Hyundai Precision & Industries of South Korea, the world's largest manufacturer of seagoing shipboard containers and chassis, disclosed plans Monday to build a 28-acre plant in Tijuana that may eventually employ up to 1,500 people.
Hyundai's planned move into the El Florido business park about 5 miles east of downtown Tijuana makes it the second heavy industrial company to plan a plant in Baja California in the wake of liberalized investment guidelines announced by the Mexican government last summer. The guidelines enable foreigners to own 100% of Mexican corporations.
Louisiana-Pacific, a Portland, Ore.-based lumber company, began construction last month on a large plant in El Sauzal, north of Ensenada, where it will dry and plane rough-cut redwood timber barged down from Northern California. Most of the redwood will then be shipped back, mainly for sale in Southern California.
With 1988 sales of $1.2 billion, Hyundai Precision & Industries controls about 35% of the worldwide steel shipboard container market. The containers measure from 20 feet to 53 feet in length and are sold to shipping companies, said B. M. Ahn, president of Hyundai Precision America, the company's U.S. subsidiary based in Long Beach.
Y. K. Youm, a Hyundai Precision & Industries official, said in a telephone interview from Seoul that Hyundai selected the Tijuana site to take advantage of the low costs of labor and to be close to the U.S. market. The plant will be in operation by next November, and, once fully operational, should produce up to 3,000 containers and 500 chassis a month, Youm said.
The first phase of construction will contain 270,000 square feet in three buildings, at a cost of $10 million, but a second phase could double the square footage, Youm said.
Hyundai Precision & Industries is one of 30 independent South Korean companies, including Hyundai Motor, under the symbolic Hyundai Business Group umbrella, Ahn said.
The El Florido industrial park is a 200-acre development of San Diego Baja, a Solana Beach-based real estate development firm whose principals include Hugh McCaffrey and Paul Scheibe.
In an interview, McCaffrey declined to identify his firm's financial backers, but did say the park will be financed partly through a "debt swap," a technique by which foreigners buy Mexican debt and exchange it for pesos at a heavily discounted rate, under the proviso that the pesos be reinvested into preapproved projects in Mexico.
The Hyundai plant received government approval for the debt swap in part because the plant will provide jobs mainly to men. A criticism of the maquiladora boom has been that an estimated 90% of the light industrial jobs it has created have been taken by women.
McCaffrey said Hyundai was drawn to the El Florido business park in part because of its access to the San Diego & Imperial Valley Railroad, a line running through the property that connects San Diego with Tijuana and Tecate. Although Hyundai's first plans are to transport most of its finished containers by truck to Los Angeles, the company will eventually use the rail line to deliver products to more distant destinations in the United States, Youm said.
Hyundai once operated a container manufacturing plant in Long Beach, but closed it in October because of the relatively high cost of U.S. labor, Ahn said. Youm said the South Korean company expects to pay workers an average hourly wage of $1.30, contrasted with the $12.60 it would pay to hourly workers in Los Angeles.
Construction on the plant will begin in February, Youm said. At its opening, the plant should employ 1,000 workers.