Factory Slovakia

Published | 17/02/2010

On March 18th, 2004, Kia held a signing ceremony at the central government building in Bratislava, Slovakia, to officially authorize the construction of its first European automotive assembly and manufacturing plant in the Slovak Republic. Signatories to the Investment Agreement were Hyundai-Kia Automotive Group Chairman Mong-Koo Chung and Slovakian Prime Minister Mikuláš Dzurinda

Kia selected the Žilina region for its first European plant because of its transportation infrastructure, high-quality workforce, strategic proximity to European population centers, the automotive parts supply chain available in the region, and the commitment shown by the Slovak Republic, which provides the best environment for the new plant.

As well the strong commitment of Prime Minister Mikuláš Dzurinda to attract foreign investment to the country, together with the efforts of each related government ministry, created a positive environment which allowed both Slovakia and Kia Motors to reach agreement on the plant investment.

Furthermore the environment for foreign investment in Slovakia is very positive. Structural reforms necessary for foreign direct investment are in progress and the overall economic and financial outlook is good.

Kia´s investment, worth €1 billion, was recognized as a significant investment and accordingly received the 15 percent maximum incentive allowed under EU guidelines. The total incentive package includes gratis access to the site, provision of infrastructure, grants for job creation and subsidies for equipment and facility purchases, etc

Kia´s new European assembly and manufacturing operation that will be built on 166 hectares will be an investment made exclusively by Kia Motors Corporation. Kia will be financing 50 percent of the plant and will acquire loans to finance the remainder. All of the vehicles to be produced at this plant will solely be Kia models to be sold by Kia´s European dealer network. Vehicles produced at this plant will feature all new models currently under development specifically for the European market: one B-class model and one C-class vehicle, both in vehicle segments that are the most popular in Europe. Production is expected to begin in late 2006. From that time, Kia´s plant in Slovakia will have the capacity to manufacture 200,000 vehicles per year with plans to expand production capacity to 300,000 depending on market conditions.

The plant will directly create employment for approximately 2,800 Slovakians and will also attract an inflow of capital from Kia suppliers such as Hyundai Mobis that will be investing €130 million in an adjacent plant. Logistics, parts and supplies that are competitive will mainly be procured locally. Kia with Hyundai Mobis, plan on developing and sourcing from local suppliers with the aim of localizing 70 percent.

In regards to R&D, the major portion of the new product development and other R&D-related operations for the Slovakian plant will be carried out at the combined Kia/Hyundai R&D Centre in Frankfurt with support from our major R&D facilities in Korea.

Kia´s plant in Slovakia will feature the latest and most advanced technologies and facilities available today. Moreover, with a high rate of automation and systemic labor management, Kia plans on achieving world-class productivity while producing vehicles of the highest quality. With Slovakia´s relative low labor costs and competitive parts procurement channel, it is possible to acquire competitive pricing.

In terms of products, Kia will produce vehicles that are currently in development that are specifically designed for the European market. Therefore, we are confident that the market response and demand will be very positive.

Corporate Background

Origin
Kia Motors was founded in 1944 as Kyungsung Precision Industry making bicycle parts by hand. The company was originally located in Seoul, but moved to Pusan during the Korean War. While in Pusan, Kia produced Korea´s first bicycle and took its current name in 1951.

In 1961 Kia produced Korea´s first motorcycle and in 1962, the country´s first truck - the 3-wheel K360. Kia also produced Korea´s first gasoline engine in 1973 and, in October 1974, Korea´s first passenger car - the Brisa. The Brisa became the first Korean vehicle to be exported, when it was sold in the Middle East. Korea´s first diesel engine was also produced by Kia, in 1978.

Kia continued to compete in the automotive industry until 1997, when it fell victim to the Asian financial crisis of that year and was taken over by the Hyundai Business Group the following year. The Hyundai-Kia Automotive Group was founded in 2000 and Kia and Hyundai Motor Company became sister companies along with parts supplier Hyundai Mobis and a number of other companies. Kia is currently Korea´s second largest manufacturer and its oldest.

Facilities
Kia has three production centers in Korea and one overseas plant in China: Hwasung, which has an annual production of 600,000 units; Sohari, which produces 340,000 units; Kwangju, which manufactures 210,000 commercial vehicles and Jiangsu in China with 50,000 units every year. In addition, the company in 2003 combined six R&D centers in Korea within one main operational hub in Namyang.

Overseas, Kia has 13 subsidiaries and a distributor network covering 154 countries. The company also maintains two R&D centers in the United States, one in Germany and one in Japan.

Kia and Hyundai
Kia was taken over by the Hyundai Business Group in 1998. When Hyundai Motor Company spun off from the group in 2000, Chairman Mong-Koo Chung formed the Hyundai -Kia Automotive Group, which comprises Kia Motors Corporation, Hyundai Motor Company, Hyundai Mobis (a parts supplier) and 19 other companies all related to the Group´s core business.

Kia Motors Corporation and Hyundai Motor Company operate as separate companies in the marketplace. However, the two companies share R&D facilities and parts distribution networks. By 2008, the number of platforms will be reduced from 22 to 7.

Kia employs 29,943 workers worldwide with a main headquarters in Seoul, South Korea and a total of six regional headquarters throughout the globe.

Kia´s vision is to be a top five automaker by 2010. By 2010, Kia predicts sales of 2.3 million units which will amount to 3% of the global auto market. Furthermore, Kia expects total turnover to amount to 29 billion USD by 2010.

Slovakia Plant Information

Proposed Plant Time Schedule
• Groundbreaking April 7th , 2004
• Construction begins September 2004
• Construction ends September 2005
• Production begins December 2006