Hyundai Mobis Goes Global
Increases overseas presence by expanding module plants and logistics centers
Domestic car parts makers have stepped on the gas to make an aggressive foray into overseas markets by capitalizing on a competitive edge in terms of quality and price obtained through massive R&D investments. In the wave of change, departing from the local industry, characterized by insignificant business, dependence on domestic demand and backward development of core technologies is Hyundai Mobis, Korea's largest automotive parties maker.
Hyundai Mobis has set up module manufacturing plants in some parts of the world and operated a global network of logistics centers, aimed at ensuring a swift parts supply, to back up Hyundai Motor and Kia Motors' global competition. The automotive parts maker is going global by turning to the supply of large-scale modules to overseas auto manufacturers, staying away from the past export of single parts.
Global logistics center
In 2000, Hyundai Mobis acquired Hyundai Motor and Kia Motors' after-sale parts business, a business arena separately operated by the automotive parts maker. The acquisition came at a time when the Korean giant automakers put an emphasis on the after-sale service to enhance their brand images while exploring their overseas markets. The Hyundai Automotive Group stressed after-sale business to implant - the image of their quality brand, shedding - the ?heap?image of their brands from the American market.
With the acquisition of after-sale service business from Hyundai Motor and Kia Motors, Hyundai Mobis overhauled the separately operated parts service business for repairing Hyundai and Kia Motors cars to provide better service. The automotive parts maker put an initial emphasis on integrating after-sale business divisions of Hyundai Motor and Kia Motors. A task force team subsequently established a mid- and long-term strategy to develop a logistics network designed to ensure the most efficient supply of after-sale parts.
Under the strategy, Hyundai Mobis launched projects to construct logistics centers in the Middle East, Shanghai and the United States.
In August 2001, Hyundai Mobis took over MPE, a corporation in Belgium, from Hyundai Motor. The automotive parts maker has transformed the company into a European logistics center handling automotive parts of large quantities and diverse types.
In July 2002, the automotive parts maker built a large-scale parts center covering 5,000 pyeong (3.3 sq. meters) in floor space on a lot of 18,000 pyeong in Shanghai. Three months later on the same year, the company dedicated a large-scale logistics center on a lot of 18,000 pyeong in Dubai, serving as a bridgehead reducing the average parts transport time from 40 days to 10 days. In January 2003, the company set up HMEPD, a logistics corporation in Germany and dedicated a parts logistics center in Miami, the United States in June 2004. Hyundai Mobis set up BHMPC, a logistics joint venture in Beijing, last September and MPCIS, a logistics corporation in Moscow last December.
Hyundai Mobis, which has nine large-scale logistics centers, plans to increase the figure to 13 by the end of this year. It aims to build up a network of 21 logistics center around the world.
Besides, Hyundai Mobis built up its exclusive Internet network, dubbed "Mobis Global Network, designed to exchange information with overseas parts outlets and purchase parts via cyberspace. The network improved overseas after-sale parts supply business by curtailing the time between purchase requests to forwarding from previous two to three days to one day.
As part of its efforts to rationalize export logistics centers in Korea, Hyundai Mobis dedicated a large-scale export logistics center in Asan in March 2003 by integrating three small- and medium-sized ones dispersed across the nation. The export logistics center in Ulsan is in charge of exporting genuine parts for Hyundai Motor cars, while the exports of genuine parts for Kia Motors parts is left to the Asan center, resulting in a 10 percent reduction in logistics costs.
Hyundai Mobis, a specialized automotive parts maker, has taken the lead in module trend in the domestic auto manufacturing industry. The company has pursed integration of systems and has obtained considerable results of reduction in weight and number of parts, promptness of assembly, effective inventory management and cost saving, thus contributing to a competitive edge of manufacturing automobiles.
After obtaining the experiences and know-how on large-scale modules in Korea, Hyundai Mobis has begun construction of module plants abroad in earnest in the early 2000 when global competition has intensified in the wake of the World Trade Organization agreements, and Hyundai and Kia Motors car brands have made a good showing in the foreign markets due to their recognized quality. Hyundai Motor and Kia Motors have begun to build up global manufacturing centers. Hyundai Mobis has concentrated on building production centers through establishing module plants or simultaneous entry into foreign markets with Hyundai Motor and Kia Motors.
In the first such move, the automotive parts maker began production of modules at a plant in Jiangsu, China, in December 2002 to supply chassis and driving seats to Donfeng Yueda Kia Motors, a joint venture with Kia Motors. The module plant has a capacity of churning out about 130,000 units, a jump from an initial 50,000 units.
In March 2003, Hyundai Mobis?module plant in Alabama, the United States broke ground. The plant capable of producing about 300,000 units per annum was dedicated last May on a lot of 200,000 pyeong, just nine miles away from Hyundai Motor car assembly line. The module plant supplies driving seats and chassis modules to Hyundai Motor Manufacturing Alabama. It has introduced the Electronic Monorail System (EMS) on the ceiling to raise efficiency. The module plant is the first one among foreign module plants to introduce Enterprise Resource Planning, a resources management system designed to integrate production, materials, personnel management, accounting, production costs and wages.
In November 2003, Hyundai Mobis dedicated another large-scale module plant in Beijing designed to supply 300,000 units to Beijing Hyundai Motor. In April of last year, it dedicated a transmission plant with an annual capacity of 200,000 units. The module plants have been set up to meet a surge in manufacturing Hyundai Motor and Kia Motors cars in China.
Hyundai Mobis plans to raise the capacity of module plants in China to 1 million units by 2008. To this end, the automotive parts maker will build a second module plant in Jiangsu to increase a combined capacity to 400,000 units, while raising the capacity of Beijing module plant in Beijing to 600,000 units. It also plans to build an additional bumper factory with a capacity of 300,000 units.
Besides, Hyundai Mobis will construct a module plant with an annual capacity of 300,000 units in Slovakia next year and India in 2007, respectively, as part of its efforts to expand its global module production.
Module exports to global top automakers
Hyundai Mobis outbid global automotive parts maker in a race to conclude a long-term contract of supplying complete chassis modules worth 180 billion won yearly from 2006 to Daimler-Chrysler in August last year, the largest-ever single export performance in history of automotive parts. The U.S. auto giant also unveiled a plan to construct a comprehensive automotive module center within the precincts of its car assembly line in the United States. The feat represents the fact that Hyundai Mobis has been recognized for its module technology and price competitive edge, company officials said.
Hyundai Mobis has displayed strenuous efforts to explore overseas markets and these efforts have paid off. Starting with a parts fair in Japan, the automotive parts maker has actively held parts exhibitions in such countries as the United States, Japan, Europe and China on scores of occasions. Hyundai has taken the lead in publicizing Korean-made parts in terms of price and quality competitiveness by participating in overseas parts fairs with the members of the "New Partnership 21,"a collaborative body, established by Hyundai Mobis along with 120 local parts makers. Hyundai Mobis?efforts have led to local parts makers'OEM exports to foreign car manufacturers, overcoming the weak points of the domestic parts industry - insignificant business, dependence on domestic demand and backward development of core technologies.
Hyundai Mobis has focused on such major items as modules and power trains since the late 2002, and such exports have increased on a steady basis. In the early 2004, Hyundai Mobis received a good reception by holding parts fairs for global top three automakers, including Daimler-Chrysler. The Korean automotive parts maker won a deal to supply approximately 35 billion won worth of steering columns to Daimler-Chrysler in 2002. The agreement calls for supplying 300,000 units yearly during the period between 2004 and 2008. nw
In November 2003, Hyundai Mobis dedicated a large-scale module plant in Beijing designed to supply 300,000 units to Beijing Hyundai Motor.
The staff of Mobis Slovakia poses for the camera during a ceremony marking the anniversary of Hyundai Mobis. Hyundai Mobis will dedicate a module factory in Slovakia next year.