Korean battery makers’ broad restructuring hits US

SK On Co., South Korea’s No. 3 battery maker, has decided to furlough employees at one of its US battery factories in the state of Georgia to cut its battery output amid a slowdown in the electric vehicle market, according to a local news outlet in the US.

The Atlanta Journal-Constitution on Monday reported that SK Battery America Inc.’s factory in Commerce, Jackson County will let an unknown number of workers temporarily take unpaid leave for an unfixed period, citing its interview with the company’s spokesman Joe Guy Collier.

The spokesperson was quoted to say, “We made the decision as a part of our efforts to optimize line operations and workforce management with flexibility as the EV industry is adjusting its pace of growth.”

But he also offered assurance that the factory will remain open without a production halt.

Its bigger crosstown rival LG Energy Solution Ltd. will also let go of about 170 employees at its battery plant in Holland, Michigan, which account for about 13% of the factory’s total employees, by next January.

Its wholly owned US subsidiary LG Energy Solution Michigan’s President Hyun Oh-young on Monday announced the layoff plan to the local employees in an email, citing manufacturing line conversion and EV production cuts as the reasons for the restructuring.

EV SLOWDOWN BITES INTO BATTERY MAKERS

SK On is also reviewing a plan to put off the construction of its second joint venture battery factory with Ford Motor Co. in Kentucky, the US.

They originally planned to start commercial production at the plant in 2026 and broke ground on their multi-billion-dollar battery JV, BlueOval SK, in Glendale, Kentucky to support the US auto giant’s rollout of its EVs in last December.

But in recent months, the global EV industry has turned pessimistic about EV demand growth, and major global EV makers have announced delays or cancellations of their planned EV factory construction, which bodes ill for the EV battery sector.  

Last month, Ford said it would cut its EV investment from the original investment of $12 billion, while General Motors Co. has called off a plan to produce 400,000 EVs by mid-2024.

Both LG Energy Solution and SK On last week announced their decisions to postpone their plans to start operations of their joint ventures with Ford, citing the EV market slowdown.

SK On also abruptly suspended the construction to expand its third battery plant in Seosan, South Chungcheong Province, in Korea earlier last week, about three months after the construction began.

Although it resumed its construction five days later, the industry has suspected the temporary construction halt was part of its broad battery output streamlining efforts in line with the EV market slowdown.

The company denied the speculation.  

SK On plans to spend 1.5 trillion won ($1.1 billion) to expand its third EV battery plant in Seosan by 2025 under an agreement with the city government.

Write to Nan-Sae Bin at binthere@hankyung.com


Sookyung Seo edited this article.