Hyundai plans an import facility at Phila. port

A South Korean automaker is negotiating to put a large vehicle-import business along Philadelphia's waterfront, and create at least 250 jobs.

The auto-finishing facility for Hyundai and Kia vehicles would be on about 90 acres owned by the Philadelphia Regional Port Authority beside the Walt Whitman Bridge.

"If - and it's a huge if - we get this business, it's going to be at least 100 ships a year filled with cars," said Robert C. Blackburn, the port authority's senior deputy executive director.

The port authority in October entered into a lease with Philly Ro-Ro Partners, a company serving as the middleman for this deal, to bring a car-finishing import facility to an area that includes a parking lot, known as Pier 98 annex, at Columbus Boulevard and Oregon Avenue.

The port authority would receive $240,000 a year in rent. Port officials say they are willing to invest $1 million in capital funds for upgrading the site.

The operation - for vehicles being brought by Hyundai Motor Co. to the U.S. market from assembly plants overseas - would be run by Philly Ro-Ro on behalf of Glovis of America, a South Korean company that provides logistics and transport assistance to the manufacturer.

The deal is not yet done. "I think there are still some labor issues that have to get resolved," said port authority chairman John Estey. "It's all about who's going to move the cars."

The potential deal is being negotiated as the automaker known for affordable, quality vehicles has expanded its market share in the United States, from 4.8 percent in 2007 to 7.1 percent in 2009, according to data compiled by J.D. Power & Associates.

With only two assembly plants in the nation, the automaker relies heavily on importing many of the vehicles that end up in U.S. showrooms, said auto industry analyst John Wolkonowicz with IHS Global Insight.

Under the deal being discussed with Philadelphia, the new vehicles would be off-loaded from ships at Packer Avenue Marine Terminal in South Philadelphia and moved down the street to the southwest corner of Columbus and Oregon for finishing touches and to be stored until sent, mostly by truck, to dealer showrooms. Some cars might move out by rail.

"We have a lease that's been in place since October with Philly Ro-Ro, which is working with Glovis to bring these cars," said port authority chief counsel Gregory Iannarelli. "There are a few moving parts that have not been finalized to make it a done deal."

A provision in the lease with the port says Philly Ro-Ro can terminate if a deal is not finalized by Feb. 26, Iannarelli said.

The land includes Pier 98 annex and two other lots nearby, known as the Whiskey and Savage Yards.

"The labor portion is still being worked on," Iannarelli said. "We extended the contract; so if the negotiations are not successful, they [Ro-Ro] can walk away." Teamsters would likely handle the work.

Philly Ro-Ro has told port officials that, if a deal becomes final, the automaker would like to consolidate its East Coast operations here, Iannarelli said. The operations are now in Newark, N.J., and Baltimore.

Last March, the port authority put out a request-for-proposal to use the vacant land. Philly Ro-Ro partner Gerard McHugh, also president and chief executive of Realty Partners of America, responded. McHugh, who did not return telephone calls, had looked for suitable land on behalf of Glovis.

Port officials said they understood that a facility could be operational here by May. The site would need improvements, including creation of paint booths, car washes, and a parts warehouse.

"They still have to figure out their labor issues," said port authority chairman Estey. "There was an original agreement, later extended, on leasing the land so that Philly Ro-Ro can get all the necessary agreements in place. It is their responsibility to get all the permits, the labor straightened out, to do what is necessary with the importers."

Pier 98 annex was once before, at least 10 years ago, a car-finishing facility, Pasha Auto Warehousing, which imported Volkswagens, Iannarelli said.

The port authority board will sign off once labor issues and permits are straightened out, "so that we know we are going to have an actual company bringing in these cars," Estey said. "I don't want to lock up the land until we know that it will actually take place."

Hyundai began selling its cars in the market in 1986 and today is considered a company with "momentum," said Dave Cutting, senior manager of North American Forecasting with J.D. Power.

Its vehicles, which include Kia brands, have helped it win sales in recent years by getting high marks with consumers and offering alluring bait to cost-conscious shoppers. Cutting said one such move, which boosted sales, was Hyundai's buyer-assurance program last year.

"If you lost your job," Cutting said, "you were able to return their car without penalty."

A move to Philadelphia's port district, if finalized, would appear consistent with other moves the company has made in recent years, said Main Line native Paul Bingham, managing director of global commerce and transportation for IHS Global Insight in Washington.

The automaker built an assembly plant in Alabama after competition among several states, Bingham said.

"It was also relatively inexpensive land," he said, "for which they got some economic-development incentives from the State of Alabama."

He said another selling point for Philadelphia might be that Hyundai already has a manufacturing subsidiary nearby, Hyundai Rotem, where it makes rail cars, at a site near the Ikea store in South Philadelphia.

"They would have been able to say the port works for us, the city works for us, they had some confidence that it is a location that functions for them," Bingham said.

Unlike other merchandise, which traverses oceans in container ships that require ports with massive acreage, automobiles can be stacked in narrow freighters that cut through the Panama Canal and head to smaller ports such as Philadelphia, he said.

"Philadelphia actually plays into that," Bingham said. "You have available acreage. You have qualified longshoremen with a proven history of handling cargo in that community."

The depth of the channel - a topic often discussed as a factor limiting the growth of commerce along the Delaware River - is less of an issue for automotive freight, he added.

"A company like this," Bingham said, "would clearly be looking to make steps like this."