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South Korea’s Automotive Investments Boost Employment Rate in Alabama

Asia Korea

South Korea’s recent advancements in its automotive industry have significantly boosted Alabama’s employment rate and economic growth, further strengthening the relationship between South Korea and Alabama.

South Korea is preparing its automotive industry for the transition to next-generation vehicles such as eco-friendly and self-driving automobiles, with a strategic plan to become a leading global player in the automotive market by 2030. The government is investing heavily in fostering innovation and forging international partnerships to achieve this ambition. By focusing on eco-friendly vehicles, South Korea aims to solidify its presence in the global transition towards next-generation automobile production.

In May 2023, the South Korean government announced plans to support the country’s automotive sector by signing a Memorandum of Understanding (MoU) with local automakers, including the country’s major manufacturers such as Hyundai Motor Co. and Kia Motor Co. The agreement between the government and private sectors included an investment of 14.3 trillion won, or $10.9 billion, to support the expansion of domestic automotive production and the transition to next-generation vehicles. In December 2023, the Ministry of Finance planned to allocate a $29 billion financial package over the next five years to the country’s battery industry. By providing tax incentives and loans to key industry players, this initiative aims to increase the autonomy of South Korea’s Electric Vehicles (EV) battery sector and strengthen the country’s competitiveness in the international market.

As South Korea’s booming automotive industry continues to expand, so does Alabama’s employment rate. Home to the first and only Hyundai assembly plant in the United States since 2005, Alabama has played a leading role in producing several Hyundai car models such as Sonata and Elantra. The Hyundai Motor Manufacturing Alabama (HMMA) is located in Montgomery, Alabama, and has nearly 4,000 full-time employees. Hyundai has invested approximately $3.377 billion in its Montgomery plant over 15 expansions, providing stable employment for Alabama residents and supporting the state’s economic growth. For instance, in May 2018, Hyundai announced its plan to invest $388 million for the construction of an additional plant in Alabama, as well as to improve the existing Montgomery facility. This development was reported to create around 50 new jobs with an average annual salary of $52,000. In May 2022, the HMMA also signed an agreement with Alabama Governor Kay Ivey to launch a $300 million expansion at its plant in Alabama, adding another 200 jobs to the facility. Additionally, the HMMA’s latest major expansion in August 2023 entailed a $290 million investment to upgrade the facility’s capacity to produce new generations of Santa Fe SUVs and to support the ongoing production of the Tucson SUVs and Santa Cruz Sport Adventure model. All three expansions align with the South Korean government’s agenda to prepare for the future transition of the automotive industry toward next-generation vehicles.

Furthermore, the growth of Alabama’s job market extends beyond just car manufacturers, as South Korean auto suppliers and EV battery companies also make a substantial contribution to the state’s employment rate. In February 2023, South Korean auto supplier Samkee Corporation announced the construction plan of its first facility in Tuskegee, Alabama. This development is expected to generate around 170 jobs and serves as another economic milestone for “Tuskegee’s progression as a city.” The INICS Battery Solution Corporation, or IBS, is another South Korean-based EV battery components manufacturer that will bring an additional 30 jobs to Lee County through its recent $14 million investment plan in its new facility in Auburn, Alabama. The IBS facility is expected to open in the second half of 2024.

Partnerships between South Korea and Alabama are key drivers of the state’s economic growth, particularly in the automotive sector. South Korea’s development plans in future-generation vehicles and the automotive industry have led to Alabama’s increasing employment rate and substantial investments. Therefore, continued collaboration is crucial for both Alabama and South Korea to solidify and strengthen their positions in the global automotive market.

Aom Boonphatthanasoonthorn is a Summer 2024 Young Professional at the East-West Center in Washington. She is pursuing a master’s degree in public policy with a national security certificate at the Howard H. Baker Jr. School of Public Policy and Public Affairs at the University of Tennessee, Knoxville.