a system that would attract new and diversified industry to the state. The state’s first technical college opened in 1962.
Today South Carolina’s technical college system consists of 16 colleges located around the state. Its goals include furthering economic and workforce development in South Carolina. Affiliated with the technical college system are the readySC and Apprenticeship Carolina programs, which provide training solutions to companies bringing new jobs to the state.
The state’s technical schools are a viable alternative to increasingly expensive four-year colleges and universities and can provide a path to skilled labor positions that are in demand and pay well.
The state’s increasingly technically proficient workforce led to one of South Carolina’s first big manufacturing wins, French tire manufacturer Michelin, in the mid-1970s.
“One of the key attributes that attracted Michelin to South Carolina more than 45 years ago was the presence of a skilled and talented workforce,” said Will Whitley, director of state, local government affairs and community relations, Michelin North America Inc. “Having a highly skilled workforce continues to be essential to Michelin’s success …”
The arrival of advanced-manufacturing companies such as Michelin came as South Carolina was enjoying a manufacturing boom. Between the beginning of World War II and the beginning of the Reagan administration, nonagricultural employment in South Carolina increased from 461,000 to nearly 1.1 million, with nearly 200,000 new jobs being created in the manufacturing sector.
Many of these new manufacturing jobs were outside the original cotton-textiles field in related industries such as chemicals and synthetic fibers. Still, in 1974 more than one in four of all industrial workers in South Carolina worked in traditional textile mills.
The 1980s, 1990s and 2000s saw many of those textile jobs either move overseas or be rendered obsolete by technology. Between 1993 and 2004 textile and apparel employment in the state fell from 120,000 to 49,000, with the state’s apparel industry declining from 18,000 to 4,500 between 1990 and 2004.
Slow but Steady Growth
The manufacturing shift embodied in Michelin’s arrival helped pick up the slack as textile and apparel jobs disappeared.
“I would say the shift in South Carolina’s manufacturing base began in the mid-1970s, when business and political leaders came to realize the textile industry had taken the state’s economy about as far it could,” according to Vitner, the Wells Fargo economist. “Employment in South Carolina’s textile and apparel industry peaked around the middle of that decade, as firms increasingly automated their operations, and the industry began to lose market share to lower-priced imported goods.”
Michelin’s experience in South Carolina, Vitner said, would later help attract other tire manufacturers to the region, including:
- Bridgestone, which invested more than $1.2 billion to build two sizeable facilities near Aiken;
- Continental Tire opened a 1 million-square-foot plant near Sumter in 2015 and relocated its North American headquarters to Fort Mill;
- Singapore-based Giti Tire, which also has its North American headquarters in Fort Mill, invested $560 million to build a 1.7 million-square-foot manufacturing plant in Chester County that opened in 2017; and
- Sweden’s Trelleborg opened a 460,000-square-foot agricultural equipment tire manufacturing plant in Spartanburg in 2016.
Vitner said South Carolina now ranks as the No. 1 state in the U.S. for tire manufacturing and tire exports.
But the announcement that put South Carolina on the economic development map was the arrival of BMW in the 1990s.
The German automaker announced in 1992 that it would build a 1,150-acre manufacturing facility in Spartanburg County, and the plant opened two years later. BMW has expanded the plant over the years and produced millions of automobiles, exporting them to more than 140 countries.
“BMW’s decision to build its first North American assembly plant in Greer really kicked economic development into high gear,” Vitner said. “The selection itself garnered worldwide attention and was a marquee endorsement of South Carolina’s economy.”
Vitner said that while the state financial incentives provided to BMW were often criticized, South Carolina got a bargain.
“The facility has been expanded numerous times and is BMW’s largest assembly plant. The operation has drawn numerous suppliers to the region. But most important of all, BMW’s decision demonstrated that South Carolina workers could produce a world class product, which opened many more doors for the state’s industrial recruitment efforts,” he said.
BMW’s success paved the way for landing Boeing’s Dreamliner plant, the assembly lines of Volvo and Mercedes Benz, and Lockheed’s F-16 plant, he said.
As BMW’s supply chain grew, other companies saw the benefit of moving to South Carolina, which enabled them to share suppliers and have access to a larger skilled workforce, according to Von Nessen, the Moore School of Business research economist.
BMW and other high-end manufacturers operating in the state took advantage of South Carolina’s infrastructure, specifically the Port of Charleston, the rail lines and the Interstate Highway System.
“Access to the Charleston port along with the interstate highways and the railways has been very important,” Von Nessen said. “South Carolina has strong infrastructure and is well placed for distribution nationally and internationally. Manufacturers who relocate here can ship to just about anywhere.”
South Carolina’s largest manufacturing sector is motor vehicles and parts, followed by chemicals, machinery, fabricated metal products and electrical equipment and appliances, according to the National Association of Manufacturers.
The future of the state’s manufacturing industry looks good, given South Carolina’s location in the heart of one of the fastest-growing regions of the country, according to Vitner.
“The emergence of the state’s automotive and aerospace industries is fueling growth in advanced materials. Research and development are becoming a larger part of the state’s economy, further leveraging the state’s investment in higher education,” he said. “South Carolina’s port facilities and inland ports also add to the state’s competitive advantage, helping make the state a key export platform for many manufacturers.
“The emphasis on international trade plays well into the long list of global manufacturers operating in the state and makes South Carolina one of the top locations for new companies looking to build new factories in North America,” Vitner added.