Hyundai will start factory in Alabama

By David Kiley
USA Today

DETROIT — South Korean automaker Hyundai is joining a growing list of foreign car companies investing in large factories in the United States.

Hyundai said yesterday that it will spend $1 billion constructing a plant on the south edge of Montgomery, Ala., that's to open in 2005, capable of building 300,000 cars and sport utility vehicles a year.

Hyundai chose Alabama mainly because Mercedes-Benz and Honda have plants in the state, which means a network of suppliers there are used to meeting high standards.

Mercedes parent DaimlerChrysler owns 10 percent of Hyundai. Alabama kicked in

$150 million in incentives to beat Kentucky.

The move makes Hyundai:

• The sixth Asian automaker to build a U.S. factory.

• The third foreign maker to pick Alabama.

• The sixth to build in the Southeast in the past 12 years.

"The U.S. is clearly our fastest-growing market, and we need a manufacturing base to build more vehicles for the U.S. market first, and to get more products to our dealers faster," says Hyundai Motor America chief Finbarr O'Neill.

Hyundai CEO Kim Dong-Jin says reducing trade friction with the United States and escaping currency fluctuations also are motivators.

The plant is to build the Sonata sedan, Santa Fe SUV and possibly a Kia model. Hyundai owns Kia.

The Southeast lets foreign automakers sidestep the United Auto Workers union. The UAW failed four times to organize the Nissan plant in Tennessee, most recently last November.

No U.S. auto factory completely owned by a foreign car company is unionized.

Most workers at car plants in the region are locals who were earning less — sometimes even if they held two jobs — and had skimpy or no health or retirement benefits. They can make $15 or $20 a hour, plus benefits, at the car factories, leaving little incentive to unionize.

Hyundai says it would like to have a full-size SUV in the United States priced at $30,000 or more. The company is thought to be considering an upscale brand to compete with Honda's Acura and Toyota's Lexus by the end of decade.

Hyundai's Korean parent's profit rose 75 percent last year from a year earlier, and U.S. sales grew from fewer than 100,000 in 1998 to 346,000 last year. Hyundai forecasts U.S. profit of $200 million this year.

No wonder, then, that when General Motors' North American president Gary Cowger is asked what competitor worries him most, he answers: "Hyundai."