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 Work will begin this year on the factory in Berkeley County, with
production due to start in 2018 and quickly reach 100,000 vehicles a
year.
The investment is part of a drive by China's Geely <GEELY.UL>, which
bought Volvo Cars from Ford <F.N> in 2010, to rebuild a brand that
ran into trouble in the financial crisis.
"This is a clear sign of commitment to the revival of our U.S.
business," Volvo Cars Chief Executive Hakan Samuelsson said in
embargoed comments made before the announcement.
But the move coincides with toughening competition in the North
American luxury car market.
Rivals have been ramping up capacity, with many choosing Mexico for
its lower wages, non-unionized workforce and access to the United
States and other export markets under a raft of free-trade deals.
In total, North American production capacity is set to rise more
than 10 percent over five years to 19.6 million light vehicles in
2020, according to WardsAuto forecasts -- with most of the gain
coming from new plant investments.
Germany's Audi <VOWG_p.DE>, BMW <BMWG.DE> and Mercedes-Benz <DAIGn.DE>
are among luxury carmakers that have recently announced new
production capacity in the region.
Under Geely's ownership, Volvo has stepped up model investments and
added a pair of Chinese factories to its two older European plants.
In the United States, where its sales fell 8 percent to 56,000
vehicles last year, the production investment is key to a
medium-term pledge to return to 100,000 annual deliveries.
Volvo also faces tougher indigenous competition from the resurgent
Lincoln and Cadillac brands, as parents Ford and General Motors <GM.N>
invest a combined $14.5 billion to revamp their line-ups.
Samuelsson acknowledged the tougher U.S. market conditions, while
maintaining they would not thwart Volvo's plans.
"We have a premium brand that is very different," he said.
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Mexico was also on Volvo's initial "long list", he said, eventually
whittled down to South Carolina and Georgia.
Transport links including harbor access were among the decisive
considerations that ultimately weighed in South Carolina's favor,
according to the carmaker.
"Logistics was one of the most important factors" for a plant that
will import large numbers of parts and export some vehicles,
Samuelsson said, adding union representation was "not a relevant
factor".
According to an environmental permit application filed for the
Berkeley County site, the new factory will initially create 2,000
jobs.
Volvo declined to comment on longer-term production goals but said
it ultimately planned to employ as many as 4,000 workers --
suggesting the initial 100,000 vehicle output could approximately
double if sales ambitions are realized.
(This story has been refiled to correct second paragraph to remove
reference to Ridgeville)
(Editing by Mark Potter)
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