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The world's No. 7 automaker hopes to make inroads in the competitive U.S. market with its Montgomery, Ala., factory, which will build Sonata sedans and Santa Fe SUVs. The flexible assembly line can accommodate more models.Hyundai jumps into quality, efficiency game
Korean firm hopes Ala. factory puts it among top five
Hyundai is designing its first U.S. plant to be fast, flexible and efficient. Robotics will play a pivotal role at the 2 million-square-foot facility in Montgomery, Ala.
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Toyota, Honda and Nissan were first to raise the bar for auto manufacturing in the United States, achieving productivity levels never before seen in domestic plants. Now, it’s Hyundai’s turn.
The Korean automaker is building a $1 billion factory in Montgomery, Ala., to make Sonata sedans and Santa Fe SUVs. The aim is to match the industry’s best in manufacturing, make inroads in the competitive U.S. market and pad the bottom line with profits.
Hyundai says robotics and automation will play a key role in trimming assembly time and keeping the new plant’s work force small, nimble and lean while keeping quality high. Parts suppliers will build whole sections of the vehicles off site, reducing in-house workloads and labor costs. The plant also will be flexible enough to produce up to four vehicle models on a single assembly line.
Hyundai is taking a far different approach than it did in the late 1980s when building its first North American assembly plant. It later abandoned the Canadian facility because of shoddy quality and dismal U.S. sales.
Driven by a goal to become a top-five global automaker by 2010 — up from No. 7 today — Hyundai is designing its first U.S. plant with ultimate speed, flexibility and efficiency in mind.
“Right now, we’re really focused on the Sonata and Santa Fe, and we don’t see any additional models coming from the plant in the near future,” said Chris Hosford, spokesman for Hyundai Motor America in Fountain Valley, Calif.
But if Hyundai decides to launch a new vehicle in Montgomery, it could easily do so.
“Adding an incremental model into a flexible plant is relatively quick and inexpensive, with investment for the new model as little as 25 percent of the cost of adding a new model to a dedicated plant,” Prudential Equity Group’s Michael Bruynesteyn said in a December report titled “Flex Appeal.”
Production of the Sonata is scheduled to begin in March 2005, with Santa Fe output to kick off in early 2006.
The plant — which includes stamping, body, paint, assembly and engine shops — will be capable of building 300,000 vehicles a year with a work force of 2,000.
But it will face start-up challenges that include an all-new work force, new management and new suppliers.
To overcome launch problems, Hyundai is modeling the Alabama plant after its new Asan assembly plant in South Korea, where the Sonata and upscale XG350 sedans are produced.
Last month, Hyundai began sending the first wave of new workers from the Alabama plant to Asan to learn first-hand how to build cars and become better acquainted with Hyundai’s manufacturing methods.
The Asan factory makes 300,000 cars a year, but with 3,000 employees — 1,000 more than will be on hand in Alabama. Hyundai officials said a higher level of automation in the Montgomery plant and more outsourcing to parts suppliers will reduce the need for a larger work force.
Hyundai is also demanding that major suppliers locate within 90 miles of Montgomery, so key parts can be more quickly flowed into production.
While Hyundai’s U.S. sales are increasing, the automaker will almost certainly need to add other vehicles in Montgomery to reach the 300,000 capacity limit, said George Peterson, president of Tustin, Calif.-based AutoPacific Inc., an automotive research firm. He expects a pickup truck or a minivan to be in the offing soon from the plant.
Hyundai’s built-in manufacturing flexibility, similar to that of a Japanese plant, will make the transition to new models seamless.
“The new import brands have tremendous advantages over old-line domestic plants” in this regard, Peterson said.
If Hyundai’s current U.S. sales momentum continues, there is also reason to believe the automaker or its sister company, Kia Motors, will expand or add a second plant in Montgomery. After all, Hyundai’s new plant will occupy less than half of the 1,700-acre property the automaker owns there, and the company has aggressive plans to triple U.S. sales by decade’s end.
Hyundai officials in Alabama won’t comment on possible expansion plans, future products or production processes at the new plant. They said completing construction of the 2 million-square-foot facility, which is 75 percent done, is the main priority now.
You can reach Brett Clanton at (313) 222-2612 or bclanton@ detnews.com.
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The Detroit News.
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