Damn The Cratering Market, Kia's Going Ahead With American Plant Plans
According to the AP, Korea’s Yonhap news agency reported last week that work could be delayed at Kia’s new West Point, Georgia factory. A wait and see approach would make a lot of sense too, considering that Kia is cutting production worldwide and that the bottom appears to be falling out of the American car market ( Hyundai sales being no exception). Except that the report was not true. “No change has been made to our schedule to complete the plant by the end of November and to start production in December (2009)”, says Kia’s Michael Choo. The $1.2b plant was announced in 2006, and will employ 2,500 workers building 300k vehicles annually at full capacity. The West Point factory is Kia’s first in the US, joining parent company Hyundai’s single factory in Alabama. This makes the Georgia Kia’s third overseas production center, joining China and Slovakia, the latter of which is the subject of a fascinating piece by the International Herald Tribune. In it the secretary general of the Automotive Industry Association of Slovakia brushes aside those who would call her country (which builds more cars per capita than any other) “the Detroit of Europe.” “We’re in a good position to grow,” Maria Novakova tells the IHT. “Frankly, we don’t want to be compared to Detroit because we don’t want to end up like Detroit.” An understandable sentiment, to be sure, and one that is poignantly underlined by Kia’s decision to build cars in the US.
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There is two good reasons I can think of off the top of my head as to why Kia would do this. 1. The US economy should start to pull out of the recession before the plant is completed. 2. Korean auto unions are *FAR* more aggressive and strike-prone compared to the US non-union workforce. The more autos Kia can make here = less clout the Korean auto-unions have in their demands. (Korean unions tend to strike on a yearly basis. So much so... that colloquially, South Koreans refer to it as the 'strike season'.)
I recall when one of the Korean mfg's (either Kia or Huyndai, I think) had their quality problems, the CEO told his engineers simply: "We are going to warrant our cars for 100 K miles. Figure out how to make cars that meet this warranty". The Japanese did it, the Koreans did it, and I have no doubt that the Chinese will get to that point a lot faster than people believe.
Just slightly off topic but Toyota opened it's new Woodstock, Ontario plant today. http://cnews.canoe.ca/CNEWS/Canada/2008/12/04/7629541-cp.html
I say, good move Kia! If they are working by Kia standards, why not?!