LG reshuffles CEO lineup, shifts tech focus
By Kim Yoo-chul
LG Group has so far believed that it doesn’t need to come up with abrupt changes to top management because of its conservative organizational culture.
In other words, such catchphrases as change and innovation seem not to be sought-after values for the Seoul-based group, which was accused of just following market leaders such as Samsung.
But things are seemingly different now ― it appears to want huge changes and work is already underway as demonstrated by Friday’s personnel shakeup, which caught observers by surprise.
LG Display CEO Kwon Young-soo, one of the top confidants to members of the owner family including LG Chairman Koo Bon-moo and Koo’s younger brother LG Electronics chief executive Koo Bon-joon, moved to LG Chem, the conglomerate’s chemical affiliate.
LG said Kwon will deal with LG Chem’s information and materials division, while current LG Chem CEO Kim Bahn-suk will remain in charge overall.
``It seems quite humiliating to Kwon. We wonder whether Chairman Koo’s reshuffling style has changed. He may put performance in his criteria for promotions,’’ a senior LG executive said.
Officially, LG said the chairman is keen to expand group-wide materials and parts-related businesses and Kwon was suitably qualified.
But Kwon seemed not to know this. A month ago, Kwon told The Korea Times that he would stay in his then role despite consecutive years of operating losses. Hit by weak panel prices and low demand for LCD-embedded devices, LG’s display-making business has been stuck in negative territory for four straight quarters.
When contacted, Kwon wasn’t available for comments. LG officials said he was in Taiwan for meetings with LG Display’s key clients.
The management change comes after LG strengthened its ownership structure in key affiliates.
Rather than short-term performance, the owner structure can pursue longer-term strategies. ``The chairman’s appointment of Kwon to take a new mission represents that there is a road map in place for fresh blood in the group’s next cash cows,’’ said the senior LG executive.
Everyone gets a ``second chance’’ in his or her life and it’s exactly the same for the LG Display chief executive Kwon because battery production is truly an emerging business for the conglomerate.
LG Chem has emerged as the top cash-creating affiliate within the entire group, replacing LG Electronics and LG Display.
At a time when its electronics affiliates are reeling from falling profits due to a late entry into smartphones, oversupply in parts and weak demand for consumer electronics such as TVs, LG’s chemical business has been pushing ahead led by its battery division.
Last year, LG Chem saw 19.47 trillion won in revenue with an operating profit of 2.8 trillion won ― an increase of 25.5 percent and 34.9 percent, respectively, from 2009.
LG Chem supplies rechargeable batteries for electric vehicles (EVs) to 10 global carmakers, including General Motors (GM), and is in talks with two more.
The company plans to reap 4 trillion won in revenue from batteries by the end of 2015 and is seeking a 25 percent global share, according to spokesman H.D. Sung.
``The new role will be challenging for Kwon. But the outlook is positive. LG Chem is on the right track for the battery business,’’ said another senior executive.
Kwon has set about transforming LG Display from just a panel supplier to a market leader. LG Display supplies its ``Retina Display’’ screens to Apple’s iPhones and iPads, while it’s been expanding its leadership in the global 3D TV segment by selling its FPR 3D screens.
``LG Chem CEO Kim has been known to have a tight-lipped personality. But it goes without saying that innovation will continue as a result of Kwon’s appointment to the new position,’’ said the LG executive.
Kwon is being urged to improve the safety of LG Chem’s batteries. It supplies lithium-ion batteries to major PC maker such as Hewlett-Packard (HP) and there have been reports that they have disrupted entire computing systems.