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LG Electronics Shutters Alabama Solar Factory Amid “Rising Commodity Costs”

Courtesy of ZeroHedge View original post here.

Soaring material costs, supply chain constraints, and intensified price competition are some of the reasons why LG Electronics Inc. will shutter its solar factory in Huntsville, Alabama, according to a company press release

"The decision comes as uncertainties in the global solar panel business continue to increase due to a variety of contributing factors, including the intensification of price competition and the rising cost of raw materials," LG said.

Soaring commodity prices have sent solar-grade polysilicon prices up more than 550% in the last two years. Polysilicon is a critical raw material in producing solar photovoltaic cells for panels. 

Other commodity prices have risen, along with soaring labor and freight costs have added to LG's margin compression where it appears solar production has become uneconomical. 

The plant was opened in 2019 with 550 megawatts of annual panel output. Panel production is expected to wind down next month and officially shut down at the end of June. Around 160 employees and 60 contract workers will be fired or shifted to other LG manufacturing units. 

 

LG's US solar exit comes as inflationary pressures intensify higher commodity prices and increase the risk of stagflation. The inflation outlook is gloomy unless the Federal Reserve begins aggressively raising rates. Companies have had to bear some of the highest producer prices ever — crushing their margins. 

So much for President Biden's call to tame inflation and reduce supply chain congestion; it appears "Build Back Better" crumbles ahead of midterms. 


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