New CEO Knudt Flor sees BMW Manufacturing as a ‘local company’ with a worldwide reach

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BMW Manufacturing Co.’s new President and CEO Knudt Flor knows about timing.

During his first employment stint at the Spartanburg County plant between 1996 and 2000, it was not the highest producing facility in the Germany-based luxury automaker’s global production network. And it was not the nation’s largest exporter in terms of value. Not by a long shot.

The plant’s physical footprint, workforce, and supplier base were about half the size they are today. Roadsters still the rolled off the plant’s assembly lines. E53 was a codename for the new sport utility vehicle that Flor and his colleagues were quietly working on putting into production to compete with the Mercedes-Benz ML320.

That model turned out to be the X5 Sport Activity Vehicle. Its success provided a launching pad for a whole fleet of X models, including the X3, X4, and X6, to be built in Spartanburg.

Combined with the Germany-made X1, SAV sales accounted for about one-third of BMW’s global business in 2016.

BMW Manufacturing Co. set an all-time production record of 411,171 vehicles this past year. It is nearing completion of a $1 billion expansion announced in 2014 to expand its annual production capacity to 450,000 vehicles and support production of the new full-size X7, which is set to start in 2018.

“I’m very happy to be back. For me, it’s a homecoming,” Flor said. “I left in the year 2000. You can see there has been tremendous development. We are the biggest plant in the BMW network, not by size, but by volume. But volume matters in the car industry. Nobody would have expected this in the year 2000.”

 

Flexibility and Expansion

Flor, 57, a native of Föhr, an island off the coast of northern Germany, assumed his new leadership role at the plant on Dec. 1, succeeding Manfred Erlacher.

The road that led him back to the Upstate included stops in South Africa, China, and Europe.

A true believer in BMW’s principle that “production follows the market,” Flor said he is excited about the Spartanburg plant’s future.

“The good part about this is we will continue to grow,” he said. “We are very flexible based on customer demand. We can produce more. We can produce less. This is one of the main unique points of BMW — that we are producing cars according to the customer demand. We will further expand. We’re getting a new model, the X7. It’s a very exciting car, a new level of luxury. We are proud to build it here. It will be a new segment for BMW. Will we expand? Yes, definitely. We need more capacity in the plant. We will have more jobs in the plant. It all depends on the demand of the customer.”

On Friday, Feb. 3, Flor took time to sit down with a group of Upstate reporters to answer questions and share insights about where the plant could be headed during the next few years.

Flor said the plant could produce an autonomous, or self-driving, car by the year 2020. He said the technology is available and is being tested at BMW’s research center in Munich, Germany.

The cost of all of the systems, such as GPS, radar, and sensing equipment, that enable a driverless car to operate are expensive. There also needs to be infrastructure that helps autonomous cars navigate roadways, he said.

“Will we have a driverless car? Yes.” Flor said. “Not in the near future. Probably by 2020, maybe later.”

Flor fielded several questions about President Donald J. Trump’s recent comments about imposing a 35 percent border tax on vehicles imported to the U.S. by BMW and other German automakers, including Daimler and Volkswagen.

“They are not reality as of today,” he said. “We deal with facts, not speculation.”

Flor reiterated that the Spartanburg plant is the largest BMW plant in the world in terms of volume. He said the plant exported about 70 percent, about 280,000 vehicles, to 140 countries around the world in 2016.

“We export much more than we import,” Flor said. “We’re a local company. More than 70,000 people in this country rely on BMW for their jobs.”

“Exporting creates jobs; it creates wealth,” he said. “I’m not in fear [of tariffs]. I’m not even excited about it. Let’s see what happens.”

In June, BMW broke ground on its new plant in San Luis Potosí, Mexico.

 

Emphasis on Production

Flor said the plant will continue to ramp up the number of hybrid gasoline-electric vehicles it produces. He said about 50 are assembled every day in Spartanburg.

There could also be a fully electric vehicle model introduced in the near future, he said.

“Production itself is pretty easy,” Flor said. “It isn’t rocket science to build a car. The next challenge is precision.”

He appeared at ease about the Spartanburg plant’s ability to improve BMW’s standing in the domestic luxury market, especially with the introduction of the new X7.

In 2016, BMW’s U.S. sales did not increase for the first time since 2013. The numbers revealed that the automaker’s sales growth in the crossover market was smaller compared with the same growth among its competitors.

BMW officials attributed the trend to its lack of a full-size crossover, as well as increased global demand for its existing crop of X models that created allocation problems for the U.S. market.

“What keeps you up at night? Competition,” Flor said. “We highly appreciate this competition. … It drives perfection, especially in the premium market. It forces more energy into turning that back. It will fuel products and processes. I have a good feeling about the future.”

Flor said manufacturing processes in the plant have become more advanced throughout the years and will continue to become more technical in the years ahead, but he doesn’t believe robots will replace humans any time soon.

He said the company would need employees with digital knowledge and experience who have the ability to program and problem solve.

“Working in the car manufacturing industry is much different than it was years ago,” Flor said. “The work is not as physically demanding, not as dirty. Plants are much cleaner. You could eat off the floor of our plant.”

With the General Assembly mulling solutions to fix crumbling roads and bridges across the state, Flor said those decisions could have an impact on BMW’s operations.

“General infrastructure is extremely important,” Flor said. “We have a lot of parts coming in. Our just-in-sequence model means that [parts] must come in exactly in the sequence that we need them. Infrastructure is vital.”

“I’m not aware of any losses that we’ve suffered so far,” Flor added. “A continuous flow of material is a dream for someone in charge of a plant.”

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