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Upstate's Wish List: Industrial Recruiting Requires Focus

Monty Turner
4:05 read

-Originally seen in Greenville Business Magazine, July 2016-

Knowing where to focus limited economic development resources requires that we target our marketing on the economic sectors where we are most likely to have success. What companies should the Upstate be focused on recruiting? It’s often just as important to know what companies we should not be targeting.  To answer these seemingly easy, but actually complicated questions, let’s take a look at the past and present to see where synergies in the existing market occur.

It’s common knowledge that the Upstate was built on the textile industry. But as the textile industry evolved, many labor-intensive textile and apparel production facilities sought out locations with lower labor costs which generally meant relocating to Central America or Asia. What is not commonly known is that some more automated, capital-intensive textile operations such as non-woven materials and high-grade carpet production continue to thrive here in the Southeastern United States.

As the center of the textile industry began to move abroad, the diversification of the Upstate economy, begun with the opening of the first Michelin plant in South Carolina in 1975, continued with the recruitment of BMW in 1992 and a number of suppliers that ultimately followed. The tire and automotive industries capitalized on the transferable manufacturing skills developed in the textile mills and engrained in the workforce of the Upstate. Today, there are over 250 automotive related companies and suppliers in South Carolina that employ more than 58,000 people across the state. The Upstate’s strong position in automotive was further strengthened by Clemson University’s Center for Automotive Research in the early 2000s.

Today, there are over 250 automotive related companies and suppliers in South Carolina that employ more than 58,000 people across the state.

But just as the textile industry evolved, the automotive industry is undergoing transformation. Many car companies are now calling themselves “mobility” companies because they recognize that autonomous vehicles and changing customer needs and desires will make the old modes of owning and operating cars obsolete.

So, what should Upstate leaders be thinking about when it comes to the automotive industry? Our area is not likely to see another large OEM the size of BMW. Competition for labor typically drives these companies to maintain a reasonable distance from one another when locating a new facility. Suppliers will continue to come here as their business and logistics models with BMW and nearby Volvo, Mercedes Benz and others dictate. We must be ready to welcome them with good, shovel-ready sites and buildings, a streamlined permitting process and low fees and taxes. Recruiting efforts should be focused on targeting companies that align well with the strength of research and development such as those at CU ICAR that will be important in the new mobility era including vehicle to vehicle infrastructure and vehicular electronics.

Another game changer in the diversification of the Upstate was the decision of composites producer Toray to locate in Spartanburg County in 2014, announcing a capital investment of $1.4 billion and estimated 500 jobs. Toray supplies aviation and defense grade carbon fiber to aviation giant Boeing and others. Carbon fiber production, which is a combination of a chemical and a manufacturing process, is reminiscent of the old textile plants. There are spools of fiber feeding the looms, and looms threading fibers back and forth, back and forth. Finally, ovens cure the product. Ultimately, carbon fiber production can be seen as a high-end, value added textile mill.

Why is carbon fiber such a big deal for the Upstate? Besides the jobs and the tax base that the Toray investment brings, it puts South Carolina on the cutting edge of lightweight materials that are revolutionizing the transportation industry. The sturdiest carbon fibers are ten times stronger than steel and five times lighter. In the effort to gain higher fuel efficiency without sacrificing strength, lightweight composites and specifically carbon fiber now make up a much larger percentage of the structural and other components of airplanes produced by aviation titans Boeing and Airbus. Carbon fiber is also in the initial phases of making big moves into the automotive sector which is trying to meet federal fuel efficiency standards even while government and consumers require better safety records and more bells and whistles which inevitably add weight to the car. Well, it just so happens that one of those high-end automotive manufactures that is leading the charge is located right here in the Upstate. And one the world’s largest producers of carbon fiber is opening just down the road.

The major hurdle for carbon fiber use in automobiles is volume and cost. The cost of carbon fiber today is $10-12 per pound, compared to about $1 per pound of steel. Studies have shown that for carbon fiber vehicles to compete with steel and other lightweight materials such as aluminum, the cost needs to decrease to around $5 per pound. Carbon fiber manufacturers will need to continue making major shifts in production to serve the automotive sector including capturing economies of scale. Reaching the $5 per pound mark is plausible considering 10 years ago carbon fiber hovered around $35 per pound.   Coupled with the Boeing assembly of the 787 Dreamliner in North Charleston, these investments are bookends in the state’s growing aviation cluster from basic raw material to finished, world-class aircraft.

Some suppliers as well as other Boeing operations have moved to the state, but there are many opportunities to expand upon this investment. The carbon fiber that will be manufactured in Spartanburg, for example, will be made into different products such as fabrics, materials impregnated with resins, and final parts that will go into the 787 and other airplanes.

With a problem such as this, comes significant opportunity. The combined resources of CU ICAR, BMW, Toray, Boeing and a skilled manufacturing workforce, the Upstate and South Carolina have the assets necessary to weave it all together.

The combined resources of CU ICAR, BMW, Toray, Boeing and a skilled manufacturing workforce, the Upstate and South Carolina have the assets necessary to weave it all together.

In addition to the impact that Toray has in the aerospace industry in South Carolina, Lockheed Martin has a significant MRO operation at the former Donaldson Air Force Base and is currently competing to win the Department of Defense’s bid for the Advanced Pilot Training (APT) competition. Should Lockheed Martin and Greenville win this bid, it will establish the Upstate and South Carolina as a leader in the aerospace industry which would lead to more investment from suppliers, service providers and similar companies.

So, what companies should the Upstate be focused on recruiting? The Upstate Alliance, whose mission is to promote economic development in the eleven county Upstate region, lists Aerospace, Automotive and Advanced Materials as three of its five areas of focus. These are three areas in which the Upstate not only already has a competitive advantage, but are industries that are experiencing great transformation. Using light-weight materials such as carbon fiber in mass automotive production is in its infancy. Autonomous vehicles may now seem futuristic but are in fact on the verge or becoming a reality. Only time will tell which companies and which regions of the world will lead the charge. But what is clear, is the Upstate can play a major role in facilitating the growth and future of these dynamic industries.

Just as transformation drove the textile industry away from the Southeastern United States in the last half of the twentieth century, so can the dynamic changes in the sectors of advanced materials, aerospace, and "mobility" drive investment to it.


Category: In the News