Lee Jin-man  /  AP
A South Korean worker of Kia Motors walks around at the company's showroom in Seoul, Monday. Kia Motors Corp., South Korea's second-largest automaker, announced Monday it will set up an auto factory in West Point, Ga. that will begin production in 2009.
updated 3/13/2006 12:48:36 PM ET 2006-03-13T17:48:36

Kia Motors Corp., South Korea's second-largest automaker, announced Monday it will set up its first U.S. plant in the southern state of Georgia.

Production will begin in 2009 and the $1.2 billion factory will employ 2,500 workers, Kia said in a press release. Georgia Gov. Sonny Perdue and Kia President and CEO Euisun Chung made the formal announcement at a ceremony in Seoul.

Locations in Mississippi and Tennessee had also contended for the plant.

The facility in West Point, Georgia, near the Alabama border, is expected to produce 300,000 vehicles per year at maximum capacity, Kia said. The Korean carmaker also said that five to six auto suppliers are expected to set up nearby, resulting in the creation of an additional 2,000 jobs.

The company, maker of the Optima and Amanti midsize sedans, the small-size Picanto and the Sorento midsize SUV, is an affiliate of South Korea's largest carmaker, Hyundai Motor Co., which has a factory in Montgomery, Alabama, 120 kilometers (75 miles) away.

Proximity to the Hyundai site _ combined with a $258 million incentive package from the state _ helped sway Kia, Georgia state officials said.

Georgia has been hit hard by decisions at Ford Motor Co. and General Motors Corp. to close their plants in the state _ largely due to increasing competition from Asian automakers.

Perdue said Kia's decision to locate in the state "is a testament to the tools, experience and know-how Georgia will deliver to one of the automotive industry's leading innovators."

Kia, which last year exported three-fourths of its South Korean production, is pursuing an aggressive overseas expansion. Besides moving into the United States, it's building a second plant in China and expects its first European factory to start up in Slovakia at the end of the year-end.

The company also supplies materials to partners for vehicle assembly in Malaysia, Indonesia, Vietnam, Russia and Iran.

"Kia Motors has entered an aggressive growth phase in the U.S," Chung said.

The Korean carmaker expects its sales in the United States and Canada to increase 15 percent to 350,000 vehicles in 2006, and grow further to 800,000 by 2010.

The company said that Kia Motors America posted record sales of 20,719 vehicles for the month of February, and is 3.2 percent ahead of its record setting 2005 sales pace.

In January Kia said its 2005 net profit rose 2.9 percent to 680.9 billion won ($696.5 million) as revenue gained 4.6 percent to 16 trillion won ($16.4 billion).

Kia sold 1.27 million vehicles worldwide in 2005, 13.9 percent more than the year before.

Kia said it has invested more than $300 million in the United States over the last four years.

Facilities include a research and development center in Ann Arbor, Michigan, vehicle proving grounds in Mojave, California, and what it calls the largest automotive design studio in California, which it shares with Hyundai Motor America.

The company is currently constructing a $87 million U.S. corporate campus in Irvine, California, expected to open in December 2006, and which will include a design center.

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