Hyundai Lays Off 6% of U.S. Work Force
Hyundai Motor America Inc. fired 6% of its U.S. workers Tuesday as it struggles with stagnant sales and a South Korean financial crisis that is keeping its Seoul-based parent from providing more financial support.
The Fountain Valley-based company, which imports and distributes Korean-made Hyundai cars, also said it intends to change its marketing approach in the U.S. in coming months in an effort to boost sales.
A company spokesman said a total of 31 employees were dismissed to help offset ongoing operating losses, leaving a payroll of about 435. Most of those fired were mid-level managers who worked in the Fountain Valley headquarters, where almost all of the company’s employees are based.
Among those let go were three high-level executives: marketing director Maurice Bowen, product planning chief James Hossack and Duane Kaylor, head of operations for Hyundai’s dealer and consumer finance subsidiary.
The high-level layoffs underscore Hyundai’s problem in the U.S. The company has been unable to decipher the market since sales began tumbling in 1989 when consumers grew alarmed at the frequent and hefty repairs for Hyundai Excels--a model the company no longer sells.
Spokesman Chris Hosford said Tuesday that economic turmoil in South Korea, where heavy borrowing by industrial conglomerates over the past decade has loaded the nation’s banks with hundreds of billions of dollars of overdue debt, was a factor in the layoffs.
But it wasn’t the main problem, he added.
“The primary reason is that Hyundai Motor America needed to cut costs in order to offset operating losses,” he said.
Industry watchers, though, say that parent Hyundai Motor Corp. has been supporting its U.S. operation for years and that its own cash flow problems--stemming from borrowing restrictions on all Korean companies--prompted an order to cut costs in Fountain Valley.
Earlier this week, Korean car maker Daewoo Motor Co. abruptly canceled plans to introduce its new U.S. line of three sedans at the Greater Los Angeles Auto Show next month. Daewoo officials said the decision was not tied to South Korean economic problems, but industry observers said Daewoo’s credit rating had recently been cut and that it probably was having difficulty borrowing funds to finance its U.S. sales launch.
Hyundai has overcome its quality problems and now sells a line of moderately priced cars that have won praise from many U.S. auto critics. But it has been unable to persuade consumers.
The company set U.S. sales records for several years after it introduced the low-priced Excel in 1986, peaking at 264,000 sales in 1988. Sales plunged to 183,000 cars the next year and continued falling until leveling off at about 109,000 in 1993. Hosford said sales should top 108,000 cars this year.
