Kia Motors Corporation on Monday announced plans to build its first plant in the United States.
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A US$1.2bn vehicle manufacturing facility in West Point, Troup County, Georgia, will begin production in 2009.
The investment was announced at a ceremony in Seoul attended by KMC president and CEO Euisun Chung and Georgie state governor Sonny Perdue.
The Kia plant will be located close to the border with the state of Alabama which is already home to Kia parent Hyundai Motor’s first US plant (about 90 miles away, near Montgomery) which commenced full production last year. Mercedes-Benz also has a plant in the state near Tuscaloosa.
Proximity to the Hyundai site – combined with a $258 million incentive package from Georgia state – helped sway Kia, Georgia state officials told The Associated Press.
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By GlobalDataWest Point is about 100 miles south-west of Doraville, an Atlanta suburb that is currently home to a General Motors minivan plant slated for closure in 2008. Kia’s plant may offer new opportunities for experienced workers laid off from that GM facility and Ford’s doomed Taurus plant – also in Atlanta – that is slated for closure by 2008.
Locations in Mississippi and Tennessee had also bid for the Kia plant, according to wire service reports.
The new manufacturing facility is expected to produce 300,000 vehicles per year at maximum capacity and will be built on 2,200 acres. The plant will employ approximately 2,500 local workers, while around a half dozen suppliers are expected to set up operations in Troup County, creating an additional 2,000 jobs.
Analysts told the Reuters news agency that overseas production is crucial for Kia as a rising won undercuts profits earned abroad. Kia sells about three quarters of its cars overseas.
“It will definitely be positive for earnings,” Suh Sung-moon, an analyst at Korea Investment and Securities, told Reuters. “The main reasons for the move are likely to be to guard themselves against foreign exchange risks, and Kia also wants to reduce trade friction with the US government.”
“Kia Motors has entered an aggressive growth phase in the U.S and the decision by KMC to build a manufacturing facility in West Point, Troup County, Georgia is the latest example of the company’s commitment to the marketplace,” Chung said in a statement.
Kia is currently building an $87 million US corporate campus in Irvine, California (south of Los Angeles), that is expected to open in December this year, and will include a 6,039 square-metre design centre.
Kia has invested more than $300 million in the United States over the last four years, including a research and development centre in Ann Arbor, Michigan; a custom-built vehicle proving ground in Mojave, California and an automotive design studio in California, which is shared with Hyundai Motor America.
Kia expects its North American sales (US and Canada) to climb by 15% to 350,000 units in 2006, and further grow to 800,000 units by 2010.
Graeme Roberts
