KG Mobility grapples with factory fires due to aging facilities
KG Mobility has been grappling with a series of fires at its aging factory facilities as it struggles to find a site for its new plant amid a delayed negotiation with the provincial government, according to industry officials, Thursday.
The automaker operates two production lines in Pyeongtaek, Gyeonggi Province. But a fire broke out at one of them on Dec. 24 last year, leaving damages to tens of vehicles there, which raised calls for the company to complete the timely relocation of its factory to minimize further damage stemming from aging equipment.
Previously, two other fire incidents were reported at the firm’s production lines in November and December. The factories were built in the 1980s and 1990s.
The automaker has been in talks with the provincial government over purchasing a new site, but it is estimated to cost more than 1 trillion won ($763 million). Talks with the authorities continue to fine-tune cost-related details.
An official at a local automaker said the relocation of a factory is a time-consuming matter, particularly during an industry paradigm shift.
“Regardless of the scale of the outbreak of fire, it is a serious problem for any automakers to leave it as it is without maintenance,” the official said.
“But all the automakers, including KG Mobility, will keep reviewing which one is more cost-effective between the maintenance of existing facilities and the relocation of their aging facility, and the issue is more complex than before due to the ongoing auto paradigm shift,” he said.
KG Mobility said it will focus more on establishing a new factory, rather than investing in maintenance of the existing aging facility, in a bid to maximize its investment returns amid the rapid rise of electric vehicles (EVs) here and abroad.
“Our planned relocation is as part of our efforts to be in line with the auto paradigm shift driven by electrification,” a company spokesman said. “It is more efficient for us to build a new manufacturing facility focusing on EVs, rather than investing in equipment renovation for existing facilities.” Earlier, the company shared its plan to finish purchasing the land site and break ground for the new production line sometime as early as the end of this year. The facility will have a capacity of 300,000 vehicles each year after its completion possibly by the end of 2028.
“The timeline is subject to change, as the negotiation with the regional government is still underway,” the spokesman said.