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LG Electronics’ new washing machine factory in Clarksville, Tennessee. (provided by LG Electronics)
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US production site a response to Trump administration’s tariff barriers
LG Electronics announced on May 30 that it had completed construction the day before on a washing machine factory in Clarksville, Tennessee, with an annual production capacity of around 1.2 million units. It is the first lifestyle and home electronics production plant established by the company in the US. The local production approach is expected to increase the company’s response capabilities to the Donald Trump administration’s tariff barriers. The newly completed factory has a floor area of 77,000㎡ on a site measuring 1,250,000㎡. LG has invested some US$360 million in the factory, which began construction in August 2017. A “smart autonomous factory,” its two production lines are capable of producing one front loading and one top loading washing machine every 10 seconds. It boasts a “one-stop” production system that includes everything from a component manufacturing line for processing metal to a module assembly line for developing the components into standardized modules and production line for completing and packing the washing machines. LG noted that the smart factory design and advanced integrated production management system would enable it to change the items produced by its lines in a matter of minutes. LG Electronics’ decision to move up the scheduled date of its Tennessee factory’s operation appeared motivated by safeguards (emergency import restrictions) by the US government. In January 2018, the US set a tariff-rate quota (TRQ) level of 1.2 million units for imported home washing machines, introducing a tariff of 20% on volumes below 1.2 million units and 50% for units over the quota for the first year. For the second year (2019) and third year, the respective tariffs amount to 18% and 16% for the first 1.2 million units and 45% and 40% for additional units. LG says, “Whirlpool brought us here” “The biggest advantage of local production is the ability to respond flexibly to the US market,” explained Song Dae-hyeon, who heads the LG Electronics Home Appliance & Air Solution (H&A) project headquarters, in a talk with local South Korean correspondents after the completion ceremony. “Our goal is to make it so that production in the US works in our favor even after the safeguard tariffs go away in the future,” Song said. “Whirlpool brought us here,” he added, referencing the fact that the US government safeguards came in response to demands from the US appliance company Whirlpool. Along with the company’s washing machine factory in Changwon, South Gyeongsang Province, the new factory appears set to serve as one of two major production bases supplying washing machines to the US market. The Tennessee factory will be responsible for volumes previously produced in Thailand and Vietnam. The completion ceremony on May 30 was attended by US Representative Mark Green, Tennessee Governor Bill Lee, Montgomery County Mayor Jim Durrett, and Clarksville Mayor Joe Pitts, along with Song Dae-hyeon and Kim Young-joon, consul general from the consulate in Atlanta. By Song Gyung-hwa, staff reporter Please direct comments or questions to [english@hani.co.kr]
