Korea’s LS Electric to build first North American production base in Texas

LS Electric Co. buys site in Bastrop, Texas, U.S. [Image source: Google Street View]

LS Electric Co., an electric power equipment manufacturing unit of South Korea’s LS Group, will establish its first North American production base in Texas, U.S., amid growing demand for power distribution systems from Korean companies in chips, automobiles, and battery sectors that have been upping operations in the U.S.

According to sources from the conglomerate circle on Sunday, LS Electric purchased 46,000 square meters of land and facilities located south of the city of Bastrop, Texas, on June 23.

The site already has a 3,700 square-meter building, which will be renovated into a production facility by LS Electric. The company plans to expand the facility on idle land and also open a research and development center.

LS Electric acquired MCM Engineering II Inc., a manufacturer of custom switchgear based in Utah, U.S., last year, but it is the first time the company is establishing a full-fledged production factory for power distribution systems in the U.S. given that MCM Engineering is a small company that mainly produces military supplies.

Until now, LS Electric’s overseas plants have been limited to Asia, including China, Vietnam, and Japan.

LS Electric’s new factory site, in the meantime, is 55 kilometers away from Samsung Electronics Co.’s foundry plant in Taylor, Texas, which is under construction.

LS Electric signed a contract to supply a distribution system worth 174.6 billion won ($133.98 million) to the Samsung Electronics’ factory in November last year. The power distribution system is a vital power supply infrastructure that distributes electricity to each production machine within the factory.

In addition to Samsung Electronics, LG Energy Solution Ltd., SK on Co., and POSCO Future M Co., are also expected to become major customers of LS Electric’s Texas factory as they manage production bases in North America.

LS Electric is supplying power distribution systems to a joint venture between SK on and Ford Motor Co. that is building an EV battery plant in Kentucky. It is also supplying systems to a joint venture between LG Energy Solution and General Motors Co. for plants in Ohio, Tennessee, and Michigan. On the back of robust orders, LS Electric’s North American sales reached 92.3 billion won in the first quarter, up 368.3 percent from a year ago.

LS Electric’s effort to enhance its presence in North America is also driven by the fact that power distribution systems require a significant demand for maintenance and management after installation.

“Engineers and research personnel will be stationed in Texas within this year,” said an LS Electric official.

LS Electric’s EV parts subsidiary, LS e-Mobility Solutions, is also preparing to build a production base in Mexico this year to target the North American EV market.

The 35,000-square-meter factory will mass-produce key EV components such as EV relays and battery disconnect units (BDUs) from next year.

“The U.S.-China trade dispute has led to the establishment of new secondary battery, semiconductor, and automobile factories in the U.S., creating more opportunities for LS Electric,” said Na Min-sik, an analyst at SK Securities Co.

LS Group’s U.S. subsidiary, Superior Essex Inc., has also successfully raised $150 million through domestic private equity funds in May. The company, the 4th largest communications cable company in North America, plans to use the proceeds to expand its communications cable business in the U.S.

“Demand for fifth-generation (5G) specialized networks in smart factories, education, and healthcare sectors is increasing in North America,” said an unnamed official from LS Group.