Tennessee ready to accommodate LG plant
Song Dae-hyun, left, president of LG Electronics' home appliance division, and Tennessee Governor Bill Haslam, right, sign a memorandum of understanding, Feb. 28, to build a plant in the U.S. state. / Courtesy of LG Electronics
State official says that it has ‘shovel ready’ site
By Kang Seung-woo
Bob Rolfe, the commissioner of the Tennessee Department of Economic and Community Development
Tennessee will be a perfect fit for LG Electronics’ first production facility in the United States, its economic commissioner said, Wednesday.
LG, a global home appliance and electronics heavyweight, announced last month that it will build a $250 million (281 billion won) washing machine plant in Clarksville, Tenn., expected to open in 2019. The facility is expected to create 600 new jobs.
“It means a great deal to Tennessee that LG chose our state to invest $250 million in a state-of-the-art home appliance production facility that will provide 600 jobs to Tennesseans. We are proud to have LG in Tennessee,” Bob Rolfe, the commissioner of the Tennessee Department of Economic and Community Development, said in an e-mail interview with The Korea Times.
“We look forward to having one of the greatest manufacturing companies in the world do business and invest in Tennessee, and we anticipate a long and prosperous partnership in the years ahead.”
The commissioner said that there are other critical advantages in addition to the economic support that Tennessee has to offer.
“Tennessee has an excellent ‘shovel ready’ site that will allow LG to move quickly with the construction of its new facility. ‘Speed to market’ is always an important consideration in significant projects of this magnitude,” Rolfe said.
“Tennessee has a world class workforce that will be ready to support LG in its mission to manufacture world class products. In Tennessee, we pride ourselves on the fact that we still make things here, and our workforce understands the artisan craftsmanship of manufacturing the highest quality goods for their employers.”
He also said that Tennessee has a central geographical location within the U.S. and close proximity to over two thirds of the country, which will offer significant logistical cost savings on both bringing in raw materials to LG’s facility as well as savings on getting its finished goods to the market.
Since U.S. President Donald Trump took office in January, he has pressured global firms as well as local business entities to build their plants in the U.S. as part of efforts to create jobs for Americans.
The LG decision also raised speculation that it was due to the Trump administration’s protectionist moves. Along with LG, Samsung Electronics also considers building a plant there.
However, the commissioner said that LG and Tennessee had already been in talks over the plan ahead of Trump’s inauguration.
“We were working with LG on this project long before President Trump was elected,” he said. “But LG has stated that the company’s investments in America are consistent with President Trump’s goals of creating jobs and improving the economy of the U.S.”
The commissioner also said that the U.S. state is actively hosting and pursuing several other global companies to invest there, adding that it was named the No. 1 state in the nation for foreign direct investment job commitments in 2015, according to IBM’s 2016 Global Locations Trends report.
Some analytics reports say that LG will have to shoulder higher personnel costs in the U.S. than those of Mexico, where it currently manufactures home appliances shipped to North American markets.
But he said that the Tennessee selection will provide other benefits to offset it.
“We believe that any higher labor costs versus other countries will be balanced by logistical cost savings and production efficiencies,” he said. “As LG has pointed out, labor costs are only part of the equation.”