Korea’s factories face an uncertain future as firms ramp up US investment

The production line at the Hyundai Motor Group Metaplant America, located in Georgia. Hyundai plans to increase annual production here from the 300,000 range to upwards of half a million units. (courtesy Hyundai Motor Group)

Korean corporations have continued investing in production infrastructure in the US under tariff pressures from the Donald Trump administration.

In addition to automobile and battery factories, investments are also being channeled into steelworks and shipyards. The situation has prompted some in the Korean manufacturing industry to voice concerns about the loss of domestic work and jobs in the long run.

An investigation of the industry situation on Wednesday found that the Hyundai Group plans to invest US$26 billion in the US between 2025 and 2028. Following its decision to expand the annual production capacity of its Hyundai Motor Group Metaplant America (HMGMA) production site in Georgia from the 300,000-400,000 range to the 500,000-600,000 range, it is now considering plans for the construction of additional infrastructure that would increase that level to the 700,000-900,000 range by 2028.

The plant currently produces the Hyundai Ioniq 5 and Ioniq 9, with mass production beginning this past June for the Kia Sportage Hybrid.

In terms of the steel industry, Hyundai Steel and POSCO are investing US$5.8 billion in the construction of an electric arc furnace steel mill in Louisiana with an annual production of 2.7 million tons. The target date for commercial production is 2029.

The plan would establish a system for supplying US-produced automotive steel to plants locally producing finished automobiles.

In the shipbuilding industry, the Hanwha Group plans to expand its construction capabilities with an additional investment of US$5 billion in its Philly Shipyard. HD Hyundai has set its sights on building a new shipyard in the US in collaboration with the US company Kiewit.
LG Energy Solution, which produces batteries, plans to increase its North American energy storage system battery production capabilities to over 70 gigawatt-hours by the end of 2027.

Back home, manufacturing industry insiders have voiced worries that the investments could lead to the reduction of existing production infrastructure.

One steel mill worker said, “While the expansion of projects is welcome, some of the workers on the ground are worried that this could become a means of rationalizing additional restructuring at domestic production facilities.”

“There haven’t been any immediate visible changes, but given the difficult state of the steel industry, we can’t help feeling very nervous,” they added.

The increase in finished automobile production capacity in the US is also very likely to impact the manufacturing ecosystem, which includes many upstream and downstream partner businesses.

“If the operating rate of Hyundai Motor’s US plant increases next year and full-scale local production of hybrid automobiles and sport utility vehicles begins, that will inevitably lead to a reduction in the volume produced and exported in Korea,” predicted Kim Kyoung-you, a senior research fellow at the Korea Institute for Industrial Economics and Trade.

“A decrease in domestic finished automobile production would lead to reduced work, which would deal a major blow to domestic businesses supplying components,” he explained.

In a previous report on the “rise of the economic security paradigm and structural shift in Korean investment,” the Bank of Korea predicted that increased foreign direct investment could have negative consequences that include hollowing out of the domestic manufacturing base, a weaker cooperation ecosystem, and reduced hiring.