• Nov 24, 2010
In the event of war, you can't hurl Hyundais at the enemy



Former General Motors Chairman Rick Wagner used to talk of "externalities," those uncontrollable factors that he routinely blamed for the humbled automaker's continuing decline. Other industry leaders preferred the term "headwinds," but they were routinely referring to such matters as rising raw materials costs, unpredictable petroleum prices or, perhaps, an economic meltdown.

What most major automakers don't have to worry about is the idea of having a shell land in the middle of their boardroom. But the news out of the Korean peninsula makes it clear this is a very serious, very real possibility for the folks who run Hyundai and Kia.

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Paul EisensteinPaul A. Eisenstein is Publisher of TheDetroitBureau.com, and a 30-year veteran of the automotive beat. His editorials bring his unique perspective and deep understanding of the auto world to Autoblog readers on a regular basis.


On a trip to their headquarters a little while back, I was reminded of the unusual situation Koreans live with on a daily basis. Sure, Seoul is a sprawling and fast-moving metropolis, but it is also barely an hour's drive from the border that divides North from South. Euphemistically called the "Demilitarized Zone," or DMZ, it is, in fact, one of the most heavily fortified stretches of real estate in the world.

During my visit we had the chance to take the DMZ equivalent of a Disneyland ride, a descent into a potential hell. A hundred or so feet below the surface we unloaded and stooped down to enter one of the four known tunnels that cut under the border. Built by the North but revealed by a defector, each was designed to let 10s of thousands of soldiers rapidly slip into South Korea in the event that the armistice approved 50 years ago collapsed.

South Korea has thrived under a situation that few Americans would be able to live with.
It seemed set to do just that on Tuesday morning, when the ever-unpredictable Pyongyang started shelling a South Korean island just off the coast, arguably the worst provocation in decades. As an NPR report shortly after noted, the guns and rockets of the North could readily flatten Seoul in a matter of minutes should the fragile truce totally break down. And that doesn't even call into play the nuclear weapons Kim Il Sung and his minions have been stockpiling. Meanwhile, by some accounts there may be a dozen or more additional tunnels under the DMZ yet to be revealed.

It's more than a minor miracle that life in Seoul continues despite the constant threat that lingers over the city like a Sword of Damocles. Yet the South has not just survived but actually thrived under a situation that few Americans would be able to live with. (Imagine a battery of howitzers pointed at GM headquarters from over the river in Windsor, Ontario – even though many parts of Detroit already look like war zones.)

In fact, the ever-present danger may be a big factor in what has driven the Korean economic miracle. In the first years after the Panmunjun armistice was signed, Korea was one of the poorest nations on the planet, with a per capita income on a par with that of sub-Saharan Africa. Even when I first visited Seoul, in the early 1980s, it was more Third World than the globe-leading capital it is today.

The ongoing threat of war is difficult to prepare for, but even more difficult to ignore.
Talking with a number of senior executives on my most recent trip, I bluntly asked what had driven the Koreans to become such a major force in industries like automobiles, consumer electronics and appliances. Several factors, it turns out, including perhaps most of all the desire to pay back the Japanese for decades of occupation and humiliation. While the biggest battleground may be the American automotive market, there are few things the Koreans would like more than beating back that symbol of Japanese prowess, Toyota, I was told over and over.

There's also the North, and the sense that economic success will be as much a factor in resisting the communist/dictatorial regime as a well-armed military. But, in the event of war, you can't hurl Hyundais at the enemy. And the news of yesterday morning gives a new meaning to Kia, with at least two South Korean soldiers killed in action.

For the moment, the two makers' operations will continue as normal. But you can assume that management will be taking another, closer look at how – and where – it does business. Like its Japanese rivals, Hyundai and Kia have been expanding their off-shore operations; each now operates a plant in the U.S. Considering both rising Korean wages and the need to build products closer to your market, this makes clear sense. But it also permits the two makers to have a fallback in case the military situation on the Peninsula continues to deteriorate.

The latest crisis very well could lead to even more production moving to such transplant operations in the reasonably near future. As far as externalities go, the ongoing threat of war is difficult to prepare for, but even more difficult to ignore.


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  • 46 Comments
      • 4 Years Ago
      I live in Korea. As an ex-pat I can say Korea is still MUCH safer than the southside of Chicago. And to those that were offended by the statement concerning parts of Detroit being like war zones, get a life! More people die in Detroit than Korea anyday.
      • 4 Years Ago
      I like the fact that is neglected is that Hyundai/Kia make more cars IN the USA than GM and Chrysler/Fiat ( I don't know about the trucks, though many of the Ram V-8's are made in Mexico) is totally neglected....not only that but the new Sonata has the highest domestic content of any Car or Truck ( yep even higher than the F150) on sale in the USA...
      So while there is Uncertainty on the Korean Penn. I'm fairly certain that A company as large a Hyundai, LG, or Samsung already have planes in place it the worst happens and North and South come to Blows again.

        • 4 Years Ago
        "I like the fact that is neglected is that Hyundai/Kia make more cars IN the USA than GM and Chrysler/Fiat "

        Ah wrong. This lie was told for years in support of the Japanese manufacturers and now it is going to be made in favor of the Koreans?

        It is great that the TWO plants in the US that make H/K cars are there, but it is not true that their output equals that of the hunderedish plants of Ford, Chrysler and GM. (54 alone for GM)
      • 4 Years Ago
      There goes the Autoblog proof reader, napping at their desk again. While Seoul is a world leading CAPITOL (seat of power), it is the South's CAPITAL (money, assets) that the North craves.
      • 4 Years Ago
      Hurl a Hyundai? Of course you can hurl a Hyundai, Paul. Hyundai also makes tanks, armored cars and artillery pieces!

      http://www.hyundai-rotem.co.kr/eng/
      • 4 Years Ago
      Living myself in a troubled unstable country, though not nearly as productive as Korea, i can relate to the uncertainty. But a 50 year old Armistice will not be risked neither by Kim Sr, nor Jr. the ruling family has control over about 20million something people and do what they please with their country. i see the provocation and the shelling more like a protest and a means to revive the talks, and keep an ace up their sleeves. they will not risk an all out war they know they will loose. Just imagine how rearwards these supposed nukes guidance systems must be, they will probably splash before they even arm... but it would never get that far, North Korean, just like anyone else are Human Beings and would take to total mayhem and annihilation in serious and existential way. they wont fire these weapons if they have them when they decide to go to war... it's not a simple flick of a switch...

      But a message to many, when you start commenting about WMDs, remember that the U.S was the first, and only nation to ever use them, against civilian targets of all things. so please cut the crap...

      • 4 Years Ago
      Scary.
      • 4 Years Ago
      "In the event of war, you can't hurl Hyundais at the enemy."

      Trebuchet?

      http://www.youtube.com/watch?v=LuC6jeKjTdg

      • 4 Years Ago
      one low yield nuke isn't going to be enough to stop 1500 K1 and K2 tanks from storming across their border with an ungodly amount of air and infantry support. I wonder if the North is aware of what happened 20 years ago in SW Iraq? Our technology has advanced quite a bit since then, while they're still using the same old import model T72 and T55 BS the Iraqi's were.
        • 4 Years Ago
        it wouldn't come close to kill a million people. unless it was a surprise it wouldn't even get a tenth that. Hiroshima only killed so many because the citizens didn't take cover during the air raid warnings, Nagasaki was a much bigger bomb and killed far less because they took shelter. You're right though, nobody wants to get blamed, except Kim Jong Ill.
      • 4 Years Ago
      Interesting article.
      I didn't realize just how far north Seoul actually was. Figured it was farther away from the border just like Pyongyang is.
      • 4 Years Ago
      Automotively speaking, if this skirmish really turns into something bad and big it could threaten the global car market. It could kill sales and resale value of Kias and Hyundais until it's all sorted out.
      • 4 Years Ago
      This is karma for snubbing Obama and the treaty to open S. Korean markets to goods imported from the United States. I hope we make our military support contingent upon South Korea signing the Free Trade agreement. It's called negotiation, Mr. President.

      30,000 G.I.'s I'm sure would rather spend Christmas with their families back home than guarding Hyundai plants on December 24th. The Koreans can keep their cars, but we'd happily take every plant they would like to send us for safekeeping.
        • 4 Years Ago
        Ugh this was a reply to Amy.

        I hate the comment system around here. It's so 1995.
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