Hyundai focuses on automation

MONTGOMERY, Ala. -- Nearly a dozen international automakers faced down the challenge of building cars in the United States before Hyundai Motor Corp. ever set foot in Alabama. But Hyundai had a different challenge:

The Korean automaker needed to begin manufacturing in one of the world's most expensive markets without losing its ability to price vehicles below those of its Japanese competitors.

Its solution was a $1.1 billion auto plant. The factory opened last month in Montgomery.

The plant relies on a combination of modular outsourcing and high automation to hold down costs. There's also a substantial amount of local content to reduce transportation costs.

Once running at full throttle, Montgomery will produce 300,000 Sonata sedans and Santa Fe SUVs a year. And those vehicles will use V-6 engines made on the premises.

If that plan sounds simple, it is anything but. Hyundai's new operation is one of the most advanced auto plants in North America. It not only represents Hyundai's strategy for moving production to America, but also hints at the future of automaking in general.

To minimize the number of workers, Hyundai is using a system of material handling, stamping and body welding it says is 100 percent automated.

Steel coils are delivered into the back of the plant by automated cranes, and no human touches the material until it has been converted into finished body panels, according to the company.

Transfer machines move the steel through the blanking process, load them into stamping presses and then gather them and deliver the stampings into the body-welding area. A few Hyundai workers monitor the work, which is performed by robots.

As a result of this technology, the Hyundai operation will employ only 2,000 people at full volume. By comparison, Honda Motor Co.'s efficient plant 100 miles away in Lincoln, Ala. - it also builds 300,000 vehicles a year, and their V-6 engines - employs 4,000 people. Mercedes-Benz U.S. International Inc. is gearing up to employ 4,000 people building about half that number of vehicles, minus their engines, at its expanded plant in Vance, Ala.

Two and a half years ago, when the plant was still an excavation site and he was being interviewed for a job at Hyundai, John Kalson was understandably curious about Hyundai's strategy for starting U.S. manufacturing. Kalson was a Ford Motor Co. manufacturing manager. Hyundai was trying to recruit him from his job as plant manager of AutoAlliance International Inc., Ford's 50-50 joint venture with Mazda Motor Corp. in Flat Rock, Mich.

Mazda also had stirred up curiosity in the 1980s when it opened the Flat Rock plant. Outsiders wondered how a Japanese automaker would be able to convert a Detroit-area UAW work force into the sort of cooperative, company-loyal, product-loyal team that Mazda was accustomed to in Japan.

The Michigan venture had its rough spots. Most of them were financial, as Mazda's sales fortunes declined after the Flat Rock plant opened. Ford took a 50 percent stake in Flat Rock in the 1990s, but the operation still struggled to use its full capacity.

This year looks brighter than ever at Flat Rock. But that's because AutoAlliance has taken over production of the hot new Ford Mustang, in addition to the Mazda6.

Kalson listened to Hyundai's job pitch. He asked about the plans for automation.

"They knew what they had planned here," says Kalson, who now is director of production for Hyundai Motor Manufacturing, Alabama.

"But they kept those cards pretty close to their chest. What I had to do was learn more about Hyundai. And the more I read, the more I liked the sort of company they are."

What Kalson discovered was a changed company. Hyundai entered the United States in 1986 as a low-end brand. But quality was mediocre, and Hyundai's reputation was spotty. It attempted its first North American assembly plant in Bromont, Quebec, in 1989. But sales of the factory's Sonata fizzled. Production halted after only four years.

More recently, Hyundai's sales and quality have improved steadily. Last year the Korean-made Sonata topped the J.D. Power and Associates Initial Quality Study with the fewest problems per 100 cars of any vehicle sold in America.

That level is down slightly in the recently released Initial Quality Study. But Byung-Kee Suh, Hyundai's president of global quality assurance, observes that the Sonata was still No. 2 in its segment in Power's quality ranking.

"And that's not bad," he said during a visit to the Alabama plant last month.

Michael Robinet, an industry consultant with CSM Worldwide in Troy, Mich., says Hyundai, as a manufacturer, bears little resemblance to the Quebec automaker of 1989.

"They've spent a lot of time studying the Japanese in the past few years," Robinet says.

"They've looked at what the Japanese and Europeans have done right in North America and what they've done wrong. They've hired good people out of those companies. And they've also done something very important. They have moved their chaebol over the U.S. That will enable them to basically do in America whatever they have been able to do in Korea."

The Korean chaebol has a similar meaning as the Japanese keiretsu. Both refer to the tight network of suppliers and automakers in Asia's key production markets.

Hyundai relies on a network dominated by megasupplier Hyundai Mobis and steel supplier Hysco America Co.

Unlike its venture in Quebec, where Hyundai relied on parts shipped from Korea, Hyundai came to Alabama with a full force of familiar Korean suppliers in tow.

While the automaker itself invested $1.1 billion in Alabama, its new U.S. supply chain invested another $700 million in that state.

Mobis delivers chassis systems to the Montgomery plant, along with cockpits and front and rear modules. SL Alabama LLC delivers lighting modules and gearshifts.

The project also is using North American suppliers. ArvinMeritor Inc. provides door modules and, through a joint venture with Korea's Sejong Industrial Co. Ltd., mufflers and catalytic converters.

Seats come from Lear Corp. Wire harnesses are produced in Alabama by a joint venture between Lear and Korea's Kyungshin Industrial Co. Ltd.

And in a strategic move that is being attempted elsewhere in the industry, Hyundai is simultaneously producing its own engines at the Montgomery site.

The V-6 engine line uses heads and cylinders cast in Sylacauga, Ala., by Teksid Aluminum Components Inc. Hyundai workers then machine the components and assemble them into finished V-6s in unison with vehicle production in the plant.

Honda also builds engines and vehicles in unison at its Lincoln plant. Toyota's Georgetown, Ky., car plant also builds engines, as do Subaru of Indiana Automotive Inc. in Lafayette, Ind., and General Motors' Saturn plant in Spring Hill, Tenn.

The strategy allows the automakers to control quality, reduce transportation costs and time, and centralize production planning for both the vehicle and supply chain.

But it's the marriage of in-plant automation and outsourced content that clearly dominates the picture at Hyundai in Alabama.

In body weld, workers inspect almost 2,000 welds made by 254 robots. But Hyundai's robot force is only part of the process of creating the 2006 Sonata. Suppliers are responsible for another 4,100 of the vehicle's welds.

Once welded into a body-in-white, the Sonata enters an elaborate paint system, created on a turnkey basis by Durr Industries Inc., that features a long 110,000-gallon dip tank.

Typically, automakers dip a steel vehicle body and then raise it for inspection before it gets the next layer of coating.

At Hyundai, automated carriers roll the bodies in 360-degree circles, flipping them end-over-end 12 times through the long dip tank as they proceed through the paint process.

Hyundai executives say the resulting upside-down submersions allow for a better coating with no trapped air bubbles.

And the robotic carrier arms make for a cleaner paint environment, replacing the chance of contamination that can come from traditional overhead carrier systems.

On the final assembly line, workers continue to put trim and wiring into place. But an automated arm lowers the vehicle's air conditioning unit into place from an overhead delivery system.

Heavy automation also represents risks, Robinet warns.

"Lest we forget Poletown," he adds, referring darkly to General Motors' 1980s attempt to automate its Cadillac plant in Detroit, nicknamed the Poletown plant. It had so much cutting-edge technology that workers struggled to keep it working correctly. The results: high expense, low output.

"There will be a great deal of maintenance required to keep the new technology performing as intended," Robinet says. "But I'm confident the Koreans can pull it off. They've shown a real interest in embracing new technology in the past few years, both in the factory and in the cars themselves.

"What I think they will get out of the Montgomery plant is a lot of reassurance about quality.

"They're looking to automation to give them a lot of consistency as they build vehicles around the world, in Korea, in China, in the U.S. They're serious players today. They know they've got to compete against the Japanese on quality now, and this is how they will do it."

You may e-mail Lindsay Chappell at