Korea picked as No. 1 US auto parts outsourcing partner

Filed in archive Outsourcing News on October 29, 2005

The Korea Trade-Investment Promotion Agency (KOTRA) reported that Korea was rated as the most attractive outsourcing partner by the biggest U.S. automakers for its high quality and price competitiveness.

Auto giants, GM, Ford and Chrysler, ranked South Korea as the best outsourcing country, while major U.S. auto parts providers rated the country second in investments.

Citing U.S. automakers, KOTRA said that 40 percent of Korean companies manufacture quality products as compared to only 5 to 10 percent of Chinese companies. And with the recent bankruptcy of Delphi (the world's second-largest auto parts maker) outsourcing is expected to rise in the country as the company restructures itself.

More than 70 percent of US auto parts companies have also expressed their intention to invest in Korea for its high growth potential. According to them, "Korea has good market access to neighboring countries, a skilled workforce and high productivity, but it has to tackle high labor costs and militant labor unions as quickly as possible."

Kwon Joong-hun, director of the Overseas Market Research Team of KOTRA, said, "Once Korea becomes the outsourcing base for U.S. auto parts makers, the country will see shipments of auto parts and foreign direct investment soar."

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