Hyundai eyes shift of SUV line to Ga. plant

Hyundai appears likely to shift production of its Santa Fe SUV from a plant in Alabama to sister company Kia's new plant in West Point, Ga.

The move could push Kia’s Georgia work force to 3,500 workers by this time next year – a huge economic boost to an economically hurting region and a state with double-digit unemployment.

Kia and Hyundai officials wouldn’t comment Thursday on the likelihood that Georgia will build the  Santa Fe alongside the Kia Sorento now in production in West Point. But two Hyundai auto-parts suppliers are reportedly preparing to lay off workers or shift them to West Point.

The Alabama Office of Workforce Development confirmed Thursday that one of the companies, Jay Mid-South in Gadsden, will lay off 75 employees because of the production shift.

“Jay Mid-South is basically doing what they need to do based on projected scenarios, but there won’t be any official announcement until July,” said Robert Burns, a spokesman for Hyundai in Montgomery.

Hyundai has built autos in Alabama since 2005. Kia began production last October in West Point, about 80 miles from Hyundai and just across the Georgia state line. Both are owned by Hyundai Motor Company of South Korea.

The production shift underscores Kia-Hyundai’s explosive U.S. growth. Sales of the popular Santa Fe jumped 53 percent from February 2009 to February 2010. Kia, which began selling the Georgia-built Sorento in early January, sold more than 8,200 last month, making it Kia's top seller. Both models are marketed as crossover SUV's that combine car-like ride with the utility of a truck-based SUV.

Kia, which now has about 1,200 workers in West Point, has always planned to add another Sorento production line and double the workforce to 2,400 by the end of 2010, according to spokeswoman Joanne Mabrey.

At an official grand opening last Friday, Kia officials announced that 3,500 people would likely be employed by 2011 at the massive, $1 billion factory alongside I-85 near the Chattahoochee River. But they didn’t specify which new vehicle would be built there.

Jim Hossack, an automotive consultant in California, has speculated for a year that Hyundai would shift Santa Fe production to West Point.

“Originally, the plan was to have a Hyundai facility and a Kia facility and keep them separate,” said Hossack, a consultant with marketing and research firm AutoPacific. “Production-wise, though, it’s a more efficient allocation of resources to have SUVs in one place and sedans in the other.”

Jay Mid-South, which supplies seat frames to a major Hyundai supplier, told the Birmingham News earlier this week that it will lay off 75 employees due to the transfer of production to Georgia.

Neither Jay Mid-South nor Mobis, the other supplier expected to shift work, returned calls Thursday. But Ricky Jordan, a dislocated worker specialist with Alabama’s workforce development office, confirmed that Jay Mid-South filed a federally required layoff notice last month. Seventy-five of Jay’s 110 employees will be laid off, possibly for only two months, until works picks back up, Jordan said.

If the Santa Fe heads to Georgia, Hyundai's Montgomery plant could easily pick up another manufacturing line, industry experts say.

“Hyundai is capable of producing three different vehicles on the same production line,” said spokesman Burns. “We can shift from one vehicle to the next without even blinking an eye.”