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LG Streamlines Mexican Manufacturing Operations

Mexico City – LG
said this week that it will reorganize its manufacturing plants
and expand investments in Mexico to maximize efficiency and competitiveness.

The company said
it will invest an additional $100 million over the next three years toward the
effort, increasing total production capacity to $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,” the
company said in a statement.

LG Electronics currently operates three
manufacturing facilities in Mexico: Reynosa and Mexicali, which produce TVs,
and Monterrey, which produces refrigerators and electric ovens.

The reorganization program, which is now
under way, includes:

  • consolidation of LCD TV manufacturing
    plants, integrating two separate plants in Reynosa and Mexicali into one
    consolidated plant in Reynosa by September 2009 to produce mid-to-large size
    and premium TVs;
  • outsourcing of small- and medium-size
    LCD TVs through collaboration with an undisclosed external Mexican manufacturing
  • withdrawal from mobile phone
    manufacturing in Mexicali, by closing the Mexicali plant in June and shifting
    North American handset production to Korea and China;
  • expansion of Monterrey plant
    capabilities to include gas ovens in addition to electric models by the end of
    2009; and
  • localization of components by acquiring
    more parts from inside Mexico to gain cost competitiveness.

The company said planned increases in
investment and employment include:

  • expanded production capacity to $4
    billion by 2012, up from $2.6 billion in 2008;
  • adding new workers at production lines
    in Reynosa, which will generate about 1,200 new jobs, and Monterrey, which add 1,300
    new jobs; and

  • retirement benefits and outplacement
    support offered to displaced workers. All 500 Mexicali employees will be
    eligible for positions in Reynosa or Monterrey.