LG Electronics to source more components from Mexico

Mexico City — LG Electronics is planning to reorganize its manufacturing plants and to expand its investments in Mexico to maximize efficiency. Part of the restructuring includes sourcing more components in Mexico to gain cost competitiveness, said the consumer electronics manufacturer.

LG will invest an additional $100 million in Mexico over the next three years, increasing total production capacity to $4 billion by 2012, up from $2.6 billion in 2008. This is designed to generate synergies among plants in Mexico and to improve cash flow during the current global recession, while improving capabilities to serve customers in North, Central and South America, said the company.

LG Electronics currently operates three manufacturing facilities in Mexico. The Reynosa and Mexicali plants produce TVs and the Monterrey facility manufactures refrigerators and electric ovens.

The reorganization program, which is now under way, includes the consolidation of its two LCD TV manufacturing plants into one plant in Reynosa that will product mid-to-large size and premium TVs. Consolidation is expected to be completed by September 2009.

LG also plans to outsource its small- and medium-size LCD TVs, expanding its collaboration with an external manufacturing partner in Mexico. The company is also dropping its mobile phone manufacturing in Mexicali, closing the plant in June. Handsets for the North American market will be produced in Korea and China, according to the company.

However, LG plans to expand the Monterrey plant capabilities and start manufacturing gas ovens at the facility, along with refrigerators and electric ovens, by the end of 2009.

The additional production lines in Reynosa are expected to generate 1,200 new jobs and the Monterrey plant is planning to hire 1,300 additional workers. 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, said the company.