As its European home appliance manufacturing base expands significantly, Korea’s LG is aiming high with its white goods ambitions. Ian Calcutt reports from Poland.
On a 44,000 square metre site in Biskupice Podgórne, 16km from the centre of Wrocław in south west Poland, sits LG’s new home appliance factory. To get a sense of its scale, it is capable of assembling 300,000 to 400,000 refrigerators and washing machines each, per year. By 2015 it could be able to grow both of those totals to one million per annum, if market demands support those numbers.
At the official launch, Moon-Bum Shin, LG’s executive vice president of HA Overseas Marketing, said that Europe is “our most important market. This is not simply about making more products. LG is a global company with global goals and global responsibility.” He added that with the new facility LG can “benefit from a greatly improved logistics chain.”
Wrocław is Poland’s fourth largest city, located approximately 100-160km from the borders of Slovakia, the Czech Republic and Germany. Until 2011, LG’s washing machines and many of its fridges were shipped from Korea and China and they took more than a month to reach Europe. With final assembly now happening in Poland, LG says that the maximum time to distribute new stock throughout Europe will be five days, and less for market situated closer to Poland.
Young-ha Lee, President and CEO of LG Electronics Home Appliance Company, said, “For us, a production base in Europe means quicker response to demands through far quicker and more efficient logistics, whether in transportation or storage. We will also increase the availability of the products more sought-after by European consumers.”
A prominent university city, Wrocław provides LG with a pool of well educated, technically proficient workers, and labour costs in Poland are generally lower than much of Western Europe. Around 800 additional workers have been hired for the new facility and LG has expanded the number of partnerships with local businesses by more than a third.
LG has so far invested at least 40m US Dollars (£25m) in the plant, with considerably more to be spent by 2015 if the Korean company’s targets are realised. In contrast to most of the European economies, in 2010 Poland’s GDP (gross domestic product) measured a relatively buoyant 3.8 percent, the third highest of EU Member States. The 2011 figure is estimated to be similarly high.
LG’s Wrocław County facilities now employ a total of about 1,900 staff, including the factories and their offices. In addition to the washing machine and refrigerator lines, there is a 12-line flatscreen TV plant established in 2006, producing 3mln displays a year, which is also due to expand.
“We have begun with a capacity for 1 million washing machine units,” said Young-ha Lee. “In the near future, we expect more units and models to be built in Wrocław, making the Polish city LG’s central manufacturing base for Europe. For now, we are manufacturing the Mega Refresh and the Mega Pro Refresh models, both of which have been popular in Europe.”
A few fridges have been produced by LG in Wrocław in recent years but the expansion with the latest factory – on which construction work was completed in May – means that other products can be made, such as combination fridge-freezers.
For washing machines, the factory’s current output is equivalent to 700,000 units per year, 70 percent of its eventual full capacity. Since the start of production in September 2011, two types of its popular front-loading washing machines are being made. Later this will expand to include premium high-speed 2400rpm units.
At present, half of the raw materials used in the HA factory come from the EU, with the others coming from Asia. Some refrigerator pieces, including sheet metal, plastic mouldings and injection parts, are made on the site. Electrical components such as motors, come on pallets from the Far East.
LG’s home appliance brand vision is to produce smart devices that provide convenience for consumers while offering savings on their utility bills too. One example of this is the inverted direct drive for washers, which results in less noise and vibration.
With its ambitious plans for Europe, LG has a couple of well-established German competitors in its sights, hoping to match their reputation for reliability. “Our vision is to achieve number one in both refrigerators and washing machines by 2015, through the introduction of new technology which we have presented,” said Mr Shin.”
LG’s Linear Compressor is one of the core technologies in two of the fridge models now being made in Wrocław County. These models are the signature side-by-side, which has an A++ energy rating, and the new two-door bottom-freezer, rated A+++ despite its large 385-litre capacity. The Linear Compressor uses a direct transmission system to minimize mechanical loss. With fewer functioning components, it makes the appliances run more quietly, while inner friction points are reduced from four to one, which improves durability (the part comes with a 10-year warranty).
The Multi Air Flow System disperses cold air around the fridge to prevent any areas, such as the door, from experiencing higher temperatures.”
The Total No Frost feature prevents interior condensation and cools down warm food rapidly. One specific area in the fridge is cooled to about zero degrees for meat and fish, while the Moist Balance Crisper stops fruit and veg from drying out too soon.
The Wrocław factory is also now producing LG’s 614-litre side-by-side refrigerator, which is another model to employ the Linear Compressor. It has an A++ energy rating and a water and ice dispenser that uses the simplified No Plumbing feature. A built-in hygienic tank holds fresh water instead.
The Smart Eco Door option is a door within a door for easy access to frequently used items without having to open the rest of the fridge, therefore reducing the energy used to keep it cool.
The new Wrocław County facility is producing various washing machines. Output is being ramped up to meet increasing demand in Europe for LG’s Front Loading washing machines. The 7kg Mega Refresh and Mega Pro Refresh, use LG’s Inverter Direct Drive motor, which works without the belt and pulley of conventional motors.
The company says this less complicated design, which uses no belt and pulley, is more effective and reduces energy consumption. As with the Linear Compressor in the fridge range, its reduced friction between parts has led to LG guaranteeing the Inverter Direct Drive’s performance for 10 years.
LG also plans to start producing the new ‘Big In’ 12kg Six-Motion Direct Drive washer at the Wrocław plant. This model is rated A+++-20%, meaning that it is 20 percent more energy efficient than washing machines rated A+++. Its six drum motions – tumbling, scrubbing, filtration, rolling, stepping, and swing – are engineered and programmed for washing various types of fabrics accordingly.
Finally, the manufacturer is to launch its clothing manager, the LG Styler, in Europe. This product, which looks superficially like a small wardrobe, removes wrinkles and odours by emitting steam particles in combination with a moving hanger feature. n