LG Chem to build $303 million lithium battery plant in Holland, Michigan
By Shandra Martinez
The Grand Rapids Press
March 12, 2010
HOLLAND -- LG Chem Ltd, a subsidiary of South Korea electronics giant LG, is announcing what has been widely speculated: It will build its first North American lithium ion battery plant in Holland.
The $303 million facility will go up in a cornfield about two miles away from a competing facility to be run by Johnson Controls Inc.
LG Chem's decision will do more than generate 400 direct jobs over the next three years, said Randy Thelen, president of Lakeshore Advantage.
This second battery plant will make Holland the epicenter of the Western Hemisphere's lithium ion battery production, an emerging market that is expected to rev up to $3.2 billion in sales within two years, he said.
"This is an incredible opportunity," Thelen said. "Opportunity of this magnitude occurs rarely and, for many communities, never."
The plant will operate under Troy-based Compact Power Inc., LG Chem's North America subsidiary.
The official announcement, scheduled to be made in Holland this afternoon, comes after a yearlong intense scrutiny of 15 Michigan sites. Ultimately, LG Chem's leadership concluded that Holland is the best location, despite the city being 300 miles away from the heart of the automotive industry.
Why did Holland top the list?
A reliable low-cost electric supply by its public utility, a skilled and productive work force and a quality of life that would appeal to executives transferring to the area to oversee the plant appealed to the company.
Much of LG Chem's conclusions were based on hard numbers, gathered from government data and even local companies' private files. But the LG Chem team also acknowledged that they were swayed by conversations with top executives from Haworth Inc., Gentex Corp., Transmatic Inc., Bradford Co. and Manpower Inc.
"Because they have experience with the work force and their work ethic, it made a pretty strong impression on us," said Kee Eun, Compact Power's director of planning/cell-manufacturing, in a phone interview Thursday.
The plant's operations are "high-tech, sophisticated and highly automated," Eun said.
More than 300 employees will be hired in the next 18 months. Construction of the 650,000-square-foot plant on 48th Street, near Waverly Road, is scheduled to begin in mid-summer. The first batteries that will be produced the first quarter of 2012 will power General Motor's new Chevrolet Volt. At its peak, the plant will produce enough cells for 50,000 to 200,000 vehicle battery packs. Eun said the 120-acre site has room to expand the operation.
"We are hoping for that," Eun said.
Half the $303 million cost to build the battery plant is being funded with a $151 million grant, one of four the U.S. Department of Energy is giving to spur battery development.
The state is also throwing in a $100 million tax credit, $25 million job creation tax credit and a Renaissance Zone designation that eliminates the company's state and local tax bill for 12 years.
Bringing LG Chem to the state is part of Gov. Jennifer Granholm's strategy to make Michigan the automotive battery capital of the world, said Eric Shreffler, who heads business development for the battery sector at the Michigan Economic Development Corp.
"We were looking to attract the best and brightest from around the world," said Shreffler, noting that LG Chem and JCI-Saft are among the leaders in the technology.
The first of a half-dozen visits by LG Chem site evaluation teams to Holland began in April and concluded with a three-hour visit by chief executive officer Peter Kim in September
"In my 16-year career, no company has ever put us through the level of due diligence this firm put us through," said Thelen, who gathered a team of more than 60 business, higher education and government leaders to respond to the LG Chem's detailed questions.
The Holland team showed its mettle in the second-to-last visit when LG Chem representatives said they liked the site but needed 100 additional feet to the east. Within 24 hours, Holland secured the options from two property owners and began discussions with neighboring Fillmore Township about annexing the land.
"There was a strong commitment and determination from local leaders," Eun said.
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Who is LG?
Fortune Global 500 ranking: 69
Slogan: Life's Good
Headquarters: Yeoido, Seoul, South Korea
Products: 75 subsidiaries design and manufacture products including televisions, cell phones, appliances and electronics
Employees: 177,000
2009 sales: $82 billion
Publicly traded: Korea Stock Exchange (symbol: 066570) and the London Stock Exchange. (LGLD).
Source: Fortune Magazine |
