At its third quarter analyst briefing held last week, Norfolk Southern’s executive vice president and chief marketing officer Don Seale said the North American rail provider expected to add to its automotive business in 2011 thanks to new plant activity at BMW’s Spartanburg facility in South Carolina, and Volkswagen’s plant in Chattanooga, Tennessee.
“These two plants combined will represent 230,000 new units of production and over 3,600 new jobs in their respective markets,” said Seale. “Volkswagen's outbound rail shipments are slated to begin late in the second quarter of next year. The plant will build a new mid sized sedan and have the capacity to build 150,000 vehicles annually.
“BMW's plant expansion is now complete and will increase capacity from 150,000 vehicles to 200,000 units starting in early 2011 with over 50% of production being exported out of the port of Charleston,” he added.
BMW has invested $750m to bring the X3 to the Spartanburg assembly line alongside the current X5 and X6 SUVs and held a ceremony in October to mark the addition.
Norfolk Southern is hoping to turn around results in its automotive segment which was the only one in the third quarter results to post a decline (of 1%), primarily because of Ford’s vehicle network redesign, said Seale. “Without this, year-over-year adjustment which reduced volume in the quarter by 8,300 loads versus last year, automotive volume would have increased 10%.”
Ford renegotiated its contract with Norfolk Southern last year after about 12 years. The new contract secured higher rates, but accounts for a smaller Ford production network in the US, including the elimination of four mixing yards across the country that were no longer necessary, as the carmaker now consolidates at load or origin points.
In the first quarter of 2010 the company posted results that showed a 14% increase in automotive volume due in part to new business in the northeast of the US. Read more here.
