[Exclusive] LG's overseas phone factories may face closure

(Yonhap)

Preparing to bid adieu to its 26-year-old mobile device business, LG Electronics is mulling over what to do with its overseas phone plants, with outright closure being considered as one possible option, people familiar with the matter said Tuesday.

Closure could mean hundreds of employees losing their jobs within a few months.

LG’s head office in Seoul, when announcing the handset business exit on Monday, said it planned to “convert” the overseas facilities and use them for other purposes. LG has handset production bases in Vietnam, Brazil and China.

Industry sources said the company would be weighing various options.

“As the attempts to sell the phone business failed, it is mulling measures to make good use of the manufacturing facilities,” said an industry insider. “Some of the facilities could be converted for other products. Some, not suitable for such a conversion, could face a sale.”

The LG phone factory in the Brazilian city of Taubate has already halted operations, a worker there told The Korea Herald. Around 15,000 employees work there, including around 400 in the phone assembly section. Another 400 or so, dispatched from local manpower agencies, work in the same line.

The workers are to hold talks with management on Tuesday, Brazil time, on their salaries and remaining working days.

“We will have a meeting between the union and the company tomorrow to find out what they are going to do in terms of salary, etc.,” said the worker, who assembles LG phones.

“Several local companies contracted with LG for manufacturing the phones will be closed as well as lose their jobs,” she said.

On Monday, LG said it would continue producing the contracted volumes of smartphones until the end of May. After that, no more LG phones will be produced.

The workers in Taubate have been paying keen attention to the fate of LG’s smartphone business since early this year.

The company produces nearly half of its phone products -- approximately 10 million units a year -- at its Haiphong plant in Vietnam, and the rest in Brazil and China.

For smaller facilities, LG may lean toward outright closure, observers said.

Some local news reports also suggested that LG would seek to close down the facilities and recoup its investment through a sale.

A spokesperson for LG in Seoul said: “Regarding the overseas plants’ operations, the company is reviewing multiple options. Nothing has been confirmed yet.” 　

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

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