As the debate over whether taxpayers should fund a bailout of the Big Three U.S. automakers remains front and center on Capitol Hill, foreign auto manufacturers are surviving in the United States, operating without the need for a massive loan from the federal government.
The Dec. 3 broadcast of the “CBS Evening News” compared two auto plants – a Hyundai plant in Montgomery, Ala., and General Motors facility in Michigan.
“Five years ago, John Kalson put Detroit in his rear-view mirror. He left Ford in Michigan for Hyundai in Alabama,” CBS correspondent Mark Strassmann said. “At this new plant, Kalson oversees it all, a thousand Hyundais built a day – both mid-sized sedans and SUVs – 3,000 non-union employees and Kalson hired them all.”
Kalson, vice president of Hyundai Motor Manufacturing, Alabama LLC, told Strassman he saw the writing on the wall. He landed in Alabama and developed a manufacturing process without the high costs associated with the facilities that use United Auto Workers (UAW) union labor.
“North of Detroit, Gary Malkus manages this GM Plant. Union labor makes mid-sized sedans. But, what’s really on the line, jobs – for 4,000 employees,” Strassmann said.
The difference – Hyundai’s business model in its American plants allows it to remain competitive, while GM is liable for union contract deals it made long ago.
“Hyundai’s workers, including all benefits, make almost $28 an hour – less than half the typical GM Union worker,” Strassmann said. “One reason – covering the needs of its retirees costs GM more than $37,000 per active worker per year. GM has 360,000 retirees. In America, Hyundai has zero.”
Hyundai’s Alabama facility is also versatile – able to adapt to the needs of the market much more efficiently than its American counterpart.
“Another Hyundai advantage in Alabama – America’s most automated car plant,” Strassmann said. “Hyundai has achieved in only three years what Detroit has struggled with for the last 30 – a highly competitive combination of quality and flexibility. When SUV sales dived, the plant built more sedans. At many GM plants, that switch would take weeks.”
Despite Hyundai’s successful business model which is outperforming GM’s, CBS criticized Hyundai for not being an American-owned company.
“With a major difference – these GM workers build American innovation and inspiration,” Strassmann said. “Not so in Alabama.”
Strassmann included industry analyst and consultant Maryann Keller who reiterated his point downplaying foreign manufacturers’ use of American workers to build cars in American plants.
“It’s really just putting pieces together that somebody else in some other country has designed and developed for us,” Keller said.
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