Kia Motors opens second production plant in China
Kia Motors Corporation (KMC), one of the fastest growing automakers in the world, in conjunction with its joint venture Dongfeng Yueda Kia (DYK) Motors, officially opened its second manufacturing facility in China at a ceremony in Jiangsu Province on Saturday.
The opening of the US$800 million state-of-the-art, fully integrated passenger car production facility indicates that expansion plans to boost overseas production to over one million by 2009 are on track and represents a pivotal step in the automaker’s goal to ensure long-term success in China. When in full operation, the facility will have an annual production capacity of 300,000, bringing total production capacity in China to 430,000. In addition to the 300,000-unit annual capacity Slovakia plant which began production in December of 2006, Kia’s overseas production capacity will be further boosted to 1,030,000 units annually with the completion of Kia’s first North American plant in Georgia, U.S. in the second half of 2009.
Speaking at the ceremony, Kia Motors Chairman & CEO, Mong-Koo Chung said, “Along with our Slovakia Plant currently in operation and the U.S. plant in Georgia scheduled for completion in 2009, this second plant in China plays a significant role in our ‘glocalization’ strategy of thinking globally and acting locally to bring ultimate satisfaction to our valued customers around the world.”
“Today also signifies a very important milestone in the evolution of the Kia brand in the increasingly competitive Chinese market as Kia Motors strives to be among the top makers in China market by the end of the decade,” he added.
In 2008, Kia plans to produce 100,000 units each at the two Chinese plants to meet its annual production and sales target of 200,000 units. By the time the second plant is operating at full capacity in 2010, Kia expects to sell 440,000 vehicles in the Chinese market through: the introduction of localized products that satisfy the tastes of Chinese consumers, implementation of cost-cutting measures to raise price competitiveness, cultivation of high standard exclusive Kia dealerships, and elevating the Kia brand image by leveraging KMC’s existing sports sponsorships and carrying out diverse localized marketing campaigns.
The new plant began producing the Cerato sedan in October, with the 5-door hatchback version added earlier this month. Thanks to the high-level of assembly skills possessed by local workers and high operating ratio in the 90-95% range, the production line has been running smoothly and initial targets have been met, with approximately 7,000 units of the Cerato produced as of the end of November. Kia is also planning to introduce a new model for production at the new plant in 2009 and is currently assessing Chinese market trends and conditions before finalizing the next model.
Commenting on the significance of the investment for China, Liang Bao Hua, Governor of Jiangsu Province, said, “We warmly welcome the establishment of DYK’s second manufacturing facility here in Jiangsu Province and I can assure you that the Chinese government and local citizens will extend our fullest support to help Kia enjoy long-term growth here in the Chinese auto market.”
Currently, the new plant employs 1,400 workers and plans to add an additional 1,350 employees to bring the total direct employment by the plant to 2,750 people. This will bring the total direct and indirect employment through Kia investments in the area to 17,150 jobs including the 2,400 workers at the first plant as well as approximately 12,000 workers at supplier firms.
In order to secure stable component supply and quality competitiveness at the new plant, several suppliers such as Hanil E-Hwa and Daewon Industry have already completed expansion to serve the new plant. To reduce operating costs, Kia also plans to localize more than 90% of all components. The new manufacturing facility is located only 3.5 kilometers southeast of DYK’s first plant. The new plant is situated on 1,470,000 square meters of land with 270,000 square meters of building space.
Meanwhile, the Chinese government has lent extensive support for the project by offering favorable plant site acquisition terms, various tax benefits, and railway, port and road infrastructure expansion.
More than 700 people attended the official opening ceremony including many Chinese government officials and dignitaries, KMC and DYK employees, Kia dealers, partner firms and local media marking the culmination of the 2-year long, US$800 million construction project that broke ground in October 2005.