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Lawrence "Buck" Roll feeds cattle in his pasture across from Hyundai Motor Co.'s $1.1 billion plant in Montgomery, Ala. The factory embraces lessons learned from other, failed plants.Special Report: The next Toyota?
Hyundai factory finds sweet home in Alabama
State welcomes new manufacturing jobs to make up for loss of textile industry.
Diannetta Johnson works on a front seat at the Lear Corp. plant in Montgomery. After discovering quality problems with imported parts at its Canadian plant, Hyundai learned to keep suppliers close.
Instructor Joe Franklin demonstrates how to run a wiring harness by feel at Hyundai's training center. The automaker puts workers through an extensive training process.
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MONTGOMERY, Ala. -- When Lawrence "Buck" Roll heard that Hyundai Motor Co. was building a $1.1 billion factory across the road from his cattle stockyard here, he didn't think much of it. Then, it hit him.
"I knew things were fixin' to change around here."
Indeed they have. In the three years since the South Korean automaker announced plans for its first U.S. plant, thousands of new jobs have come to the area.
Crews have repaved roadways. New stores and restaurants are popping up. And residents who used to swear by their Fords and Chevys have begun to take a shine to those little Korean cars with the funny name.
On Friday, Hyundai celebrates the formal opening of its plant outside Montgomery, which is already building the Sonata midsize car. At the event, company officials and politicians will expound on how far the project has come and tell the story of that balmy April evening in 2002 when city leaders got the call that changed everything.
The journey has been bumpy at times, marked by land disputes, vast cultural differences and a frenzied race to establish a network of suppliers and train a new work force.
But in the end, Hyundai says it has produced a state-of-the-art auto factory that will fuel its drive to more than double its U.S. sales to 1 million by 2010.
"This is just so much more than we ever dreamed it would be," said Ellen McNair, director of corporate development for the Montgomery Area Chamber of Commerce, who played a key role in recruiting the company.
Hyundai still faces the challenge of moving from constructing a plant to building cars and SUVs with the quality and appeal to succeed in the crowded and competitive U.S. market.
But the company's early success in this Southern community stands in stark contrast to its hasty first attempt to assemble cars in North America more than a decade ago.
Cars produced at Hyundai's plant in Bromont, Quebec, were so riddled with quality problems that the automaker shuttered it after just three years and returned to South Korea.
Courting local favor
This time around, Hyundai has taken it slow, bringing over an army of engineers to ensure quality while sending new American hires to South Korea to learn the "Hyundai way."
The company also has taken pains to earn the support of a community that is sometimes wary of foreign companies but desperate for well-paying manufacturing jobs.
Chris Bush, 27, jumped at the chance to work in Hyundai's machining shop. After bouncing between local textile mills and seeing those jobs migrate to Mexico, he needed steady work.
"I was worried," he said. "I'll put it that way."
Hyundai leaders have followed the example of Toyota Motor Corp. and Honda Motor Co., running TV and magazine ads that downplay its foreign roots and trumpet its U.S. investment and job creation -- a move that has helped endear the company to many Alabama residents.
"While they may have come from Korea, I think of Hyundai as an American company now," said Neal Wade, director of the Alabama Development Office, the state's business recruiting arm.
Montgomery Mayor Bobby Bright drove a black Hyundai XG350 sedan for two years to make a similar point, and he believes local attitudes toward foreign cars are changing.
"We have people driving Hyundais in Montgomery that would have never driven one a few years ago," he said.
That's saying a lot for this conservative capital city, where less than two years ago the chief justice of the Alabama Supreme Court dared state leaders to remove the monument of the Ten Commandments from the court building.
Room to grow
Montgomery is a place that still grapples with a conflicted past by promoting itself as both the Cradle of the Confederacy and the birthplace of the civil rights movement. And it's a place where grown men still say "Yes, ma'am," and eat heavy lunches of fried catfish, greens and sweet iced tea.
This central Alabama city of 300,000 has gone out of its way to be hospitable to its new neighbor from Asia. After four years with Hyundai, people here are getting used to the sight of clean-cut Korean men in company-issued blue jackets.
"It's life as usual," said Alan Hackel, the dean of Auburn University Montgomery's school of continuing education. "But life as usual now includes the Koreans."
Bright just hopes Hyundai remembers all the local support when it comes time for the automaker to consider an expansion.
Last month, Bright took a group of business and civic leaders to South Korea to meet with Hyundai Chairman Chung Mong Koo in hopes of getting a commitment for future investments. But Chung gave no hints about the company's next move. He did, however, agree to sell Bright the first Alabama-built Hyundai, the new Sonata midsize.
Hyundai's 2 million square-foot plant -- eight miles south of Montgomery -- is capable of producing 300,000 vehicles a year. But it has plenty of room to grow at its 1,700-acre site. Yawning stretches of land sit unoccupied to the west and north of the complex, which includes assembly, paint, stamping and engine shops. Local officials believe Hyundai may eventually add a transmission plant and a second assembly line at the site.
For now, the automaker has only committed to build the Sonata, which debuted in January at the Detroit auto show, and its next-generation Santa Fe SUV early next year in Alabama. But industry analysts believe up to two more vehicles could be produced at the plant without an expansion, including a more upscale sedan and a wagon-like crossover vehicle.
The company declined requests by The Detroit News to tour the Alabama plant, citing a need to focus on launching new vehicles.
Even before the plant opened, Hyundai enjoyed tremendous momentum in the U.S. market, where sales hit a record 418,000 vehicles in 2004 and are up 14 percent so far this year.
High-tech advances
The automaker has modeled the plant after its sedan factory in Asan, South Korea. But in Alabama, Hyundai is outsourcing more work to lower-wage parts suppliers and will depend on a greater level of automation to reduce manufacturing and labor costs.
The Alabama plant has yielded some high-tech advances not found in Asan, including an innovative vehicle painting system. Instead of showering the car body with paint or sliding it into a vat of paint, the vehicle is tipped nose-first into the paint and rotated twice before emerging, to ensure an even coating.
But finding the top-shelf workers to keep the plant running has proven harder than Hyundai had expected.
More than 35,000 people have applied for 1,600 production and maintenance jobs since early 2003, but Hyundai is still looking for qualified recruits.
"We've been very selective for a reason: To make sure we have the right people," said Kerry Christopher, a spokesman for the Alabama plant.
The 1,500 workers now in place have worked in timber mills, chicken-processing plants, apparel factories, on farms and in the aerospace industry, but have little or no experience building cars. To bring them up to speed, Hyundai has put them through extensive training courses that include refreshers on math and simulations of actual plant jobs.
"I bet it was nine weeks before I saw the inside of the plant," said Jason Stiff, 28, a skilled trades worker at the Hyundai plant.
But some Hyundai workers washed out after they got an up-close look at life on an automotive production line.
"People come in thinking, 'I'm going to put a car together,'" said Ed Castile, director of the Alabama Industrial Development Training office, which trains Hyundai applicants as part of the $252 million incentive package used to lure the company to the state. But "at the end of the day, it's still just a manufacturing job."
The South is home to a growing number of foreign-owned auto plants, which now account for 26 percent of all car and light truck production in the United States, according to a new study by the Center for Automotive Research in Ann Arbor.
Like most foreign automakers, Hyundai was attracted to the South partly because it does not want a unionized work force.
Yet few manufacturing jobs in Alabama offer the pay and benefits found at Hyundai. The automaker starts production workers at $14.22 an hour and pays them $21.34 after two years -- slightly less than workers at Mercedes-Benz and Honda Motor Co. plants in Alabama make, but more than the state's average hourly wage of $12.90.
Workers also get 401(k) matches and pay modest premiums for health care coverage.
Demanding environment
Hyundai workers describe a culture within the plant as cooperative but demanding and say factory president M.H. Lee takes a hands-on approach, stopping often on his daily golf cart rides through the plant to check in on employees. Lee replaced factory start-up specialist Y.S. Kim in the plant's top job last summer. He is a by-the-book operations guy who, despite the presence of many American managers, still conducts some daily business meetings in Korean.
Under Lee, plant workers start each workday with calisthenics at their work stations, a Korean custom that some of Hyundai's American parts suppliers in Alabama have also adopted.
"It's just to get the blood flowing," Hyundai spokesman Christopher said.
Hyundai plans to keep a small cadre of Korean managers and engineers in place through the initial ramp-up, but ultimately plans to pass operations to American managers. The Korean team gives close attention to every detail so that cars do not leave the plant with defects.
Hyundai began production of the Sonata in March. But the pace of output remains low as the company perfects operations to ensure quality.
"We could have just belted out some products and said, 'We'll fix them later,'" said Bob Cosmai, CEO of Hyundai Motor America, the automaker's U.S. sales and marketing arm in Fountain Valley, Calif. "But we don't want to do that."
The company learned this lesson the hard way with its first North American manufacturing plant in Quebec, which opened in 1988 and closed three years later when quality problems wrecked the automaker's early momentum in North America.
That project failed because Hyundai, rushing to establish a beachhead in North America, chose a poor location and relied heavily on imported parts, which were costly and inefficient to ship, said Michael Robinet, vice president of global forecast services at CSM Worldwide in Farmington Hills.
This time around, Hyundai has brought more than 30 parts suppliers with it to Alabama and has required them to locate within 90 miles of the auto plant.
"They're very meticulous and demanding as far as quality is concerned," said Song Lee, manager of Lear Corp.'s seat plant in Montgomery, which is paid routine visits by high-ranking Hyundai officials.
Southfield-based Lear was one of the first U.S. suppliers selected to feed the Hyundai plant, and has helped guide South Korean parts makers on the ins and outs of doing business in America.
"A lot of them had never heard of OSHA," said Jerry Cade, Lear's human resources director in Montgomery, referring to the Occupational Safety and Health Administration. On a recent night, Lear employees were also surprised to discover a group of Korean engineers measuring the height of the seat maker's loading dock so they could build one of their own.
Advantage of hindsight
While there still are risks this time around, the South Korean automaker may have an advantage over other foreign automakers that have opened U.S. plants.
"Hyundai has the benefit of hindsight," Robinet said.
The example of Nissan Motor Co., which suffered numerous quality glitches after it opened a new plant in Mississippi two years ago, is particularly instructive to Hyundai.
Hyundai is moving slowly to make sure the same doesn't happen in Alabama.
"They have looked at both the successes and failures of the Japan Three" -- Toyota, Honda and Nissan -- "over the last 20 years and have really done a good job of figuring out what works and what doesn't work," said Robinet.
One unexpected wrinkle has been a messy dispute over land.
The city of Montgomery negotiated and acquired property for the site from numerous landowners. But when Hyundai determined later that it needed additional land, the city was forced to pay higher prices to acquire the extra acreage, prompting suits from landowners over the inequity of land prices. The lawsuits are still pending.
Still, many locals are taking Hyundai's arrival in central Alabama in stride. From his side porch, Jim Henry has watched the plant rise over the past few years. But the 56-year-old retiree remained fairly detached until he noticed his street had a new name.
"I had to change my letterhead to Hyundai Boulevard," Henry said, "after I learned how to spell it."
You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.
Locals in Montgomery, Ala., have taken Hyundai's arrival in stride, applying for jobs and, like Mayor Bobby Bright, driving the automaker's vehicles.
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The Detroit News.
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