Hyundai to Remain Strong in United States and Globally
7 January 1998
Hyundai to Remain Strong in United States and Globally Says Hyundai Motor America President M. H. Juhn
DETROIT, Jan. 7 -- The current economic difficulties in South
Korea will neither slow Hyundai's new product plans for the United States nor
keep Hyundai Motor Company from continuing to take a major role in the
international auto industry, according to Hyundai Motor America President
M. H. Juhn.
Speaking to journalists at the North American International Auto Show,
Juhn said that by the year 2000 Hyundai would bring in six new vehicles to the
United States market. Two will be completely new products for Hyundai Motor
America, a minivan and sport utility vehicle. Four others will replace
products the company currently sells.
Juhn also said that the recent steps taken in Korea will undoubtedly
eventually lead that country out of its current difficulties, despite the
difficult months ahead. He said that not only was the basic economy strong,
but that the people of South Korea were strong willed and committed to
returning their country to economic stability.
"I see a revival for South Korea not just in economic spreadsheets but in
the faces of the people both in the board rooms and in the streets of Seoul.
Korea and Hyundai Motor Company are going to emerge stronger than ever and you
can't take that to the bank."
Hyundai Motor Company, based in Seoul, South Korea, remains committed to
becoming one of the top ten auto makers in the world, said Juhn. The company
was the 13th largest auto manufacturer in 1995 and climbed to 11th position in
1996.
Discussing the strengths of the Korean-based Hyundai Motor Company Juhn
said that as its position as the largest auto maker in Korea with some 45
percent of its home market gives it a strong base of support. Despite the
fact that the Korean auto market is expected to decline significantly in 1998,
Hyundai has prepared for such a downturn.
Even more importantly, Hyundai Motor Company had already begun
restructuring for a more competitive environment well before the current
economic troubles in Korea arose. In 1994 Hyundai began a top-to-bottom
analysis of all its business operations and then undertook the first phase of
a reorganization designed to enable it to become more competitive in the
global market place.
The restructuring included strong actions to reduce costs, including
cutting production costs by 10 percent per year. All manufacturing operations
were analyzed to increase efficiencies of operations and parts operations were
reorganized for reduced cost and improved effectiveness.
The overall corporate structure of the company was also streamlined and
unnecessary layers of management were removed. The company has already
reduced its executive ranks by 30 percent as part of these efforts.
The company's new manufacturing center in Asan, Korea, was designed to
take advantage of the most advanced manufacturing techniques, such as adjacent
stamping facilities, just-in-time parts deliveries and the delivery of
completed sub assemblies.
These actions gave the company a head start in preparing for the belt
tightening that now faces the nation.
The results of the first phase have been recognized by the respected U.S.
consulting firm Arthur Little. In 1997 it surveyed over 4,500 firms in 14
Asian countries, including Japan, to determine their competitiveness.
Criteria such as financial productivity, sales, profitability, asset
structure, market strategies and price competitiveness, were studied. The
resulting rankings placed Hyundai Motor Company as the 8th most competitive
business in all of Asia.
The company has now begun the second phase of the restructuring. It has
announced that it will cut total employment by 11 percent. Reorganization
efforts will result in the combining 14 internal divisions into just seven.
Despite the over employment reductions there will be no cut in the number
of engineers and designers, Juhn indicated. The company is committed to
pushing its engineering and design strengths further.
"We know that in order to grow as an automaker, we cannot weaken our
technical knowledge base," Juhn said.
Indeed, the company is determined to increase spending for research and
development. In 1997 Hyundai spent about 3.5 percent of its total revenues on
research and development. The company remains committed to raising that level
to 5 percent within the next several years.
Debt carried by companies in Korea has became a significant concern and
Hyundai has also said that it will cut its debt by 50 percent within the next
several years. In addition, only 25 percent of Hyundai's current debt is held
by banks and institutions outside of Korea.
In regard to investments and the need to raise capital, Juhn pointed out
that Hyundai Motor Company is fortunate in that it had completed or nearly
completed many major capitol investments before the crisis hit its home
country.
The company's new manufacturing plant in Asan was completed in 1996, as
was a new, state-of-the art test track, with 26 separate testing sections. In
1997 the Namyang Research and Development facility, including the complete
engine testing and development sections was completed.
Overseas, assembly plants in countries such as India, Egypt, Venezuela and
Turkey are either completed or near completion. Thus, all the financing
required is in place and the vast majority of capital expenditures have been
made. Also, in many countries these operations are joint ventures, where the
costs are shared with local partners.
These completed investments, low foreign exposure and commitment to
reducing current debt, provide a stable basis for Hyundai, even at this
difficult time, said Juhn.
SOURCE Hyundai Motor America
