Agility in Alabama

Hyundai shifts production in the US

The Korean carmaker has moved production of its highly successful Santa Fe SUV to an under-utilised plant to better use its assets and maintain its employment promise to the community as Simon Duval Smith finds out.

Hyundai Motor Manufacturing Alabama (HMMA) in the city of Montgomery was completed in June 2004 and started production in May 2005. Originally the plant had a capacity of 300,000 units per year but it is now running at around 390,000 units, as demand for the Korean carmaker’s products has grown steadily in the region. In addition to complete automobiles, the facility also makes approximately 700,000 engines, for its own use and for the nearby Kia plant in Georgia.

Indeed, Hyundai and Kia have cleverly sited their plants just 85 miles apart, allowing both plants to benefit from using the other’s capacity. The two factories are directly linked by the I-85 highway and over the years production has been shifted between the two plants. For example, Kia engines are made in the HMMA plant while some SUV production was moved from Hyundai to the West Point Kia plant in a ‘peak shaving’ exercise.

HMMA originally employed 3,000 workers in 2013 and this headcount has steadily risen as demand has increased.The company had originally invested $1.1 billion in the facility but this has now topped $2 billion, following the announcement in May 2018 that it plans to invest $388 million to build a 260,000-square-foot engine head manufacturing plant to produce its next-generation engine, which includes new technologies and components, as well as updating its existing engine plant. The engines will be used in Montgomery and at the Kia facility in nearby West Point, Georgia and construction should be finished next year.

Chris Susock
The SUV boom drives production - and jobs 

In March 2018, Hyundai unveiled a redesigned Santa Fe SUV designed to buttress the OEM’s push to better cater to the SUV-hungry US market. This is assembled entirely at the Montgomery facility. The plant was established to build sedans such as the Sonata and the Elantra and thrived for many years as US buyers remained enthusiastic about saloon cars. When fuel prices came down, so buyers started to look anew at the thirstier SUVs and demand for saloons dropped. The plant started building some Santa Fes two years ago but was still rolling out too many cars, leading to layoffs of some temporary employees and mid-week shutdowns of the assembly line. The company even slowed the speed of the line to keep full-time employees working during the downturn. 

“We’re not in full capacity utilisation where we’d like to be,” says Chris Susock, Vice-President of Production Operations at the plant. “But since June 2018, with the launch of the Santa Fe, we have raised the level of capacity.” There have been no additional staff hired for Santa Fe production but $52 million has been spent on robot programming, retooling and logistics. The Santa Fe was previously built in the Montgomery plant but production was shifted to the nearby Kia plant in August 2010, after HMMA had made 400,000 of the SUVs. To streamline production of the ‘new’ SUV line, Susock created a launch team, using 36 HMMA production employees from the general assembly area. The 36 team members were destined to become trainers for other staff at Montgomery and they spent some time at the Kia plant in Georgia, where the Santa Fe was already being assembled. “Each of these individuals are subject matter experts within their processes,” says Susock. 

Supplier opportunities and expansion

When it was built, the plant was expected to generate an additional 5,500 jobs and $500 million in investments from suppliers, benefiting the local area and further afield in the US. Many of the suppliers were already in the region supplying the Mercedes, Honda and Toyota plants in the state. The success of the HMMA plant and the availability of local suppliers led Hyundai/Kia to invest over $1 billion to build the Kia Motors plant in West Point, Georgia. 

With all the increases in Hyundai and Kia production, I ask Susock whether he is running low on capacity at Montgomery and does he have plans for expanding the site in the near future. “There no plans for expansion at HMMA. The capacity of our plant is 390,000 units per year, increased from the original projected 300,000 units by careful organisation and better use of existing resources,” he says. 

I press him on this point and mention that there have been rumours about plans for expanding the Montgomery plant with a $270 million investment in the second half of next year. This would allow the plant to produce the Tucson SUV, the subcompact Kona and a pickup. “Hyundai Motor Company is investing additional resources to support the launch of the Theta III engine in the US. The plant currently produces the Theta II. The investment will increase the plant’s cylinder head machining capability. The plant will continue to produce approximately 700,000 engines per year to support vehicle production at HMMA and Kia Motors Manufacturing Georgia,” he says. 

Peak shaving and automation

I ask Susock if he is able to 'peak shave' on the extra demand that he is seeing, by using the nearby Kia plant, as is done in Hyundai/Kia plants in Europe and elsewhere. As I might have expected, he is keeping any plans close to his chest. “The Kia plant in Georgia has been used to support Santa Fe Sport production. I don’t have knowledge of other plans to produce Hyundai vehicles at the Kia plant.” 

Increasing production by some 30%, from 300,000 units per year to 390,000 has taken a mix of increased automation and improved assembly techniques, as well as different shift patterns and Susock says that the balance between automation, such as robotics, and manual assembly has changed. “HMMA uses robots and other forms of automation where it makes the most sense and is more productive, based on current technological capabilities. However, the detailed assembly of our vehicles is best suited to be performed by our team members.” 

HMMA-5-Mill-Engine
Machinery purchasing and suppliers

As with most Japanese and Korean carmakers, Hyundai/Kia have tended to stay with their traditional machinery and equipment partners but there are signs that this is changing; in China, Hyundai and Kia have been open to bids from local machinery makers, mainly for machinery for making dimensionally less critical components. Susock could not tell me about how heavily HMMA’s production machinery purchasing is dictated direct from Korea and how much equipment and machinery he can purchase within the US, and from US-owned companies and/or global machinery suppliers with big US presences but there are definitely opportunities for new suppliers to bid for business with both Hyundai and Kia. This situation may become even more open as trade tariffs and barriers are implemented by the Trump administration.

At present, automation is evident throughout the stamping and assembly operations at HMMA. The stamping facility is centred on two 5,400-ton IHI crossbar transfer presses (parts are processed double-attached; 17 different parts are processed, including all of the outer panels), material handling is fully automated, from the blanking presses to an automated storage and retrieval system. In the bodyshop, stamped parts arrive via electrified monorails, and are processed by more than 250 robots which carry out both welding and sealing. The paint shop, too, is fully automated; there is no hand-spraying performed. Each vehicle body is submerged in a cathode bath and is rotated 360° a total of 12 times, thereby eliminating any air bubbles on the surface prior to the application of the water-borne base and primer. HMMA is working with DuPont and PPG in the facility. The paint shop, which was built by Dürr, is capable of handling five different models. 

Managing manpower

Every manufacturing and purchasing manager I speak to in the automotive industry has one overriding complaint - a lack of manpower, both skilled and semi-skilled. I ask Susock what the situation at HMMA is, and what is the company doing to recruit and train staff. He says that it is important to start early in the education cycle of possible employees. “HMMA works closely with local high schools and technical schools to identify current and future skilled workers to support the automotive industry. The plant has internships for maintenance personnel that allows them to work side-by-side with our maintenance professionals. A number of these interns have been hired after they completed their course work.” 

I press him on this point and ask if HMMA is working with local schools/colleges to bring in graduate engineers and managers and also apprentices who are high school graduates. “HMMA has a college student summer internship programme for a wide variety of disciplines. This includes logistics, accounting, mechanical, electrical and industrial engineering programmes. “HMMA also has an engineering development programme for new college graduates. The programme allows the new hires to rotate between several departments over a two-year period and then decide which area of the manufacturing operation is the best fit based on their skills and interest. As Hyundai is growing in the US, we want our present and future employees to be part of this success story, to contribute to our progress but also to grow with us and help us contribute to the local community.” 

You may also like:

Don't miss out

Be the first to know about the latest news in the automotive and transportation industry, through our weekly mailer and bi-monthly publications.

Subscribe
Automotive Purchasing and Supply Chain | Three6Zero Limited © 2018