Hyundai Czech Plant Gets OK; Kia Slovakia in Trial Production

Czech Republic representatives are scheduled to arrive in Seoul this week to sign an agreement for a new €800 million-€1 billion ($1 billion to $1.3 billion) plant Hyundai Motor Co. Ltd. plans to build in Nosovice, an industrial park located about 200 miles (320 km) east of Prague.

At full capacity, the plant will be capable of building 300,000 vehicles and 600,000 transmissions annually, the Czech industry ministry says. The facility is expected to come on line in 2008.

Located within a 3-hour drive of Kia Motors Corp.’s new plant in Silina, Slovakia, the Hyundai complex reportedly will employ about 1,000 workers by 2008 and up to 3,500 workers by 2010, once production reaches full capacity.

A Hyundai spokesman confirms the plant is a “go,” despite the recent arrest in Seoul of Hyundai Motor Group Chairman Chung Mong-koo on misuse of company funds. Chung’s son, Kia Motors President Chung Eui-sun, also is being investigated in the embezzlement case and has been banned from leaving the country.

“We’ll make an announcement when (the Czech representatives) arrive, but they will definitely come this week,” the spokesperson tells Ward’s.

Kim Dong-jin, Hyundai Motors vice chairman and co-CEO, has full authority for signing any plant expansion contracts in the absence of Chung.

Kim, in fact, had been scheduled to go to Czech Republic for the signing ceremony last month but changed plans on the news of Chung’s imprisonment.

Czech Prime Minister Jiri Paroubek and Industry and Trade Minister Milan Urban reportedly told Hyundai executives they were willing to travel to Seoul to ink the deal.

There has been widespread media speculation that developments in the Hyundai bribery scandal would put the Czech deal on hold. However, South Korean security analysts say there is little chance of that happening, as the new plant is vital to Hyundai’s expansion plans in Europe.

Like the nearby Kia Silina, Slovakia, plant, the Hyundai Nosovice facility will use a flexible production system to build C-segment passenger cars and small SUVs, both designed specifically for the European market.

Analysts say the Hyundai and Kia plants will draw from the same suppliers in the shared region.

Kia Motors Slovakia (KMS), which is in pilot production of a new hatchback codenamed ED at its just-finished €1 billion ($1.3 million) facility, is testing various new technologies incorporated in the 534,803-sq.-ft. (163,000-sq.-m) complex.

The vehicle is the first the auto maker has designed specifically for the European market and is similar to the Kia Ce'ed concept car unveiled at the Geneva motor show in February, a KMS spokesman says.

KMS currently employs more than 1,200 workers on a single shift, and hiring is under way for a second shift. Plans call for the plant to operate three shifts, with 3,000 workers, when it attains full production in 2009, he says.

Kia is producing both gasoline and diesel engines at the complex for the new entrant. The spokesman says this is the first time a foreign-based auto maker in Slovakia is building both the vehicle and its engine.

The Zilina plant features several production technologies new to Kia, including a controlled-pressure environment with under-floor vapor and gas-emissions-ejection system, more effectively reducing pollutants in the air better than previous ceiling-level exhaust systems, the auto maker says.

The system is supplied by Czech company AZ Klima Praha.

The paint shop includes a Regenerative Thermal Oxidizer, reducing odor by 5% and total hydrocarbons 10%. The paint process is fully automated, using Robotel atomizers. Volatile organic compounds also are reduced significantly.

The automated spray process for base and topcoat will use water-soluble paints. Dupont Primer Surfacer will be used by Kia for the first time, as well as 1K Clearcoat, which requires a short 20-minute bake time.

KMS says it saved significant construction costs by eliminating the need for an energy plant. Instead, it contracts with local utility supplier Zilinska Teplarenska to provide steam for the paint shop.

The KMS plant is connected to the utility plant by a 4-mile (6.5-km) pipeline. Parts maker Hyundai Mobis has a similar arrangement for its plant located adjacent to the KMS complex.