Hyundai Motor Group parts suppliers, representing 1,400 companies, are calling for the release of group Chairman Chung Mong-koo from prosecutors’ custody.
Lee Young-chup, chairman of the ad hoc Hyundai (Motor Co. Ltd.)-Kia Motors Corp. Suppliers Assn., tells the local media “the whole (South Korean) industry is insecure because of the absence of the Hyundai Motor leader.
“(Chung) should return to his management role as soon as possible, considering the problems of high-energy prices and unfavorable exchange rates caused by the strong won,” he says.
Chung is under house arrest for misuse of company funds and is awaiting an indictment hearing now set for May 16. His legal council is expected to argue for his release based on the theory his continued incarceration would threaten the nation’s economy.
Chung’s son, Kia President Eui-sun, also is being investigated in the embezzlement case.
Senior Prosecutor Chae Dong-wook reportedly has said he is allowing Chung to run his family-controlled conglomerate from his cell at the Seoul Detention Center, where he has been given special permission to receive more than one visitor per day.
Nevertheless, Lee Myoung-keun, CEO of Sungwoo Hitech, says he is “anxious about the situation in the Czech Republic.”
Lee says his company, in which he holds a 39.1% stake, has plans to build a $214 million facility to supply the upcoming $1 billion Hyundai plant approved by the Czech government this week, but Chung’s absence from the company is causing grave concerns.
Sungwoo Hitech, which makes a wide range of stamped steel body parts, operates five plants and a technical center in the Bunsan area of Korea. It also has two affiliated operations in China and one in India. All three offshore plants support Hyundai..
A Hyundai spokesman tells Ward's the plant will be built, and a signing ceremony is planned in Seoul for May 17. At full capacity, the facility, which comes on line in 2008, will be capable of building 300,000 vehicles and 600,000 transmissions annually.
Meanwhile, the supplier group has issued a statement that says in part, “Our concerns, including a tarnished brand image, sluggish exports and delays in overseas plans are becoming a reality.”
The group represents two separate supplier associations, one for Hyundai and the other for Kia. In actuality, the parts manufacturers serve both auto makers with the same or similar products.
Hyundai and Kia account for approximately 75% of the suppliers’ combined sales.
