LG Energy Solution, suppliers seek to create sustainable value for clients

By Heo Yu-jeong, The Korea Herald - South Korea’s top battery maker LG Energy Solution is committed to a management policy focused on sustainable growth with its partner firms, driven by a spirit of cooperation and mutual growth.

The company said it aims to bolster the competitiveness of its suppliers, even amid management uncertainties while maintaining its leadership position in the market.

Under the banner of mutual growth, the company has implemented support programs encompassing both short-term goals such as cost competitiveness and long-term objectives like localization of the value chain and technology development. These quality and productivity support programs are now accessible to both domestic and international partners.

To ease the financial burden on suppliers, LG Energy Solution has introduced a financial support program, called Investment Funding for Mutual Growth. The program, worth 150 billion won ($112 million), has assisted partners in securing low-interest loans based on the firm's deposits in financial institutions since 2020. The company has also established a price indexation system for interlocking contractors to adapt to fluctuations in raw material prices.

The commitment to mutual growth is especially evident during holidays, with the company significantly boosting cash flow to partners by making payments before the due date. This alleviates the substantial cash outflows suppliers face, particularly for raw materials and incentives.

LG Energy Solution also plans to recommend well-performing projects to the Korea Credit Guarantee Fund, aiming to provide partners involved in these projects with a guarantee of obligation.

Beyond financial support, the company actively promotes a fair trade culture. Internal committees, such as the Internal Transaction Committee and the autonomous Dispute Resolution Committee, ensure the legal compliance of subcontracting transactions and seek internal resolutions to controversies with partners.

Emphasizing the importance of co-development, LG Energy Solution is also investing in its partners' growth opportunities. It is set to establish a business partnership with educational institutions to offer free online courses -- such as business, IT, language, culture, leadership, and sexual harassment compliance training. Additionally, a partners-only recruitment page on hiring platforms is in the works.

"Guided by the win-win philosophy, we will extend cooperation for improved qualities, technologies, and productivity based on mutual trust. Our goal is to maintain leadership in the field of next-generation batteries," said an LG Energy Solution.

Source: https://www.koreaherald.com/view.php?ud=20240221050608 

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