LG Chem, US Battery Plant Shutdown for 3 Weeks... Shutdown Spreads Across All Industries

[Image source=Yonhap News]

[Asia Economy Reporters Soyeon Park, Yoonju Hwang] Following the shutdowns of Hyundai Motor's India plant and Samsung Electronics' Brazil home appliance factory, LG Chem's electric vehicle battery plant in the United States has also halted operations, marking the 'global shutdown' of Korea's flagship companies due to the impact of the novel coronavirus disease (COVID-19). This shutdown, which began as a measure to contain the spread of COVID-19, has become a reality across all industries beyond the automotive and electronics sectors, putting Korea's export-driven industries in an unprecedented crisis.

According to industry sources on the 25th, LG Chem will temporarily suspend operations at its electric vehicle battery plant in Holland, Michigan, until April 13, following state government guidelines. An LG Chem official explained, "Since the administrative order for citizens to stay at home was issued yesterday, operations are being limited to essential minimum personnel."

Earlier, on the 23rd (local time), the governor of Michigan issued an administrative order requiring residents, except for essential workers, to stay home for three weeks. LG Chem's Holland battery plant is known to have an annual production capacity of 5 GWh of electric vehicle batteries, which accounts for about 7% of LG Chem's total electric vehicle battery production capacity (approximately 70 GWh).

Kia Motors' Georgia plant in the United States (KMMG) has also decided to suspend operations from the 30th of this month to April 10 in response to the COVID-19 outbreak and supply chain issues. The Georgia plant produces models such as the K5, Sorento, and Telluride, and shipped a total of 274,000 vehicles last year.

The situation in Europe is also becoming urgent. Hyundai Motor's Czech plant and Kia Motors' Slovakia plant have decided to close for two weeks starting from the 23rd, while Hankook Tire's plant in Hungary is reportedly considering a shutdown. This is due to border movement restrictions imposed by European countries and the consecutive factory closures by European automakers such as Mercedes-Benz and BMW, which have led to a sharp decline in tire demand.

LG Chem's plant in Poland, SK Innovation and Samsung SDI's plants in Hungary are also closely monitoring the spread of COVID-19 and government directives. An industry official said, "Operations in Europe are currently normal, but if administrative orders are issued or orders sharply decline, the situation could change, so we are on alert."

The steel industry has also closed plants located in India. POSCO's Delhi processing center and Pune processing center will halt operations until the 31st.

The problem is that the spread of COVID-19 is intensifying, leading to a domino effect of shutdowns and a rapid decline in consumption. In particular, following China last month, sales have been sluggish in the United States and Europe since this month, raising concerns that there is "no way out." A representative from a major company said, "Key sales markets in Europe and the United States are also shutting down," adding, "It is difficult to predict how severe and prolonged the damage will be at this point."