Hyundai's U.S. Hopes Ride on Hope Hull

HOPE HULL, AL — The McLane Garrett Cattle Co., Winn Dixie Retail Support Center and CocaCola Bottling plant near this tiny hamlet on Interstate 65 a few miles south of Montgomery soon will have a new — and unlikely — neighbor: Hyundai Motor Co. Ltd.

Buoyed by its relatively recent success in North America, the South Korean auto maker broke ground on April 16 last year for its first U.S. assembly plant on 1,620 acres (656 ha) of flat land here that previously was comprised of small farms.

Construction is expected to be completed by June 2004, with trial production starting a month later. The first Sonata midsize sedan is scheduled to roll off the line in March 2005, followed by the first Santa Fe SUV in January 2006. At full output in 2007, the plant will be capable of building 300,000 units annually.

The fully integrated, 2 million sq.-ft. (186,000 sq.-m) plant, patterned after Hyundai's Asan facility in Korea that currently builds Sonatas, will produce engines and stampings for the next-generation Sonata and Santa Fe, which are built on the same platform.

After a see-saw record in the U.S. and Canada during the 1980s and 1990s, Hyundai's sales grew from 244,391 in 2000 to 375,119 last year, all imported from Korea.

“They needed North American capacity,” says Steve Sewell, executive vice president of the Economic Development Partnership of Alabama, a privately funded organization of 69 companies that helped land Hyundai. The auto maker is investing $1 billion in Hope Hull, which is scheduled to be annexed by the city of Montgomery, the state capital and center of a metropolitan area of some 300,000 people located mid-state. Sewell's group and city and state authorities provided $252 million in incentives, including $54.8 million for training.

Hyundai considered numerous sites — and incentive packages — before settling on the Montgomery area. The state of Ohio was a finalist, and Kentucky (the Louisville area) and Mississippi were in the running, says Bill Lang, spokesman for Hyundai Motor Mfg. Alabama (HMMA), which is responsible for the project.

At full capacity, the plant will employ 2,000, including 1,600 hourly workers and 400 salaried employees, he says.

Wages haven't been set, but Lang says they'll be “competitive” with other automotive jobs in Alabama, indicating something in the range of $17 to $21 hourly at the outset.

An Auburn University study indicates Hyundai's investment ultimately will create 8,000 direct and indirect jobs with an annual payroll of $280 million. Jobs are limited to Alabama residents as part of the deal.

Sewell says suppliers signed on so far have committed more than $500 million to facilities that will generate 3,355 jobs to serve the Montgomery operation.

Thirteen major suppliers, many of them Korea-based with longstanding ties to Hyundai, already are building new facilities in the state, most within a 100-mile (162 km) radius of the site. Shin Young Metal Industries, for example, has invested $110 million in a plant to make frames in Luverne, AL. Employment is pegged at 400. SHR & Co., also Korean, has built a $20 million facility at Enterprise, AL, employing 350 to manufacture hoses and tubing.

Other Tier 1 suppliers include Hyundai Mobis, which will invest $30 million and hire 430 to make chassis components, instrument panels and other components; Halla Inc., which is investing $28 million to make climate-control and front-end modules in Shorter; and Lear Corp., which reportedly plans a $10 million facility employing 300 near Montgomery to supply seats and wiring harnesses.

That suggests more investment and jobs are on the way in a state that just a decade ago was an automotive unknown but now is hailed by some as “The Detroit of the South.”

And it's possible Hyundai could add models of its subsidiary company, Kia Motor Corp., to the Montgomery mix at some future date.