NORTH AMERICAN REPORTS

xactly one month apart – on March 13 and April 14, respectively – Kia Motors Corp. and Samsung Electronics Co., Ltd., part of South Korea’s two historically largest chaebols, or family-affiliated conglomerates, pledged investments in two U.S. projects that collectively could top US$5 billion. Both investments cited existing U.S. facilities as major influences. And both may be strong influences in their own right in approaching trade negotiations between the two nations.

   Kia’s US$1.2-billion Kia Motors Corp. project in West Point, Ga., will have a capacity of 300,000 vehicles a year when it opens in 2009, and employ 2,500.

   “Kia Motors has entered an aggressive growth phase in the U.S. and the decision by KMC to build a manufacturing facility in West Point, Troup County, Georgia, is the latest example of the company’s commitment to the marketplace,” said Euisun Chung, Kia’s president and CEO, at the signing ceremony in Seoul, accompanied by Georgia Gov. Sonny Perdue. Chief among the chosen location’s attributes is its proximity to Hyundai’s just-launched assembly plant in Montgomery, Ala.

   But South Korea’s Special Prosecutor is investigating possible bribery and slush funds at Hyundai Motors Corp., and has forbidden approximately 10 top Hyundai and Kia executives, including Chung, from traveling overseas themselves. The news broke at nearly the same time as the announcement of a memorandum of understanding between Hyundai and the Czech government for another $1.2-billion plant as well as disagreements between Kia and the government of Slovakia over incentives the company says it was promised.

   As a result of the investigation, an April 26 groundbreaking in Georgia did not take place.

   “The ceremony has been temporarily postponed and a new date has not yet been set,” Kia spokesman Michael Choo told Site Selection on April 8. However, Hyundai officials did travel to China for groundbreaking ceremonies for yet another billion-dollar assembly plant, a joint venture with Beijing Automotive Investments in Beijing that will employ 3,200 and will be the company’s second plant there.

   The bribery investigation includes questioning of lead financial and planning executives, in part related to rezoning that enabled Hyundai to expand its Seoul headquarters. However, Choo says, “none of the financial or planning executives involved in the U.S. plant project have any connection whatsoever to the ongoing investigations in Korea.”