LG Electronics is planning to reorganize manufacturing plants and expand investments in Mexico to maximize efficiency and competitiveness.
The company will invest an additional US$100 million over the next three years, increasing total production capacity to US$4 billion. This is designed to generate synergies among plants in Mexico and improve cash flow during the current global recession, while further improving capabilities to serve customers in North, Central and South America.
LG Electronics currently operates three manufacturing facilities in Mexico: Reynosa and Mexicali producing TVs and Monterrey making refrigerators and electric ovens. The reorganization program, which is now under way, includes:
· Consolidation of LCD TV manufacturing plants – Two separate plants in Reynosa and Mexicali will be integrated into one consolidated plant in Reynosa to produce mid-large size and premium TVs. Consolidation is expected to be completed by September 2009.
· Outsourcing of small- and medium-size LCD TVs – LG Electronics plans to expand its collaboration with an external manufacturing partner in Mexico.
· Withdrawal from mobile phone manufacturing in Mexicali – With the closure of the Mexicali plant in June, handsets for North America will be produced in Korea and China.
· Expansion of Monterrey plant capabilities – The refrigerator and electric oven manufacturing Monterrey plant will start producing gas ovens by the end of 2009.
· Localization of components – LG Electronics will source more components in Mexico to gain cost competitiveness.
Planned increases in investment and employment include:
· Increased investment – LG Electronics plans to invest more than US$100 million in Mexico over the next three years.
· Expanded production capacity – LG will expand production capacity to US$4 billion by 2012, up from US$2.6 billion in 2008.
· Additional employment – Adding new production lines in Reynosa will generate about 1,200 new jobs and the Monterrey plant is planning to hire 1,300 additional workers. Localizing component production will help boost recruitment opportunities in Mexico.
· Retirement benefits and outplacement support – All 500 Mexicali employees will be eligible for positions in Reynosa or Monterrey. Retiring employees will receive pensions or outplacement support services consistent with local labor laws.
About LG Electronics Inc.
LG Electronics Inc. is a global leader and technology innovator in consumer electronics, mobile communications and home appliances, employing more than 84,000 people working in 115 operations including 84 subsidiaries around the world. With 2008 global sales of $44.7 billion, LG comprises of five business units – Home Entertainment, Mobile Communications, Home Appliance, Air Conditioning and Business Solutions. LG is one of the world's leading producers of flat panel TVs, audio and video products, mobile handsets, air conditioners and washing machines. LG has signed a long-term agreement to become both A Global Partner of Formula 1 and A Technology Partner of Formula 1. As part of this top-level association, LG acquires exclusive designations and marketing rights as the official consumer electronics, mobile phone and data processor of this global sporting event.
