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Workers at the Hyundai plant near Montgomery, Ala., assemble Sonatas.Hyundai opens new Alabama plant, with quality-over-quantity attitude
Former President George Bush, right, and Hyundai Chairman Mong Koo Chung participate in a ribbon-cutting ceremony for the new Hyundai manufacturing plant. Hyundai officials are noticeably patterning their management and production strategy after Honda, Nissan and Toyota.Detroit News special report
Hyundai: The next Toyota?
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MONTGOMERY, Ala. -- John Kalson left his Ford job in Detroit to work as production director for the new Hyundai plant in Montgomery, as did several of his current production line supervisors who say they were eager for a change from the Big Three culture.
"Is Ford building a new plant? No. Is GM? No. Is Daimler? No," Kalson said while walking through the gleaming new Hyundai Corp. production line on display at Friday's grand opening, revealing the South Korean automaker's first U.S. plant.
Experts say the new plant is an example of how the Asian brands, and their growing market share in the U.S., are putting pressure on Ford Motor Co., General Motors Corp. and DaimlerChrysler AG's Chrysler Group.
Asian brands have capitalized on new technology, improved quality and a willing labor force in the South, without getting bogged down in union issues that have saddled the domestic makers around the Great Lakes in the past, said Art Spinella, president of CNW Marketing Research.
"The Southeast has become a new Detroit primarily because workers work. That used to be one of the traits Detroit had in the worldwide climate," Spinella said.
"People used to talk about the Midwest ethics of working long and working hard, somehow that disappeared," he said. "In the South it still exists."
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., said he disagreed with that perception of the work ethic. Instead, he said, huge health care and pension liabilities have put a burden on the traditional Big Three and an aging work force has taken a toll on the companies.
"It's tremendous pressure," Cole said. "One of the most serious problems that the companies that have been here a long time face is they have a fairly stable work force -- meaning you're not a growing work force."
He pointed out that, for example, GM has to compensate 2.5 retired employees for every active employee.
GM, Ford and Chrysler have not been sitting idly by. The three are spending billions of dollars to make their manufacturing plants more lean and flexible, which would allow them to shift production from one model to another more easily as consumer tastes change.
Southern states like Alabama also have been offering tax incentives to lure automakers.
Hyundai, for example, received $252.8 million in tax breaks, worker training, road improvements and other incentives from the state and local governments. Alabama officials have said the 2,000-plus jobs that the plant will create justify the incentives.
Hyundai officials, whose grand opening included remarks by former President George H.W. Bush, said Friday they want to catch up with the quality and massive production touted by Japanese leader, Toyota. And they're noticeably patterning their management and production strategy after Honda and Nissan as well as Toyota.
Bob Cosmai, president of Hyundai Motor Manufacturing America, said Friday he's more concerned with competing with the top three Japanese automakers -- Honda, Nissan and Toyota -- than the Big Three.
"We just think our products line up a lot better," Cosmai said.
Toyota Motor Corp. and GM, the world's two largest automakers, had the top vehicles in 15 of 18 categories in a survey of 2005 models released this month by research firm J.D. Power and Associates.
Hyundai has risen in the ranks in the past 15 years, though it initially had an image of poor quality and saw its lowest sales volume in 1998. The Korean automaker fared well in this week's J.D. Power initial quality report, with the new 2005 Hyundai Tucson having just 99 problems per 100 vehicles compared to the industry average of 118 problems per 100 vehicles.
Hyundai's new quality-over-quantity attitude is evident, especially at the Montgomery plant. The company's goal is to produce 150,000 Sonatas this year at the 2 million square-foot facility and hopes to reach 300,000 when the production line is at full capacity.
"But we're not going to sacrifice quality for speed," Cosmai said.
Bush, in his remarks, said he disagreed with those who predicted a "great sucking sound" of American jobs being lost to foreign workers under global trade initiatives. He said he believed they would bring jobs to this country, citing Hyundai's plant as an economic plus for Montgomery and Alabama.
Hyundai, like other Asian automakers, is also boasting successful sales numbers as domestic companies watch their market share shrink. Hyundai sold 40,958 vehicles in April, up from 34,415 the year before. It sales so far in 2005 are up nearly 15 percent over last year.
As well, Hyundai's U.S. market share for the first four months of the year was 2.6 percent, up from 2.3 percent at the same point last year, according to research company Autodata Corp. GM's U.S. market share, in contrast, was 25.4 percent through April, down from 27 percent a year ago. Ford's U.S. market has fallen from 19 percent to 18 percent during the same period.
Former Big Three employees now at the Hyundai plant say the company's recent strides are a refreshing change.
"It's being a part of a younger company and not being so entrenched in tradition," said Mark Stover, who worked at the GM plant in Lordstown, Ohio. "Here there's a new way of doing business and they're more open to innovation."
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The Detroit News.
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