War Footing Could Harm Hyundai, Kia

The Hyundai Kia Automotive Group has seen its company rise from the eleventh largest automaker in the world to the fourth largest in the span of just one decade. That's a tribute to sound management by the South Korean automaker who has found a way to build increasingly great ability vehicles and at prices lower than its competitors.

Hyundai's rise appears to be unstoppable, but there is one glaring matter which could upset the apple cart: war with North Korea. The Korean peninsula has been divided for six decades with the two nations at odds with each other ever since. In November 2010, the North Korean troops shelled a South Korean island near the demilitarized zone, killing two civilians and two troops personnel. That strike, which was without provocation, sent a strong signal to the south that the unstable northern government could kick off an all out war.

News North Korea

War Costs

War would devastate both countries, killing hundreds maybe thousands of citizen without exterior intervention. China, which has been loathe to operate the North Korean government, may be forced to intervene if the United States comes to the defense of South Korea. U.S. Involvement is likely despite America's current involvement in Afghanistan and Iraq.

Besides the human toll, a deep financial slam could be forthcoming if North Korea attacks South Korean factories. Much of South Korea's manufacturing base lies within remarkable distance of the north, together with plants owned by Hyundai. Any disruption of yield could hurt the Korean automaker, maybe jeopardizing its very existence if North Korean troops manage to overrun and destroy South Korea's infrastructure.

External Variables

It is these sort of external circumstances company leaders have taken note of down through the ages. War, retreat and natural calamities cannot be avoided, but they normally can be managed. In Hyundai's case, chance up added plants overseas helps as some of its yield is shifted off of the powder keg Korean peninsula. Indeed, both Kia and Hyundai now have manufacturing plants in the United States and Hyundai says that 80 percent of its global sales is beyond Korea.

A war with the north could prove to unrecoverable for Hyundai if North Korea introduced nuclear weapons into the mix. The north is a nuclear power, the south is not -- South Korea would need the U.S. To open up its nuclear umbrella to fend off a devastating assault or to sass in kind.

Even if the north chooses not to toss nukes, the South Korean megalopolis is within one hour of the north. Accepted bombs and troops could sack Seoul, reducing it to ruins in short order.

These sort of external variables has to keep South Korean leaders awake at night, wondering what sort of response they should make with minute time to weight the issues. The ramifications would likely go well beyond the Korean peninsula, maybe drawing a pair of global powers, the United States and China, into a war which could kill millions.

War Footing Could Harm Hyundai, Kia

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