[krishnakarthik1]

“People have a tendency to blame politicians when things don't work, but as I always tell people, you get the politicians you deserve,” Obama.

[itwasntme]

Having worked extensively in the infrastructure development industry, I can safely say that these are very normal moves in a game of chess. I suspect KIA has read IN's federal 'flaws' and have already decided to set up a different line (maybe sedans or EVs) in say GJ, TN or UK which were the original 3 other states in the fray.

In IN, it is better not to put all your eggs into one basket anyway.

[libranof1987]

Not ideal news when the overall business sentiment in the country isn't positive anyway. Worse, when it is driven by petty politics by a vindictive leader. How do you expect corporations to invest when policies are not just changed but previous schemes rolled back once Govts. change.

Here's some irony:

needs to "shun hesitation" and make investments to drive the country's economic growth

https://timesofindia.indiatimes.com/...w/73948717.cms

That said. Does Kia have a larger play in this move? They have the benefit of economies of scale if they do move to TN, since their parent Hyundai has a well established set up in the state.

[psankar]

Originally Posted by locusjag

Kia had originally wanted to set up shop in Tamil Nadu only. If I remember right, political unrest was brewing in the state at the time that they were scouting for a location. Was it the Sterlite protest or was it the movement against the Salem-Chennai highway? In any case, the overactive extreme fringe elements in TN had scared Kia away...

Sterlite protests happened in Tuticorin against Vedanta chemicals who were accused of polluting air and ground water, nothing related to automobile sector in TN. The "overactive extreme fringe element" that you referred to are native people (more than 20,000) who protested peacefully for more than 100 days and then the police shot dead young people including students. Read https://en.wikipedia.org/wiki/Thoothukudi_massacre

Kia Moved from TN to AP originally because the ruling ADMK Government (and coalition partners of the ruling BJP Government) demanded huge bribes and political instability due to Jayalalitha's death.

Relevant news: https://www.hindustantimes.com/autos...rkSo8OBIO.html and https://www.business-standard.com/ar...1900522_1.html

Avoid political/sensitive comments like "the overactive extreme fringe elements in TN" please.

[pgsagar]

Originally Posted by vrrraju

Andhra Pradesh was never an automobile state, so getting a skilled resource will always be challenge, in order to fill the competency gap, it will take at least 3 years if you want to employee local people as per the new policy. Any further expansion at this facility will not be viable also.

No state is a born automobile state. Or, born IT state or born any such thing. Bangalore is the IT capital of India. Do you think their entire workforce is from Banaglore or Karnataka? I am sure almost 70 per cent IT guys would be from different states. In every industry, people are hired pan-India. Every state has to start some day, somewhere.

I don't know what exact underlying reason KIA has but politicians are almost the same in whether AP or Karnataka or TN or for that matter any other state in India. Ask anyone running a business in Karnataka /TN or any other state, I am sure you would hear some interesting tales, off the cuff.

And, KIA or any other multinationals, they aren't exactly angels either. They play one state against another, seeking concessions. I am not saying it's bad. They are here, after all, to maximize their ROI. It's just what they do.

And lastly, a politician can mess with a small local business but it is hard to mess with a multinational company. A company which is an automotive major of a developed country. Someone of KIA's standing can easily put in a word straight to PM or Home Minister and state can be made to toe the line the very next instant.

[saisree]

KIA wanted to setup their plant in Chennai and almost zeroed in at the Oragadam SIPCOT. Due to lot of political issues they moved on to the then Sun Rise state AP and in one of their interviews said that, there is an agreement between Hyundai and KIA to set their manufacturing plants in different geographical regions and they shouldn't be competing.

Originally Posted by John

AP Govt sending out all the wrong signals
Already the Japanese Govt has advised them caution over moves to renegotiate renewable energy tariff.

Originally Posted by avira_tk

AP has no consistency in policy and to top it off, there is harassment of Kia itself and most likely of its suppliers,if the politicians are so brazen to Kia itself.

Originally Posted by pgsagar

this news would be a big setback for the state's image, which in all honesty was never a great one to start with.

Originally Posted by pgsagar

And lastly, a politician can mess with a small local business but it is hard to mess with a multinational company.

Need not be surprised with the current state of affairs and policy paralysis in AP. This is the same political group which went through lot of tussle and mooted out Volkswagen from setting up a plant in Andhra Pradesh back in 2005. Bribes every where. Source

You cannot expect anything different from them. Expecting more to come.

Originally Posted by krishnakarthik1

To continue in Andhra Pradesh you should have a manufacturing facility at Kurnool, finance and cost control offices at Amaravati, sales and marketing offices at Vizag.

The new CM loves you.

[MercFan]

Govt of TamilNadu denies any such talks.

https://www.thenewsminute.com/articl...-smooth-117600

Kia Motors India dismisses the news

https://www.thehansindia.com/andhra-...-motors-603008

[hillram]

Having plied many times between Hyderabad - Bangalore, every time I witness the mega fold increase in Infrastructure around Kia Factory near Anantpur on NH44. An array of guest houses, even korean restaurant are in offering near the plant.Anantpur is a big town located about 50km from the Kia Plant.Here are a list of Ancillary Companies located near to Kia Plant on NH44:
1)DAEHA PLASTIC COMPOUND INDIA PRIVATE LIMITED
2)WOOYOUNG AUTOMOTIVE INDIA PRIVATE LIMITED
3)HWASEUNG IA AUTOMOTIVES PRIVATE LIMITED
4)SLAP Pvt Ltd
5)Bugok India Pvt Ltd
6)DAECHANG SEAT AUTOMOTIVE PRIVATE LIMITED
7)JRG Automotive Industries India Pvt Ltd
8)United industries plastic Pvt Ltd
9)UE PRESS TOOLS PVT LTD
10)KSH AUTOMOTIVE PRIVATE LIMITED
11)Faurecia
12)SUNGWOO HITECH AP PRIVATE LIMITED
13)HYUNDAI MATERIALS INDIA PRIVATE LIMITED
14)Seoyon E-Hwa Automotive Anantapur Private Limited
15)Glovis India Private Limited
16)Mobis India Module Private Limited
17)NVH India Anantapur Auto Parts Pvt Limited

Kia plant on NH44 near Anantpur, AP is too huge and built very well for years to last.I doubt if they will shift to Chennai. Maybe, a second plant could be built in Chennai, where Hyundai already has a facility in Orugadem.
I often stop at the Kia Plant for few minutes enroute to Bangalore, just to enjoy the vast view from my car.

[GTO]

Great discussion, guys . Just a soft reminder of our rules = please don't discuss politics or politicians. Thank you!

[BaCkSeAtDrIVeR]

Being from Kerala, I want to cry. Now weep. Wail.

Nah. KL too gets the kings we deserve.

[navpreet318]

Shifting plants is actually not quite a huge loss. The transportation costs are not astronomical compared to the revenue generation and future cost reduction due to closeness of the parts suppliers etc. Most of Kia's parts suppliers are common with Hyundai and they would immensely benefit from this.

Contrary to what it feels and looks like, it's not that tough a job. Cranes are hired at pretty normal costs and costs of hiring the trailers for the movement are also not that high. Although I must add that my perspective is from the company point of view. If that amount is seen isolated, it might seem huge.

[2000rpm]

I think this is a threat which someone rightly identified as a Chess move.

This seems to be like a clash of ego between some local bureaucrat / politician and Korean Babu, this will be settled "amicably" between the parties once someone level headed intervenes (for a price of-course).

[Thermodynamics]

There is a reason why states like TN, GJ are preferred choices for Auto manufacturing. It is always a safe bet to ride with the crowd because any policy change would affect everybody unlike this case where one bad policy is all it takes to put your whole business into jeopardy.

Events like these remind how grave the situation is to do business / foreign direct investment in India. It is a shame for the Andhra Govt if they let that happen. I don't think it is going to be easy for Kia either if they chose to quit/shift out of Andhra. The ugly is yet to surface.

I guess a better move would be to continue with the status-co for the time being and few years down the line when demand for capacity increases, invest in a new plant in TN and gradually shift production.

[gururajrv]

If reports are to be believed posted online, Kia is contemplating on moving their new plant out of Andhra to Tamil Nadu due to recent policy changes.

We should appreciate Tamil Nadu for being more concerned on creating jobs by keeping policies liberalized, which most of the states including Karnataka doesn’t have policies for conducting business and creating jobs in the automobile sector.

If Kia is indeed moving out of Andhra, then its a loss for their own state.

Got this link from WhatsApp group.

@ Mods - you can move this to an appropriate thread if required.

Quoting the entire story in my post below.

https://finance.yahoo.com/news/exclu...174012997.html

NEW DELHI (Reuters) - South Korea's Kia Motors is discussing with Tamil Nadu the possibility of moving a $1.1 billion plant out of neighbouring Andhra Pradesh only months after it fully opened, due to policy changes last year, sources close to the talks told Reuters.

Kia inaugurated the Andhra plant, its first in the world's fifth-largest car market, in December after two years of construction. It has an annual capacity of some 300,000 units and created 12,000 direct and indirect jobs.


However, Kia is now in talks with the nearby state of Tamil Nadu, home to many major autoparts suppliers, about potentially relocating the plant, a senior state government official and a second source familiar with the discussions said.

"(Kia) are facing problems (in Andhra Pradesh), they have been in preliminary negotiations with us ... There is a secretary-level meeting next week, we might have more clarity then," the official told Reuters on Wednesday.

Kia said in a statement it has a long-term commitment to the Indian market and it aims to utilize the full capacity of its Andhra plant "before considering further expansion".

"We do not have any plans to shift the manufacturing facility from the current location," it said, without commenting on any policy concerns or talks with Tamil Nadu, which are at an early stage.

Kia is being represented in the talks by executives at its sister company Hyundai Motor Co, which is India's second-largest automaker and has all its car production facilities in Tamil Nadu, the state official added.

Hyundai did not respond to a request for comment. The Tamil Nadu and Andhra Pradesh chief minister's offices did not respond to requests for comment.

Kia has been troubled by a new Andhra state law on local hiring and by the new state government wanting to review the incentives given out by the previous administration to encourage the company to set up the plant, the second source and a third person with knowledge of the discussions said.

Moving the plant to Tamil Nadu could also help Kia in reducing logistics costs as it would bring it closer to some of its parts suppliers, the second source added.

It was not immediately clear how swiftly Kia could move production lines from a plant in one state to another, or what sort of disruption that would entail.

The sources declined to be named as the talks are private.



STATE POLICY CHANGES

Kia started building the new plant in 2017 and formally inaugurated it in December, when it said the 23 million square foot facility would manufacture vehicles like its Seltos SUV for both the Indian and overseas markets.

It said the facility would "become a vital part" of its global production network in the long term.

But considering relocation within months of the inauguration highlights the challenges foreign investors face while dealing with policy changes at federal or state level in India.

Kia was caught off guard in July after the new state government in Andhra mandated companies to reserve 75% of all jobs for locals from the state, making it much harder for the company to find suitable employees, two of the sources said.

Kia has also been unnerved by the new state government's bid to review certain financial incentives - such as breaks on electricity tax and deferred land payments - given to the company by the previous administration, one of the sources said.

After taking control of Andhra in 2019, a new government has decided to review agreements signed with several companies, including from the renewable energy sector, sparking concerns among foreign investors around sanctity of contracts in India.

The Japanese ambassador to India, given Japanese companies interest in the region, told Andhra Pradesh not to renegotiate renewables contracts as it would hit business sentiment in the region, an Aug. 7 letter seen by Reuters showed.

Prime Minister Narendra Modi's federal government is separately working on a foreign investor protection law to safeguard against policy changes, Reuters has reported.

"This is a problem for all companies including Kia ... the cost of moving the plant would be too high and would set the company back by about two years and they have made huge investments," said one of the sources aware of Kia's concerns.

[nishsingh]

I hope this news isn't true for the sake of the state and the nation - it would be a big blow for the image of all parties involved, including Kia if this divorce were to happen.

On a lighter note, if this does indeed happen, the Kia Carnival would be the perfect vehicle to undertake the shifting of all personnel and equipment from Kia's factories. Maybe that is why Kia launched this vehicle in India it in the first place.