Korean Economy News
LG Elec opens new logistics center in U.S.

By Hwang Hyung-gyu and Lee Ha-yeon

South Korea’s LG Electronics Inc. has opened a home appliance warehouse and distribution center in the U.S., hoping that improved shipping efficiency would help it reinforce its leading position in the North American home appliance market.

LG Electronics USA said on Monday it begun operation of its new distribution center commanding a site of 38,000 square meters in East Windsor, New Jersey, two years after it broke ground in October 2016. The new center will serve as a storage and distribution hub for the company’s home appliances that will be shipped to neighboring New York City and other eastern areas in the U.S.

The company expects the new logistics center would significantly improve delivery efficiency in the region, further enhancing customer satisfaction and its brand value, said an official from LG Electronics. In September, LG Electronics beat out all white goods rivals in customer satisfaction in the country by ranking No. 1 in the 2017 American Customer Satisfaction Index (ACSI) for three years in a row with 83 grades out of 100.

The company’s home appliances that will be manufactured in the Tennessee factory are expected to pass through the new logistics center, according to the company. The Tennessee factory with an annual output of 1 million washing machines or more is currently under construction with an investment of $250 million. The company aims to kick off its operation in the second half of next year as its first appliance manufacturing site in the U.S.

The Korean electronics giant has announced a series of new investment projects in the U.S. where trade protectionism is rising after U.S. President Donald Trump took office. President Trump has pressed foreign companies to increase investment in the U.S. or American companies to return home to boost local economy.

LG Electronics also pledged to inject $25 million to build production facilities for electric vehicle parts like battery packs in Hazel Park, Michigan, by the early 2018 and invest another $300 million to construct its new North American office building in Englewood Cliffs, New Jersey, by the end of 2019.

LG Electronics is currently facing the risk of higher tariffs on its washing machine imports from Korea. Earlier last month, the U.S. International Trade Commission (ITC) ruled that rising imports of washers were harming American producers, and following the ruling, U.S. appliance maker Whirlpool has called for a tariff rate of 50 percent on washing machines by LG Electronics and Samsung Electronics Co., claiming the two Korean companies have dumped their washers at unlawfully low prices.

Shares of LG Electronics Monday closed 1.48 percent down at 93,000 won from the previous session.

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