New Hyundai Plant Should Aid Alabama Economy

John Birchard
September 9, 2004
Washington, D.C.

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Whenever the word goes out that an import automaker may build an assembly plant in the U.S., individual states wage heated competition for the opportunity to be the company's new American home. VOA's automotive reporter John Birchard has an example of why states are such ardent suitors.

An auto assembly plant not only means construction jobs to build the facility and assembly line jobs once the plant is ready to produce, it brings with it the requirement for suppliers to build, assemble and transport parts and components for the new vehicles to the assembly plant.

Take the case of Hyundai. The South Korean company is building a big plant at Montgomery, Alabama. David Echols, a senior project manager with the Alabama Development Office, points out the main attraction of such a facility.

"The economic impact of the Hyundai plant in Alabama, over 20 years, is expected to be over seven billion dollars," Mr. Echols said.

With at least four other states competing hard for Hyundai's attention, we asked company spokesman Bill Lang, why Alabama?

"There was a good work force ready here," he said. "There had been a lot of manufacturing jobs that had gone away and so there was a good work force. Where we are, we are about two and a half hours from the port of Mobile, which is good for transportation - and the state of Alabama and the city of Montgomery said that they really wanted the company to locate here."

So, how did the city and the state sweeten the pot to win Hyundai's corporate affection? According to David Echols, it was an array of enticements.

"We provided an incentive package in the neighborhood of $252 million over a period of years," Mr. Echols said. "That involved some land assistance and site preparation work, road work, training and tax incentives."

In a decade, says Hyundai's Bill Lang, Alabama has come from nowhere on the world's auto industry map.

"In Alabama 10 years ago, there were no automotive companies," Mr. Lang said. "Right now, there's the Mercedes[-Benz] plant. Honda has a plant here also, where they produce the Odyssey [minivan] and the Pilot [sport utility vehicle]. And also Toyota has an engine plant. So, I think Alabama has shown the ability to train the work force. So, I'm sure that was a factor in deciding on the state."

The Hyundai plant will be a significant operation. When finished, it will produce 300,000 vehicles a year. Bill Lang says the Korean company has a big budget for the facility.

"We're investing a billion dollars in the plant here. Our suppliers are investing another half billion in Alabama," Mr. Lang said.

Those suppliers play a surprisingly large role in the modern auto industry.

"At Hyundai, we're bringing 2,000 jobs to the state," Bill Lang said. "We are also bringing in a lot of suppliers. Originally, we thought we would have between 12 and 15 locate in Alabama. But right now, we're over 30, so those suppliers are bringing an additional four thousand jobs.

The Alabama Development Office's David Echols sees no downside to having a big automaker settle in his state.

"It provides great job opportunities for the present and future work force in the area. It's taken an area that been kind of average [in] growth and has made it more healthy, and that's been a real positive benefit," Mr. Echols said.

Production is scheduled to begin at the Montgomery plant in March 2005.