On May 30 LG Electronics announced 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 LG 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 of LG has a floor area of 77,000㎡ on a site measuring 1,250,000㎡. LG has invested some US$360 million in this factory, the construction of this factory started in August 2017. A “smart autonomous factory,” its two production lines are capable of producing one front loading and top loading washing machine every 10 seconds.
The $360 million factory, believed to be the most advanced, integrated washing machine production plant in the world, already employs more than 550 American workers who are supporting continued production
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.
This factory of LG 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.
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