ZF's new 9-speed transmission factory provides one example of economic impact
Posted: Jul 31, 2013
In the age-old debate of whether government regulations help or hinder economic growth, here's one example where more rules have helped create American jobs.
President Obama ushered in stringent new fuel economy standards last year. Federal legislation mandates that the corporate average fuel economy standard rise to 54.5 miles per gallon by 2025. Automakers are scrambling to update their vehicles with fuel-saving technology.
The ripple effect was felt in Laurens County, S.C., last week, when automotive supplier ZF announced expansion plans for a transmission factory that opened only last month. The assembly plant produces the world's first 9-speed transmission, which ZF says improves fuel economy by 16 percent over a more conventional 6-speed model.
Orders are stacking up for the 8- and 9-speed transmissions made here. ZF opened this facility in June. It was on pace to hire 1,200 employees here by the end of the year. Now, the German company will invest $215 million more into an expansion, and eventually hire an additional 450 workers, bringing its total workforce here to 1,650.
"Fuel economy is a key megatrend we see in all regions of the world, and with this product, we're well positioned," said ZF CEO Stefan Sommer.
Some critics had considered the MPG rule excessive, and doubted that automakers could reach the standard in the allotted timeframe. During the 2012 presidential campaign, Republican candidate Mitt Romney said the rule would limit consumers' choices in the dealership.
But automakers are reacting quickly to the rule. Currently, this ZF factory has the capacity to annually produce 800,000 transmissions. Once the expansion is complete, that number will increase to 1.2 million.
The Range Rover Evoque, which achieves an EPA-rated 20 mpg in city driving and 28 mpg on the highway, will be the first vehicle to receive the 9-speed transmission.
"Fuel economy, with what we're tasked with by 2025, we'll have to develop newer models and higher-tech vehicles," said Clinton Blair, vice president of governmental affairs for Jaguar/Land Rover in North America. "The 9-speed is a big step forward for us."
