LG to Relocate 2 Domestic TV Production Lines to Indonesia
SEOUL, May 20 (Korea Bizwire) — LG Electronics Inc. said Wednesday it will relocate two of its TV production lines in South Korea to Indonesia in a move to boost its global production efficiency amid the novel coronavirus pandemic.
LG said two of the six production lines at its TV plant in Gumi, some 260 kilometers south of Seoul, will be moved to its factory in Cibitung, Indonesia, within this year at the earliest.
The latest restructuring is aimed at making the Indonesian TV plant into the company’s Asian production hub, LG said.
Its Cibitung factory, founded in 1995, currently produces TVs, monitors and digital signage products. LG said it will increase the production capacity of the factory by 50 percent.
LG said the move will reinforce its regional cluster production system. With Indonesia being its Asian production hub, its plant in Poland will supply TVs to Europe, while North America will be covered by its factory in Mexico.
Despite scaling down the capacity of its domestic plant, LG said there will be no layoffs.
Some 500 workers for TV production lines at the Gumi plant will be relocated to other TV and solar module production lines, with some of them moving to its research center in Pyeongtaek, south of Seoul, according to the company.
LG said the Gumi plant will remain the control tower for its TV business and will produce high-end products, such as rollable and “wallpaper” TVs.
LG was the No. 2 player in the global TV market in terms of value in the January-March period with a market share of 18.7 percent, according to market tracker Omdia, only behind its local rival Samsung Electronics Co. with 32.4 percent.
LG’s home entertainment unit, which manages the TV business, reported solid earnings results in the first quarter, with its operating income surging 31.7 percent on-year to 325.8 billion won (US$264 million).
More than 90 percent of its TV sales were from overseas.
However, the company expected weak performance in the second quarter, as advanced markets have suffered from the fallout of the COVID-19 crisis.
With major sports events, such as the Tokyo Olympics, postponed due to the pandemic, industry tracker Omdia earlier predicted global TV shipments would decline 8.7 percent on-year to 203.5 million units this year.
This is not the first time that LG has shifted its domestic production lines overseas. Last year, the company relocated some of its smartphone production to Vietnam.
LG’s latest announcement, however, stands in contrast to South Korea’s plan to bring back local companies’ overseas manufacturing facilities.
The finance ministry earlier announced that it is reviewing options to ease regulations to boost reshoring.
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May 20, 2020 at 12:06PM