Workers perform a final inspection on Sonata and Elantra vehicles at the Hyundai plant in Montgomery, Ala.
Bloomberg—Getty Images
By Doron Levin
June 26, 2014

Signs of Hyundai’s soaring performance in the U.S. automotive market become obvious after a only short visit to the automaker’s factory in Montgomery, Ala., where workers are exerting themselves to meet demand for cars.

Built in 2005, the highly-modern factory added a third work shift to the normal two shifts per work day to accommodate dealer orders for its Sonata family sedan and Elantra compact sedan. When three shifts weren’t sufficient, the automaker began adding Saturday overtime. By the end of 2013, Hyundai workers had managed to build a whopping 398,000 cars at a plant whose rated annual capacity is just 300,000 vehicles.

“We’ve tried to be careful not to add too much Saturday work so that our team members aren’t away from their families,” said Robert Burns, a spokesman for Hyundai’s manufacturing arm.

Although Hyundai’s sales have risen steadily since 2008, for the past two years the company hasn’t been able to keep pace with the growing U.S. market. Consequently, the company’s share of the market has fallen.

Hyundai executives in the U.S., eager to maintain growth and sales momentum, have been lobbying their South Korean counterparts for a new North American factory to satisfy demand. Hyundai’s affiliate, Kia, is similarly oversubscribed, having built 360,000 vehicles last year at its plant in West Point, Ga. That factory also is rated to build 300,000 vehicles a year under normal conditions.

Hyundai/Kia’s chairman, Chung Mong-koo, declined to expand U.S. capacity, instructing U.S. executives to concentrate instead on maintaining high quality and avoiding the problems that dogged Toyota when sales grew too quickly.

The South Korean carmaker may soon announce more capacity in any event. An unconfirmed report by Reuters earlier this month said that Hyundai/Kia now has decided to build a new factory in Monterrey, Mexico.

In the meantime, Hyundai this month began production of its seventh generation Sonata, the fourth to be sold in the U.S. Larger and more sophisticated than the model it replaces, the new Sonata displays what Hyundai calls “fluidic” styling and a raft of new comfort and safety features, including an airbag that mitigates driver leg injury in the event of a collision. Sonata and Elantra account for more than half of the Hyundai’s U.S. sales, which are approaching 750,000 on an annual basis.

Unlike the domestic automakers, which sell pickups, minivans and other truck-like models, Hyundai’s product line emphasizes passenger cars.

Dave Zuchowski, chief executive of Hyundai’s U.S. sales organization, has said he would like to sell a small crossover model and a small open-bed utility vehicle. He took over this year from John Krafcik, who became president of TrueCar, an Internet-based vehicle buying and information service.

“In May we sold almost 71,000 [vehicles] in the U.S., the best month in our history,” Zuchowski said.

With nearly 3,000 workers at the Montgomery plant earning at least the $17 an hour entry-level wage, the region’s economy has improved over the past decade. A great deal of new construction in and around the state’s capital attributable to Hyundai’s impact. A spokesman for the plant estimated its economic impact at roughly $4 billion.

If Hyundai’s new Sonata maintains the momentum of its predecessors, the pressure on workers in Montgomery won’t ease up anytime soon — even if the automaker does build a new factory.

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST