Daewoo to Build $180-Million Picture Tube Plant in Mexico
South Korean electronics giant Daewoo will build a $180-million picture tube plant in Mexico near the California border that will employ 3,000 and turn out 3 million television and computer screens annually beginning in mid-1997, a top company official said Wednesday.
Pan-Tae Koo, general director of Daewoo’s Mexico operation, said that the company will decide within a few weeks between two competing sites about 30 miles apart: in Mexicali, 15 miles south of El Centro, or San Luis Rio Colorado, nearer to Yuma, Ariz.
The Daewoo plant, which will be among the biggest in the border area’s burgeoning television production industry, is the latest example of foreign investment in Mexico spurred by the North American Free Trade Agreement and the devaluation of the peso.
Though the Daewoo plant will mean some economic benefits to California through the purchase of parts and services, state officials had worked with officials from Baja California to try to lure the Daewoo plant to the Tijuana-San Diego area.
But Tijuana’s water shortage ultimately decided Daewoo against locating there, said California trade officials familiar with the negotiations.
A joint delegation that included Julie Wright, secretary of the California Trade and Commerce Agency, and her Baja counterpart, Carlos Fernandez, recently visited Daewoo headquarters in Seoul and other manufacturers in South Korea, Japan and Hong Kong to promote the region.
Most major television manufacturers, including Daewoo, have already set up plants in Mexico to take advantage of low-cost labor and to meet “local content” rules of NAFTA, the U.S.-Mexico-Canada free-trade pact.
The year-old trade law requires offshore companies to assemble mainly with components made in the United States, Canada and Mexico to qualify products for the preferential duties outlined by NAFTA.
In an interview, Daewoo’s Koo said that NAFTA was directly responsible for the company’s growing presence in Mexico. The new tube plant and other expansion will boost Daewoo employment in northwestern Mexico to 4,800 by mid-1997 from 1,200 now, Koo said.
Daewoo would be only the second major TV manufacturer after Samsung to build a picture tube plant in Mexico. Partly because of the big investment and critical water requirements, most TV manufacturers have the tubes made in the Far East and ship them in for assembly.
Whichever location Daewoo selects, the new plant shows that foreign manufacturers believe Mexico will ride out its current economic crisis and provide a strong market and export “platform” on which multinational companies can build, Mexican trade officials said.
NAFTA “is working with respect to bringing investment to the region, in moving companies from outside to manufacturing within,” said Jaime Alatorre, president of the Mexican Investment Board, a government sponsored agency.
Daewoo joins a list of foreign companies upping their Mexico stake. The 100 largest foreign manufacturers in Mexico said last week that they plan to invest $6.3 billion in Mexican operations in 1996, a 53% increase from this year.
About a quarter of the 26 million television sets sold in the United States are made in a 150-mile band stretching from Tijuana to San Luis Rio Colorado.
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Daewoo in Mexico
The South Korea conglomerate will build a television picture tube plant in either San Luis Rio Colorado or Mexicali.
