By Hans Greimel, Crain News Service
SEOUL, South Korea (April 9, 2013) — The expressway from downtown Seoul to the city's auto show venue is lined with tank traps, barbed wire and guard towers. Mounting tensions with North Korea are a chilling reminder why.
The heavily armed border with the erratic, sword-rattling communist state is just a 30-minute drive up the road.
The South Korean capital of Seoul — with its 10 million people and the headquarters of Hyundai Motor Co., Kia Motors Corp. and GM Korea Co. — lies within artillery range and along the presumed invasion route if another Korean war breaks out between the two nations.
Auto makers there have long factored this scenario into their business plans. Now, with North Korea stoking fresh concern about conflict, some are dusting off those contingency plans.
In recent weeks, North Korea has threatened nuclear war, unilaterally pulled out of the 1953 Korean War armistice, unveiled plans to restart a shuttered nuclear plant to make more bombs and severed hot-line links with the South Korean government.
But auto makers in South Korea, along with the rest of the country, are largely desensitized to the threats. On March 28, press day for the Seoul Motor Show, the North Korean "menace" was the subject of small talk that elicited eye-rolling — not elevated pulses.
One auto maker's spokeswoman at the show quipped that earthquakes in Japan were scarier than the rumblings from neighboring North Korea.
Hyundai and Kia, which have known since their founding that their operations could be destroyed by war, declined to comment when asked how they were prepared. A spokeswoman for Hyundai Motor Group declined to say whether the companies even had a contingency plan for possible conflict.
GM CEO Dan Akerson, by contrast, said his company is preparing contingency plans to protect workers and investments.
"If there were something that would happen in Korea, it's going to affect our entire industry, not just General Motors," mr. Akerson said in an interview on CNBC's "Squawk Box" morning show. Last year GM's four South Korean assembly plants churned out 2 million vehicles, including 1.2 million knockdown kits for shipment overseas.
"Are we making contingency plans? Absolutely, we would be irresponsible not to," GM Korea said in a statement. "Other than to say we are committed to upholding the safety of our employees and assets, and focused on continuity of supply for our customers, we are not in a position to comment on those plans."
All-out war would hit Hyundai-Kia hardest. South Korean production accounts for about 58 percent of Kia's global output and about 43 percent of Hyundai's.
Top-selling U.S. nameplates such as the Hyundai Sonata and Kia Optima sedans are made in North America. But a war still would wreak havoc on supply chains.
War also would likely hammer overseas production of any manufacturer that relies on parts from rapidly expanding Korean suppliers, such as Hyundai Mobis and Mando Corp. Japan's 2011 earthquake and tsunami showed how local disasters can have global ramifications.
For now, though, it's business as usual in South Korea. And people there have learned to react with patience, not belligerence, to the North as they wait for the latest flare-up to recede, as it has so often before.
This report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.