LG starts producing washers at Tennessee plant to minimize US tariff impact

LG Electronics said Thursday it has completed its new plant for washing machines in Tennessee, the United States, and will start producing 1.2 million washers annually for the American market.

The South Korean electronics manufacturer held a ceremony to mark the completion in Clarksville, Tennessee, attended by US Rep. Mark Green, State Gov. Bill Lee, Montgomery County Mayor Jim Durrett, Clarksville City Mayor Joe Pitts and other Korean government officials.

LG will move forward to December full operations of the $360 million production line, with a plan to churn out 1.2 million washing machines per year, starting production six months earlier than initially planned.

The company highlighted that the new facility is equipped with a system with around 100 robots for automation, which enables a washing machine to be completed every 10 seconds.

LG has been considering establishing production facilities in the US since 2010, in an effort to raise cost competitiveness by reducing logistics costs and tariffs on imported products. 

As part of US safeguard measures against imported goods imposed last year, LG is paying tariffs of 18 percent on exports of 1.2 million washing machines to the US this year, and 45 percent on exports exceeding the quota.

“The company has nearly reached the quota, and will deal with the rest of demand with products made in Tennessee,” said Song Dae-hyun, president of the home appliances business at LG, during a press conference in the US.

According to Song, LG will sell over 1.2 million units of washing machines in the US market this year. Due to the tariffs imposed last year, the company had to raise retail prices for the American market. 

“Despite the price increases, our products were recognized by consumers for premium quality,” Song said. “With the backing of the production volume from the Tennessee factory, the washing machine business in the US is expected to post double-digit growth this year.”

The new LG plant has hired around 550 local employees, and the total workforce will be expanded to 700 by the end of the year, according to the company.

By Song Su-hyun (song@heraldcorp.com)