[Photo provided by Hyundai Electric & Energy Systems Co.]
South Korea’s Hyundai Electric & Energy Systems Co. has agreed to buy a full stake in a U.S. transformer plant under its sister company Hyundai Heavy Industries Co. that is expected to help it enhance its competition in the North American market amid rising trade barriers.
Hyundai Electric & Energy Systems said on Sunday it has purchased a 100 percent stake in Hyundai Power Transformers USA in Alabama, the U.S. at 30.9 billion won ($28.8 million). The Alabama plant, established by Hyundai Heavy Industries in 2010, has an annual capacity of 14,000 megavolt-amperes, capable to churn out 80 units of transformers.
Following its acquisition, Hyundai Electric will make an additional investment of 35 billion won to upgrade the facilities. It plans to build a training center for engineering experts and automated manufacturing lines to ramp up the output by 60 percent. Through the investment, it aims to bump up annual sales at its new U.S. entity from last year’s $100 million to $200 million sales by 2021.
The company expects the Alabama factory would help it respond promptly to any adverse impact from the rising trade protectionism in the U.S. such as anti-dumping tariffs by Washington. According to UK-based market research firm Goulden Report, the U.S. is the world’s second biggest transformer market with a 12.71 percent share as of 2016 after China with 34.57 percent.
Following the latest purchase, Hyundai Electric now operates three manufacturing bases in Europe, China and the U.S. It plans to strengthen its sales network and diversify its product portfolio to expand its foothold in the U.S., according to the company.
Hyundai Electric was spun off from the Hyundai Heavy Industries Group in April 2016 as part of the shipbuilding conglomerate’s plan to reorganize into a holding company.
Shares of Hyundai Electric closed Monday down 1.02 percent at 77,900 won.
By Woo Je-yoon and Lee Ha-yeon
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