South Korea's LG Electronics to Build U.S. Factory in Tennessee

South Korean conglomerate LG Electronics Inc. said it is planning to build a new washing machine factory in Tennessee, its first major U.S. plant, and hire at least 600 workers by the end of 2019.

LG's decision to locate production in the U.S. could aid its push into the American home-appliance market, where it has gained share in recent years competing against rivals such as Michigan-based Whirlpool Corp.

A U.S. plant would also help the foreign company avoid U.S. tariffs aimed at its washers produced abroad. For instance, the U.S. Department of Commerce last year imposed tariffs on LG washers made in China, as the company looked for other production bases, including Thailand and Vietnam.

William Cho, chief executive of LG's North America division, said U.S. duties were among the company's considerations but not the prime motive for building the U.S. factory.

While new factory jobs would further U.S. President Donald Trump's goal of boosting American manufacturing, LG's decision was part of a long-term plan in the works since 2010, Mr. Cho said, adding that a U.S. factory would speed up deliveries to American customers, reducing shipping time and costs, and allow it to more quickly respond to market demands.

Mr. Cho said having local facilities and shorter supply chains would generate significant benefits. "Increased speed to the market makes us more nimble," he said.

LG said it considered locating its U.S. factory in eight states, including ones in the Midwest, but ultimately decided on Tennessee, which offered a grant worth about $20 million for the construction of the 829,000-square foot factory on 310 acres of land near Clarksville, Tenn., according to a person familiar with the matter. LG will lease the land from a local agency and the agreement includes discounted rents and property tax abatement, according to this person.

A spokesman for Tennessee Gov. Bill Haslam didn't respond to requests for comment, but the governor praised LG's decision in a statement.

LG's products have gained traction in the U.S. in recent years. Its share of the U.S. retail washer sales grew to 16.5% in 2016, up from 13.2% in 2012, according to TraQline data compiled by the research firm Stevenson Co.

LG billed the highly automated Tennessee factory as "the world's most advanced production plant for washing machines." The company previously had a small assembly plant in Alabama in the U.S. about two decades ago.

Foreign companies have been opening factories in the U.S. for years. Netherlands-based airplane maker Airbus Group SE and Japan-based heavy equipment maker Komatsu Ltd. have U.S. factories in Alabama and Tennessee, respectively.

LG isn't the only appliance manufacturing taking aim at the U.S. market. L ast year, the Chinese manufacturer Haier Group paid $5.6 billion for General Electric Co.'s appliance unit.

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