Years go, we at Business Week discovered that Detroit was moving south, resulting in a cover story called Detroit South. Boy, did we get that one right. Major auto plants have sprung up in Kentucky, Tennessee, North Carolina, Alabama and Mississippi, just off the top of my head.
One of the companies that has made a major investment is Daimler, the owner of Mercedes Benz. The chief financial officer of Daimler, Bobo Uebber, was in New York recently and I was pleased to be invited to hear what he had to say.
Daimler has 21,000 employees in the United States and 23 percent of its shareholders are American, up from 15 percent six years ago. This company has sunk deep roots into the U.S.
The company is now making three SUV models at Tuscaloosa, Alabama, a plant that opened in 1997. Uebber says the company is exporting SUVs from Alabama all over the world. It is the only place in the world where they make these SUVs. The company also is moving some production of its C Class entry-level sedan to Alabama in 2014 and a fourth SUV model will be located there in 2015. This model has not yet been disclosed.
This is great news for manufacturing in the United States and is part of what appears to be a gathering wave of manufacturing investments headed toward the United States, partly because of our abundant and cheap natural gas but also because our labor costs have moderated. In fact. A.T. Kearney, the consulting firm, says its survey of global executives reveals that the United States is now the No. 1 choice, edging out China.
That was one interesting thing Uebber had to say. Here are some others:
–Its experiment with Car2Go is expanding. Mercedes now has 3,000 two-seat Smart Cars in the United States in nine different cities. The concept is like Zip cars except that it’s more flexible. You can use a smartphone to locate the nearest Car2Go, hop in and drive it to wherever you want to you. When you’re finished, you lock the car in a public parking area for the next Car2Go member to locate and use. All this is aimed at improving convenience, reducing congestion and reducing pollution. Globally, Daimler has deployed 9,000 vehicles to Car2Go programs. One of the biggest programs in the United States is in San Diego where Mercedes has deployed 350 electric Smart cars. They’re mighty cute.
–It does not look like diesel is winning major U.S. acceptance. The Germans believe diesel is a great alternative to gasoline now that a higher grade of diesel is available and is cleaner. Diesel accounts for 50 percent of the European market. But Americans can’t seem to overcome their impression that diesel is dirty and noisy. So Mercedes is betting on other technologies more heavily. It owns 4.3 percent of Tesla and is using Tesla’s power system for its new B class. This is a very interesting bet. Tesla uses lithium ion batteries so Mercedes will soon have a relatively affordable lithium ion battery car. It’s also working on plug-in hybrids.
–Mercedes is clearly trying to attract new, younger buyers by coming into the market with an A and B class, with the Smart cars and also with a new CLA, which will start at $29,900. See below. The question is whether the company can maintain its exclusive image for its high-end S Class cars at the same time in is attracting younger buyers into cheaper vehicles. Uebber says the company has got the formula figured out. But I and other auto industry watchers will be waiting to see how that plays out.
