LG Corporation is one of those stereotypical Asian conglomerates that stretch like octopuses across the entire globe. The “LG” comes from the merger of two related companies, Lak-Hui, a chemical company, with GoldStar (a plastics company). Because Lak-Hui is pronounced in Korean to sound like “lucky,” the LG is now said to stand for Lucky GoldStar. The GoldStar division is the electronics part of the overall company and this is where the air conditioners fall. In 2008, the air conditioning sales had been so successful they separated this out and formed LG Air Conditioning as a separate company1.
Because LG offers air conditioners in many markets across the globe, and because they have such a huge product line, it is difficult to pin down just how much of the market they own. Estimates put them at 27% in India (huge market for air conditioning) and as much as 20% as a world total. Most Americans are not familiar with the company, but many own LG products. As an example, they manufacture window units under the Kenmore brand name for Sears and K-Mart. The company claims to have been the top manufacturer globally for at least nine years2.
Primarily, the company has taken market share by undercutting prices, offering extremes in innovation and through joint ventures – rather than by acquiring other companies in the market. The substantially lower cost to manufacture air conditioning units in Asia has helped them tremendously. In fact, there aren’t any manufacturers based solely in the U.S. anymore.
There are too many offerings to list them all, but some of the highlights are:
- Portable air conditioners – these are combination air conditioning and dehumidifiers that vent through a hose to the outside. A typical model is LP1210BXR, a 12,000 BTU unit that retails for up to $500. Generally, consumers liked it. Complaints revolved around noise (largely dependent on environmental background levels) and how often the water collection tank has to be emptied3.
- PTAC – this stands for Portable Terminal Air Conditioner; these are the units usually seen in hotels and motels that are built into an outside wall. This configuration allows for much higher energy efficiencies. Many are rated at SEER of 12 or better. Timers and remote controls allow for savings keyed to usage – the main reason they find broad commercial use. They can also be configured as heat pumps, providing cooling in the summer and heat in the winter.
- Window units – this is the common residential application for seasonal use. Generally, LG air conditioners perform well and come with a modest base price (as low as $100). Prices jump when innovations are added – see below.
- Duct free – these units are installed with an indoor cassette (slim, attractive and unobtrusive) that is fed by refrigeration lines running to an outside compressor. Models are available down to a single inside and outside unit up to many multiple units (for a home, business or apartment setup). These can also be used as heat pumps. The two main varieties are split and mini-split. The difference is the size of the indoor units. The smaller (mini) is inconspicuous but meant for smaller areas. The regular is about the size of a large toaster and provides greater cooling.
- Commercial — Multi V line uses variable demand for cost savings in ductless systems with zone control. LG has started a complete branch dedicated to large building air handling with a noticeable environmental slant. They have recently added solar and lighting solutions and seek to become the single source provider for multiple aspects of commercial environment management.
Some of the technology sold under the LG banner demonstrates their two pronged attack on the global air conditioning market. The first isn’t visible – they leverage their plastics and other divisions, along with favorable labor markets to make inroads in the bottom-of-the-market. This comes by way of cheaper materials and shopping for the lowest assembly costs.
The second strategy is innovation. Some examples of this are the artistic and pleasing form factors used (they have five design facilities). A couple stand out: one is a mirrored face cassette with the “guts” completely hidden, and another is an LCD display covered unit that can show a variety of pictures. This is an area largely overlooked by others in the market, and having an aesthetically pleasing, yet functional unit is a great bonus.
They’ve also opened several LG Air Conditioning Academies in the U.S. (there are others across the globe) to train engineers and architects in the use of its Multi V systems4. Currently, there are four locations and they announced an additional academy will be opened in Chicago in the fall of 2011. The purpose is to promote their products and train those in the HVAC industry on their systems.
The overall picture for LG and for consumers is good. At both the high and low ends of the marketplace, for both business and residential, LG is aggressively pushing to meet the needs of their customers. Growth is likely to continue in the business to business arena, much of it in emerging markets in the Middle East.
For those considering an LG system, tax savings are a deal sweetener. For a current (2011) list of tax credits available, LG provides a certification statement online5.
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