LG Shifts Production Focus to North America
According to reports, LG Electronics is making a significant strategic shift by halting its expansion plans for television and home appliance factories in Southeast Asia, including Vietnam and Indonesia. Instead, the company is refocusing its manufacturing strategy around North America, with particular emphasis on Mexico and the United States.
According to recent industry reports, LG has postponed its previously planned production expansions in Vietnam, Indonesia, and Poland. This adjustment reflects the company’s response to evolving global trade dynamics, especially changes in U.S. tariff policies.
In early 2024, LG Electronics had contemplated reducing its manufacturing footprint in Mexico due to concerns over potential high tariffs. At that time, the company was evaluating options to relocate production to other countries. LG employs a flexible "swing production" system that allows it to shift output between regions based on logistics costs and local economic conditions.
On February 1, the U.S. imposed a 25% tariff on products imported from Mexico, prompting LG to prepare contingency plans to increase output at alternative locations. However, the tariff was suspended just two days later and remains on hold. Notably, Mexico is currently not included in the U.S.'s list of reciprocal tariff nations.
More recently, the U.S. announced steep tariffs of 46% on goods from Vietnam and 32% on those from Indonesia. These new measures have significantly eroded Southeast Asia’s cost advantages, leading LG to abandon its expansion plans in the region.
In response, LG Electronics is now considering scaling up production at its Mexican facilities and expanding its existing home appliance plant in Tennessee. Of particular note, the company is investing $100 million in a large warehouse adjacent to its Tennessee washing machine facility. This warehouse is designed to be easily converted into a full-scale manufacturing site, offering greater flexibility in meeting future production demands.
