Greenfield or brown, the money rolls on

When auto companies invest in new plants, the public takes notice. New factories mean new jobs and a boost in economic activity in individual towns and regions.

But turning raw ground into a new auto plant is just one piece of the economic force of automotive capital expenditure. Automotive manufacturers, both carmakers and parts suppliers, spend billions annually rebuilding older plants, converting old lines into new products, retooling factories and embracing new capabilities - in addition to constructing all-new factories.

The ongoing stream of investment often comes as a surprise to the general public.

In a single month this year - March - the United States saw 36 new projects announced, representing a combined investment of more than $1 billion and plans for 8,100 new jobs, according to the Center for Automotive Research's Book of Deals.

Of those 36 March projects, 20 will be expansions of existing facilities, and two are factory retooling projects. The other 14 are planned new facilities.


The numbers add up fast.

Last year's report from the American Automotive Policy Council, "The State of the U.S. Auto Industry," calculated that automakers alone have invested $50.3 billion in their U.S. assembly plants, powertrain factories, research labs and offices over the past five years.

Few of those projects were greenfield industrial projects, unlike the $1.6 billion project announced in January to build a Toyota-Mazda joint venture assembly plant in Huntsville, Ala. But second or third-phase plant expansions still have an impact, creating new jobs or reaffirming existing jobs.

Volkswagen said in March it will invest $340 million more in its Chattanooga assembly plant to put a new five-seat Atlas crossover into U.S. production. That plant opened seven years ago with an initial investment of $1 billion. Two years ago, VW committed another $900 million to expand the site to begin producing the Atlas.

This year's investment did not promise new jobs - it spoke instead of retaining jobs.

The added commitment also spurs supplier spending. Approximately 5,600 auto parts suppliers operate in the United States with 871,000 workers, according to the Motor & Equipment Manufacturers Association. Anytime an automaker invests in a product or a manufacturing plant, suppliers spend correspondingly to keep up with the customer.


The Canadian supplier giant Magna International said this year it will spend $8 million to expand a seating plant in Spartanburg, S.C., one of four sites it operates in the state where BMW is a key customer. BMW revealed last year that it will invest another $600 million in its 23-year-old Spartanburg assembly plant to upgrade its manufacturing infrastructure and add 1,000 more jobs.

Magna's project might be small in comparison. But the project will bring 130 new supplier jobs to Spartanburg. Job growth is a driving motivation for cities, states and nations around the world that funnel government incentives to the industry to foster it.