Electronics Makers Turn to Eastern Europe for Labor, Tax Breaks

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Samsung Electronics and LG Electronics are building new assembly lines and expanding existing plants for TVs and LCDs in Eastern Europe.

Four or five years ago many makers of high-tech electronics operated assembly lines in Western European countries such as the UK and Spain. Now those companies are moving their plants to Eastern Europe to take advantage of cheaper labor and tax benefits. LG.Philips LCD said on Sunday that it began construction on a liquid crystal display plant in Wroclaw in southwestern Poland. It is the company's second overseas factory, following one built in Nanjing, China, in 2003.

Kwon Young-soo, LG.Philips LCD's president and CEO, said the LCDs will be sent to local LCD TV makers that target Europe. Initial annual production will be three million screens larger than 32-inches, eventually increasing to 11 million. Meanwhile, Samsung's LCD department announced that it is spending $420 million to build an LCD assembly plant in Slovakia. It is Samsung's second overseas LCD plant, following one in Suzhou, China.

Samsung also operates TV assembly plants for European customers in Hungary and Slovakia. It closed its TV plants in the UK and Spain in 2003, and is planning to expand an assembly line in Hungary by July. LG Electronics also closed a TV plant in the UK in 2005 and is now operating an LCD TV assembly plant in Poland.

Eastern European countries promised to reduce our taxes by up to $100 million and labor is cheaper here compared to Western Europe,” An official at Samsung's plant in Hungary said. „Those things are magnets that are pulling multinationals to Eastern Europe.”

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