Mexico City - LG Electronics 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 partner;
- 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.