Dongbu Daewoo Electronics is moving to liquidate its manufacturing plant in Spain as a part of its efforts to boost and realign its production concentration in Korea, China and Mexico, a company official said.
The planned sell-off, which was “under consideration for some time,” is in part due to high labor costs in the region. Also, the latest debt crisis that affected the eurozone including Spain had made it move forward with the plan, the official said.
Daewoo Electronics’ Spain manufacturing plant was built in 1998 with a capacity to produce 600,000 units of refrigerators for Europe and elsewhere. The plant – DEMESA – also produced microwave ovens.
The book value of the plant was at about 5.4 billion won ($5 million), according to its audit filing in 2012.
Daewoo Electronics, which was acquired by Dongbu Group a year ago, said its top priority was increasing its facility investment to upgrade and advance its manufacturing of its flagship household appliances such as washing machines and refrigerators.
Its three main plants in Korea, China and Mexico would be reinforced to further roll out such products for export, and to strengthen its partnerships with Electrolux, GE and Siemens for original equipment manufacturing.
Korea’s third-largest home appliance maker also plans to foray into flat-panel televisions and robot vacuum cleaners this year to help regain its former glory achieved before the Asian financial crisis when it had a competitive edge over Samsung Electronics and LG Electronics.
Dongbu Daewoo Electronics said it is steadily outselling LG and Samsung in household appliances such as refrigerators in Mexico and the Middle East.
Daewoo had been the first Korean home-appliance maker to introduce washing machines and refrigerators tailored to the Islamic tradition and custom, it noted.
The official also said that the company would eye stock flotation in the coming years when the market conditions improve, noting that the company’s vice chairman Lee Jae-Hyung said an initial public offering was part of its plan.
Lee told the press that it could launch an IPO in five years, which was part of a deal with its financial investors when Dongbu Group acquired Daewoo Electronics in 2013 as the listing on the stock market would provide an exit for the investors.
The company seeks to achieve sales of around 1.9 trillion won this year, up from 1.7 trillion won last year.
By Park Hyong-ki