Construction on Hyundai’s new U.S. headquarters in Fountain Valley–alongside the I-405 freeway–is part of the South Korean car company’s expansion.
Hyundai sold 703,000 cars in the U.S. in 2012 and has outgrown the Fountain Valley facility it moved into more than 20 years ago.
“We simply needed a larger building,” said Chris Hosford, a spokesman for Hyundai Motor America, which distributes Hyundai cars in the United States.
So Hyundai demolished its old building in Fountain Valley and is spending $200 million on a new facility that will more than double its size to 500,000 square feet.
But the company thought about moving elsewhere, including Irvine. City of Fountain Valley officials said Alabama, where Hyundai has a manufacturing plant, was also on the list of possibilities. Fountain Valley didn’t offer Hyundai any financial incentives, but Hyundai decided to stay there.
UC Irvine economics professor Jan Brueckner said foreign car companies are drawn to Orange County.
“They want to keep in touch with the trendy parts of the United States, where fashion trends and car trends are set,” Brueckner said.
Hosford also said keeping talented employees is important.
“There is a great, very talented workforce from which we can draw here in Southern California,” Hosford said. “There are a lot of people that are knowledgeable about autos here in Southern California and that’s important to us in recruiting people.”
And, Hyundai said it already owned the land and liked its visibility on the I-405.
While Hyundai is staying put in the Golden State, some other companies—including auto companies—have taken incentives to relocate operations elsewhere.
In 2005, Nissan said it would move its U.S. headquarters from Gardena to Tennessee – along with about 1,300 jobs. A driving force behind that move was economic incentives. While it worked financially for Nissan, many employees stayed behind.
Steven Lam is one of those who stayed. He loved his job, but not enough to move to Tennessee.
“My whole family is here,” said Lam, who now owns an auto repair shop in Irwindale. “I have my parents here and they are starting to get a little older. I’m married and we were planning to have kids so we wanted to have family around for that.”
If Nissan stayed in California, Lam said he would probably still work for the company.
Larry Perrault also refused to move – and he’s from Murfreesboro, Tennessee. But he worried about possible discrimination because he’s gay.
“I would have lost benefits … as well as job protection because I have several friends I knew that have lost jobs just because of who they are in the state of Tennessee,” Perrault said.
Perrault now works for Hyundai. He will join as many as 1,300 workers from Hyundai (and affiliated companies) that will move into the new Fountain Valley headquarters. About half of the jobs will be for subsidiary Hyundai Motor America, with a focus on sales and marketing.
The building, which will be completed at the end of this year, has a capacity for 1,400 people–which could mean more jobs in the future.
Hyundai’s decision to stay in Orange County also benefits the area economy. Fountain Valley City Manager Ray Kromer said the company is the city’s largest foreign employer.
“We’re looking at it strictly from jobs,” Kromer said. “Also, those people will go out and eat lunch and they will be buying at the Costco, etc. and all the other stores in the area. We think it will have a big financial impact on us.”
Kromer says Hyundai pays the city $20,000 to $25,000 in property taxes each year.
U.S. sales for the company’s cars continues to increase.
But David Whiston, an equity analyst for Morningstar, said Hyundai has started to lose market share to other companies like Ford and Nissan.
“They’ve got sort of a good problem in that they can’t keep up with U.S. demand right now,” Whiston said. “I think they are ultimately going to have to bite the bullet and built more factories in the U.S.”
But Hyundai spokesman Chris Hosford says there are no plans to open any U.S. factories in the near future.