Hyundai Writes a Check… Hyundai Assembly Plant in Alabama
Hyundai Launches New Alabama Assembly Plant
May 19, 2005, Montgomery, Alabama: AutoPacific attended the opening celebrations for the new Hyundai assembly plant in Montgomery, Alabama on May 19, 2005. This was a great, gala event, complete with a chartered Boeing 747 full of Hyundai executives, Korean press and government officials and featured remarks by no less than George H. W. “Big” Bush, 41st president of the United States! (And yes, the place was swarming with Secret Service, a SWAT Team and even a sniper team on the roof with a Barrett 50-caliber sniper rifle).
It is estimated that no less than 4,000 people were in attendance, including Hyundai and supplier employees. The 98-degree, 100-percent humidity day only dampened the event slightly.
The star of the show wasn’t the party, but rather the assembly plant itself and the commitment it represents.
The facility is large (capable of an annual production volume of 300,000 vehicles). It is as modern as any in North America – maybe in the world. The whole facility represents an investment of about $1.1 billion; two million air-conditioned square feet under roof. It includes not only vehicle assembly but also a stamping plant (manned by only 37 workers) and V6 engine machining and assembly, even a 2.3-mile test track (where 100% of initial production will be tested). Employment will be about 2,000.
Production of the new 2006 Hyundai Sonata mid-size sedan is already underway. The new Santa Fe sport utility will follow next year, and there is provision for two additional models, yet to be announced. And, no, there will not be any Kia products produced at this plant. It is Hyundai only.
Actually, production launch is a little behind schedule. Why? Because of Hyundai’s attention to quality. This isn’t just words – they mean it! Launching an all new assembly plant along with an all new car is a tremendous challenge. Lessons from Hyundai’s Bromont, Quebec experience of 10-15 years ago and the experience of other manufacturers who may have recently tried to launch too many vehicles too quickly have been well learned. Just ask Nissan about the challenges at their Canton, Mississippi plant.
This facility represents a huge commitment to the American market on the part of Hyundai, and must be considered in light of their recent investments in a design center (for both Kia and Hyundai) and proving ground in California (right next door to the Honda proving ground) and an all new significantly larger engineering center in Michigan.
While declared competition is said to be facing Toyota, Honda and Nissan models, it is likely that most customers will actually come from GM, Ford and Chrysler. It is going to be difficult for the old “Big Three” to compete head to head with this modern, non-unionized facility. Toyota may not be too worried – but the Big Three should be!
While this plant is the latest and greatest, it does show that anyone with a spare billion dollars can have the best manufacturing facility that money can buy. Anyone… and that includes the Chinese, as evidenced by AutoPacific’s recent visit to Chery Automotive in Wuhu, China.
While Hyundai’s fully accounted U.S. costs may be higher than those from Korea, at least initially, this facility reduces foreign exchange exposure, helps with government relations, lets some vehicles be labeled “Made in the U.S.A.”, and may give Hyundai more leverage with respect to Korean labor unions.