Locations -- Hranice na Morava, Czech Republic

Dec. 21, 2004
Royal Philips Electronics and LG Electronics form an alliance and a factory to produce television picture tubes.
Plant A joint venture between the Netherlands' Royal Philips Electronics NV and South Korea's LG Electronics Inc., LG.Philips Displays late last year celebrated the opening of a US$170 million factory in Hranice na Morava in the Czech Republic. The factory has begun production of 28- and 32-inch picture tubes for color television sets. In July of this year, the company expects to begin production of what it's calling "the most difficult and innovative picture tubes in the world" -- flat, wide-screen Cybertubes. The 70,000-square-meter facility employs 1,000 workers and has a production capacity of more than 2.5 million color picture tubes per year. When the facility is complete, expected to be in 2005, LG.Philips -- which is the largest manufacturer of cathode-ray tubes in the world -- will have spent a total of $650 million on the facility and will employ 3,000 people. Corporate Strategy Hranice, which is in the Olomouc region of the Czech Republic, has become a center for the manufacture of electronics, and by locating there LG.Philips is close to many of its suppliers. "The [Hranice] Technology Center is important to the future of LG.Philips Displays' expansion as a company," says plant director Jon Richters, "and to the Hranice area as an employer." LG.Philips -- which was created last year and has its headquarters in Hong Kong -- received wide-ranging tax exemptions and incentives for construction of the facility in Hranice and for training of its employees. The company is exempt from Czech taxes for a decade, and received a grant of 200,000 Czech koruna (approximately $5,500) for each new job created. Additionally, the Czech government gave aid to the city of Hranice to develop the industrial zone in which LG.Philips now operates. Production Strategy Philips, which chose the Hranice site before the joint venture became official, decided to put a plant there because the location helps shorten distribution lines to customers in central and eastern Europe, where there has been a surge in demand for large-screen televisions. The joint venture has trained some of its Hranice workers by sending them to other LG.Phillips Displays' facilities around Europe. Community Located roughly 300 kilometers (about 188 miles) east of Prague, Hranice is an ancient town of 20,000 people not far from the Polish border. It also offers easy access to Hungary, Slovakia and Austria. LG.Philips has operations in Poland, Slovakia and Austria as well. The greater Olomouc region of Moravia -- where unemployment levels were above 10% as recently as June 2001 -- also boasts an array of vocational schools and an extensive highway and rail network. Locations profiles selected siting and facility strategies by manufacturing companies. Send submissions for Locations to Senior Editor John S. McClenahen at [email protected].

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