LGES pauses US factory construction after raid
A spokesperson for LG Energy Solution told South Korean media that the company had already postponed the start of production at the battery factory until next year due to market conditions, rather than starting this year, adding that it was too early to say whether recent events would affect the plant’s operations. Additionally, the report specified that Hyundai has banned all US trips for its staff.
The “recent events” refer to last Thursday’s raid, when nearly 500 agents from the US Immigration and Customs Enforcement (ICE) and other investigative agencies descended on the battery factory construction site within minutes, including Hyundai’s factory known as HMGMA (Hyundai Motor Group Metaplant America). 475 people were arrested, including apparently more than 300 South Korean citizens.
“We are well aware of the concerns that have been raised regarding our investment in the US following the immigration crackdown,” said South Korea’s Presidential Chief of Staff, Kang Hoon-sik. “To prevent similar incidents in the future, we will review and improve the accommodation and visa system for those on US project business trips in cooperation with the Ministry of Trade, Industry and Energy and related companies. The government will ensure the practical implementation of all measures to harmoniously achieve the two goals of the swift release of detained citizens and the stable execution of the investment project.”
The Trump administration’s interests collide a bit on this subject: on the one hand, it wants to position itself as a hardliner and crack down on illegal immigration. On the other hand, foreign investment in the US is supposed to help create and secure jobs for Americans. Hyundai and LGES plan to invest a total of 7.6 billion dollars in Georgia. Brian Kemp, the Governor of Georgia and a Republican, spoke of the largest economic development project in the history of the state.
Apparently, there were errors in the visas of many South Korean workers on site, but the proportionality of the action has been criticised. South Korean companies cannot rely solely on US workers, but must also send their own specialists. However, the necessary work visas are difficult to obtain, especially under the Trump administration. For this reason, travel visas were also used to work on site, which has apparently been tolerated by the US authorities so far, also from an economic policy perspective.
Following a deal between the governments, the South Korean citizens who were arrested in the meantime will probably be allowed to leave for their home country this week. However, it is uncertain whether they or other technical experts from South Korea will return to the construction site in Georgia. And with it, the future of the plant under construction and further billion-dollar investments from South Korea is in question.
Kang DaeKwun, chief investment officer at Life Asset Management Inc, also commented on the impact on the prospects of investing in U.S. business: “The case demonstrates how tough it has become for Korean companies to make money from the investments in the US. Return on investment was already getting low due to inflation, and now companies face hiring challenges as well.”
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