From Boats to Tires: Global Manufacturing is Thriving in Charleston, South Carolina

During day two of my visit to the Charleston, S.C., metro area, we visited Scout Boats in Summerville, S.C., which as a boat builder, is a more traditional type of manufacturer than you would expect to find in a deep-water port community.  A family-owned business, Scout builds luxury center console sort fishing and bay boats.

Steve Potts, who founded the company in 1989, told me, “I have been in the boat business since I was 14 years old, and my wife and I made a decision to start making 14 foot to 15-foot fishing boats in a garage we rented after planning for years and saving $50,000.

“We got off to a good start, and then Hurricane Hugo hit and leveled our building.  We salvaged what we could and started over. The next winter, we got 11 inches of snow and the roof partially collapsed while we were developing a 17-foot sized boat. This boat put us on the map, and we sold this model for years. We displayed this boat in the local boat show and came out of the show with a list of 31 dealers that we developed into a dealer network.  We sell exclusively through dealers.

“In 1990, I prepared my plan for 1991 and predicted that we would do $750,000 in sales, and we did.  The only year we lost money was 2009. In 1992, we moved down the road to a 12,000-square-foot custom-built building.  However, we couldn’t expand, so in 1995, we bought 16 acres of land and built Plant A. We added another building (plant B) and then added Plant C. Plant A build boats in size from 17-25 feet, Plant B builds boats 27-35 feet in size, and Plant C builds 38-42 foot models. Plant D will be a 100,000-sq. ft. building to build boats up to 53 feet in size. We also have a small plant for R & D. We are a debt-free company, so we build when we have the cash.

“Today, we have 28-30 models, and our annual sales will be $100 million this year.  For many years, we focused on 25-30 foot boats, but we are expanding to build up to 53-foot sized boats.  We export 17-18% of our boats. Canada and Mexico are our two top markets, but from 2003-2008, our largest dealer was in Athens, Greece.

We have 380 employees now, and our five-year plan is to grow to 680 employees by 2020. We strive to be as diverse as we can be.  We sell yacht tenders for the large luxury yachts that are towed behind the yachts. Our three adult children are part of our business and are very involved. Consequently, we have had an ongoing succession plan in place for more than 10 years. I want Scout Boats to be a dynasty for years and years to come.”

Potts is the epitome of the exemplary American entrepreneurial spirit that once made our country the dominant manufacturing center of the world. To think that his company survived three recessions in his 28 years in business without going into debt is extraordinary.

The Right Location for Manufacturing

Our next meeting was with Mark Fetten, president and CEO of Cooper River Partners, LLC that manages the Charleston International Manufacturing Center (CIMC) at Bushy Park in Goose Creek, S.C.  CIMC is a wholly owned subsidiary of Pacolet Milliken Enterprises. CIMC is a 1,750-acre industrial complex in a heavy industrial zone, as well as being a Foreign Trade Zone.  It has deep-water access to the Atlantic Ocean via the Cooper River with barge slip access and rail access via a rail spur. CIMC is located less than 10 minutes from two major highways in the region (I-26 and I-526) for trucking products.

In addition to the existing tenants, it has 300 acres of developable land.  The site is currently home to the following manufacturers:

• AGFA Corporation – medical x-ray and technical imaging regional distribution center
• Evonik – manufacturer of silica for tire production (under construction)
• Kemira Chemicals – paper dyes, specialty chemicals for ink jet applications
• Lanxess Rubber Chemicals – vulcanization for tires and peptizers used in rubber manufacturing
• Nexans – high voltage underground and submarine cables
• Philips Industrial Services – industrial and marine painting, fireproofing, hydroblasting, water jetting, epoxy floor systems, and industrial vacuuming
• Sun Chemicals – organic pigments for paints, plastics, and cosmetics
• Symrise – flavors and fragrances, menthol, sunscreens, and aroma esters (expansion project under construction)

Fetten said the biggest advantages CIMC offers are the utility services and other support functions that allow tenants to focus on their core business. “CIMC enables companies to get their products to the market faster with the existing infrastructure within CIMC, while minimizing CAPEX and risk,” he explained.

Located only 1.5 miles from a major power station, CIMC has a 1-MW solar farm on the property that feeds back into the power grid. A second solar farm is in the final stages of planning. A wide variety of utility services are provided, including electrical, steam, compressed air, nitrogen, refrigeration, natural gas and waste water treatment. Other services include on-site security, environmental management and emergency responders.

CIMC was originally built up by Bayer Corp. over a period of 30 years, but in 1999, Bayer started divesting companies. In 2009, Bayer sold the park to a privately held company of which Marc Fetten was a partner with two other gentlemen. Fetten previously worked in M&A for Bayer, so he saw the opportunity.

The driving tour around CIMC showcased the advanced manufacturing legacy of the Southeast. In addition to the $250 million in Capex I saw under construction, I got to see a gem of heavy industrial manufacturing. The former General Dynamics and subsequent Jacobs Engineering plant was purchased by Cooper River Partners, LLC in the summer of 2016. This 94-acre facility located adjacent to CIMC, appropriately named CIMC North, produced some amazing examples of advanced manufacturing, the nose cones to U.S. Navy Trident Class Submarines and later modular assembly and pipe fabrication.

CIMC North consists of 400,000 square feet of manufacturing and warehouse space, 800,000 square feet of open-air assembly, an array of welding, assembly, blasting, painting and handling equipment, as well as a barge slip and rail access.  Also of note, are the 10 bridge cranes, eight of which are rated for a 40-ton load. The two 20-ton bridge cranes have infrastructure in place to support transloading to and from railcars. According to Fetten, “CIMC North expands our footprint and facilitates bringing prime industrial, warehouse and distribution space to the market immediately, which is in high demand in the Charleston region. Providing a dock, rail access, large capacity cranes and a 200-ton shuttle lift is a big cost saver for companies looking to minimize Capex. This model aligns perfectly with our sustainable approach of minimizing environmental impacts.”

Evonik Keeps Things Rolling

Afterward, we met with Robert Brown, communications manager, and Arthur Dube, business director, Precipitated Silica & Rubber Silanes of Evonik Corp., the U.S subsidiary of Evonik Industries AG, which is a German company that is one of the world’s leading specialty chemicals company. Evonik Industries produces chemicals for a variety of applications, including adhesives, cleaning products, construction materials and employs more than 33,500 people worldwide in more than 100 countries.

Brown said, “Evonik Corp. was formed in 2007 in Chester, Pa., and has 33 plants in the U.S., Canada and Mexico. We have about 5,000 employees in the U. S.  The new plant we are building in this center will open in June 2018 and produce precipitated silica to supply the tire industry. We will hire about 50 people for this plant. This business park offers the existing infrastructure we need, and there is a high level of skilled workers in the region for the higher paying jobs we offer. There are also workers at other plants that may transfer to this plant. David Elliott will be the manufacturing director for the new plant.”

He explained, “Evonik helps improve consumer and industrial products, and this plant will make tires run better, longer and be stronger.” He said that South Carolina has become home to several major tire manufacturers, such as Michelin, Bridgestone, and Continental, so they are following their customers. Another reason for locating in South Carolina is that the Sumter area mines produce 99% pure silica sand that is used in producing our precipitated silica.

Wanli Tire Corp., a Chinese tire manufacturer, is investing $1 billion to build a new plant in Orangeburg County, S.C.  Also, Giti Tire, based in Singapore, announced a new plant last year that is being built just south of Rock Hill, SC.”

These two additional tire plants will further boost the state's status as America's tire-producing capital and create over 3,000 new jobs for the region when they are at full employment.

I was given a brief explanation of how they make precipitated silica by mixing silica sand with sodium carbonate and melting them. Then, they dissolve the mixture in water and precipitate it. The resulting white precipitate is filtered, washed and dried in a proprietary manufacturing process. Any further detail exceeds my technical expertise to explain. I was shown samples, which looked like pieces of fluffy popcorn that were a great deal lighter than you would expect from what started as a piece of silica. As an additive to tires, the precipitated silica produces fuel-efficient tires with wet grip properties, which can save up to 8% in fuel consumption compared to conventional car tires.

This two-day visit to the Charleston region confirmed what Harry Moser of the Reshoring Initiative has been telling me about the increase of manufacturing jobs from foreign direct investment. The favorable business climate, low state taxes, developable land, and skilled workforce has made South Carolina an attractive location for companies from Germany, France, Belgium, the U.K, and Denmark to expand their U. S. manufacturing presence. If the U.S. would lower the national corporate tax rate, we would not only attract more foreign direct investment, but would attract more American corporations to return manufacturing to America.