In an apparent bid to become the Douglas Corrigan of supply chain management, LG Electronics plans to start producing LCD TVs at its new production line in Wroclaw, Poland in September, about six months earlier than its original schedule.
Last week, the South Korea-based company also announced it has completed construction of a Russian plant for flat-panel TVs and home appliances. LGE invested a total of US$150 million in the 49.5 hectare complex. The facility will produce 500,000 digital TVs (DTVs) annually and the capacity will be doubled to one million units by 2008, according to a company press release.
This is a dangerous bid for unprofitable market share in the face of what one competitor calls an inventory glut that will require a year to correct. As we have said in the past, the right move for the industry is to push back production and capacity increases until demand catches up with supply.
In light of a potential consumer slowdown, that may take longer than many realize. But wait – according to Best Buy consumers are buying flat panel TVs left and right.
The Best Buy Company reported a higher-than-expected quarterly profit yesterday, helped by store openings and sales of high-priced electronics, easing fears that consumers are pulling back on spending.
The company, which stood by its full-year financial outlook, said demand was robust for flat-panel televisions, an important engine of growth.
Or are they? The housing slowdown may be having an interesting short-term reverse impact for one consumer product:
Many individual sellers are offering innovative inducements such as free plane tickets if the purchaser buys by a certain date, or giving a car away with the house, while another is offering a flat panel TV and lawn maintenance with the sale. (Leesburg Today)
The question is, will the flat-panel demand dry up as fast as the housing demand?Like this article? Why not try out: