Hyundai plant is space-age wonder

In the welding shop of Hyundai's vast car assembly plant near Nošovice, north Moravia, doors are being picked up and taken across to a piece of machinery, where a series of operations are carried out.

The welding work is finished after a few moments, and the doors, which are of different shapes and sizes since they are from different models, are carried back and passed on to the next stage of the complex manufacturing process.

It all happens with remarkable fluency and precision, and there's a reason for that: Every action in this section of the plant is carried out by a robot.

This space-age 1.2 billion euro factory, a dizzying showcase of robotic technology, last year produced 303,000 vehicles, the largest number since the plant's production began in the Moravia-Silesia region in 2008.

Looking like angular metallic creatures from a science-fiction film, the yellow-painted robots play a vital role in the 21-hour process that sees steel panels come out of the stamping plant and transformed into Hyundai i20 and i30 cars and ix35 SUVs.

That is not to say people are a rare sight inside the plant. Far from it: There are about 3,500 staff, 96 percent of whom are Czech. About twice as many again are employed by nearby suppliers that provide everything from seats to axles.

"Hyundai was followed by 12 Korean companies that created the first-tier supplier companies. They created, together, an additional 7,000 jobs. Altogether, the Hyundai project created more than 10,000 jobs," said Petr Vaněk, Hyundai Motor Manufacturing Czech's public relations director.

The vast Hyundai site, which takes up 200 hectares, 28 of them covered with buildings, has five sections: the stamping shop, welding shop, paint shop, transmission shop and final assembly. Although housed in separate buildings, walkways lead from one section to the next.

Rolls of 0.7 mm-thick steel arrive at the stamping plant and are pressed into doors, wings, bonnets and various other panels, with each vehicle made up of 17 of them.

In the welding shop, more than 30 robots complete and weld together body parts before each car enjoys a nine-hour trip through the paint shop, where another 38 robots are kept busy spraying on primer, color paint and protective varnish. Although 16 colors are offered, more than three-quarters of the vehicles are white, black, silver or gray.

In final assembly, the work is more labor-intensive, with production line staff doing everything from fitting engines and dashboards, attaching protective tape and carrying out checks on the finished cars. There are large signs hanging up with phrases like "Flawless Work. Happy Customer," and the spotless facility is surprisingly quiet. It is certainly not the noisy, greasy heavy industrial plant one might expect.

Eight-hour shifts

The plant operates 24 hours a day, five days a week. Shifts last eight hours, including two 10-minute coffee breaks and a 25-minute meal break, and begin at 6 a.m., 2 p.m. and 10 p.m.

While final assembly in particular has a higher concentration of workers, even here robots carry out tasks such as squeezing glue onto rear windows, guided by laser, and sticking the glass panes to the trunk doors.

As well as being used in vehicles produced locally, transmissions made in Nošovice are sent to Hyundai in Russia and a plant in Žilina, Slovakia, that assembles vehicles for sister company Kia. In the opposite direction, engines made in Žilina are sent to Nošovice.

Every finished car - 1,300 are produced on an average work day - is taken for a spin on the plant's 3.3-kilometer test track.

Given the complexity of the plant, with highly specialized machinery and production processes controlled by computer and synchronized with the deliveries of suppliers, it is hard to believe it was built and fitted out in just 18 months.

In the opening year, 2008, a modest total of 11,000 cars rolled off the production line. Last year, the plant largely reached full capacity, cranking out 303,035 vehicles, although only 4 percent of these were actually sold in the Czech Republic, with the cars exported to nearly 60 overseas markets.

Last year's production figure gave the plant a 26 percent share of the 1.174 million cars produced in the country, up 5 percentage points on 2011.

Mladá Boleslav-based Škoda Auto took 56 percent of production, and Toyota Peugeot Citroën Automobile accounted for the remaining 18 percent at its plant near Kolín.

Hyundai is at pains to emphasize it does not make Korean cars in Europe, and the likes of the i20 and i30 certainly bear little resemblance to the supersized Hyundai sedans that clog the roads of Seoul, Hyundai Motor Company's home city.

Indeed, Vaněk described them as "everything but Korean" cars, with design having taken place in Germany under the supervision of a German chief designer.

"The cars are a combination of European design with super-innovative Korean technology," he said.

Hyundai's sales in the Czech Republic have grown significantly in recent years, and last year it enjoyed a 25.4 percent increase to 15,162 vehicles. That was enough for third place, a fraction behind Volkswagen, which like Hyundai secured an 8.7 percent market share. Škoda retains a healthy lead with 30.9 percent.

The launch of a new i30 model range in 2012 partly helped account for Hyundai's growing sales locally, the car now the third-most popular model in the Czech Republic with 4,888 sales last year. Only Škoda's Octavia and Fabia models sold better. Vaněk said it was not just the launch of a new generation that accounted for the i30's popularity.

"More and more, people are identifying with the cars made here as cars made locally in the Czech Republic," he said.

In a clear piece of symbolism, although the flags of the Czech Republic, Moravia-Silesia, Hyundai and the European Union fly outside the plant's main administration building, South Korea's red, white, blue and black flag is conspicuous by its absence.

There are 18 South Korean staff members, and others work at Nošovice under various short-term arrangements. The president and the three vice presidents of the Czech operation are South Korean, although Czechs occupy many other senior roles.

Hyundai has a significant cost advantage over most European-headquartered car manufacturers, especially those with plants concentrated in the more expensive countries of Western Europe. The average gross monthly wage for production line workers at Nošovice, including bonuses, is 25,400 Kč ($1328).

According to estimates published last year, labor costs for each Hyundai i30 total 207 euros, while at Ford's plant in Saarlouis, Germany, the wage bill per Focus model is 480 euros. It is no wonder Hyundai and Kia bucked the trend of stagnant sales in Europe last year.

The European Automobile Manufacturers' Association said Hyundai's sales in Europe grew 9.4 percent in 2012 to 432,240, while Kia enjoyed a 14.6 percent increase in sales on the continent to 337,466, giving a market share of 6.1 percent.

"Hyundai and Kia exhibited superior risk management in the European market in 2012, outperforming the market by a wide margin as a result," Kim Yoonki, an analyst at Mirae Asset Securities in Seoul, said in comments to media late last year.

Lower labor costs

According to a reported prediction from Lee Sang-hyun, an analyst at NH Investment and Securities, Hyundai will enjoy a further sales increase in Europe of 6.6 percent in 2013.

Although Hyundai focuses on the European origins of its Czech-made cars, in the early days of the plant's operations, workplace practices and management expectations were said to be decidedly Korean, and that created problems with staff used to European norms.

"In the beginning, there was a tendency of the Korean managers to run the place Korean style. There was a lack of understanding the local people," Vaněk said.

"They would announce in the morning: 'Today, we will stay two hours longer.' The local people, they may have plans for the cinema, with their family and so on. This caused some problems."

The difficulties arose, Vaněk suggested, because of cultural differences between how Koreans and Europeans view their working life. He said there were misunderstandings on both sides.

"In Korea, their personal life is totally subordinate to the professional life. It's company first," Vaněk said.

Since then, Vaněk said problems have been resolved, with management decisions better communicated and overtime requirements passed on to staff well in advance.

Across all functions, 18 percent of staff are female, and women are by no means an unusual sight on the production line itself. While some jobs, such as attaching engines to the chassis and bodywork, are largely the preserve of men, others, such as final inspection and sticking on protective tape, tend to be more female dominated.

Just as the labor situation has settled down, so have production volumes. As the Nošovice plant largely reached full production last year, total output is unlikely to grow significantly, but in the long term Hyundai could scale up its Czech operation significantly.

Space exists for another plant the same size as the current one, although there are no immediate plans to press ahead with building work. "It's not in the plan I would say for the next 15 to 20 years," Vaněk said.

But with Hyundai continuing to enjoy a significant labor cost advantage over rivals, it is hard to bet against the Korean conglomerate investing hundreds of millions of euros more in the Czech Republic.

Daniel Bardsley can be reached at
business@praguepost.com