New cars spill off the Kia Motors assembly line in every 60 seconds. The automaker’s nearly four-year-old plant near the Georgia-Alabama line is close to maximum capacity, humming 24 hours a day, often six days a week.
That crunch – plus labor issues at Kia and Hyundai factories at home in South Korea – could give Georgia an opening to lure more production.
Gov. Nathan Deal recently met in Korea with top Hyundai officials, and one of his pitches was that Georgia lacks the unionized workforce that has caused headaches at the company’s Korean plants.
“We’ve helped them to achieve great success with the Kia brand, and we believe we could do that with any other facility if they ever chose to expand,” Deal said last week in an interview.
Both Kia and Hyundai need to build more cars in the United States to avoid supply issues, auto industry analyst Joe Langley said.
“If they lose a week of shipments (from Korea), it can’t be made up here in America,” said Langley, of IHS Automotive in Michigan.
Auto plants are among states’ most coveted economic development coups. Even the hint of a new auto plant can cause job-hungry states to scramble.
Georgia’s Kia plant employs about 3,000 people, and suppliers account for another 14,000 jobs in two states. Former Gov. Sonny Perdue’s administration ponied up a quarter billion dollars in various incentives to win the West Point project.
No specific expansion project is under discussion, state and company officials said. Economic development officials in Alabama, where Hyundai builds Sonata and Elantra sedans, plan a South Korea trip of their own.
Meanwhile, Hyundai has warned its Korean workers it could shift production overseas if labor tensions don’t ease. Such talk could be aimed at extracting concessions out of unions there, but Georgia officials are happy to take any opportunity to lobby for more suppliers or a new plant, two senior officials said.
The West Point Kia plant along I-85, 75 miles southwest of downtown Atlanta, is on pace to build about 360,000 vehicles this year, said Randy Jackson, vice president of human resources and administration for Kia Motors Manufacturing Georgia (KMMG).
“We’re pretty much at full capacity,” he said.
Kia builds the popular Kia Sorrento and Hyundai Santa Fe crossovers, as well as the Kia Optima sedan at the Georgia plant.
But Jackson declined to discuss potential expansion, saying, “The market will determine what our next steps are.”
The 700,000-plus Hyundais and Kias built in Georgia and Alabama are sold solely in North America, though some versions of the same models are built elsewhere.
The U.S. plants are at full capacity, and Hyundai and Kia still import most of the models they sell in North America, Langley said.
Hyundai and Kia sales in the U.S. jumped a combined 71 percent from 2009 to 2012, according to IHS Automotive. Combined sales are expected to grow to about 1.37 million vehicles in the U.S. in 2015.
Langley said he expects Hyundai and Kia to boost U.S. production — either by expanding their existing plants, or building new ones.
The focus of Deal’s trade mission to Asia last month was trying to reverse decades of middling success in wooing business from China. But Deal started the trip in South Korea and met with Hyundai Chairman Chung Mong-koo.
Two senior Georgia officials with direct knowledge of the talks said Deal told Hyundai the state already has a trained workforce ready if the company was prepared to expand.
About the same time, Georgia Lt. Gov. Casey Cagle paid a visit to the West Point Kia plant, promising he’d be “a partner and friend” to the company, according to the LaGrange News. Kia executives have said the company has concerns about transportation issues with suppliers getting parts to the plant, and Cagle reportedly said he’d be happy to facilitate discussions with state transportation officials.
The newspaper reported that Kia maintains about four hours of parts inventory on hand and that foul weather or interstate congestion can wreak havoc on the supply chain. State transportation officials are studying ways to expand highways in the area.
In the meantime, auto suppliers continue to move to the area. One such supplier, Hyundai Dymos America, is preparing a $35 million plant near the Kia factory that could employ 300 people. Jackson said site work has started, and last week the board of the state Department of Economic Development approved an easement for utilities to connect to the site.
Jackson last month said another is considering the area.
Langley, the IHS analyst, doubts Hyundai is playing games with the states or its unions.
Any hiccups in production caused by labor stoppages in Korea would hamper sales, Langley said. Manufacturers are trying to trim logistics costs, he said, putting plants in the key sales markets.
“If they want to take it to the next level … you need to put more capacity here where you’re selling the vehicle,” Langley said.
U.S. auto sales leaders in 2012
Source: IHS Automotive.