February 18, 2011
Hyundai’s Swift Growth Lifts Alabama’s Economy
By NICK BUNKLEY
In 2010, Hyundai and Kia each posted their highest sales in the United States and, taken together, surged ahead of Ford Motor Company to become fourth-largest automaker worldwide. Hyundai built 300,000 cars in Montgomery last year and sold most of them in the United States.
More than 50 companies have followed Hyundai to the Montgomery area from Korea, with executives and their families in tow. The city’s Korean population has jumped from about 100 before Hyundai to more than 3,000 today, said Su Yong Sim, president of the Korean-American Association of Greater Montgomery and a contractor who moved from Houston to help build part of the Hyundai plant.
For 2011, Hyundai is working to increase the plant’s output by an additional 10 percent, or 30,000 vehicles, Mr. Krafcik, the chief executive, said.
Hyundai’s leadership in both fuel economy and price is largely responsible for the company’s growth. The company said the vehicles it sold in January had an average fuel economy of 34.7 m.p.g., meaning it is already close to meeting future government standards without a single hybrid car in its lineup. (The new gas-electric hybrid Sonata has already arrived at some dealerships.)
At the same time, the vehicles’ quality — the subject of a billboard alongside the freeway in front of the Montgomery plant — has improved greatly, to the point that persuading shoppers to try a Hyundai is far easier, said Rob Butler, who has owned the Butler Hyundai dealership in Indianapolis since 1988.
“We’re on a lot more shopping lists than we used to be,” Mr. Butler said. “Hyundai’s really crashed through that old perception of what Hyundai used to be. Now, not only are they better-priced but they’re a better car.”
The plant builds the Sonata midsize sedan, whose sales rose 63.8 percent in 2010, and the newly redesigned Elantra compact car, which is rated at 40 miles per gallon on the highway and has a starting price under $15,000. The Elantra is expected to be a fierce competitor to the new Ford Focus and the Chevrolet Cruze, both of which also break the 40 m.p.g. barrier.
About 10 Korean restaurants, a dozen Korean churches and a few small grocery stores like the Seoul Market, which stocks items as diverse as dried anchovies and toothpaste from Korea, have sprouted around town.
Jeannie Park, who opened a hair salon after moving here from Atlanta two years ago, sees a steady stream of female customers during the week, and men jam the shop on the weekends. She admitted that Montgomery lacked some of the excitement she was used to, but that the more Koreans move to town, the more she feels at home.
“It’s more of a community here,” she said.
In West Point, Ga., where the Kia plant sits on a former cow pasture, a sushi restaurant has opened among the 19th century storefronts downtown, and a former Pizza Hut across the Chattahoochee River is now the Korean BBQ House.
Kia arrived in West Point as the area was reeling from the closure of 12 textile mills that had formed the economic base for decades. After the mills sent their work to India and China, Kia moved in, offering better pay and benefits.
“A lot of really great things are happening now,” said Ruthanne Williams, who opened the Irish Bred Pub at the center of West Point in 2009. “It’s been better than expected.”
With Kia raising the town’s profile, Atlanta Christian College announced this month that it would relocate to West Point and renovate the abandoned headquarters of one of the textile companies that pulled up stakes. A Hyundai-owned supplier to Kia, Glovis, recently turned a sprawling empty mill a few miles away into a logistics hub, adding several hundred jobs.
Montgomery’s recently struggling downtown, home to the Hank Williams Museum, has enjoyed a Hyundai-fed building boom, anchored by a new Renaissance Hotel where the televisions can be set to greet visiting executives in Korean.
Near the car plant on the south edge of town, a Hyundai subsidiary that makes electrical transformers is building a factory that was originally supposed to create about 500 new jobs. Even before construction began last year, the company had doubled that estimate, to 1,000.
The factory will undoubtedly receive a crush of job applications, much as Hyundai did when it was first increasing production.
“It was like a rock star was coming to town,” said Ashley Frye, vice president of production for Hyundai Motor Manufacturing Alabama.
Mr. Frye said that when he wore his Hyundai jacket or shirt around town, people often approached him to ask, “Are you hiring? What can I do to get a job out there?”
For more than a year, workers at the Hyundai plant have been putting in 10 hours of overtime a week as part of their regular schedule, plus occasional Saturdays. With an average regular wage of about $20 an hour, the additional overtime hours mean workers here are earning more than many workers at the unionized plants up north. The United Automobile Workers union has long tried to organize plants in the United States operated by foreign carmakers, most of which are in the South, but has yet to succeed anywhere.
“If folks looked deeply at how far we’ve gone so quickly, from having no U.S. production five years ago to where we are today, it’s amazing,” John Krafcik, chief executive of Hyundai Motor America, said. “I don’t know that any company has gotten to such a high level of local assembly as Hyundai that fast.”
While Michigan’s dependence on the auto industry caused it to have one of the nation highest unemployment rates in recent years, the presence of Hyundai and Kia has helped Alabama keep its jobless rate among the lowest in the Southeast even as textile mills continue to close.
“As far as the pay, nobody else around here can compete with them,” said Richard Watson, a former auto mechanic who was out of work for a year and a half before getting a temporary job ath the Kia plant in West Point, GA, last fall. He said some of his co-workers drove two hours each way because the plant’s jobs were in such demand.
Hyundai is running its Montgomery plant, which employs 2,650, around the clock on weekdays and occasional Saturdays to keep up with demand. Last summer, it moved production of its Santa Fe sport utility vehicle 95 miles northeast to the Kia plant to free capacity in Montgomery. Kia recently hired 600 additional workers to operate a second shift for the Santa Fe and plans a third, with 1,000 more jobs.
Both carmakers expect to easily top their 2010 sales in the United States this year. Hyundai’s sales were up 22 percent in January; Kia’s rose 25.6 percent, the highest among the industry’s larger players. Together, the two sold more than 65,000 vehicles, about 5,000 short of surpassing Chrysler. Hyundai makes its own engines in Montgomery, and transmissions for its cars come from a Hyundai-owned company Powertech, which is attatched to the Loa plant in Alabama lists 138 suppliers that support the Hyundai plant, directly or indirectly.(some also do business with the Honda and Mercedes plants near Birmingham and the Toyota engine plant in Huntsville.) These jobs have good salaries and good fringe benefits, and are more self-fullfilling than the ones that have left the area, said Seth Hammett, director of the Alabama Development Office. “The automobile business has really been good for Alabama”
MONTGOMERY, Ala. — Few people in this city 800 miles south of Detroit cared much about the auto industry until Hyundai announced it would build cars here nine years ago.
These days, Montgomery cannot stop talking about it.
Hyundai and its sister company, Kia, which opened a plant last year just across the Georgia state line, have brought thousands of wellpaying jobs to the region and even helped nurture a little Korean culture in Montgomery, the first capital of the old confederacy.
Hyundai is running its Montgomery plant almost nonstop. Rarely do more than a few weeks pass without word that another parts supplier has dozens of new positions to fill, typically offering good benefits and double the pay that the average Alabaman earns.
Hyundai, which will observe its 25th anniversary selling vehicles to American drivers on Sunday, was little more than an ambitious, second-tier brand when it chose to build its first United States car factory just south of Montgomery. But during the recent recession the South Korean company thrived as Americancs sought out cheap cars just as Hyundais were improving in quality.