Tuesday, April 02, 2002

Kentucky loses out on Hyundai



By Tom O'Neill, toneill@enquirer.com
The Cincinnati Enquirer

        Despite months of negotiations and last-minute wrangling in hopes of attracting a $1 billion Hyundai plant to Hardin County, Kentucky lost out Monday night to Alabama.

        Governors from both states confirmed the decision shortly before 10 p.m. Monday. It will be Hyundai's first plant in the United States.

The planned Hyundai plant
    • To employ 1,800 to 2,000 when it opens in 2005.

    • Will annually produce 300,000 Santa Fe sport utility vehicles and Sonata sedans.

    • Finalists: Hardin County, Ky., and Montgomery, Ala.

    • Would be first Hyundai plant in United States.
   Source: Commonwealth of Kentucky

        Kentucky and Alabama were the finalists for the $1 billion plant, which is expected to employ about 2,000 workers, beginning in 2005.

        A decision was delayed several hours Monday night as Hyundai officials considered improved, last-minute pitches from both states.

        “I think that we have done the best that we can do,” said Gov. Paul Patton, who was surrounded by top aides and economic development officials.

        Despite a package comparable to Alabama's, a conflict between the state and a Glendale, Ky., family that owns 111 acres of land near the proposed site was a sticking point throughout negotiations.

        The governor said the state agreed Monday to the Howletts' offer for a $6 million option on the property. He said the family was able to force the state into offering the amount but also that negative publicity about the land dispute cooled Hyundai toward Kentucky.

        The facility in Montgomery, Ala., will produce 300,000 vehicles annually, most of them SUVs. But the economic impact will go far beyond its work force — and state borders.

        That's why the decision was closely watched by state and industry officials in Ohio, where some major auto-parts suppliers already have working arrangements with Hyundai.

        “It's been some tough negotiation. It's been very tough,” Mr. Patton said earlier Monday. “We insisted on protecting the interest of the commonwealth. There were certain things in the agreement we didn't agree with.”

        Kentucky is the nation's third-largest producer of automobiles, behind Michigan and Ohio, with 39,499 automobile production jobs in 2000, according to the Kentucky Cabinet for Economic Development.

        Both states have had success in luring foreign automakers, among them the Toyota plant in Georgetown, Ky., and a new Mercedes-Benz plant in Alabama.

        The Toyota plant in Georgetown employs 7,800 and is regarded as a continuing success story by both Toyota and the state.

        Had Kentucky won, the ripple effect would have been a boost for thousands of outside jobs, from restaurants and uniform suppliers to transportation companies.

        Ohio's many major auto suppliers, including one in Dayton, could have seen increased business, though such impact would have taken years to materialize.

        “We're looking at 20 years before that fully pans out,” Steve Kelley, senior economist at the Ohio Department of Development, said Monday. “You can't quantify it in many cases, but they bring established networks (of suppliers).”

        Ohio had been a contender, along with Mississippi, for the plant, but both were cut in February.

        Mr. Kelley said a plant of this size could generate five outside jobs for every plant employee, with suppliers and transportation companies among the big winners.

        One such auto-parts supplier, Toledo-based Dana Corp., has 300 worldwide facilities and already has Hyundai contracts. It also has 14 plants in Kentucky, including a Dry Ridge unit that assembles axles and employs 500 people.

        “We're the suppliers,” Dana spokesman Jeff Cole said Monday. “We're going to follow the customers.”

        Kentucky's $123 million incentive package for Hyundai included $103 million for “site development and construction” and related costs, and $50 million in direct payments to Hyundai.

        It was slightly more than the $118 million package the Alabama legislature approved for the plant, but Alabama offers lower wage costs.

        ---

        The Louisville Courier-Journal and the Associated Press contributed to this report.

       



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