US: Daimler to expand Alabama production

The Wall Street Journal - Daimler AG announced plans to build an all-new Mercedes-Benz model in the U.S., boosting investment in its Tuscaloosa, Ala., plant by another $350 million and expanding its manufacturing footprint in North America.

The German luxury car maker declined to disclose or describe the new model, which it will begin producing in Tuscaloosa in 2015, but said it would be an "entirely new" product aimed at boosting Mercedes sales, particularly in the U.S.

"This new model from the Tuscaloosa plant is an important element of our growth strategy," said Daimler Chief Executive Dieter Zetsche in a statement. The addition of the new Mercedes model would bring 400 jobs and increase Daimler's total planned investment in its Tuscaloosa plant between 2010 and 2014 to nearly $2.4 billion. The auto maker already makes its M-, GL- and R-Class luxury sports utility vehicles at the Alabama plant. It also has plans to begin producing C-Class cars for the North American market in Alabama as of 2014.

Analysts said the new model likely would be targeted heavily toward the U.S. market but some would be slated for export, as more than half of the plant's Mercedes SUVs are now. A possible candidate, analysts say, is a coupe-like crossover that would allow Mercedes to compete directly with the likes of BMW AG's X6, which the German luxury rival launched in 2008.

Such a car could share a platform with Mercedes's M-Class SUV, "so it would make sense to build it in the same plant," one analyst said. Last year, the Tuscaloosa site, first opened in 1997, produced more than 125,000 vehicles.

To bolster sales, particularly among younger buyers, Mercedes is already rolling out a revamped and expanded line of small cars over the next few years, including new A- and B-class models, followed by a small coupe, a compact sport-utility vehicle and another, still undisclosed, compact model. It plans to sell at least one of them, possibly its retooled B-Class, in the U.S. by 2013. Last month, it added a C-Class coupe to its U.S. sales lineup, also in its bid to lure younger buyers.

Mr. Zetsche added that the new model to be built in Tuscaloosa would be one of 10 additional models that the company plans to introduce over the next four years "across all segments."

Daimler, which is also the world's largest truck maker, said it also planned to boost production of its Western Star heavy-duty trucks at its Portland, Ore., plant, creating 350 new jobs by the end of 2012. The new hires will increase the number of production workers at the plant by almost 50%. They are in addition to Daimler's recently announced plans to bolster the workforce at its U.S. and Mexico truck plants by 2,700 workers—the result, it says, of a robust rise in sales.

Daimler has been ramping up production capacity in North America in recent years to take advantage of rising demand and lower production costs, as well as to reduce its exposure to currency fluctuations. BMW, likewise, has expanded its plant in Spartanburg, S.C., in recent years and is considering adding further production capacity.

Daimler announced in late 2009 that it would shift some production of its C-Class cars from Germany to Tuscaloosa by 2014, building those designated for North America there. The company said at the time that the shift could translate into savings of roughly €2,000 ($3,017) a vehicle.