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Suppliers cluster near their customers
By Dan McCue
Staff Writer
When Cummins Inc. established itself in North Charleston, buying a pre-existing plant in 1972, the company’s goal was simply to create an engine plant.
“That’s what we did at the time,” recalled Tim Solso, the company’s chairman and CEO. “We created two engine platforms intended to serve the North American heavy truck market.”
But when new emission standards went into effect in the mid-1980s—standards the Cummins engines couldn’t meet—the company faced a fateful decision.
“We either had to close the plant, and lose a lot of valuable workers, or do something that was a significant departure from the past,” he said.
The result, on Leeds Avenue near Interstate 26, is a facility that Charleston Regional Development Alliance President and CEO David Ginn alternatively described as something of an “auto mall” and an “automotive business cluster unto itself.”
Today the facility turns out a wide array of engine-related products for both the marine and terrestrial vehicle markets, its separate divisions working side by side in one large facility.
But the company’s run of success since changing its form and function has resulted in Cummins maxing out its current home. As a result, the company is currently building a facility in Ladson to house its Holset division.
From an economic development perspective, focusing on business clusters is an idea with a lot of merit, Solso said.
“You start by determining what differentiates your community and that gives you a base to build on,” he said.
The Robert Bosch Corp. built its first South Carolina production facility on 120 acres on Dorchester Road in North Charleston in 1973. It started production with 80 associates who built diesel inline pumps for Mack trucks and the agriculture industry.
Thirty-three years later, the 900,000-square-foot facility’s 2,500 workers produce anti-lock brake and fuel injections systems for the traditional big three automakers—Ford, General Motors and DaimlerChrysler—and also supplies Asian transplants in the Southeast: Honda, Nissan and Toyota.
Bosch also happens to be Cummins’ largest suppler, with about $200 million worth of products being sent by the North Charleston facility to Cummins’ operations worldwide annually.
“Most of our plants are strategically located,” Solso said. “The issue of what you buy and where you buy it, as well as what you make and where you make it are critical.”
Solso believes how other automotive companies address those issue will be a big determinate of Charleston future as an industry powerhouse.
“In a dynamic environment, executives are asking themselves, where is the customer? How productive is the work force? What is the transportation infrastructure like?” he said. “But ultimately, the issue essentially comes down to cost. People in our industry will put a facility anywhere costs are low, given a level of quality production.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
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