The company has seen shrinking demand for its flat-screen TVs and decreased margins in the mobile phone division, but no major jobs cuts are planned yet.
LG Electronics said it will cut $2.2 billion in expenses in order to trim costs during the global economic slowdown.
The consumer electronics manufacturer has seen shrinking demand for its flat-screen TVs and decreased margins in the mobile phone division. This led to a $487 million loss for the fourth quarter, the first loss for the company in seven quarters.
The cutbacks will involve manufacturing and indirect costs at the headquarters and all 82 subsidiaries around the world. LG said there are no major layoffs planned for its 82,000-member workforce yet, but there could be some jobs lost in the manufacturing plants. The company has developed a unit it calls the Crisis War Room that will implement and manage the new business plan.
Overall, the cutbacks will trim about 30% overhead of the annual costs, LG said. The company said it would not reduce, and may increase, investments in research and development, design, marketing, and branding. In particular, it will invest in things like solar power, commercial air conditioners, and business solutions.
"Every company -- not just LG -- has been affected negatively by the economic downturn," CEO Yong Nam said in a statement. "The poor performance of many global companies in the last quarter of 2008 was a wake-up call that we needed to take drastic actions, not just safe ones."
LG is just the latest consumer electronics company to feel the sting of the global economic slowdown, as consumer demand has dropped dramatically. Samsung recently saw its first-ever quarterly loss thanks to the sluggish performance of liquid-crystal displays and memory chips. Sony also saw its fourth-quarter profits fall 95%.