Business

Kia auto parts suppliers nearing major decisions

The quest to land a Kia auto supplier and potentially hundreds of jobs is heating up, with a flurry of decisions by Korean companies expected within 60 to 90 days.

The LaGrange and Troup County area of Georgia is banking on becoming a big winner in the months-long process that has included routine visits to South Korea to meet with auto parts manufacturers.

Those overseas jaunts — which typically include tours of Hyundai and Kia corporate campuses in Seoul — are being complemented by visits from Korean firms to the local area.

The burgeoning business relationships are close to paying off, said Diethard Lindner, chairman of the Development Authority of LaGrange.

"There's four (suppliers) that we feel pretty optimistic about for Troup County," he said. "In most of these cases, they're still in the final down-selects. But I feel very good about those four for Troup County because I'm familiar with their circumstances."

Lindner declined to name the potential employers or the products they would make for Kia, which is constructing a 2.4 million-square-foot auto assembly factory on more than 2,200 acres off Interstate 85 in West Point, Ga. The site is a few minutes west of LaGrange and near the Georgia-Alabama border.

He did say the four companies represent at least 1,000 jobs for the county, which already has about a dozen automotive-related manufacturers.

"We're pretty excited about it," he said.

Landing a supplier All about timing, location

The Kia plant is being built and equipped at a cost of $1.2 billion. Ground was broken for the project last October and the land grading has been completed. Roads are now being built, while construction of the main factory is expected to begin in July.

Overall, the company will employ as many as 2,900 people when full production begins in the third quarter of 2009. Kia suppliers collectively are expected to employ up to 2,600 more.

The deal that landed the automaker in Georgia included a promise that at least five parts suppliers would locate satellite plants in the state. No number has been given on how many suppliers might be needed, although the Hyundai factory near Montgomery, Ala., has about 20.

"They're looking in Muscogee. They're looking in Meriwether. They're looking in Coweta," Jane Fryer, president of the LaGrange-Troup County Chamber of Commerce, said of the searches by Kia suppliers. "They're looking on the Alabama side — our real competition is the Alabama side."

Alabama has the ability to use free land and a 100-percent ad valorem property tax exemption as carrots to attract new industry. Muscogee County, in contrast, can only offer a maximum property tax exemption of 50 percent.

Decisions by the auto parts manufacturers on where to locate their facilities should begin to surface soon, Fryer said, perhaps within 60 days, Fryer said.

Some companies will have to make their intentions known by August, Lindner said, simply so construction can begin on the factories and be completed in time to supply the mother plant. The general deadline for making a site decision is February.

"Depending on what the supplier is and if they're supplying Hyundai as well as Kia makes a difference in their timing," he said. Fryer and Lindner were both part of a nine-person delegation from Troup and Harris counties that hopped aboard a Delta Air Lines flight to South Korea two weeks ago.

The mission was clear: Visit the Hyundai and Kia headquarters, continue to build on their relationship with the company, then pitch their Georgia amenities to potential suppliers in the hopes of nailing down deals. It was Fryer's first trip to the Asian nation, offering glimpses into the culture and competitiveness of the business. For instance, groups of Koreans met the Georgians at the airport, dressed in colorful, traditional outfits. It made for great photo opportunities. Later, however, all cameras were confiscated by Hyundai/Kia prior to her group's admittance into the research and development area. "Getting to see the magnitude of Kia and Hyundai was fascinating," she said. "They absolutely know what they're doing, and they seem to be anxious to get started as soon as possible. Their training facility there is like a campus. They've got 7,000 people there. It's like a hotel where employees stay. Everything's right there on the campus."

Columbus still working with 3 to 4

Columbus economic officials have made the prerequisite visits to Korea in hopes of landing an auto supplier that might employ from 100 to several hundred people.

The recruiting has yielded more than a dozen visits to the area. Some are interested in Columbus and Phenix City, while others have their eye on a 200-acre industrial park being developed in north Harris County, only five miles from the Kia plant site. The park is owned by the Harris County Commission, but the Valley Partnership is helping to market it.

Lindner said he knows of at least one company that is "favoring" Muscogee County as a site. One of the most likely locations would be Muscogee Technology Park on the city's east side and off four-laned U.S. 80.

"I don't know of any company that has told us they're favoring us," Mike Gaymon, president and CEO of the Greater Columbus Chamber of Commerce, said Friday. "There's probably three or four that we're still working with" that would make a good fit for the city based on computer-generated studies that match economic investment with potential return on that investment.

Some prospective companies approach communities such as Columbus wanting the world, Gaymon acknowledged. Free land and buildings are often sought by businesses, he said. But if the numbers don't work, any potential deal evaporates.

One company, he recalls, wanted the freebies in return for a work force that was going to be paid $7.50 to $8 an hour. Not a good exchange, Gaymon said.

"Just because they say 'Kia supplier,' we're still doing our due diligence and I think that's what everybody needs to do. The numbers still have to work," he said.

No deal is ever sealed until contracts are inked and dirt is being turned for a manufacturing facility, Gaymon said.

"You're never confident," he said. "Until they say 'We are coming' and you have the groundbreaking, you never really get confident. I'm not trying to be flippant, but that's the way it is. This is a high-stakes deal."

Becca Hardin, executive vice president of economic development with the chamber, has traveled to Korea twice. She's worked closely with the prospects, submitting proposals and entertaining site visits and tours. And parts makers have expressed "strong interest" in the local area, she said.

Hardin, too, looks for news to break soon on who is landing "where" and manufacturing "what" for the main Kia factory. "Some of the projects are further along in negotiations than others," she said. "But it's my understanding that they're going to be pressured to make some decisions in the next couple of months. So we anticipate getting down to the final wire very, very quickly."

Phenix City banking on labor pool

Victor Cross, meanwhile, has made a couple of visits to Korea in recent months, touting the benefits of locating a parts supplier in Phenix City. President of the Phenix City-Russell County Chamber of Commerce, Cross said the recruiting efforts have yielded official visits from five auto suppliers so far and a couple of more that didn't go through the chamber in their search.

Although no one has committed to Phenix City or Russell County yet, Cross remains optimistic about landing at least one such Kia-related business. He also understands the July-September timeframe is when several firms will make their decisions on where to locate.

"Depending on which direction you go from here to the West Point site, it's either 54 miles going one way or 37 miles going the other way," he said. "I think we're still in that close proximity, and I think we still are in a better position right now as far as what we can provide as far as labor force."

Cross is betting suppliers will have to search farther away from the main Kia factory to find a plentiful work force. Columbus and Phenix City in recent years have been bleeding manufacturing jobs with the loss of textile and grill business to overseas competitors. So a retrainable labor force is here.

The Phenix City Industrial Park on U.S. 431 South and an older industrial park off Brickyard Road are the two main sites for a supplier, Cross said. Most prospects are interested in land rather than retrofitting older structures, he said.

The 15-hour flights to Korea and talking with auto suppliers are the easy part, he said. The process becomes harder after that, particularly emotionally.

"It's the waiting game. That's the tough part," Cross said. "You spend all of this time and money working on something like that and it takes forever for 'em to let you know where you are."

Kia expects to begin "internal concept" production in early 2009. The automaker essentially fine tunes its operations by building several cars, then tearing them down to make certain the assembly line and final product processes are correct.

Production on vehicle models that will be sold to the public looks to start in the fall of 2009.

Hiring for management could begin toward the end of this year or in early 2008. The state's Quick Start training center is now built, with crews currently moving equipment and furniture inside now.

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