Korean automaker Hyundai decided to build a new automobile assembly plant in Alabama. What factors do you think Hyundai considered in selecting Alabama as the site for the factory? Who benefits and who loses from the new plant in Alabama?
Based on research, it seems that the most important factors that tilted the decision in favour of a plant in Alabama, USA, are as follows:
1. Proximity to the market - This seems to be one of the most important factors. With American cars being large, expensive and fuel efficient, there was a latent demand for more compact, fuel efficient cars, especially with rising fuel prices and economic recession. [ As of the end of 2013 the HMMA plant is running in excess of its 350,000 listed capacity due to the high demand for Hyundai automobiles in the US market.]
2. US standards for cars - US has its own standards for automobiles, which are inconsistent with standards in Korea and the rest of the world. There are safety standards under the Motor Vehicle Safety Act of 1966, revised under the Imported Vehicle Safety Compliance Act of 1988; Bumper standards under the Motor Vehicle Information and Cost Savings Act of 1972, which became effective in 1978. Air pollution control standards under the ...
This solution takes a look at the factors that motivated Hyundai to invest in a plant in Alabama, USA. The article looks at the benefits and also the downside of the new Hyundai plant in Alabama.