Hyundai Motor Corp.'s rivals may dread the start-up of the carmaker's $1 billion U.S. plant because of the competition it represents. But suppliers also have something to fear: Hyundai's project is giving more than a dozen Korean suppliers their first foothold in North America.
The official plant launch last week in Montgomery, Ala., simultaneously triggered a new North American chain of Korean-owned supplier factories across that state. And this at a time when the U.S. Big 3 are shopping Asian markets such as Korea and China for lower-cost suppliers.
Hyundai will build 300,000 Sonata sedans and Santa Fe SUVs a year in Alabama, along with their engines. The automaker is trying to price its vehicles slightly below competing vehicles from Honda, Toyota and Nissan. But until now, Hyundai has been an import-only brand.
To begin producing products locally, Hyundai's suppliers -- many of them unknown in North America -- have invested some $700 million in plants in Alabama, according to data from the state. About $600 million of that came from Korean companies.
The flow of U.S.-made, Korean-brand parts to the Montgomery plant includes sunroofs, instrument panels, seat frames, drivetrain and chassis parts, hose pipes, lighting, metal stampings, batteries and glass.
"It does stir the pot," says Jim Gillette, director of supplier analysis in the Grand Rapids, Mich., office of CSM Worldwide Inc. "Some of the suppliers we work with are concerned. On the other hand, Hyundai also represents an opportunity for some of them to go after new business."
|Korean suppliers' American plants|
|Korea-based suppliers to Hyundai's Alabama plant|
|Daehan Solution Co. Ltd.||Sun visors, interiors|
|Dongwon Autopart Technology Alabama||Door frames|
|HS Automotive Alabama Inc.||Weatherstripping, tubing|
|Hwashin America Corp.||Chassis, drivetrain parts|
|Hysco America Co.||Steel sheeting|
|Hyundai Mobis||Cockpits, chassis components|
|Pyongsan America Inc.||Hose assemblies|
|SCA Inc.||Plastic components|
|SL Corp.||Lighting systems, gear shifts|
|Seoil America Inc.||Sealants, undercoatings|
|Sungwoo USA Corp.||Batteries|
|SMART LLC||Tailgates, hoods, sunroofs|
Competition from overseas is nothing new. A wave of suppliers arrived from Japan in the 1980s and 1990s. And for the past several years, suppliers from Europe have gained ground with their own North American plants.
But building a U.S. factory is only the beginning. Some confident Japanese suppliers initially failed to win any Big 3 business after investing here in the 1980s, Gillette recalls. And French-based Valeo SA has struggled with its North American business plan.
Yet Hyundai's beachhead has already paid off for its largest supplier, affiliate Hyundai Mobis. The multi-product parts maker is pegged to produce chassis modules for the redesigned Jeep Wrangler scheduled to be built next spring.
You may e-mail Lindsay Chappell at [email protected]