South Korean Firms Invest In U.S.

The governors of Michigan and Georgia, in separate announcements made on Nov. 5, are welcoming investments by South Korean chemical companies that expand high-technology manufacturing in their states.

LG Chem will build a new electrolyte production plant in Holland, Mich., to supply its nearby $300 million lithium-ion battery cell facility, currently under construction. The battery facility received significant government incentives, including a $151 million federal grant for battery manufacturers and more than $100 million in state tax credits.

“We appreciate LG Chem CEO Peter Kim’s assertion that the company intends to make this key component in Michigan,” said Gov. Jennifer M. Granholm. “Today’s announcement sends a strong signal about the market potential for electric vehicles and reaffirms LG Chem’s commitment to our state.”

The battery cells will be assembled into electric-car batteries by LG Chem’s North American subsidiary, Compact Power, in Troy, Mich. Compact Power will supply batteries for General Motors’ plug-in hybrid Chevy Volt and Ford Motor’s all-electric 2012 Ford Focus BEV.

In Georgia, Gov. Sonny Perdue said a new facility to produce film for solar panels will open in Covington, an hour’s drive east of Atlanta. The plant will be built by SKC, a U.S. subsidiary of South Korea’s SK Group, a manufacturer of specialty polyester films.

Like the LG plant, the SKC project will be an expansion of an existing manufacturing campus. The state offered the company an $8.5 million incentive package for job creation. SKC’s $100 million investment is expected to create 120 jobs; the company says it will begin hiring for the 200,000-sq-ft plant in April 2011.

The governors aim to create a virtuous cycle of establishing high-tech manufacturing that in turn lures additional jobs and investment to fill out the supply chain, says Willy C. Shih, professor of management practice at Harvard Business School. For component manufacturers, he says, “it makes sense to locate where the point of consumption is.”

But governments should be careful, Shih warns. “It’s very hard to get it right in terms of incentives and market uptake rate. Do you actually help, or are you amplifying a boom-and-bust cycle?”