BMW Plans $1B Manufacturing Facility in Mexico
Bayerische Motoren Werke AG (BMW) intends to invest roughly $1 billion in a new factory in Mexico, which may enable it to catch up with its German competitors already manufacturing luxury cars in the Latin American country.
According to a source familiar with the matter, BMW’s second plant in North America will produce 150,000 cars a year once production begins by 2019. The factory will be located 250 miles northwest of Mexico City in San Luis Potosi, the source said, declining to be identified before the official announcement was made.
The maker of BMW, Mini and Rolls Royce vehicles is the last of the global top three luxury car manufacturers to outline plans to build vehicles in Mexico, where labor costs are about 20 percent of U.S. levels. Recently, Daimler AG (DAI)’s Mercedes-Benz announced plans to produce autos jointly with Nissan Motor Co.’s upscale Infiniti unit starting in 2017 in Aguascalientes. Additionally, Volkswagen AG (VOW)’s Audi will begin assembling sport utility vehicles in San Jose Chiapa in 2016.
BMW shares rose in Frankfurt trading due to the news. In 2014, the stock has gained 10 percent, valuing the company at 60.5 billion euros ($82.8 billion).
“BMW can’t afford to compete with Mercedes and Audi at a labor-cost disadvantage,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, recently told Bloomberg. Still, the German manufacturers are “taking significant risks in a country that has little history of manufacturing luxury cars.”
Audi, BMW and Mercedes are all expanding as they strive for record global deliveries and compete with one another to be the sales lead in the segment. Both Audi and Mercedes have vowed to overtake BMW by the end of the decade.
During the first half of the year, sales of BMW brand cars in the United States jumped 12 percent to 157,382 vehicles. Deliveries were lifted by demand for the 4-Series coupe and X3 SUV, which is manufactured in South Carolina. Mercedes sales rose 6.8 percent to 151,624 cars in the period, while Audi delivered 74,277 cars, 14 percent more than a year ago.
Ludwig Willisch, chief executive officer of BMW’s North America unit, released a statement saying that U.S. customer demand during the first half of the year was “stronger than many have thought, and we fully expect confidence and demand to stay strong through the end of the year.”
Production in North America helps European automakers reduce the impacts of dollar-euro fluctuations. In March, BMW projected that currency shifts may weigh on car-division revenue this year. Factories in Mexico give manufacturers tariff-free access to the United States—the world’s biggest economy—while enabling them to keep costs down.
The new plant follows BMW’s decision to invest $1 billion to raise production capacity 50 percent at its facility in Spartanburg, South Carolina. By 2016, the plant will have the ability to make as many as 450,000 vehicles, including the new full-sized X7 SUV.
Fluent.ai x BSH: Voice Automating the Assembly Line
Fluent.ai has deployed its voice recognition solutions in one of BSH’s German factories. BSH leads the market in producing connected appliances—its brands include Bosch, Siemens, Gaggenau, NEFF, and Thermador, and with this new partnership, the company intends to cut transition time in its assembly lines.
According to BSH, voice automation will yield 75-100% efficiency gains—but it’s the collaboration between the two companies that stands out. ‘After considering 11 companies for this partnership, we chose Fluent.ai because of their key competitive differentiators’, explained Ion Hauer, Venture Partner at BSH Startup Kitchen.
What Sets Fluent.ai Apart?
After seven years of research, the company developed a wide range of artificial intelligence (AI) software products to help original equipment manufacturers (OEM) expand their services. Three key aspects stood out to BSH, which operates across the world and in unique factory environments.
- Robust noise controls. The system can operate even in loud conditions.
- Low latency. The AI understands commands quickly and accurately.
- Multilingual support. BSH can expand the automation to any of its 50+ country operations.
How Voice Automation Works
Instead of pressing buttons, BSH factory workers will now be able to speak into a headset fitted with Fluent.ai’s voice recognition technology. After uttering a WakeWord, workers can use a command to start assembly line movement. As the technology is hands-free, workers benefit from less physical strain, which will both reduce employee fatigue and boost line production.
‘Implementing Fluent’s technology has already improved efficiencies within our factory, with initial implementation of the solution cutting down the transition time from four seconds to one and a half”, said Markus Maier, Project Lead at the BSH factory. ‘In the long run, the production time savings will be invaluable’.
Future Global Adoption
In the coming years, BSH and Fluent.ai will continue to push for artificial intelligence on factory lines, pursuing efficiency, ergonomics, and a healthy work environment. ‘We started with Fluent.ai on one factory assembly line, moved to three, and [are now] considering rolling the technology out worldwide’, said Maier.
Said Probal Lala, Fluent.ai’s CEO: ‘We are thrilled to be working with BSH, a company at the forefront of innovation. Seeing your solution out in the real world is incredibly rewarding, and we look forward to continuing and growing our collaboration’.