Kia Motors Corp. confirms it will build a new $1.2 billion vehicle manufacturing facility in West Point, GA.
The South Korean’s auto maker’s first U.S. plant, which will employ 2,500 workers, will begin production in 2009 and produce up to 300,000 vehicles annually.
The announcement, made in Seoul at a ceremony attended by Kia Motors President E.S. Chung and Gov. Sonny Perdue, concludes a pitched battle among four Southern states to win the facility, with Mississippi and Georgia as the frontrunners.
The decision to locate in West Point was based primarily on “maximizing synergies with theMotor Co. Ltd.’s Alabama plant, availability of a qualified workforce in the area and strong logistical and transportation infrastructure,” a Kia official in Seoul tells Ward’s.
Kia's E.S. Chung and Georgia Gov. Sonny Perdue cement the deal.
and Kia are part of the Hyundai Automotive Group.
The Kia official says Georgia offered a financial package of $410 million.
“The $410 million in incentives includes plant site infrastructure, financial assistance for job creation and training, project promotion and tax reductions,” he says, noting he cannot confirm reports out of Atlanta that peg some of the incentives provided in the package.
Local media reports say Kia will receive $75.9 million in tax credits over a 5-year period, $20.2 million for a job-training facility to be built on the plant site property, $60.5 million to prepare the site and $130 million in tax abatements from the City of West Point and Troup County over a 15-year period.
The Kia plant will be constructed on a 2,200-acre (890-ha) site along Interstate 85, where an interchange will be constructed.
Reports say the plant will contain 2 million sq.-ft. (185,800 sq.-m) of floor space, with two vehicle assembly lines, an engine plant, press shop, paint shop, training center and visitor center. That would make it quite similar to Hyundai’s operation in Montgomery, AL.
The Kia official confirms the facility will have its own engine plant but declines to say which engines will be produced there. He also says the exact vehicle models to be produced there have yet to be selected.
“We have no firm decision on the exact models, but we will produce both passenger cars and (utility vehicles), whether SUVs or MPVs (multipurpose vehicles),” the official says. “We will be very competitive within the North American market, but the exact models are still under review.”
Kia last year sold 275,851 vehicles in the U.S., a 2% increase over prior-year. The auto maker now says it is pushing for 350,000 sales in 2006 and aims to hit 800,000 (including Canada) by the end of the decade.
In order to meet its aggressive plans, Kia realized a U.S. plant was mandatory. But another consideration was South Korea’s strong currency. The won has risen 3.2% against the dollar so far this year and gained 2.7% last year.
Site work on the new plant will begin immediately, the Kia official says, with a groundbreaking ceremony set for April.
According to local reports, the State of Georgia is paying $37.5 million for the property, which is being acquired from 35 owners. It will be transferred to Kia Motors ownership for $2 million. However, the Kia official says he cannot confirm these amounts.
Additionally, 2,000 jobs will be created by five to six major suppliers that will set up operations within the area, the official says. The supplier operations could be based within Troup County or across the state line in Alabama, where more than 40 Hyundai suppliers are located.
Mississippi originally was cited as the favored state and Meridian as the probable location. The state reportedly offered a $1 billion incentive package. But Kia changed its direction and began negotiating earnestly with Georgia in November, the Kia official says.
Local media reports say a Mississippi industrial development spokesperson who was bandying about the $1 billion figure was speaking out of turn. Such a package was never available, Mississippi officials now say.
“I don’t think it would be appropriate for us to comment on any offers made by Mississippi or say anything about why we did not locate there,” a Kia spokesperson says.
The new West Point plant is the largest in several investments Kia is making in the U.S. Total investments prior to the plant announcement was $300 million.
They include an $87 million corporate headquarters complex under construction in Irvine, CA., that includes a 65,000-sq.-ft. (6,039-sq.-m) design center; a state-of-the-art research and development center it shares with Hyundai in Ann Arbor, MI; and a vehicle proving grounds in Mojave, CA.
Insiders say there have been abundant signs for some time that the small town of West Point, located outside of LaGrange, had landed the deal.
After putting the West Point plant location site under purchase options, several Georgia State Properties Commission officials met with Kia officials in Irvine, CA, to hash out a deal on Feb. 11.
During a 6-day session, the group worked out a tentative agreement for the site, and Georgia officials returned victorious Feb. 17.
Next, Hyundai Group Chairman Chung Mong-koo announced plans to visit the Hyundai plant in Montgomery. But his real goal was to examine the West Point site.
Before he got there, his son, Chung Eui-sun, president and CEO of Kia Motors, inspected the site on Feb. 21, along with Kia Senior Vice President Ahn Byung-mo.
Local media reports says Chung arrived in West Point Feb. 23 with the the Kia and Georgia entourage. He inspected the site, talked with development officials, gave it his approval and proceeded to Montgomery where he visited the Hyundai plant.
Georgia economic development officials and some Kia officers put the finishing touches on the deal over dinner that night, and a senior Georgia official sent a message via Blackberry to the governor telling him everything was wrapped up.
The deal in rough form was finalized in Irvine on March 1, and plans for making the announcement began. Despite all the activity and the obvious presence of the Hyundai and Kia officials in West Point, no word of the final deal got out until the official announcement in Seoul.