Where Benzes are Built – Part V: MBUSI Vance
The history of the automobile factories of Mercedes-Benz
On a sunny morning in Alabama, you could be driving serenely down the freeway, seeing nothing but trees, or the occasional McDonald’s, on each side of the road when suddenly – smart, white and undeniably massive and industrial – a major factory just barely comes into view over the tree line. The road signs – “Mercedes Drive” is a compelling clue – explain the apparent apparition, for this is where Mercedes-Benz established its first-ever automobile manufacturing plant outside Germany, which is now a major player in the company’s global production network.
Sweet home, Alabama
Twenty-five years ago, in 1993, this site at Vance, Alabama, between Birmingham and Tuscaloosa, was totally undeveloped. It was then that Mercedes-Benz decided to locate its brand-new SUV plant there, originally only to build the newly developed ML series of sport-utility vehicles. With a great deal of green space around it, the new site occupied 1,000 acres, which some cynics insisted would never be filled. Now, during the current expansion that includes new electric-vehicle assembly, battery production to power them and warehousing needed to look after the burgeoning export and “completely knocked down” (CKD) business shipping disassembled cars to other countries for reassembly, the company has acquired another 280 acres. Will that be all that is ever needed? Don’t bank on it.
But that was then, this is now, and there may be more to come. At first, it was hoped that 70,000 MLs – some for the domestic U.S. market, and a growing proportion for export (many of those cars going to Europe, where they had been conceived) – would be built in a full year. Now, having survived, then blossomed, after the serious financial crisis of the 2008-2011 period, a fascinating variety of machines – ranging from all the current C-Class sedans and wagons intended for sale in North America to the massive but silkily seductive GLS – now flow out of the gates.
How many? Up to 300,000 vehicles each year – 6,000 in a good working week – which are built courtesy of a local workforce of 7,000 (3,800 “team members” and more than 3,000 contractors), supported by more than 20,000 workers in supplier concerns throughout North America, as well as with engines and transmissions coming in from Mercedes-Benz’s plants in Germany. Vance is now the company’s lead plant – the home, effectively – for SUV manufacture, while C-Class assembly is primarily for the United States and Canada. One impressive measure of the site’s size is that it stretches more than a mile from end to end; another is that more than 2.5 million cars have already been built at Vance in the first 25 years; and a third – financially impressive by any standards – is that $5.4 billion has already been invested in the operation, with an additional $1.3 billion plant expansion plan announced in 2015.
Sounds unbelievable? Maybe it did, even to us, until a few weeks ago, when on a long-awaited visit to StarFest® 2018, we first looked over the 6-million-square-foot operation and then talked to President and CEO Jason Hoff about his experiences so far and his hopes for Vance’s future (see interview, page 53).
The first miracle achieved here was by the Alabama authorities, who persuaded Mercedes-Benz that it should build its first overseas new plant in their own state, after a fierce and lengthy competition with North Carolina and South Carolina. The final decision had to be kept out of the automotive and financial press for months – something so successfully carried out, that when the time came to go public in 1993, the original launch party of press was loaded on to a charter plane in Detroit and was not told where their destination was to be until the aircraft was landing at the airport in Birmingham, Alabama.
Early days
By this time, the idea of building cars in the United States had been brewing within Mercedes-Benz for several years, even before the deal with the Alabama authorities became a reality. At first, the concept originally took shape, slowly and haltingly, without much thought being given to a specific production site. Like those of rival concerns, the first Mercedes-Benz estate car and wagon types (the T machines) had been car-based, using sedan-based body shells with conventional rear-wheel drive, and had few novelties to recommend them except for enhanced stowage accommodation.
At the end of the 1980s, not only had the first minivan breed grown up in the United States, but Jeep was also selling a lot of its biggest Grand Cherokee types; in the United Kingdom, the increasingly smooth, sophisticated and versatile Range Rover was showing just what could be done with an elegant four-wheel-drive installation.
The legend goes that although Mercedes-Benz was already building an eye-catching four-wheel-drive machine – the rugged G-Wagen – it considered completely upgrading that range, not only to have more modern styling, but to have more car-like chassis and handling abilities. The Range Rover, particularly, may not have been a close rival in terms of sales, but it had acquired that seductive the-aristocracy-drive-them reputation that Mercedes-Benz could only dream of.
Soon, therefore, the existing G-Wagen (and the many and varied derivatives that followed) was reprieved and would finally not need to be replaced until 2017-2018. Enter the new M-Class, which management thought would be an ideal base on which to build the company’s presence in the SUV market. And so it was. The new four-wheel-drive ML models were launched in 1997, soon began to sell extremely well particularly in the U.S. market at which they had always been aimed and within just two years had already reached their projected target of 70,000 units a year.
Center of excellence
Since then, MBUSI, its workforce, and its product seem to have delivered almost everything that top management hoped of it when the project began: Now is the right time to summarize how its evolution has affected the group as a whole.
First of all, Mercedes-Benz likes to remind everyone that Vance was the first of the brand’s overseas automotive manufacturing plants, and it was only after the investment in Vance had proved to be such a success that the East London (South Africa) and Beijing (China) production facilities would follow.
Then there is the steady way that the plant has grown, for it has now virtually matched the production of other major assembly plants. Quoting from a fabulously detailed booklet, “Mercedes-Benz Cars at a Glance,” we learn that Sindelfingen, as expected, tops the lists with approximate production of 310,000 – with Bremen and Rastatt in Germany and Beijing close behind – but we also see that Vance now lines up alongside those three. Considering that two of those rival plants produce many cars in the lower-power price bracket than those emanating from Vance, that is a remarkable achievement.
Thirdly, there is the group’s proud insistence that Vance is now the “center of excellence” for its ever-growing SUV family. As Vance produces nearly all of the group’s total SUV output, that seems justified. What a proud title to hold for a site that was no more than a green field just a quarter of a century ago.
Although Vance was originally erected solely to look after assembly of the sturdy ML-Class four-wheel-drive machines, it was clear that there was a healthy demand for more – and a greater variety. One is reminded of the famous film line spoken about building a remote baseball operation: “If you build it, they will come.” Before long, production of the R-Class began.
That model, based as it was on the same platform and running gear as the ML-Class, but complete with side doors like many a rival minivan, and spacious enough to carry even more people and their kit, should have been ideal for the North American market. However, it didn’t find favor among Mercedes-Benz customers and was later withdrawn from Vance, though it continued successfully to be produced at another location to sell in other markets (particularly China) for some time.
Not just SUVs
By 2014, however, there was a desire to add a different model to the Vance portfolio, and potential demand for the new-generation C-Class sedan was so high that the decision was made to establish a completely new line within Vance to cater for delivery to the United States and Canada.
There was more to come, however, for not only did the new GLE wagon replace the ML (this paralleled the introduction of the GLC model at Bremen in Germany), with the elegant five-door GLE coupe added, but in 2017, a new Vance flagship – the massive, though beautifully equipped and functionally capable GLS – was added to the lineup. From that moment on (and we are sure that more new models and derivatives of the above, as well as hybrid and electric powered versions, are on the way), Vance established itself as one of the automotive big-hitters in the Mercedes-Benz production network.
On the ground at Vance
It took just one visit to surprise and delight me. Usually, when visiting a major car-manufacturing plant (and in my case, I am lucky to have visited many), I approach the site through other industrial surroundings, some of them demonstrably old, inefficiently laid out, not welcoming, and most cheek-by-jowl with their neighbors. For instance, Stuttgart-Untertürkheim, which is still located on the same site first occupied in 1903, has nowhere else to grow, and is closely, if tastefully, surrounded by elevated roads, a river and railroad tracks.
But not Vance. After a 70-mph approach cruise along the freeway that passes the site – the plant is almost half a mile away from the closest intersection – there are sweeping green fields surrounding it, and it has been so carefully landscaped (with the addition of several strategic berms), that the sheer bulk of this mighty complex is not obvious until one is very close to the main gates.
Inside the main building, which has really become two separate operations – the first major addition to the complex was made in 2004 – all is just as air-conditioned and as cool as one might expect; in the Alabama open air, it can become mighty hot and humid at times. In many ways, assembly operations proceed as smoothly, quietly and eerily automatically as in other Mercedes-Benz plants; at times, I had to remind myself that this was not Bremen, where precisely the same variety of C-Class models also take shape. In both, there are multitudes of robots lifting, turning, swooping and diving from the end of one operation to the start of the next, none of the employees seem to be rushed or under great pressure (management specifies a pace slower than most other manufacturers), and the vehicles – of several different shapes, colors and with a number of engines specified – continue to flow. Even though Hoff insists that an annual output of around 300,000 vehicles is “about right” for his needs, this is still a business that operates three shifts a day and never seems to be dormant.
In his annual report to shareholders, Daimler AG Board Chairman Dr. Dieter Zetsche has already promised many new models and technical innovations to arrive before 2025. We’ll be fascinated to see what share of these comes from Alabama over that period.
Interview: Speaking with Jason Hoff
Chief Executive Officer and President, Mercedes-Benz U.S. International Inc.
Catching time with the CEO of Mercedes-Benz U.S. International at Vance, Alabama was never going to be easy, but I managed to sit down with Jason Hoff at the massive assembly plant that he manages so capably – seemingly without stress.
“I’m an American, born and raised in Oregon, and had a finance degree in a small college – Linfield College – up there,” Hoff told me, “though I have been with Daimler-Benz companies since graduation. I actually started work with Freightliner, the truck-making concern, but was then with MBUSI from December 1993. When I started here in Alabama in 1994, there was still nothing at all at Vance – we worked in Tuscaloosa and ground clearing was just starting at Vance.
“Originally, I was an investment controller – looking after the original $300 million Daimler was investing, along with working with the state of Alabama to ensure they met all their commitments to us. Then, after the place was up and running, about seven years in, I moved into quality engineering, and for five years I was responsible for the team, which works with our suppliers. Then I moved into assembly operations, running the shop where we build our SUVs, before [in the 2000s] running the entire assembly shops.”
But there was more, for in 2010:
“I moved into logistics for a time, then moved back to Germany to run purchasing, worldwide.”
He seems totally at ease with the awesome responsibilities of the job, but is not a “buttoned-up-surrounded-by-lackeys-figure” that a Brit like myself might have expected. Instead, he is tall, lean, fit and clearly enjoys every high-profile moment of his day.
Hoff has been CEO at Vance since 2013, but his connections with the plant since the North American operation was conceived in 1993, mean he has 25 years of experience with the project and is still at the very heart of its current, immediate and long-term plans for the future.
“I’d been out of college for about eight months when I joined Daimler-Benz in Stuttgart, and I’ve been with them ever since. I never really thought, or planned, that I would stay here for 25 years, but one thing led to another, and I’m still excited to be around. Even so, I did go back to Germany in 2010 to work for three years on the purchasing project, quite unrelated to the M-Class and USI.”
Although Hoff is totally in charge of the MBUSI operation, his superior is in Stuttgart; he has to make frequent returns to headquarters – about once a month – for consultations. The planning for future models and for major activities such as factory expansion is still made in Germany, but in general, Hoff solely presides over a 300,000-unit annual-output operation. His view on the size of the USA operation is fascinating.
“I think it is safe to say that in 1993, no one in the company was thinking beyond the 65,000 to 70,000 unit annual sales that the ML could achieve, and it was not until 2004 that a $600-million plant expansion was launched to open up a totally new assembly line when GL production was added.
“Although we think that 300,000 units a year is about the right size for us, our expansion will now involve building more and more components for these vehicles rather than importing them from other countries, notably Germany. Nevertheless, we have announced our plan to bring an electric vehicle into this operation in the early 2020s, plus a new battery plant to support it.”
What makes Hoff particularly proud, now, I felt, was that the arrival of Mercedes-Benz in Alabama transformed the state’s image – and its prospects.
“Let me emphasize,” Hoff recalled, “that before 1997, not a single car had ever been manufactured in Alabama. Mercedes-Benz changed all that.”
Following the German firm’s investment in the state, three other major carmakers have arrived, and total automobile production in the state is now more than 1 million cars each year.
Hoff went on to eulogize the contribution, the commitment and the enthusiastic support the company had received from state and local government – and, of course, the hard-working population of this southern state.
Even before we reached the end of our talk, it was clear that Hoff is a man who thinks far beyond the next quarter’s output – the next Vance-based new-model launch (something is brewing for Model Year 2019, but we don’t yet know what that is to be) – to the difficult-to-forecast/different-to plan-for 2020s.
“I still get excited by what I might be doing in those years,” he told us, “and it makes me happy to come to work every day. I’m still delighted to see the way that this operation has developed since I had a part in initiating it in 1993.”
But where will Hoff be then? Still at Vance, or back at corporate headquarters in Stuttgart, involved in management of more high-profile new products? We can only wait to see.
TOP: Aerial view of the MBUSI plant, Vance, Alabama, 2017; the training facility can be seen at the lower center of the photograph. The massive site measures more than a mile from end to end; more than 2.5 million vehicles have been built here. ABOVE: Sign of the times, 1993.