Just like their U.S. market shares, South Korean automakers’ government influence initiatives are rapidly expanding this year — a development starkly contrasting with the lobbying efforts of most American, German and Japanese car companies.
Hyundai, most notably, has already spent more this year on federal lobbying than during any year previous, buoyed in large measure by its burgeoning Washington office and the hiring this summer of Chrysler’s much-heralded lobbying chief. Kia, for its part, zipped from zero to $600,000 in lobbying expenditures between 2009 and 2010, a spending level it’s on pace to attain again this year.
As their efforts have broadened, so has the spectrum of governmental issues they’re tackling — from combating distracted driving to negotiating a new compromise on fuel standards. The companies also lobbied hard in favor of the recently approved United States-Korea Free Trade Agreement, which could help further boost their economic fortunes.
General Motors, Ford, Toyota and Honda are still spending more money on federal lobbying than their comparatively tiny South Korean counterparts.
But these behemoths have generally slashed their Washington influence efforts since recording their largest annual lobbying outputs during the middle or late parts of the past decade. The South Korean automakers’ moment to close this influence-peddling gap is present now perhaps more than ever, and the companies are eagerly accelerating toward the opportunity.
“As our stake and employment grows in the United States, it’s become logical for us to increase our presence in Washington,” Hyundai spokesman Chris Hosford said. “It is a little different what we’re doing. When the rest of the industry goes right, we tend to ask ourselves, ‘What [would] happen if we go left?’ Our first reaction is not asking what everyone else is doing when it comes to telling our story.”
Said John Anderson, director of Kia’s two-year-old, four-person Washington office: “We’re very proud of what we’ve done so far, and it’s been an interesting process getting here because people had very limited information on Kia. We’re hoping to build a long-term understanding that Kia is here to stay.”
Hyundai opened its first U.S. assembly plant in Alabama in 2005, while in 2009, Kia opened an assembly plant in Georgia. Hyundai’s U.S. market share has jumped to 5.1 percent in October from 4.5 percent a year earlier, according to Motor Intelligence, while Kia’s share has risen to 3.7 percent from 3.3 percent during the same period.
And not coincidentally, the companies’ aggressive lobbying activity coincides both with their growth and key U.S. government decisions, such as free trade and fuel standards, that stand to significantly affect South Korean automakers.
On these and other issues of import, the tack of Hyundai and Kia is largely to engage, even charm lawmakers, not fight them, company officials say.
During this year’s third quarter, Hyundai spent $260,000 on formal federal lobbying efforts, and it’s on pace to spend $1 million in one year for the first time ever, federal records indicate. That’s more than 12 times the amount Hyundai spent in 2000 — just $80,000 — and as recently as 2008, the company posted a comparatively modest $350,000, steadily increasing its output each year since.
In addition to its internal lobbyists, Hyundai has contracted with the firm Clark & Weinstock for services, including those from more than a dozen former federal government employees, such as former Rep. Vin Weber (R-Minn.). Weber sports taut connections with a variety of prominent GOP leaders, having advised presidential candidate Mitt Romney for several years.
Kia frequently reminds job-conscious lawmakers of the thousands of new positions it has created at its Georgia assembly plant and notes in its federal lobbying disclosures that it “is in the process of hiring the third wave of workers at the facility.”
Hyundai’s influence push in Washington hardly ends there, however.
In late October and throughout November, for example, the company purchased full-page advertisements in the print editions of each of Capitol Hill’s daily newspapers — POLITICO, Roll Call and The Hill. It also sponsored POLITICO reporter Mike Allen’s Playbook column every day between Oct. 31 and Nov. 6.
Meanwhile, the Hyundai Kia America Technical Center, a joint design and engineering operation with locations in California and Michigan, has separately spent nearly a quarter-million dollars so far this year on federal lobbying initiatives — more than in any other year. Fuel-efficiency standards and “general interest in issues relating to automotive manufacturing, fuel economy, emissions, service, safety and finance” are recent lobbying targets, according to federal records.
“Hyundai — they’re kind of the team to beat right now. You see an uptick with them because Kathleen is kicking butt,” one veteran auto industry lobbyist, who represents a European car maker, said, referring to Kathleen Hennessey, the former Chrysler lobbyist who now runs Hyundai’s Washington office. “She’s very smart, down to earth and what Hyundai needs to get its story out here.”
Hennessey directed questions to Hosford, who likewise, praised her work and noted that her hiring brought the company’s Washington office up to seven people.
Lobbyists representing both domestic and foreign automakers are keeping a keen watch on Hyundai and Kia — upstart companies that could soon become their consummate frenemies.
“I would suspect that they’re going to continue to be very engaged in what’s a very open and competitive auto market,” said American Automotive Policy Council President Matt Blunt, the former Missouri governor whose organization represents the policy interests of GM, Ford and Chrysler. “We won’t agree on everything. But there are so many issues that we have in common, and to the extent that we can speak with a common voice on these issues — safety, fuel standards — that’s a good thing.”
Aside from the latest corporate iteration of Chrysler, which is spending slightly more on lobbying this year than it did last year, two of the Big Three are dramatically down.
To wit: In 2007, in the months before the U.S. government rescued GM from almost certain annihilation, the company spent $14.28 million on lobbying, whereas it’s on pace this year to spend $9.73 million, federal records indicate.
Ford is on pace to spend about $6.8 million this year — hardly the decade-high $9.6 million the company put forth in 2005.
“We are lean and mean, and that’s who we are right now. We are able to do more with less, I hope, in Washington,” Ford Group Vice President for Government and Community Relations Ziad Ojakli said, adding that it would be “hard to anticipate” whether it will ever again find itself expanding its Washington office like Hyundai and Kia are.
“On most of the issues like international trade, we’re fundamentally in agreement,” said Edward Cohen, vice president of government and industry relations for Honda. “It’s mostly the nuance of policy where we may have differences.”
The Korean automakers’ increasing Washington presence “is predominantly an opportunity for us,” Cohen said, noting that he expects Honda to keep its own lobbying efforts, at least in the near future, level with where they are today. That doesn’t mean, however, that it isn’t employing new lobbying techniques: Last week, for example, the Honda government relations office launched a website, www.HondaInAmerica.com, as a “resource for policymakers, regulators and media at the federal, state and local levels.”
Beyond their own government affairs work, Hyundai and Kia may also benefit from the growth of a trade association — the Association of Global Automakers — of which they are members along with 13 other makers, including Isuzu to Maserati. “You’re going to see a lot of new technology in the auto industry this decade, which will have a dramatic effect
The association this year changed its name from the Association of International Automobile Manufacturers, moved its offices from Arlington, Va., to downtown Washington and promises to become a bigger force in U.S. governance.
“Our access to Capitol Hill is better, and our move puts us in the middle of the action,” said Michael Stanton, president of the Association of Global Automakers. “So it pays to engage in the political process and work with the Hill and agencies, because they’ll be very involved.”
That jells with the government influence outlook for the South Korean automakers.
“We’re going to remain flexible,” Anderson said, noting that lobbying expenditures are “going to at least stay probably at the level that they’ve been at and grow organically from there.”
Hosford says that while future lobbying growth is difficult to predict, “there’s a growing desire still on the part of Hyundai that the company is available to legislators to provide any information that is helpful for them.”
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