By Park Jin-hai
Hyundai Motor’s plan to relocate research staff to centralize its research activities is facing opposition from local communities.
The world’s fifth-largest carmaker drafted a 2 trillion won investment plan in February, whereby it will boost its less competitive commercial vehicle segment by transferring its commercial vehicle sector researchers in Jeonju to its central Namyang Research Center in Gyeonggi Province, and having the personnel remaining in Jeonju focus more on production over the next five years.
According to the plan, some 350 researchers from 520 total staff will move out in the first half of this year.
Hyundai’s self-help plan, however, has invited opposition from local communities and politicians, who see it as a “brain drain” and fear that it will disable its automobile cluster function.
The Jeollabuk-do Provincial Assembly adopted a motion last week calling for the scrapping of the plan. In a written statement, it said, “When the auto industry accounts for 22 percent of the province’s total exports, the relocation is tantamount to hollowing out the city. It will make investment more focused on the capital area, aggravating the unemployment rate of Jeonju.”
It claims the current research personnel should be retained, while its research function should be reinforced.
The main opposition New Politics Alliance for Democracy also voiced opposition saying, “Although the company said it will create 1,000 new jobs by 2020 by expanding production capacity, it didn’t specify how it will do this. Rushing to relocate research it raises the speculation on the drain of research personnel.”
Hyundai Motor tried to centralize elements of its scattered research before in 2013, which prompted local opposition calling for the scrapping of the plan.
Hyundai says that the relocation decision has been solely based on product development and managerial efficiency.
“It is a trend that local companies such as Samsung and LG are unifying their research centers into one in the capital area for managerial reasons. In the big picture, to enforce our competitiveness we have to try and do this,” said a company official.
“Since the development of passenger cars and commercial vehicles isn’t that different, it is only reasonable to have a centralized research center,” he added.
Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade, said that unifying research activities for passenger and commercial vehicles is essential for the automaker’s competitiveness.
“The automaker should develop pickup lines and trucks. But at the same time, it should develop its small and medium-sized fleet. It is much more efficient to have a centralized research center under its control,” he said.
“But, at a time when Gunsan, another automobile city in North Jeolla, is losing its production quota, if Jeonju loses its research function it fears that it will be reduced to an automobile assembly center. In that case, cost is the most dominant factor and when the production cost goes up, Hyundai could exit the city at any time trying to find another city with lower costs,” he added.