LG Electronics has decided to relocate some of its TV production lines in Gumi, North Gyeongsang Province abroad. As a result, the relocation of workers at LG Electronics' Gumi workplace is expected.
LG Electronics announced on May 20 that it will relocate two of its six TV production lines at its Gumi plant to Indonesia as early as the end of this year. LG Electronics' Gumi workplaces are currently producing finished products such as OLED TVs, LCD TVs, and monitors for computers.
LG Electronics is planning to increase production capacity of TVs in Indonesia by 50 percent by moving two production lines from its Gumi plant to its Cibitung plant in Indonesia within this year.
To that end, the Cibitung plant will expand its automated facilities in large numbers throughout the entire process, including assembly, quality inspection and packaging. The Cibitung plant in Indonesia, which was completed in 1995, is currently producing TVs, monitors, and signage, with labor costs reportedly about one-seventh of Korea's.
At the same time, LG Electronics is going to strengthen its base production system by region. The plan is to increase productivity and efficiency by allowing production plants in Poland, Mexico and North America to supply TVs exclusively to the continental market, respectively.
Amid stagnant global TV demand recently, LG Electronics is pushing to streamline production sites to flexibly cope with rapidly changing business conditions such as intensifying price competition.
In relation to this, TV production sites such as Rayong in Thailand, Shenyang in China, Wroclaw in Poland, Haiphong in Vietnam, and Almaty in Kazakhstan have been integrated into nearby production sites since 2015.
The Gumi plant plans to exclusively produce top-notch premium TVs and medical monitors that require high technical skills such as rollable and wallpaper, instead of reducing the number of TV and signage production lines from six to four. In addition, it will also carry out research to verify mass-production of new products and improve efficiency of production.
"The move of production lines in Gumi is not a decision made due to the lack of strategic importance of domestic production sites," LG Electronics said. "The move is aimed at strengthening the regional hub production system, led by the Gumi plant, which is the mother factory and control tower of global TV production."
However, it drew a line that there will be no artificial manpower restructuring for Gumi operations. "There are about 500 employees in charge of TV-related work at Gumi," LG Electronics said. "About 400 of them will work at TV production lines and solar module production lines at the same workplace."
It added, ”The remaining 100 people will be relocated to LG Digital Park in Pyeongtaek, Gyeonggi Province, through individual meetings to support TV-related services and research and development.”
In order to help employees adapt to Pyeongtaek, LG Electronics will provide convenience such as special loans and expenses to move, holidays for travel to workplaces, and weekend transportation.
Meanwhile, civic groups in Gumi, North Gyeongsang Province, immediately protested the relocation of LG Electronics' production line to Indonesia. Cho Geun-rae, secretary general of the Gumi Citizens' Coalition for Economic Justice, criticized, "There are many parts suppliers of LG Electronics, and we are concerned about the impact on these companies," adding, "The Gumi mayor, lawmakers of the district, and other municipal officials have given a bad signal that they will remain silent even if large companies leave."
"The relocation of production lines is not only about two out of six, but also about leaving one out of 4.5 lines at its Gumi plant," he said. "The company is trying to relocate the complete assembly line to Poland as well as Indonesia."
Regarding the reduction of the number of employees, he pointed out, "LG Electronics said there is no artificial restructuring, but it is fortunate that the number of workers for restructuring has been reduced to 100 from the original 380 while pointing out that LG Electronics is currently receiving applications for voluntary retirement along with the relocation of Pyeongtaek.
It is heard that LG Electronics' Gumi business will receive applications for voluntary retirement and relocation of Pyeongtaek from June 1 to 12. The procedure will be completed by August 31.