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Huge restructuring begins at LG.Philips Displays

Posted: 31 Jan 2006 ?? ?Print Version ?Bookmark and Share

Keywords:John Walko? LG.Philips Displays? CRT?

LG.Philips Displays is blaming an unprecedented decline in demand from TV makers for CRTs for its decision to close plants in the Netherlands and Germany. The move will result in the loss of 750 jobs, and the company said more plants and jobs are threatened.

Plants immediately affected are located in Aachen, Germany, and Eindhoven, the Netherlands.

The company also said it is "reviewing the financial position" of subsidiaries and operations in France, the U.S., the Czech Republic, Slovakia and Mexico.

Union officials at LPD France are also meeting to consider seeking insolvency protection at the French facility.

"Because of the unsustainable debts at the holding company as well as one of its Dutch subsidiaries [LG.Philips Displays Netherlands B.V.] and at the German subsidiary in Aachen, all these subsidiaries have filed for insolvency protection," the company said in a statement Friday (Jan. 27). LG.Philips Displays Holding B.V. is the European holding company for LG.Philips Displays.

The company said plants in Brazil, China, Indonesia, South Korea and Poland will be largely unaffected. Factories in the U.K. (Blackburn) and the Netherlands (Stadskanaal and Sittard) remain "economically viable," and are expected to continue production.

LG.Philips Displays added that it will "seek support and the approval of the Dutch trustee and supervisory judge" to continue those operations, which represent more than 85 percent of LG.Philips Displays' production capacity. They employ approximately 15,000 workers.

The company cited plummeting demand for CRTs, notably in Europe, over the past few years as flat-panel display demand takes off, especially LCDs and plasma TVs.

Another LG-Philips venture, LG Philips LCD, said late last year it expected shipments and average selling prices to increase in the third quarter of 2005 and maintained its 2005 capital expenditure budget in the range of $3.35 billion to $4.31 billion.

LG.Philips Displays nevertheless said global demand for CRTs remains strong, especially in emerging markets.

The company had been in discussions with its bankers and its parent companies, Philips and LG Electronics, to explore financial solutions, especially in Europe. "However, these negotiations were ultimately unsuccessful," it said.

"Having explored all possible restructuring options, we really had no choice but to take these actions," said J.I. Son, president and CEO of LG.Philips Displays. "We are working to maintain employment for our remaining employees through our ongoing operations."

- John Walko
EE Times




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