plant is no windfall for U
When Kia Motors Corp. opens its $1.2 billion vehicle assembly plant in Georgia in 2009, the largest companies supplying the parts are more likely to be named Mobis or Dongwon than Magna or Dana.
Instead of looking for new suppliers in the United States, Kia will piggyback onto the largely Korean supply chain that opened last year in Alabama to serve Kia’s sister company, Hyundai Motor Co.
Kia has told Georgia officials that it envisions only five or six new supplier plants being necessary to support the Georgia auto plant. companies have reason to compete for Korean business. output of the two Korean affiliates will reach 600,000 vehicles a year. That would help some companies offset lost production from General Motors and Ford Motor Co., which together plan to close 26 North American plants over the next six years.
Alabama economic development officials say privately that some supplier plants there already have been told to expand for the project in Georgia. Kia will build its factory only 90 miles from Hyundai’s plant in Montgomery, Ala., just two miles across the Georgia line.
“It’s pretty clear that Kia sees an efficiency of scale in just using the supply chain Hyundai has already created,” says Mike Wall, an analyst with CSM Worldwide in suburban Detroit. suppliers that there is still some opportunity in this deal. companies, the outlook is promising. “We’d never be so cocky as to believe the business is in the bag, but we do have a good leg up,” says Frank Pierce, vice president of North American sales and marketing for ArvinMeritor Inc.
Last year the suburban Detroit exhaust and chassis supplier opened two Alabama plants to supply Hyundai, one of them a joint venture with Korea’s Sejong Industrial Co.
“We don’t know yet what the opportunity will be for us at Kia, but we’re talking to both Kia and Hyundai in Korea,” Pierce said. “We’re part of their sourcing strategy, but it’s by no means a gimme.”
Other North American companies that already are part of the Hyundai chain include interior parts makers Lear Corp. and Johnson Controls Inc. and wheel assembler T Inc. parts industry will find Kia in little mood to take on the unnecessary risk of unfamiliar suppliers. Erecting a full scale auto plant in a new market with new workers will be risky enough.
Officials who worked with Kia to pick its Georgia site say Kia wanted to be near Hyundai’s Alabama suppliers. Kia’s plant wi replica watches ll be almost a replica of Hyundai’s Montgomery plant.
Kia’s Mister Fixit
To oversee the project, Kia relied on the closest thing it has in North America to a seasoned veteran: Ahn Byung Mo. It was Ahn, the 1990s president and CEO of Kia Motors America, who was dispatched by Hyundai Chairman Chung Mong Koo to find a plant site for Hyundai in Alabama. Hyundai and Kia are both owned by Korea’s Hyundai Automotive Group.
Just before the Hyundai plant in Alabama began production last year, Ahn again quietly disappeared with no explanation. investment: a twin Kia factory.
Reserved and soft spoken, Ahn is in some ways the typical Hyundai Group Korean executive. He avoids the press, sidesteps public events and discourages invitations to speak.
During the construction of the Hyundai plant in Montgomery, where he surprised many by taking the No. 2 position of executive vice president, he routinely declined invitations from eager city officials to speak about the project. During the Kia plant site search, he sometimes dispersed welcoming committees in favor of small one on one meetings.
But it was clear to many that when it came to making decisions, he represented the chairman. Site officials say that Ahn himself discovered the Kia factory location in West Point while driving from the Montgomery factory to Atlanta, 150 miles away.
In the end, it would be Ahn’s site that Georgia packaged and delivered, with state and local incentives of more than $400 million.
Like the Alabama Hyundai plant, Kia’s plant will have two vehicle pr replica watches oduction lines and an engine plant. It will rely heavily on automation and buy large component modules mostly from established Korean suppliers.
Though bare replica watches ly known in North America, the diversified Mobis is one of the world’s largest auto parts producers. Its 2005 revenues topped $7.70 billion, and the company is forecasting sa replica watches les this year of $8.32 billion.
Kia owns an 18.2 percent stake in Mobis, and Mobis in turn owns 14.6 percent of Hyundai Motor Co. In a regulatory filing in Korea last year, Hyundai said it also is studying a plan to acquire Mando Corp., Korea’s No. 2 parts maker. Mando supplies brakes to the Alabama plant.
One new local supplier, according to a Georgia official who worked on the project, will be a large logistics plant that will sequence incoming parts for delivery to the Kia production line.
Kia has not chosen a logistics company, but odds are good that it will be Seo Jee yeon Glovis. Glovis is a Hyundai owned logistics firm that Chairman Chung’s son, Chung Eui son, took public on the South Korean stock market in December. The company already operates two logistics and warehouse buildings for the Hyundai plant in Alabama, employing about 400 people.