Hyundai Cars USA – Single-Handedly Floating the Economy of Alabama
In 2007, Business Week carried a story on Hyundai Cars USA. It was a piece called Hyundai’s House of Pain. It was about how Hyundai had expected a great deal of demand for its cost-effective passenger cars back then and built an entirely new car plant in Alabama. The recession came along then, and no one was fascinated in new cars and even if Hyundai’s cars were often thousands of dollars cheaper than the cars from the competition – from Honda or Toyota. Hyundai had to repeatedly idle the factory that year because it just had too many cars on its lots with no one to sell them to.
Fast-forward to four years later, and things could not be better for Hyundai Cars USA. In a time when expensive Toyotas are no more recognized for bulletproof quality, Hyundai’s heroic tries at improving the design of its cars, at improving quality and at giving value for money, have been perceived as specially noteworthy by customers around the country. Its ten-year warranty hasn’t gone unnoticed either. And for Montgomery, Alabama, where Hyundai car comes together, this could not be better news. Montgomery, the original capital of the Confederacy, used to be a textile town. When all the textile jobs in America were shipped out to the Far East, the town was practically without a hope in the world. Until the foreign car makers began to move in. The thing is, a car factory is not just about jobs for assembling parts. It’s about the whole ecosystem of dozens of parts manufacturers who set up shop in the area to be able to keep the supply chain going quickly and cheaply. And around Alabama, barely a month goes by that a new parts supplier doesn’t advertise dozens of new full-time jobs with great pay and benefits. It shows in the way the unemployment rate in Alabama is the lowest anywhere in the southern US.
Hyundai Cars USA and its partner car firm in the low-cost space, KIA, have two plants in Alabama, and together, they move half a million cars annually. To make up for the damage that the recession a few years ago did, sales are up to 25% this year. Up until recently, the downtown of Montgomery was a struggling rundown area. Now, the Atlanta Christian college is coming in, and there are dozens of hair salons, restaurants, hotels and entertainment venues that have sprung up, to help citizens spend what they earn.
How much did workers at Hyundai’s various plants in the area make? It’s approximately $20 an hour over a regular five-day week; and then there’s extra time on Saturdays. What causes Hyundai cars USA to enjoy the kind of demand that they do now? The cars they make in Alabama, like the midsize Sonata or the compact Elantra has seen the demand rise by 70% in one year. The fuel-efficient Elantra that sells for $15,000, competes head-to-head with the Ford focus in the Chevrolet Cruze. For levels of comfort, trim and equipment that solidly beat those cars. What is not to love?
