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Gold Star Plans September Start at Mexicali TV Plant

July 14, 1988|CHRIS KRAUL | San Diego County Business Editor

SAN DIEGO — South Korean consumer electronics giant Gold Star said Wednesday that it is joining the throng of Asian competitors setting up shop in Baja California and will begin assembling 19-inch color televisions in a plant in Mexicali in September.

Gold Star's selection of the Mexicali location caps a year-long site search in Mexico including Juarez and Tijuana. I. H. Hwang, president of Gold Star's Huntsville, Ala.-based U.S. subsidiary, said Mexicali was chosen over other sites because of lower labor, building and utilities costs.

The Gold Star announcement follows a similar one earlier this year by its South Korean rival Samsung that it would begin assembling color televisions at a plant in Tijuana by the end of 1988. Observers said Gold Star is anxious to get the Mexicali plant in operation to neutralize any competitive advantage Samsung may gain by virtue of its new Tijuana operation.

Low Labor Costs

Gold Star will lease a 110,000-square foot plant in the 200-acre Mexicali Industrial Park, employing up to 150 once it is up and running. Gold Star has also obtained an option to buy the plant, sources involved in the transaction said Wednesday. The company may expand the plant by another 30,000 square feet over the next year, Hwang said.

The Mexicali plant will be Gold Star's first company-operated maquiladora, although Electra Corp. of Mexicali has been been supplying Gold Star with television chassis over the past year. A maquiladora is an assembly plant in which parts are shipped into Mexico from foreign countries and assembled by low-cost Mexican labor.

Attracted by the low labor costs, Japanese television manufacturers Sony, Sanyo, Matsushita and Hitachi have each relocated or expanded TV manufacturing operations in Tijuana over the past 18 months.

Gold Star, which reported worldwide 1987 sales of $2 billion, manufactures 10% of the 19 million television sets sold annually to U.S. consumers, Hwang said. Gold Star sells TVs here under its own label and to retailers including Sears and J. C. Penney, which put their own trademarks on the sets.

Samsung in Tijuana

Gold Star's televisions for the U.S. market are made both at the company's plant in Huntsville, open since 1982, and in South Korea. None of the Huntsville plant's 400 employees will be laid off as a result of the opening of the new Mexicali plant, Hwang said.

Richard Leister, a spokesman for Samsung's U.S. subsidiary headquartered in Saddlebrook, N.J., said Samsung' 90,000-square-foot Tijuana plant will be open by August and employ up to 300. The Tijuana plant is Samsung's first television manufacturing plant in North America, Leister said.

Ruben Aguilar, director of the Mexicali Industrial Development Commission, said his city is "very pleased" to have Gold Star in Mexicali. About 110 miles east of San Diego, Mexicali now has a total of 135 maquiladoras, up by 14 since the end of 1987.

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