Wales has secured what is believed to be the biggest inward investment ever made in Europe: two companies within the LG Group of Korea will invest £1.7 billion in a project which will create 6,100 jobs.
The project will be located at Imperial Park, Newport, where LG Electronics Inc and LG Semicon Co Ltd will establish adjacent plants on a 250-acre site.
Speaking earlier today in Korea, where Welsh Secretary William Hague signed an agreement to proceed with the project, Welsh Development Agency chairman David Rowe-Beddoe said: "This is a powerful endorsement of our approach to inward investment and of Wales itself as a leading industrial location.
"There has been a great team effort by Wales. The tremendous commitment in Wales to win this project - our first mega project - meant we could assemble an outstanding package of support services and present it with confidence. This success reinforces the choice of Wales as Britain's gateway to Europe for overseas firms."
The LG* Group is among the world's leaders in its main business areas, which include chemicals and energy, machinery and metals, and financial services as well as electronics. It employs 126,000 people in 120 countries and, in 1995, achieved sales of £40 billion.
(*The company is known world-wide as LG. It changed its name from Lucky Goldstar in January, 1995)
LG Electronics Inc intends to operate an integrated TV monitor plant - which will include production of latest technology components. The plant will be developed in two phases and ultimately employ 4,410 people. LG Semicon Co Ltd will operate a wafer fabrication and assembly plant employing 1,696.
Land for the project will be provided by the Welsh Development Agency and Newport County Borough Council. The Welsh Office is providing grant aid and the University of Wales and London's Imperial College of Science, Medicine and Technology will help provide training up to post-graduate level for LG's future employees.
Extensive additional training will be provided by Gwent TEC and a training centre specifically for the semiconductor industry will also be created at Imperial Park.
Negotiations between the WDA and LG began last October, when Wales became one of several locations across Europe under consideration for this massive investment. LG eventually narrowed its choice to a range of potential locations in the UK and the Irish Republic.
Between September and LG's final decision a few days ago, company teams made six separate visits to the WDA. The Agency's chief executive, Barry Hartop, also led a WDA project team to present the case for Wales to LG's top management in Korea in February.
"It would be difficult to exaggerate the strategic importance of the investment - or the efforts which the WDA, the Welsh Office and Newport County Borough have put into winning this project for Wales," said Mr Rowe-Beddoe.
"I know that a large number of WDA staff made a tremendous and sustained effort over recent months to win the argument for Wales. I'm proud of the team and delighted that their efforts were justly rewarded with success.
"The project will create direct employment of 6,100 jobs but the impact on supplier and support industries will take the total number of dependent jobs to nearly 15,000. In addition, thousands of jobs in the building industry will be created over the five years of construction work for LG."
Mr Hartop said that one of the decisive factors in LG's choice was the advanced training opportunity available through the long-standing links which the business park had with Imperial College in London and with the University of Wales.
Sir Ronald Oxburgh, Rector of Imperial College, said: "The College is delighted that Imperial Park, its joint venture science park with the WDA and Newport County Borough, has been chosen by LG, and Imperial College looks forward to future interaction with LG in both staff training and advanced research."
Mr Hartop said: "The WDA has undertaken to build a dedicated training centre for the semi-conductor industry at Imperial Park to provide, with the help of the two universities, training courses for technicians, process engineers and post-graduates.
"The other key factors were the superb communications from Newport to the markets of Europe and the track record of the local workforce.
"One telling argument used by the Agency was that a recent survey of leading inward investors found that 92 per cent feel that the Welsh workforce exceeded their requirements for commitment and productivity."
The LG Electronics investment consolidates Wales' position as the UK's leading centre for consumer electronics. One in five of British employees in the consumer electronics sector is now employed in Wales.
For LG Semicon, which employs 9,000 people and exports 90 per cent of its output, the Welsh plant will be its first operation outside the Asia Pacific region
LG Group's record investment was first discussed during a meeting in Seoul in September 1995 between senior representatives of the Group, the Welsh Secretary and the WDA chairman, who were in Korea on a mission to promote inward investment.
Intensive negotiations began the following month, starting with a visit to Wales by the LG project team.
The WDA created a "task force", headed by James Turner, managing director of the WDA's international division, aided by Stephen Williams, who was appointed LG project director, and including executives covering a range of disciplines, from property development to component sourcing and workforce skills. An important contribution was made by Jaepil Hwang, head of the WDA international division's permanent office in Seoul.
From late February, Mr Hartop led a negotiating team in a series of meetings with LG Group in Wales, London and Korea.
Following an understanding reached by the WDA chairman and the chief executive and LG Group management in the Korean capital on June 27, the joint efforts of the company and the WDA culminated in the signing today in Seoul of an agreement to proceed with the project.
Notes to Editors
- The LG Group
LG, formed in 1947, was one of the early pioneers of Korea's industrial development. In 1958 LG led Korean industry into the electronics field when it produced the nation's first radio. Nine years later in 1967, the Group did the same in another business field when it entered the energy sector.
Today the Group is actively involved in virtually every sector of Korean industry, from chemicals, energy, electronics and machinery to metals, trade, services and finance.
The Group now has 126,000 employees at 260 offices and facilities in 120 countries and had sales of some £40 billion in 1995. LG is best known internationally for its Goldstar brand name (the Group itself changed its name from Lucky Goldstar in January, 1995).
LG's growth has helped globalise Korea's economy through trade, technology transfer and joint venture investment. The Group's future aims are to secure a place as a world-class player in chemicals and electronics.
- LG Electronics
LG Electronics is, in its own right, one of the largest companies in South Korea. The company was launched in 1958 as Korea's first consumer electronics manufacturer.
Today the company is a world class enterprise whose Goldstar brand consumer electronics are sold in some 150 countries around the globe, generating worldwide sales of more than £5.6 billion in 1995 after achieving a 28 per cent growth over the previous year.
Exports account for 56 per cent of its output in Korea and the company ranks among the world's top 10 TV-makers. The company has 11 overseas plants in all, including a small TV plant employing 300 people in the North East of England, and employs a worldwide total of 31,000 people (35,410 when the new Welsh plant is fully operational).
- LG Semicon
LG Semicon is the fifth largest company in Korea and one of the country's major exporters. The company was established as recently as 1989 to consolidate the operations of two existing LG Group companies. In 1995 sales were some £2.2 billion.
It employs 9,000 people at its four wafer-producing plants and exports as much as 90 per cent of its output. Newport will be the first sole overseas venture by LG Semiconductors, whose only other international investment is through a joint venture with Hitachi in Malaysia.
The company has set a high priority on research and development. Currently, about 5.8 per cent of revenues are spent on research and development and the company has set itself the target of increasing that figure to 8.3 per cent by the year 2000.
- Electronics in Wales
South Wales already forms a strategic location for information technology and electronics companies. The region benefits greatly from forming part of the M4 motorway corridor, the focal point for IT-Electronics related industries in the UK.
As South Wales forms the western section of the corridor, companies located there are ideally placed to access and serve the l,0OO other lT/Electronics firms located along or adjacent to the corridor.
In addition, South Wales-based companies are within easy reach of the world class educational institutions and research facilities in and around the corridor.
Total employment within the sector in Wales doubled between 1980 and 1990 and now some 28,000 people work in the industry.
Welsh consumer elecpresents 23 per cent of British consumer electronics employment, and the office automation sector in Wales accounts for 16 per cent of the total British figure.
Given that Wales has just five per cent of the UK population, these proportions are a clear indication of the increasing strength of the Welsh IT/Electronics base.