Hyundai builds nearly 300,000 vehicles despite chip challenges

The global semiconductor chip shortage caused delays in production, but Hyundai still was able to produce 291,406 vehicles in 2021

Add a worldwide semiconductor chip shortage to a global pandemic and, if you are a car manufacturer, you are in for a bumpy year. For automakers like Hyundai Motor Manufacturing in Alabama, that year was 2021.

Like all other auto manufacturers in Alabama, and globally for that matter, HMMA in 2021 had its ups and downs as it managed ongoing COVID-19 protocols to keep the team members safe and navigated a semiconductor chip shortage that led to some disruptions in production, says HMMA spokesperson Robert Burns.

“August and September are when we were facing some challenges getting our semiconductor supplies out of Korea in the Far East. So, we had about seven total down days during that August-September timeframe,” he says.

The global semiconductor chip shortage was caused in part by the COVID-19 pandemic. As people worked and went to school remotely and just stayed indoors during lockdowns, the global demand soared for personal computers, laptops and other mobile devices that also depend on chips.

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That increased demand subsequently slowed down shipments of the much-needed chips to auto manufacturing plants like HMMA.

Robert Burns

HMMA experienced a couple of other shutdown days during other months last year. “But August and September were really challenging,” Burns says.

“We just stopped production and chose not to build any cars minus any components. In some of the one- or two-day incidents, we might have built a few cars with components that could be installed later just because that was the better way to do it until we got another supply. So, we would literally park those cars in anticipation of the component coming in, and then working them through our production process for shipment to the dealers.”

HMMA’s semiconductor chips come from as far away as Korea and Malaysia while some components are from Germany, he says.

“Most of the chips that have been an issue have been ones coming from Korea, because they’re waiting on a chip from Taiwan that gets put in a part in Korea. Then that part gets put on the plane to us in the United States and inserted into a final component that ends up being shipped to us from the U.S. supplier,” Burns says.

While the plant experienced occasional downtimes due to semiconductor supply shortages, commitments Hyundai’s mobile purchasing team had already established helped minimize the impact of the chip shortage on the plant, he says.

“The parts purchasing team has successfully collaborated with Hyundai Motor Group’s global purchasing team to keep production downtimes to a minimum.”

And he also credits Hyundai’s global purchasing team with helping to keep production moving as well.

He says the chip shortage began to improve in November and December of last year. Moreover, Hyundai’s global purchasing team predicts that the availability of semiconductor chips will continue to increase and stabilize during the first half of 2022.

But in spite of the chip shortage, 2021 was also a year of accomplishment for HMMA. Last year, team members celebrated as one of the assembled vehicles, a Santa Cruz sport adventure vehicle, rolled off the line, making it the five millionth vehicle produced at the Montgomery plant since it started assembling cars in May 2005.

Today more than 3,400 HMMA team members assemble five vehicles at the plant. Besides the Santa Cruz sport adventure vehicle, they also produce the Sonata and Elantra sedans and the Santa Fe and Tucson SUVs.

Last year, in 2021, HMMA produced 291,406 vehicles and exported 18,704 cars and other vehicles to places like Canada, Mexico, Puerto Rico and El Salvador.

According to a Jan. 4, 2022, Hyundai Motor America press report on the 2021 year and fourth quarter sales, the company reported having sold 738,081 vehicles, which represented a 19% increase over 2020 and was “the third best year in company history.” 

Further, the release states, “Hyundai sold 694,349 retail units, the highest yearly retail sales total ever, for a 23% gain.”

Meanwhile, HMMA-built vehicles accounted for 37% of Hyundai sales in the U.S. market, according to the company.

HMMA began assembling the new 2022 Tucson SUV last February. It was a new addition to the vehicles already produced there at the time, the Sonata and Elantra sedans and Santa Fe SUV. The addition of the Tucson was significant because it was the first time the model was produced in the United States, according to a company’s press release.

Later that summer, HMMA began assembling the all-new 2022 Santa Cruz Sport Adventure Vehicle, marking the first time HMMA produced five vehicles at the same time.

The Santa Cruz Sport Adventure Vehicle won high praise in October from the Washington Automotive Press Association, which named it “Best Pickup Truck.” The group credited the Santa Cruz design and utility as reasons for the pick. The vehicle was one of 20 new entries in the competition at the WAPA’s Fall Rally in North Beach, Maryland.

“The automotive industry is a dynamic and potentially growing industry whether it is internal combustion engines or electric vehicles,” Burns says.

To keep things moving, HMMA is working on a marketing initiative to recruit new team members to the Montgomery facility, Burns says.

“We and other OEMs are working hard to build interest in the workforce to want to have a career in the automotive industry,” says Burns. “And a priority for my team this year, and for years to come, is to identify people, whether they are students in high school or individuals who have chosen not to do a college career path but are intuitive, who can follow directions and do the processes that are required in an automotive facility.”

In addition, HMMA and other Alabama OEMs have teamed up with AIDT and AAMA on a recruitment effort supported with the website Visitors to the site can find the latest job opportunities among the Alabama automakers and suppliers.

“And that’s really a challenge right now for anybody out there. You probably see ‘now hiring’ signs all over the community. But we’re doing what we can to make this a great place to work and entice people to the company,” Burns says.

Burns, who will celebrate 15 years on the job at HMMA later this year, says watching team members assemble the vehicles still amazes him.

“We have 35-plus suppliers in the region that have to feed parts to our location to allow us to build the cars in the sequence that we have planned,” he says. “So they’re delivering parts that match that sequence. That in itself is a marvel to me, how we do that day in and day out to build on average about 1,300 cars a day. That in itself, to me, is just really amazing.”

Gail Allyn Short is a Birmingham-based freelance contributor to Business Alabama.

This article appeared in the March 2022 issue of Business Alabama.

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