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Twenty years after first exporting cars to North America, Hyundai Motor is witnessing a deep sales crisis there. Although the company has managed to stake out a 3 percent share of the U.S. auto market, the brand's once-competitive prices are rising as the won continues to appreciate against the dollar. The yen, meanwhile, has fallen to a 13-month low, allowing Japanese rivals like Honda and Toyota to drop their prices. Hyundai's ongoing labor strife in Korea, which flared back into the news last week, only serves to worsen the situation. In an effort to deal with both problems, Hyundai is turning to its U.S. workers, ratcheting up production at its Alabama plant. "The Alabama factory is just more reliable than our Korean plants," a Hyundai official said.
¡ß As the won goes up, so do prices
On a sunny afternoon last week, the show room of Capital Hyundai, a dealership in Montgomery, Alabama, was virtually empty. Where were all the customers? Shopping for Japanese cars, Manager Bob Meridith said. "With the yen down, Toyota and Nissan are offering discounts of thousands of dollars. But thanks to the strong won, our prices are getting higher," he said. Meanwhile, inventory is piling up, Meredith said, pointing to the 79 Sonatas on his lot, five or six times the usual number.
Steve Wilhite, vice president of Hyundai Motor America, said, "Just two or three years ago, we were much more competitive because our prices were about 15 percent lower than Toyota's. But that difference has narrowed to less than 6 percent." With the current exchange rate, Hyundai has raised the prices on its 2007 flagship Sonata by $231 and its Tucson crosser SUV by $439. The compact Avante (known as Elantra overseas) has seen its sticker rise by $1,313, putting it in the same range as the Toyota Corolla. And the subcompact Verna (known as Accent overseas) now costs more than Toyota's Yaris, its main rival.
Hyundai dealers across America are concerned, and the news of the labor unrest has only made them more anxious. "Why is it that every two months or so we hear some news about another strike at Hyundai?" a dealer in Detroit asked. "Last year when gas prices were up we had a rush of orders for our fuel-efficient models. But because of the union's long strike last summer, the cars didn't arrive on time," the dealer said.
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Business was slow at Capital Hyundai, a dealership in the city of Montgomery in the U.S. state of Alabama, January 10 with few customers seen.
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¡ß Getting the work done in Alabama
Hyundai is hoping its American plant can help, moving to increase production this year at its Alabama plant from 230,000 vehicles to 300,000. While Hyundai workers in Korea were stewing last week, a visit to Alabama plant found their counterparts in Alabama working hard. Ahn Joo-soo, president of Hyundai Motor Manufacturing Alabama, pointed out the differences. "Without having to notify each employee, we can immediately readjust the production rate of each model according to its sales levels," he said. "Here they work exactly eights a day, with a 10-minute break every two hours and a 45-minute lunch. And nobody complains if we need them for an hour or two more a day."
Those workers have helped Hyundai's Alabama plant place number 10 out of 37 auto plants in North America in 2006 in terms of quality, according to JD Power, a U.S. quality assessment agency. The facility was able to reach that ranking after just one year in operation.
The biggest difference in Alabama is the lack of a labor union. According to Hyundai Motor, the average wage at its Alabama plant is about $22 (about 20,000 won) per hour. That makes its wage to production ratio similar to, or even lower than, than Hyundai's Korea operations.
"We don't need a union. We're satisfied with our working conditions," said Frank Gibson, 30, a production line worker. Compare that to the situation in Korea, where union opposition has prevented the automaker from much-needed production adjustments.
"The American workers don't understand why the Korean workers reject personnel redeployments or the two-shift system that we need when model changes come up," Kim Byung-kwan, managing director at the Alabama plant, said.
The Korean workers should watch out, said Keith Duckworth, vice president of Hyundai's Alabama plant. "The Hyundai union should pay attention to what happened at GM and Ford. They were once the top auto makers in the world, but because of their hard-line unions, they're suffering badly," he said.
(englishnews@chosun.com )
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