A Look at a Local Giant: KIA Motors
By Jonathan Joseph Chiarella
Gwangju’s most significant economic entity is Kia Motors. In Gwangju, Kia Motors employs 7,800 people, produces 34% of local economic output and 39% of locally-made exports across 3 factories covering 1.2 km2 of land—with Factory 1 being the title-holder for J. D. Power and Associates’ highest-quality producer in Asia. Kia is also a contributor to the greater regional and national economy. Hydrogen technology inputs are 95% sourced from domestic companies. Exported Kia vehicles go through Mokpo. Kia pumps out 570,000 cars, busses and light-weight cargo trucks (“Bongoes”) per year in Gwangju—an impressive comeback from the 1999 Asian financial crash (1998 production fell
below 60,000) and the late 2000s slump and cutbacks in employment (falling from 7,605 staff in 2004 to 6,388 in 2008). Physical production and productive capacity have steadily risen: 160,000 made with 200,000 possible in 2000; 180,000 and 350,000 in 2004; 310,000 and 420,000 in 2008; 440,000 and 500,000 in 2012; and 569,000 and 620,000 in 2014. While many local factories employ foreigners, Kia’s foreign employees work exclusively in white-collar roles outside of factories.
The heart of the motor company began as “Asia Motors” on May 3, 1962, just weeks after Park Chung-hee’s coup, and was chartered as part of his plan for industrializing South 
Korea with protectionist measures to substitute imports and eventually grow as an exporter of high-end goods. The company’s first major plant opened on July 2, 1965, in Gwangju with funds from local business person Lee Mun-hwan. Kia, founded in 1944, grew from a contracted original equipment manufacturer (OEM) and licensed producer of foreign brand goods in Korea to an independent producer after buying Asia Motors in 1976. Park’s vision was for a single Korean-owned vehicle maker, but Hyundai Motors’ opening in 1967 brought competition to the domestic sphere. However, in the end, the original vision was realized. Foreign-owned firms have domestic production and Daewoo Bus remains a Korean company, but Hyundai Group is the sole Korean maker of consumer cars. After the 1997 Asian financial crisis, Hyundai bought Kia, forming the Hyundai Group. (Hyundai owns 34%, but functions as a mother company.) Daewoo’s car division became General Motors Korea. In 2011, Ssangyong, was bought by Indian firm, Mahindra.
Currently, the flagship SUV (Sportage) and All New Soul models have the most resources dedicated to production, and for the immediate future hopes for expansion are with increased sales of the Sportage. Looking beyond, overhauls of the Bongo and 
heavy bus lines and new electric models are hoped to be the source of growth, since existing Bongo and bus sales have stagnated. As long as the means of production remain in private hands, new products become necessary for workers as a whole in the industry. (Existing lines become more efficient and mechanized, requiring fewer workers to make the same amount of product with each product becoming cheaper.) By 2020, Hyundai group hopes to offer 22 enen models (hybrid, electric, hydrogen) and become #2 in the world green car market (currently #5 in all cars). Hydrogen is the youngest green tech, with Kia’s development having begun in February 2015. The goal is for production of 10,000 vehicles per year in 2025. Hyundai Group’s larger plan is for all future domestic expansion at Kia facilities in Gwangju—whose local government envisions a future of producing a million vehicles per year. In April, Chinese electric car maker Jiu Long announced a 250 billion won investment in production in Gwangju. In May, Mayor Yoon, the Democratic Party and GIST formed a task force to attract business.
Gwangju could see a major shake-up of its production environment in coming years. The government claims it wants a more “ideal work-labor environment” with an industry salary of ₩ 40,000,000 (an official says 58.9% of jobs here net less than 20,000,000). As reported in Hankyoreh, they want to emulate the successful German model—one of cooperative labor management councils that steer production, hiring and work shifts. It reduces layoffs, but has its detractors for unilateral and blanket cuts on hours and salaries and co-opting of unions (but co-optation has not materialized as much as feared). Though the touted “Gwangju-style job” is a monetary gain for most, several workers will see huge cuts. The city wants to see Kia lower its average salary of ₩ 90,000,000, possibly by legislating a pay-by-day tied to physical product made. Throughout June, chapters of the national umbrella labor union, KCTU, will debate the matter.