Published in Manufacturing

REPORTER’S NOTEBOOK: Will LG Chem’s growth spurt continue in era of deregulation, cheap gas?

BY Sunday, January 08, 2017 03:25pm

Despite the possibility of easing emissions regulations and historically low gasoline prices, LG Chem Michigan Inc. remains charged about the possibilities for electrified vehicles. 

In fact, the Holland-based manufacturer has been on a hiring spree of late, adding 140 workers last year and more than 100 people in 2015 at its 618,000-square-foot lithium-ion battery plant. 

“We’re bullish,” said Nick Kassanos, LG Chem’s president and plant manager. “We think we have a great product. It’s a very green industry and that’s where the growth seems to be. We’re glad to be a part of it.”

The company’s current situation is a sort of reversal of fortunes compared to 2013, when it was fined $1.2 million for paying idled workers with government funds as contracts slowly materialized. These days, LG Chem is adding both people and production lines, including for the new Chrysler Pacifica hybrid and another undisclosed customer this year, Kassanos said. 

LG Chem’s growing workforce symbolizes an inevitable shift toward electric vehicles and the market potential those segments could hold, he said.  

“I think you’ve seen some larger vehicles getting into the hybrid market. I think it’s coming,” Kassanos said. 

However, his bullishness comes as the industry has been targeted by President-elect Donald Trump, who’s also said he wants to ease emissions and fuel economy regulations. 

Trump’s indications and the currently low fuel prices call into question the trajectory for electric and hybrid vehicles, at least in the short term. 

Albeit unlikely, total deregulation for the auto industry could negatively affect electric vehicles, according to Mike Wall, director for automotive analysis at IHS Automotive. But what’s more likely is that the federal government will extend the milestones mandated under the Corporate Average Fuel Economy (CAFE) standards, he said. 

Wall doesn’t expect EVs to lose market share, but he also thinks they’re unlikely to “light up the sales roles in the current landscape.” He believes the better bet is on hybrid technology. 

In that case, LG Chem could continue to benefit since the company makes batteries for hybrid vehicles. Kassanos said the company also is “looking into” producing batteries for 48-volt systems. The technology allows components such as the power steering pump and air conditioning compressor to run on electrical power rather than directly from the engine, increasing fuel economy. 

Although the current political environment has injected some uncertainty into the market, Kassanos says he remains optimistic that vehicle electrification will continue to grow. 

“We’re looking at this business in the long-term,” Kassanos said. “We see the electrification of passenger vehicles on a well-established path and we just see that growth continuing.” 

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