A golden decade
LG Electronics Mława (LGEMA) is a Poland-based subsidiary of LG Electronics. It was established in 1999 as a result of a takeover of CURTIS Electronics. The new company acquired premises, equipment and a staff of 250 people. Initially, LGEMA manufactured conventional CRT TV sets but owing to numerous investments made in 2000 and 2001 the company managed to reorganize the manufacture and launched the production of higher class TVs, i.e. Flat TVs, LCD TVs and Plasma TVs as well as 32” TVs. In those years the production rate stabilized, reaching the level of approximately 500 thousand products.The years 2003 and 2004 were a significant formative period during which LGEMA established Centre for Production of Components and built new manufacturing halls and warehouses. It allowed the company to start the manufacture of LCD and PDP television receivers. The new products were designed to comply with environmentally-friendly technologies by eliminating or reducing emissions of harmful substances. In order to achieve this object the company implemented a series of manifold practices. For example, it developed a technical know-how for processing of plastic materials (application of nitrogen-assisted injection) and painting methods (use of water-soluble paints). The Centre for Digital Products was also established and the production rate of high tech TVs soared. The policy was continued in 2004 when LGEMA, among other things, completed the expansion of the manufacturing and logistics facilities and brought new innovative products to the market. In 2005 the firm reached a significant milestone when an investment agreement between Polish government and LGEMA was inked. It was a watershed in the company’s history which enabled it to develop even more rapidly. The LG concern decided to invest the amount of USD 110 million in the expansion of the Mława manufacturing plant. An extra land was allotted to build new shop floors and a research centre. The enlarged factory was to provide extra 2150 new job positions until year 2010. What is more, LGEMA also joined a special economic zone, thus being given tax relief until 2017. The creation of a ‘co-operative companies cluster’ made it possible to employ hundreds of new workers. The investment was an outcome of a consistent development strategy aiming at the implementation of innovative digital solutions. In 2005 a committee consisting of representatives of embassies and trade chambers granted LG Electronics Mława the title of Investor of the Year 2005. At the same time the Korean investment, with its annual production rate of 1.2 million products, was hailed as the best company in the Mazowsze region. With the onset of 2006 the business saw the opening of a new MA2 manufacturing plant featuring large logistics facilities. A new shop floor was constructed with dizzying speed and was made operant after five months. In August the first plasma module left the assembly line. Those events had obviously impacted on the firm’s employment, which reached almost 2000 people, and the manufacturing capacity that crossed the threshold of 3 million products. Soon after that the construction of yet another manufacturing plant started. The MA3 plant was completed in 2007, commencing the period of stabilization. A Supply Chain Management was implemented and “On Time Delivery” system was revamped. The changes were a considerable enhancement of logistics, which contributed to the increase in the production reaching 4.3 millions TVs and monitors in 2007. The following year was dubbed the year of innovation. In 2008 LGEMA reached the best Key Performance Indicator (KPI) among overseas subsidiaries of LG located outside Korea. The indicator measured the annual increase in production, efficiency, economy as well as the quality of products.
Currently, LGMA is in the process of implementing four crucial strategies simultaneously: cash transfer maximization (implemented via a level, pull-based production control system, a shortened time frame for the final product delivery and a reduction in supplies), competitiveness in all areas (including innovation in regular costs, increase in the efficiency and productivity, competitive suppliers and providing them with the idea of elimination of losses), innovation in Supply Chain Management (concerning chiefly the increase in direct “on time deliveries” and the increased role of local suppliers) and enhanced organization skills and abilities (including replacement of Korean staff members with Polish managers). As the company admits, it is planning to maintain the same production rate as in 2008, yet Mr. Jang Hyeu Lee, CEO of LG Electronics Mława, claims that it is possible to reach the manufacturing level of 6 million TV receivers and monitors in 2009. Such result would be another milestone in the firm’s annals that would confirm its strong position even in the midst of the global economic crisis. Today many global markets fly through economic turbulence resulting in unstable currencies, growing unemployment, plummeting demand and consumption and lower prices of electronic equipment. Even if Poland manages to steer out of the crisis or weather the storm, it may prove hard for LGEMA to maintain the present position on the European markets. However, the company’s management board seems to have a good strategy. As Corporate Director, Mr. Daniel Kortlan, reveals, LGEMA plumped for innovation and the policy paid off. The business is nowadays a top-of-the-range provider of LG products. A similar status quo is also maintained by local officials: “The LG logo is associated with high quality products. The electronic industry, represented by the concern worldwide, is part of high tech industries which are indicative of ultra-modernity and a very dynamic development, also in research and innovation,” says Mr. Włodzimierz Wojnarowski, Starost of the Mława District. At present LGEMA has a strong and well-established position on the market. From incipient stages of its activity, the company has gone a long way to reach the top rungs of the Electronics industry. Each year was paved with a new dose of energy and creativity. Recent production rates provide an awe-inspiring productivity growth figures in the past years. Asked about the reasons for such a big growth, Mr. Jang Hyeu Lee enumerated manifold factors: “we have launched new methods of assessing productivity in all aspects of our work. Every week we evaluate productivity of teams and recognize top performers (…) We have also changed the production system: previously, the assembly line was moved forward by a worker after completing a single operation (so called pull method), while now the line moves slowly (so called push method) and a worker can adjust his or her speed of work to the assembly line without wasting time on starting the assembly line after every single operation. When we introduced individual evaluation of employees, level of absenteeism, so important from continuity at plant’s floor level, dropped significantly – from 10 pct to 1 pct,” says Mr. Lee. “We had to recruit top talents from the outside to fill senior positions, but it proved successful. High level of professionalism of Polish managers at LG Electronics Mława and their willingness to take on new tasks assures me that the future of our company is safe,” he adds.
Treasure confined to locality
It goes without saying that LG Electronics Mława is widely respectable in business environment but the company also developed sound co-operative bonds with local authorities. The bilateral relations are flourishing. LGEMA improved the region’s employment rates significantly as well as it raised investors’ interest in the Mława region, e.g. Dong Yang Electronics. LGEMA co-operates also with the local self-government and the State School of Higher Vocational Education (PWSZ) in Ciechanów. Last year the company helped the local college launch a BSc programme in electronics and telecommunication in Mława. PWSZ was presented with monitors, plasma TVs and equipment for use in practical classes and laboratory work. At the moment the course in electronics and telecommunication is studied by about 80 students and, in the forthcoming academic year, another programme is going to be launched – IT studies. The chancellor of PWSZ, Prof. Andrzej Kolasa, PhD, MSc, reveals that “higher level education in electronics, telecommunication and IT would not be possible without help and commitment of LG Electronics.” And last but not least, the business is also engaged in charity. In 2008, for instance, LGEMA made a considerable amount of donations to educational and cultural institutions and different associations and social organizations. It seems that such admirable actions add lustre to the company’s success – both global and local.