Thursday, February 09, 2006

Korean Firms Look Overseas

Concerns by Korean Big business over the strength of the Won and rising costs in South Korea have major firms looking to ship production outside the East Asian peninsular nation. One ramification is South Korean union unrest.

This Chosun Ilbo article highlights the move overseas by the Hyundai Kia Auto Group,

Korea's largest automaker Hyundai Motor will try to parry the effects of the strong won by more than doubling its production capacity in India to 600,000 cars a year.

Hyundai Motor officials said Thursday the firm's chairman Chung Mong-koo, on a visit to the firm's plant in India'’s Chennai, disclosed the plan in a meeting with Indian government officials and Hyundai staff.

The company will expand production capacity by building a second plant there as the country emerges as a market to rival China, they quoted Chung as saying. The chairman pointed to the urgency of boosting overseas production amid threats from the strong won and record-high oil prices.

Hyundai will boost capacity of the existing plant from 280,000 to 300,000 cars this year and complete the second plant by October 2007. Hyundai is now producing its Santro, Click, Verna, Avante and Sonata in Chennai. The second plant will be used exclusively to make the compact car that will succeed the Santro.

By the time it is complete, combined Hyundai and Kia Motors production capacity will have increased from 3.89 million cars (3 million in Korea and 890,000 overseas) to 5.31 million (3 million in Korea and 2.31 million overseas). Hyundai-Kia plan to expand overall capacity to 6 million units (3 million each in Korea and overseas) by 2011 by building more overseas facilities.

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