Hyundai Shrugs Off Crisis, Opens Plant in Czech Republic

Nov. 10, 2008
The $1.45 billion plant will produce small Hyundai i30 cars, aimed at customers looking for low price and consumption.

Hyundai officially opened what it calls Europe's most cutting-edge car plant in the Czech Republic on Nov. 10, despite the global financial crisis forcing production cuts across the car industry.

Czech Industry and Trade Minister Martin Riman said in his speech that "the time Hyundai officials have chosen to start production is not exactly ideal," but the officials were quick to brush off concerns about the global downturn.

"The crisis is not an issue here. We have just started," Hyundai Motor Manufacturing Czech (HMMC) spokesman Petr Vanek said after the ribbon-cutting ceremony.

Built on land largely used to grow cabbages near the Czech border with Poland and Slovakia, the 1.1-billion-euro (US$1.45 billion) plant has started last week to produce small Hyundai i30 cars, aimed at customers looking for low price and consumption.

On Nov. 10 about 300 guests were invited to watch three cars -- blue, white and red to represent the Czech flag -- drive past the belt on which they were assembled after the ribbon was cut.

HMMC president Kim Eokjo said the company would weather the crisis by focussing on small cars, and because of the cost-saving technological quality of its facility. "I believe our sales will grow," he added.

On many leading auto markets sales of big, heavy-fuel consuming vehicles have slumped in the past 12 months in response to a surge in fuel prices and to increasing awareness of environmental issues. And in the past few months, auto sales generally have been hit by dark prospects for economies and consumers.

Renault is sacking almost 4,000 staff. Several German carmakers have issued profit warnings and said they will cut production, with assembly lines already idle at BMW and Opel, and temporary workers facing layoffs at Volkswagen.

Volkswagen's Czech unit Skoda Auto is to reduce output from 759,000 to 728,000 cars this year because of lower demand caused by the financial crisis.

General Motors and Ford Motor Co. announced third-quarter losses and cash problems last week, causing president-elect Barack Obama to promise aid to the sector at his first press conference after the election.

And even Hyundai was not spared. Last week, its U.S.-based unit producing the Sonata sedans and the Santa Fe sports utility vehicles, said it would run a reduced production schedule for the rest of this year, with the plant idle for 11 days.

In stark contrast, the Czech Hyundai plant is planning to raise workforce from the current 1,800 staff to 2,200 by the end of the year and to 3,400 by 2011.

HMMC president Kim admitted the Czech plant did not have secured contracts for the 185,000 cars it expects to turn out in 2009, against a capacity of 200,000 units, but he added this was not an issue on the global scale with the plant making five percent of the total output.
In October, global Hyundai sales rose by 12% to 269,958 units, the best monthly figure in memory, owing to demand for smaller cars. Sales of cars produced outside South Korea increased by 27%.

The Czech-based venture, including Kia Motors which has a partner plant in neighboring Slovakia, expects to produce six million cars in 2010-2011, said Kim.

Copyright Agence France-Presse, 2008

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