Originally created 05/21/05

Hyundai's new plant puts pressure on Big Three

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 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 production line on display at Friday's grand opening, revealing the South Korean automaker's first U.S. plant.

Experts say former Big Three employees like Kalson are indicative of Asian brands putting pressure on domestic automakers by building and expanding new plants, offering new models and constantly innovating.

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 traditional Big Three - Ford, GM and Daimler-Chrysler.

"We just think our products line up a lot better," Cosmai told reporters Friday, saying the Japanese are at the forefront of vehicle safety.

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 ate the traditional Big Three and an aging work force have 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 that 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.

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.

Toyota Motor Co. and General Motor Corp., 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 quality report, with the new 2005 Hyundai Tucson named as a runner-up in best entry SUV category, behind the Toyota RAV4. Hyundai's Sonata was runner-up in the best entry midsize car after the Chevrolet Malibu/Malibu Maxx.

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, particulary GM, watch their market share shrink. Hyundai Motor Manufacturing America, a division of Hyundai Corp., sold 40,958 vehicles in April, up from 34,415 the year before. After adjusting for one extra selling day last month, sales grew 14.6 percent.

Still, 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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