In what must be every development agency’s dream come true, South Korea’s Kia Motors Corporation came knocking on the door of the US state of Georgia in 2005 with a plan to build a $1bn assembly plant in a location the carmaker had already identified, ready to deal.

Not only would Kia itself build a plant there, providing jobs for up to 2500 people, it would also expect its parts and component suppliers to follow suit, adding up to 3600 more jobs and $830m in investment.

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After recovering from their surprise – it had been believed that Kia had settled on Mississippi – state and local officials swung into action and the deal was put together in just 11 weeks.

Now, more than five years after its official announcement, the story of how a conservative, bible-belt community and its exotic new neighbours adapted to each other offers a lesson in globalisation and of hopes fulfilled and unfulfilled.

Site specific

The location in rural Troup County had been spotted by a Kia executive on frequent trips between Atlanta’s Hartsfield-Jackson International Airport and Montgomery, Alabama, where Kia’s parent, Hyundai Motor Company, has its own assembly plant. Located on a major interstate highway between the two facilities, it was ideal both for travelling executives and for the shipment of Hyundai parts to be used in Kia vehicles.

The Korean negotiating team had clear expectations and an aggressive timeline, says Chris Clark, a former executive of Georgia’s Department of Economic Development and current CEO of the Georgia Chamber of Commerce, who helped negotiate the deal. Teams of experts from Korean headquarters flew in each week to study issues ranging from financing to earthquake risk and crime rates.

Kia’s demands from the state included site preparation, workforce training, tax incentives and proof that the plant would be welcomed by the community, says Mr Clark.

Mutual benefits

The state agreed to assemble and buy 1335 hectares of land for the plant at a cost of $34.6m, spend $48.5m more on site preparation and undertake $81m in road improvements. It threw in a purpose-built $14.5m training centre to be staffed and managed by experts in Georgia’s innovative QuickStart programme. A new tax credit for each job created by 'large, high-impact economic development projects' amounted to a $75.9m windfall for Kia.

Troup County and West Point also agreed to $130m in property tax concessions that will diminish over a 16-year period. The company pays school taxes. Local authorities and utilities chipped in a further $21m in improved infrastructure. Meanwhile, state and local officials received tutoring in Korean customs and business etiquette, right down to the use of fine china made in South Korea, according to LaGrange economic development officials Jane Fryer and Ray Coulombe.

It all paid off when not only Kia but major suppliers – including Hyundai-Mobis, Dongwon Autopart Technology, Sejong Georgia LLC, Sewon America, Daehan Solution, Johnson Controls, Glovis, Powertech America and Kumho Tire – all set up shop.

Amid the general euphoria, 43,000 people applied for the first 2500 jobs at Kia, paying between $15 and $27 an hour. Ground was broken in 2006 and the first car rolled off the assembly line in November 2009.

Cultural shift

The local community rolled out the welcome mat for about 50 South Korean families brought over by Kia, as well as those of its suppliers. A liaison officer, Susan Ferguson, was hired by the local community to help the new arrivals find housing, register their children in schools, find doctors and navigate their new environment.

Ms Ferguson says most of the children spoke good English but their parents, especially their mothers, had more limited proficiency. She lined up tutors to assist men and women who wanted to improve their communication skills. The biggest drawback the families have reported is the limited shopping opportunities small towns provide.

To parents and children used to South Korea’s rigorous education system and six-day school week, the five-day schools and more open approach was a shock. As some families now prepare to return to their home country, several children want to stay and finish their education in the US, says Ms Ferguson.

Other opportunities

Having the opportunity to learn English is “a huge value” compared to the expense of private tuition in South Korea, says Joseph Choi, a young Korean-born Canadian who is an engineer in Kia supplier ITW/Daelim’s new LaGrange plant. Mr Choi, who often serves as a translator, has launched a networking group for the young Korean professionals moving in.

In a largely church-going state it helps that many of the newcomers are also Christian. Mr Choi counts five Korean churches in the community, many associated with local churches that have offered their facilities for services.

“People in Georgia have been warm. Most of us feel welcome because we came during hard economic times,” says Mr Choi, adding that historically South Koreans are grateful to the US for its help in rebuilding his country following the Korean war.

“Because of that we were able to build companies such as Kia and Hyundai, and now we are able to help Americans. Many Koreans feel proud of that,” says Mr Choi.

For its part, Kia flew civic leaders and local officials from Troup County and the towns of LaGrange and West Point to South Korea to expose them to Korean culture. Some 800 workers also were sent to South Korea for training in Kia’s plants.

LaGrange mayor Jeff Lukken says Kia has contributed to the local community, and that there are open lines of communication between his office and Kia executives.

Sticking points

However, not everything has gone according to plan. Among locals, expectations were high that an influx of Korean families and workers from other states would generate a housing boom and spark a renaissance in business activity as well as new investment. Land prices rose as speculators bought properties in the area.

A few new businesses and restaurants have opened and a tax allocation district has been created to attract national shopping and hotel chains to the region, but the expected boom has been smaller than predicted and unemployment in the county remains stubbornly high.

The ongoing recession in the US is one factor. In some cases, workers hired from other states have been unable to buy property in the county because they are unable to sell their existing homes. In addition, most South Korean families brought in for limited periods are renting homes as opposed to buying.

There has also been some grumbling about the estimated $400m cost to taxpayers as a result of the concessions the state and county made to Kia. While a record at the time, Tennessee later gave up even more to lure a Volkswagen plant. Experts say the ultimate economic benefits far outweigh the costs.

One of the main reasons Kia was attracted to Georgia is because it is 'a right to work' state that discourages unions, as are many of the eight other southern states that now house non-US auto plants. Once the plant was in operation, however, some Kia workers who originally opposed unions had second thoughts. They complained about 10- to 12-hour workdays, rigid work rules and the hiring of 'temporary' long-term workers at lower wage rates. (Kia declined several requests for an interview to discuss these matters.)

Part of the establishment

For Georgia, Kia’s interest vindicated its assiduous courtship of South Korea. The state has had an economic development office there since 1985 and its governors have visited the country, luring operations of big companies such as Samsung and LG Chem. A significant number of Korean Americans have made their home in Georgia, many in the largest metropolitan area of Atlanta. Korea is also one of Georgia’s largest trading partners.

Most importantly, says Mr Clark, the visibility of Kia and Hyundai in South Korea gave Georgia an opportunity to brand itself there. Although the recession intervened, it gave the state a great opportunity to tell the Georgia story. One thing is certain; it will be retold many times.

In what must be every development agency’s dream come true, South Korea’s Kia Motors Corporation came knocking on the door of the US state of Georgia in 2005 with a plan to build a $1bn assembly plant in a location the carmaker had already identified, ready to deal.

Not only would Kia itself build a plant there, providing jobs for up to 2500 people, it would also expect its parts and component suppliers to follow suit, adding up to 3600 more jobs and $830m in investment.

After recovering from their surprise – it had been believed that Kia had settled on Mississippi – state and local officials swung into action and the deal was put together in just 11 weeks.

Now, more than five years after its official announcement, the story of how a conservative, bible-belt community and its exotic new neighbours adapted to each other offers a lesson in globalisation and of hopes fulfilled and unfulfilled.

Site specific

The location in rural Troup County had been spotted by a Kia executive on frequent trips between Atlanta’s Hartsfield-Jackson International Airport and Montgomery, Alabama, where Kia’s parent, Hyundai Motor Company, has its own assembly plant. Located on a major interstate highway between the two facilities, it was ideal both for travelling executives and for the shipment of Hyundai parts to be used in Kia vehicles.

The Korean negotiating team had clear expectations and an aggressive timeline, says Chris Clark, a former executive of Georgia’s Department of Economic Development and current CEO of the Georgia Chamber of Commerce, who helped negotiate the deal. Teams of experts from Korean headquarters flew in each week to study issues ranging from financing to earthquake risk and crime rates.

Kia’s demands from the state included site preparation, workforce training, tax incentives and proof that the plant would be welcomed by the community, says Mr Clark.

Mutual benefits

The state agreed to assemble and buy 1335 hectares of land for the plant at a cost of $34.6m, spend $48.5m more on site preparation and undertake $81m in road improvements. It threw in a purpose-built $14.5m training centre to be staffed and managed by experts in Georgia’s innovative QuickStart programme. A new tax credit for each job created by 'large, high-impact economic development projects' amounted to a $75.9m windfall for Kia.

Troup County and West Point also agreed to $130m in property tax concessions that will diminish over a 16-year period. The company pays school taxes. Local authorities and utilities chipped in a further $21m in improved infrastructure. Meanwhile, state and local officials received tutoring in Korean customs and business etiquette, right down to the use of fine china made in South Korea, according to LaGrange economic development officials Jane Fryer and Ray Coulombe.

It all paid off when not only Kia but major suppliers – including Hyundai-Mobis, Dongwon Autopart Technology, Sejong Georgia LLC, Sewon America, Daehan Solution, Johnson Controls, Glovis, Powertech America and Kumho Tire – all set up shop.

Amid the general euphoria, 43,000 people applied for the first 2500 jobs at Kia, paying between $15 and $27 an hour. Ground was broken in 2006 and the first car rolled off the assembly line in November 2009.

Cultural shift

The local community rolled out the welcome mat for about 50 South Korean families brought over by Kia, as well as those of its suppliers. A liaison officer, Susan Ferguson, was hired by the local community to help the new arrivals find housing, register their children in schools, find doctors and navigate their new environment.

Ms Ferguson says most of the children spoke good English but their parents, especially their mothers, had more limited proficiency. She lined up tutors to assist men and women who wanted to improve their communication skills. The biggest drawback the families have reported is the limited shopping opportunities small towns provide.

To parents and children used to South Korea’s rigorous education system and six-day school week, the five-day schools and more open approach was a shock. As some families now prepare to return to their home country, several children want to stay and finish their education in the US, says Ms Ferguson.

Other opportunities

Having the opportunity to learn English is “a huge value” compared to the expense of private tuition in South Korea, says Joseph Choi, a young Korean-born Canadian who is an engineer in Kia supplier ITW/Daelim’s new LaGrange plant. Mr Choi, who often serves as a translator, has launched a networking group for the young Korean professionals moving in.

In a largely church-going state it helps that many of the newcomers are also Christian. Mr Choi counts five Korean churches in the community, many associated with local churches that have offered their facilities for services.

“People in Georgia have been warm. Most of us feel welcome because we came during hard economic times,” says Mr Choi, adding that historically South Koreans are grateful to the US for its help in rebuilding his country following the Korean war.

“Because of that we were able to build companies such as Kia and Hyundai, and now we are able to help Americans. Many Koreans feel proud of that,” says Mr Choi.

For its part, Kia flew civic leaders and local officials from Troup County and the towns of LaGrange and West Point to South Korea to expose them to Korean culture. Some 800 workers also were sent to South Korea for training in Kia’s plants.

LaGrange mayor Jeff Lukken says Kia has contributed to the local community, and that there are open lines of communication between his office and Kia executives.

Sticking points

However, not everything has gone according to plan. Among locals, expectations were high that an influx of Korean families and workers from other states would generate a housing boom and spark a renaissance in business activity as well as new investment. Land prices rose as speculators bought properties in the area.

A few new businesses and restaurants have opened and a tax allocation district has been created to attract national shopping and hotel chains to the region, but the expected boom has been smaller than predicted and unemployment in the county remains stubbornly high.

The ongoing recession in the US is one factor. In some cases, workers hired from other states have been unable to buy property in the county because they are unable to sell their existing homes. In addition, most South Korean families brought in for limited periods are renting homes as opposed to buying.

There has also been some grumbling about the estimated $400m cost to taxpayers as a result of the concessions the state and county made to Kia. While a record at the time, Tennessee later gave up even more to lure a Volkswagen plant. Experts say the ultimate economic benefits far outweigh the costs.

One of the main reasons Kia was attracted to Georgia is because it is 'a right to work' state that discourages unions, as are many of the eight other southern states that now house non-US auto plants. Once the plant was in operation, however, some Kia workers who originally opposed unions had second thoughts. They complained about 10- to 12-hour workdays, rigid work rules and the hiring of 'temporary' long-term workers at lower wage rates. (Kia declined several requests for an interview to discuss these matters.)

Part of the establishment

For Georgia, Kia’s interest vindicated its assiduous courtship of South Korea. The state has had an economic development office there since 1985 and its governors have visited the country, luring operations of big companies such as Samsung and LG Chem. A significant number of Korean Americans have made their home in Georgia, many in the largest metropolitan area of Atlanta. Korea is also one of Georgia’s largest trading partners.

Most importantly, says Mr Clark, the visibility of Kia and Hyundai in South Korea gave Georgia an opportunity to brand itself there. Although the recession intervened, it gave the state a great opportunity to tell the Georgia story. One thing is certain; it will be retold many times.