Mitsubishi Electric Power Products (MEPPI) has signed an agreement to divest its Memphis power transformer factory to Hyosung Heavy Industries for $46.5m.

The acquisition enables the company to gains its first production base in the US to increase its presence in the world’s largest electric power market.

The MEPPI Memphis plant acquisition is also part of the its plans to avoid high costs associated with tariffs.

MEPPI president and CEO Brian Heery said: “When searching for a potential buyer for the Memphis factory, we engaged in a thorough process, considering many options. Our goal was to find a buyer who could better utilize our modern facility, offer continued employment to our employees and contribute to the Memphis community.”

“Even though MEPPI is no longer manufacturing large power transformers in the United States, we remain committed to the North American Power Systems market and our customers. We will continue to supply power transformers into North America from our factory located in Ako, Japan.”

Hyosung Heavy Industries to manufacture of core-type high voltage  at the facility

The plant, where MEPPI has been producing transformers, is expected to be converted by Hyosung, to facilitate the manufacture of core-type high voltage transformers for a range of industries.

According to Hyosung, the demand for core-type transformers is driven by an increase in power consumption, expansion in the renewable energy industry and growing demand for replacement of power devices due to deterioration of existing power infrastructure.

The acquisition of the facility is expected to be completed in the first quarter of 2020, subject to review and approval.

Once the plant operates in full scale, the company is planning to strengthen its Changwon plant, the main manufacturing facility in Korea, in addition to focusing on manufacturing products for Europe, Middle East and Asian markets.

Hyosung chairman Cho Hyun-joon said: “Now we are ready to provide products to customers in the United States in time through our local manufacturing facilities. And we will strengthen our position as a total energy solution provider by providing circuit breakers, ESSs and STATCOMs, in addition to high voltage transformers.”