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Weak battery demand delays operation at LG’s U.S. plant

Feb. 14, 2013 - 20:06 By Korea Herald
LG Chem Ltd., the world’s largest battery maker, said Thursday weak demand for vehicle batteries has led to a delay in the start of its American lithium-ion battery plant’s commercial operation, denying U.S. media reports that the factory is not run effectively.

Citing the U.S. Department of Energy Special Report, The Washington Post and other U.S. media reported Wednesday that the factory in Holland, Michigan, into which $142 million of American taxpayer money was injected, is allowing workers to play games and watch movies, failing to produce batteries and create jobs.

In October last year, U.S. media carried similar reports. The DOE report also said the South Korean battery maker has decided not to shift production from LG Chem’s plant in South Korea to Michigan.

LG Chem said in a statement that less-than-expected demand for batteries in the U.S. is the main reason that its plant in Ochang, 95 kilometers south of Seoul, produces batteries supplied to U.S. automaker General Motors Corp.

“Factory employees have been trained for operation and maintenance of the plant before its commercial production. They are not left idle,” LG Chem said. “We have yet to decide when to start commercial operation of the Michigan plant.”

LG Chem said it has hired 150 employees and hoped to employ more workers if demand for car batteries increases. The DOE report said LG Chem is supposed to create more than 440 jobs.

LG Chem said it plans to increase the number of production lines to five from the current three if demand for batteries revives in the U.S.

Under a deal with General Motors, LG Chem broke ground for the Michigan plant in July 2010 with U.S. President Barack Obama attending, amid expectations that the plant would create new jobs.

LG Chem originally planned to start commercial production at the Michigan plant in June or July 2012, but sluggish sales of the Chevrolet Volt delayed the start of commercial production at the plant.

The deal is aimed at providing lithium-ion polymer batteries for the automaker’s plug-in electric car, the Chevrolet Volt, from Nov. 1, 2010, until the end of 2015. LG Chem started providing batteries made in its Ochang plant to GM from December 2011. (Yonhap News)